Contract

Exhibit 2.1 EXECUTION COPY================================================================================ AGREEMENT AND PLAN OF MERGER BY AND AMONG PROFESSIONAL COMMUNICATIONS SECURITY & IMAGING INTERNATIONAL HOLDINGS BV, STHNL ACQUISITION CORP. TELEX COMMUNICATIONS HOLDINGS, INC. AND FS PRIVATE INVESTMENTS III LLC AS THE REPRESENTATIVE OF THE EQUITY HOLDERS DATED AS OF JUNE 28, 2006================================================================================ TABLE OF CONTENTS

Page —- I. DEFINITIONS………………………………………………….. 2II. THE MERGER………………………………………………….. 17 2.1 The Merger……………………………………………… 17 2.2 Effective Time………………………………………….. 17 2.3 Effects of the Merger……………………………………. 18 2.4 Directors; Officers; Certificate of Incorporation; Bylaws……. 18III. EFFECT OF THE MERGER ON THE SHARES AND OTHER SECURITIES OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; MERGER CONSIDERATION; CLOSING………………………………… 19 3.1 Effect on Capital Stock………………………………….. 19 3.2 Payment for Common Shares, Stock Options and Warrants……….. 19 3.3 Company Stock Options; Company Warrants……………………. 22 3.4 Indemnity Escrow Amount………………………………….. 24 3.5 Adjustment to the Merger Consideration…………………….. 25 3.6 Dissenting Shares……………………………………….. 28 3.7 Closing………………………………………………… 29IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY…………………… 32 4.1 Incorporation; Power and Authority………………………… 32 4.2 Valid and Binding Agreement………………………………. 32 4.3 No Breach; Consents……………………………………… 32 4.4 Capitalization………………………………………….. 33 4.5 Subsidiaries……………………………………………. 35 4.6 SEC Filings; Financial Statements…………………………. 35 4.7 Absence of Undisclosed Liabilities………………………… 37 4.8 Other Indebtedness………………………………………. 37 4.9 Books and Records……………………………………….. 38 4.10 Absence of Certain Developments…………………………… 38 4.11 Real Estate and Personal Property…………………………. 38 4.12 Tax Matters…………………………………………….. 40 4.13 Governmental Authorization……………………………….. 42 4.14 Government Contracts…………………………………….. 42 4.15 Relations with Governments……………………………….. 43 4.16 Intellectual Property Rights……………………………… 43 4.17 Material Contracts………………………………………. 45 4.18 Litigation……………………………………………… 47 4.19 Insurance………………………………………………. 47 4.20 Compliance with Laws…………………………………….. 47 4.21 Environmental Matters……………………………………. 47 4.22 Warranties……………………………………………… 50

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4.23 Employees………………………………………………. 50 4.24 Employee Benefits – U.S………………………………….. 51 4.25 Foreign Benefit Plans……………………………………. 54 4.26 Customers………………………………………………. 54 4.27 Suppliers………………………………………………. 54 4.28 Affiliate Transactions…………………………………… 54 4.29 Brokerage………………………………………………. 55 4.30 Project Contracts……………………………………….. 55 4.31 Derivative Transactions………………………………….. 55V. REPRESENTATIONS AND WARRANTIES OF BUYER…………………………. 55 5.1 Incorporation; Power and Authority………………………… 55 5.2 Valid and Binding Agreement………………………………. 55 5.3 No Breach; Consents……………………………………… 56 5.4 Brokerage………………………………………………. 56VI. AGREEMENTS OF THE COMPANY…………………………………….. 56 6.1 Conduct of the Business………………………………….. 56 6.2 Environmental Work………………………………………. 58 6.3 Redemption of the Notes; Indenture Indebtedness Satisfaction and Discharge…………………………………………… 59 6.4 Repayment of Other Indebtedness…………………………… 60 6.5 Notice of Developments…………………………………… 60 6.6 Pre-Closing Access to Information; Confidentiality………….. 61 6.7 Commercially Reasonable Efforts…………………………… 61 6.8 Securityholder Litigation………………………………… 61 6.9 Consents and Authorizations; Regulatory Filings…………….. 61 6.10 No Solicitation…………………………………………. 62 6.11 Checks…………………………………………………. 63VII. TAX MATTERS………………………………………………… 63 7.1 Tax Matters…………………………………………….. 63VIII. AGREEMENTS OF BUYER………………………………………… 66 8.1 Indemnification of Officers and Directors………………….. 66 8.2 Employment; Employee Benefits…………………………….. 66 8.3 Replacement of Letters of Credit………………………….. 67 8.4 Commercially Reasonable Efforts…………………………… 67 8.5 Access to Information……………………………………. 67IX. CONDITIONS TO CLOSING………………………………………… 68 9.1 Conditions to the Obligations of the Company, Buyer and Merger Sub……………………………………………… 68 9.2 Conditions to Buyer’s Obligations…………………………. 68 9.3 Conditions to the Company’s Obligations……………………. 69X. TERMINATION………………………………………………….. 70 10.1 Termination of Agreement…………………………………. 70

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10.2 Procedure Upon Termination……………………………….. 71 10.3 Effect of Termination……………………………………. 71XI. INDEMNIFICATION……………………………………………… 71 11.1 Survival of Representation and Warranties………………….. 71 11.2 General Indemnification………………………………….. 72 11.3 Limits on Indemnification………………………………… 73 11.4 Exclusive Remedy………………………………………… 74 11.5 General Indemnification Procedures………………………… 75 11.6 Tax Treatment of Indemnity Payments……………………….. 77XII. THE REPRESENTATIVE………………………………………….. 77 12.1 Authorization of the Representative……………………….. 77 12.2 Payments of Expenses; Holdbacks…………………………… 79 12.3 Percentage Interests, Disbursements……………………….. 80 12.4 Bank Accounts; Investments……………………………….. 81 12.5 Compensation; Exculpation; Indemnity; Security……………… 81 12.6 Successor Representative; Termination of Representative……… 83 12.7 No Third Party Rights……………………………………. 83XIII. GENERAL…………………………………………………… 83 13.1 Public Statements……………………………………….. 83 13.2 Expenses……………………………………………….. 84 13.3 Amendment and Waiver…………………………………….. 84 13.4 Notices………………………………………………… 84 13.5 Assignment……………………………………………… 86 13.6 No Third Party Beneficiaries……………………………… 86 13.7 Severability……………………………………………. 86 13.8 Complete Agreement………………………………………. 86 13.9 Disclosure Schedules…………………………………….. 86 13.10 Signatures; Counterparts…………………………………. 87 13.11 Governing Law…………………………………………… 87 13.12 Specific Performance…………………………………….. 87 13.13 Jurisdiction……………………………………………. 87 13.14 Construction……………………………………………. 87 13.15 Time of Essence…………………………………………. 88SIGNATURES……………………………………………………… 89

Annex I–Persons Constituting the Knowledge of the CompanyAnnex II–Exclusions from Other IndebtednessExhibit A–Stockholder Written ConsentExhibit B–Closing Date Net Working Capital TemplateExhibit C–Form of Escrow AgreementExhibit D–Form of Environmental Escrow AgreementExhibit E–Company Prior Period Financial Statements iii AGREEMENT AND PLAN OF MERGER This MERGER AGREEMENT (this “Agreement”) is made as of June 28, 2006, byProfessional Communications Security & Imaging International Holdings BV, acorporation organized under the laws of the Netherlands (“Buyer”), STHNLAcquisition Corp., a Delaware corporation (“Merger Sub”), Telex CommunicationsHoldings, Inc., a Delaware corporation (the “Company”), and FS PrivateInvestments III LLC, a Delaware limited liability company, as the Representative(as defined herein) for the benefit of the Equity Holders (as defined herein). RECITALS WHEREAS, the Company holds 100% of the issued and outstanding membershipinterests in Telex Communications Intermediate Holdings, LLC, a Delaware limitedliability company (“Intermediate LLC”). WHEREAS, Intermediate LLC owns 100% of the issued and outstanding capitalstock of Telex Communications, Inc., a Delaware corporation (“TCI”). WHEREAS, the respective Boards of Directors of Buyer, Merger Sub and theCompany have determined that it is advisable and in the best interests of therespective corporations and their shareholders that Merger Sub be merged withand into the Company (the “Merger”) in accordance with the Delaware GeneralCorporation Law (the “DGCL”) and the terms of this Agreement, pursuant to whichthe Company will be the surviving corporation and will become at the EffectiveTime a wholly owned subsidiary of Buyer. WHEREAS, the Supervisory Board of Directors and Managing Board of Directorsof Robert Bosch GmbH, the ultimate parent of Buyer, have approved theTransactions on the terms and subject to the conditions of this Agreement. WHEREAS, simultaneously with the parties’ execution of this Agreement,certain stockholders of the Company holding a majority of the Common Shares havedelivered to the Company a written consent in lieu of a stockholders meeting inthe form attached hereto as Exhibit A in accordance with Section 228 of the DGCLand the Company’s Bylaws (i) approving the Merger and the Transactions, (ii)adopting this Agreement and (iii) appointing the Representative in connectionwith the Merger and the Transactions (the “Stockholder Consent”). WHEREAS, Buyer, Merger Sub and the Company desire to make certainrepresentations, warranties and agreements in connection with, and establishvarious conditions precedent to, the Merger. WHEREAS, the parties contemplate that the Indenture IndebtednessSatisfaction and Discharge (as defined herein) shall be completed immediatelyprior to or simultaneously with the Effective Time (as defined herein) and thatany and all Indenture Indebtedness (as defined herein) shall be redeemed on therespective Specified Redemption Dates (as defined herein). NOW, THEREFORE, in consideration of the mutual representations, warrantiesand agreements contained in this Agreement, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, theparties agree as follows: I. DEFINITIONS “11 1/2% TCI Indenture” means the Indenture dated as of November 19, 2003among TCI, as Issuer, the Guarantors named therein, and BNY Midwest TrustCompany, as Trustee and Collateral Agent, pursuant to which TCI issued the 111/2% TCI Notes. “11 1/2% TCI Notes” means the 11 1/2% Senior Secured Notes due October 15,2008 issued by TCI pursuant to the 11 1/2% TCI Indenture. “13% Company Indenture” means the Indenture dated as of November 21, 2001,as amended, between the Company, as Issuer, and BNY Midwest Trust Company, asTrustee, pursuant to which the Company issued the 13% Company Notes. “13% Company Notes” means 13% Senior Subordinated Discount Notes dueNovember 15, 2006 issued by the Company pursuant to the 13% Company Indenture. “13% Intermediate Indenture” means the Indenture dated as of November 19,2003 between Intermediate LLC, as Issuer, and BNY Midwest Trust Company, asTrustee, pursuant to which Intermediate LLC issued the 13% Intermediate Notes. “13% Intermediate Notes” means 13% Senior Subordinated Discount Notes dueJanuary 15, 2009 issued by Intermediate LLC pursuant to the 13% IntermediateIndenture. “13% Notes” means the 13% Company Notes and the 13% Intermediate Notes. “Accounting Arbitrator” has the meaning set forth in Section 3.5(d). “Active Employee” means any employee employed on the Closing Date by theCompany or any of its Subsidiaries who is a bargaining unit employee currentlycovered by a collective bargaining agreement or employed exclusively by theCompany or any of its Subsidiaries, including employees on temporary leave ofabsence, family medical leave, military leave, temporary disability or sickleave, but excluding employees on long-term disability leave. “Acquisition Proposal” means any offer, proposal, inquiry or indication ofinterest (other than an offer, proposal, inquiry or indication of interest byBuyer) contemplating or otherwise relating to any Acquisition Transaction. “Acquisition Transaction” means any transaction or series of transactionsinvolving (a) any merger, consolidation, share exchange, business combination,issuance of securities, acquisition of securities, tender offer, exchange offeror other similar transaction (i) in which the Company or any of its Subsidiariesis a constituent corporation, (ii) in which a Person or “group” (as defined inthe Exchange Act and the rules promulgated thereunder) of Persons directly orindirectly acquires beneficial or record ownership of securities representingmore than 15% of the outstanding securities of any class of voting securities ofthe Company or any of its 2Subsidiaries or (iii) in which the Company or any of its Subsidiaries issues orsells securities representing more than 20% of the outstanding securities of anyclass of voting securities of the Company or any of its Subsidiaries; or (b) anysale (other than sales of inventory in the Ordinary Course of Business), lease(other than in the Ordinary Course of Business), exchange, transfer (other thansales of inventory in the Ordinary Course of Business), license (other thannonexclusive licenses in the Ordinary Course of Business), acquisition ordisposition of any business or businesses or assets that constitute or accountfor 20% or more of the consolidated net revenues, net income or assets of theCompany. “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act. “Aggregate Fully-Diluted Common Shares” shall be (1) the aggregate numberof Common Shares held by all holders thereof immediately prior to the EffectiveTime, plus (2) the aggregate number of Common Shares issuable upon the exercisein full of all Stock Options (whether or not then vested) held by all holdersthereof immediately prior to the Effective Time, plus (3) the aggregate numberof Common Shares issuable upon the exercise in full of all Warrants held by allholders thereof immediately prior to the Effective Time. “Aggregate Stock Option Exercise Price” shall mean the sum of the exerciseprices payable upon exercise in full of all Stock Options (whether or notvested) held by all holders of Stock Options immediately prior to the EffectiveTime. “Aggregate Warrant Exercise Price” shall mean the sum of the exerciseprices payable upon exercise in full of all Warrants held by all holders ofWarrants immediately prior to the Effective Time. “Agreement” has the meaning set forth in the first paragraph of thisAgreement. “Ancillary Agreements” means the Escrow Agreement and the EnvironmentalEscrow Agreement in the form of Exhibits C and D, respectively. “Antitrust Clearance” has the meaning set forth in Section 4.3. “Applicable Trustee” means BNY Midwest Trust Company in its severalrespective capacities as Trustee under the 13% Company Indenture, as Trusteeunder the 13% Intermediate Indenture and as Trustee and Collateral Agent underthe 11 1/2% TCI Indenture, respectively. “Audited Financial Statements” means, collectively, the Intermediate LLCPrior Period Financial Statements and the TCI Prior Period Financial Statements. “Basket Amount” has the meaning set forth in Section 11.3(a). “Business Day” means any day of the year on which national bankinginstitutions in New York are open to the public for conducting business and arenot required or authorized to close. “Buyer” has the meaning set forth in the first paragraph of this Agreement. “Buyer Indemnified Parties” has the meaning set forth in Section 11.2(a). 3 “Capital Lease” means a lease on which the Company or any of itsSubsidiaries is a lessee that is a capital lease as determined in accordancewith GAAP. “Certificate of Merger” has the meaning set forth in Section 2.2. “Closing” has the meaning set forth in Section 3.7(a). “Closing Balance Sheet” has the meaning set forth in Section 3.5(b). “Closing Date” has the meaning set forth in Section 3.7(a). “Closing Date Capital Expenditure Amount” means the amount of capitalexpenditures, if any, which have been incurred by the Company and itsSubsidiaries during the period from January 1, 2006 up to and through theClosing Date. “Closing Date Cash Amount” means all cash of the Company and itsSubsidiaries as at the close of business on the Closing Date (but excludingpayments required to be made by Buyer to the Company in connection with theClosing) including, (i) all cash balances in the Company’s or its Subsidiaries’bank accounts as at the close of business on the Closing Date, (ii) all checksreceived by the Company or any Subsidiary prior to the close of business on theClosing Date but not deposited into the Company’s or its Subsidiaries’ bankaccounts prior to the close of business on the Closing Date, (iii) all checksdeposited by the Company or its Subsidiaries into any of their bank accountsprior to the close of business on the Closing Date and which have not cleared(and the funds represented thereby which may not be available to the Company orits Subsidiaries as at the close of business on the Closing Date) and (iv) anamount equal to the fees paid by the Company pursuant to clause (a) of the lastsentence of Section 13.2. “Closing Date Net Stockholder Payment” means an amount equal to the InitialMerger Consideration, minus (A) the Stock Option Consideration, minus (B) theWarrant Consideration. “Closing Date Net Working Capital” means, as at the close of business onthe Closing Date, the sum of all consolidated current assets of any and everynature of the Company and its Subsidiaries, including accounts receivable (lessallowances for doubtful accounts, provisions for cash discounts, rebates,returns and allowances), inventories calculated at the lower of cost or marketon “first in first out” basis (less provision for obsolescence) and prepaidexpenses, minus the sum of all consolidated current liabilities of the Companyand its Subsidiaries, including accounts payable, accrued expenses, accruedcompensation related expenses, current deferred revenues and customer deposits,in each case, determined in accordance with GAAP applied on a basis consistentwith that of the Audited Financial Statements (except as more specifically orotherwise provided in this definition of the Closing Date Net Working Capital).For purposes of calculating the Closing Date Net Working Capital, (i) all cashshall be excluded, (ii) the Other Indebtedness and the Indenture Indebtednessshall be excluded, (iii) all current liabilities arising from outstandingletters of credit securing obligations of the Company and its Subsidiaries shallbe excluded, (iv) all Tax receivables, Tax refunds and deferred Tax assets shallbe excluded, (v) all promissory notes shall be excluded, (vi) all Taxes payable,deferred Tax liabilities and accrued Taxes shall be excluded, (vii) all accrualsin respect of Closing Transaction Expenses shall be excluded, (viii) prepaidinsurance expense shall be included, and (ix) any other amounts 4specifically provided in this Agreement or in Exhibit B to be included orexcluded shall be so included or excluded. Exhibit B provides a template forsuch calculation and the application of the definition as if calculated based onthe consolidated financial statements of the Company and the Subsidiaries as ofDecember 31, 2005. “Closing Date Other Indebtedness” means Other Indebtedness as of theClosing Date. “Closing Statements” has the meaning set forth in Section 3.5(b). “Closing Transaction Expenses” means the following expenses incurred by theCompany with respect to the transactions contemplated by this Agreement: (A)fees and disbursements payable to Stroock & Stroock & Lavan LLP, (B) fees anddisbursements payable to Fredrikson & Byron, P.A., (C) fees and disbursementspayable to Hogan & Hartson LLP, (D) fees and disbursements payable by theCompany to non-United States counsel in connection with the consummation of thetransactions contemplated hereby, (E) fees and disbursements payable to MorganKeegan & Company, Inc., and (F) any transfer Taxes that the Equity Holders arerequired to pay pursuant to the provisions of Section 7.1(h) of this Agreement. “Code” means the Internal Revenue Code of 1986, as amended. “Common Shares” means the shares of Common Stock, par value $0.01 pershare, of the Company. “Company” has the meaning set forth in the first paragraph of thisAgreement. “Company Latest Balance Sheet” has the meaning set forth in Section 4.6(c). “Company Latest Financial Statements” has the meaning set forth in Section4.6(c). “Company Prior Period Financial Statements” has the meaning set forth inSection 4.6(c). “Company SEC Reports” has the meaning set forth in Section 4.6(a). “Company Tax Sharing Agreement” has the meaning set forth in Section4.12(l). “Confidentiality Agreement” has the meaning set forth in Section 6.6. “Consent” means any authorization, consent, approval, filing, waiver,exemption or other action by or notice to any Person. “Continuing Employee” has the meaning set forth in Section 8.2. “Contract” means a contract, agreement, lease, commitment or bindingunderstanding, whether oral or written, that is in effect as of the date of thisAgreement or any time after the date of this Agreement. 5 “Credit Agreement” means the Credit Agreement, dated as of November 19,2003, among TCI, as Borrower, Intermediate LLC, the Company, TelexCommunications International, Ltd., as Credit Parties and General ElectricCapital Corporation, as Agent, L/C Issuer and a Lender and the other financialinstitutions party thereto, as Lenders. “DGCL” has the meaning set forth in the Recitals. “Disclosure Schedule” means the schedule delivered by the Company to Buyeron or prior to the date of this Agreement. “Dissenting Shares” has the meaning set forth in Section 3.6(a). “Effective Time” has the meaning set forth in Section 2.2. “Encumbrance” means any charge, claim, community property interest,easement, covenant, condition, equitable interest, lien, option, pledge,security interest, right of first refusal or restriction of any kind, includingany restriction on use, voting, transfer, receipt of income or exercise of anyother attribute of ownership. “Environmental Costs” has the meaning set forth in Section 4.21(a)(i). “Environmental Escrow Account” has the meaning set forth in Section3.2(b)(v). “Environmental Escrow Amount” has the meaning set forth in Section3.2(b)(v). “Environmental Escrow Agreement” has the meaning set forth in Section3.2(b)(v). “Environmental Law” has the meaning set forth in Section 4.21(a)(ii). “Environmental Work” has the meaning set forth in Section 6.2. “Equity Holders” means all holders of Common Shares, all holders of StockOptions and all holders of Warrants, in each case outstanding immediately priorto the Effective Time. “Equity Holders Indemnified Parties” have the meaning set forth in Section11.2(e). “ERISA” means the Employee Retirement Income Security Act of 1974, asamended, and the rules and regulations thereunder. “Escrow Agent” means such escrow agent to be mutually agreed upon by theparties prior to the Closing. “Escrow Agreement” has the meaning set forth in Section 3.2(b)(iv). “Estimated Closing Date Capital Expenditure Amount” has the meaning setforth in Section 3.2(a)(ii). 6 “Estimated Closing Date Capital Expenditure Deficit” means, to the extentthat the Estimated Closing Date Capital Expenditure Amount is less than theTarget Closing Date Capital Expenditure Amount, the amount of such deficit(expressed as a positive number). “Estimated Closing Date Capital Expenditure Surplus” means, to the extentthat the Estimated Closing Date Capital Expenditure Amount is greater than theTarget Closing Date Capital Expenditure Amount, the amount of such excess(expressed as a positive number). “Estimated Closing Date Cash Amount” has the meaning set forth in Section3.2(a)(ii). “Estimated Closing Date Net Working Capital” has the meaning set forth inSection 3.2(a)(ii). “Estimated Closing Date Other Indebtedness” has the meaning set forth inSection 3.2(a)(ii). “Estimated Closing Date Net Working Capital Deficit” means, to the extentthat the Estimated Closing Date Net Working Capital is less than the Target NWCAmount, the amount of such deficit (expressed as a positive number). “Estimated Closing Date Net Working Capital Surplus” means, to the extentthat the Estimated Closing Date Net Working Capital is greater than the TargetNWC Amount, the amount of such excess (expressed as a positive number). “Exchange Act” means the Securities Exchange Act of 1934, as amended, andthe rules and regulations thereunder. “Existing Policy” has the meaning set forth in Section 8.1(b). “Expense Account” has the meaning set forth in Section 3.2(b)(vi). “Financial Statements” means, collectively, the Latest Financial Statementsand the Audited Financial Statements. “Foreign Benefit Plans” has the meaning set forth in Section 4.25. “GAAP” means United States generally accepted accounting principles, as ineffect from time to time. “GECC Credit Agreement” means that certain Credit Agreement dated as ofNovember 19, 2003 by and among TCI, as Borrower; the other persons party theretodesignated as Credit Parties; General Electric Capital Corporation, as Agent,L/C Issuer and a Lender; and the other financial institutions party thereto, asLenders, as such agreement may have been amended, restated, supplemented orotherwise modified from time to time. “Governmental Authorization” means any approval, consent, license, permit,waiver, registration or other authorization issued, granted, given, madeavailable or otherwise required by any Governmental Entity or pursuant to Law. 7 “Government Bid” means any quotation, bid or proposal by the Company or anyof its Subsidiaries which if accepted or awarded, would lead to a GovernmentContract. “Government Contracts” means any prime contract, subcontract, teamingagreement or arrangement, joint venture, basic ordering agreement, blanketpurchase agreement, letter agreement, purchase order, delivery order, taskorder, grant, cooperative agreement, Government Bid, change order or othercommitment or funding vehicle between the Company or any Subsidiary of theCompany and (a) a Governmental Entity, (b) any prime contractor to aGovernmental Entity in the prime contractor’s capacity as such, or (c) anysubcontractor with respect to any contract described in clause (a) or (b) in thesubcontractor’s capacity as such. “Governmental Entity” means any federal, state, local, foreign,international or multinational entity or authority exercising executive,legislative, judicial, regulatory, administrative or taxing functions of orpertaining to government. “Governmental Order” means any judgment, injunction, writ, order, ruling,award or decree by any Governmental Entity or arbitrator. “Hazardous Materials” has the meaning set forth in Section 4.21(a)(iii). “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,as amended, and the rules and regulations thereunder. “Indemnification Period” has the meaning set forth in Section 8.1(a). “Indemnified Persons” has the meaning set forth in Section 8.1(a). “Indemnity Cut-Off Date” has the meaning set forth in Section 11.1. “Indemnity Escrow Account” has the meaning set forth in Section 3.2(b)(iv). “Indemnity Escrow Amount” has the meaning set forth in Section 3.2(b)(iv). “Indenture Satisfaction and Discharge Amount” has the meaning set forth inSection 3.2(b)(iii). “Indentures” means, collectively, the 11 1/2% TCI Indenture, the 13%Intermediate Indenture and the 13% Company Indenture. “Indenture Indebtedness” means, collectively, the 11 1/2% TCI Notes and the13% Notes. “Indenture Indebtedness Satisfaction and Discharge” means the satisfactionand discharge of all outstanding indebtedness and obligations (includingprincipal, premium, if any, and any interest thereon (whether accrued or not)and any costs or expenses of the Trustees and legal counsel associatedtherewith) under the Indenture Indebtedness and each Indenture, including thepreparation and mailing pursuant to the respective Indentures of irrevocablenotices of redemption of all outstanding Indenture Indebtedness to the Holdersthereof, together with all officers’ certificates, opinions of counsel, noticesand other documents required by each 8Indenture or requested by each Trustee, and an instrument of Satisfaction andDischarge of each Indenture with all such certificates, opinions, notices,instruments and other documents to be reasonably satisfactory in form andsubstance to Buyer. “Initial Merger Consideration” means an amount equal to (A) four hundredtwenty million dollars ($420,000,000), plus (B) the Estimated Closing Date CashAmount, minus (C) the Indenture Satisfaction and Discharge Amount, minus (D) theEstimated Closing Date Other Indebtedness, minus (E) the Indemnity EscrowAmount, minus (F) the Purchase Price Adjustment Escrow Amount, minus (G) theEnvironmental Escrow Amount, minus (H) the Closing Transaction Expenses, minus(I) the Seller Expenses, plus (J) the Estimated Closing Date Net Working CapitalSurplus, if any, minus (K) the Estimated Closing Date Net Working CapitalDeficit, if any, plus (L) the Estimated Closing Date Capital ExpenditureSurplus, if any, minus (M) the Estimated Closing Date Capital ExpenditureDeficit, if any. “Insider” means (i) a Material Shareholder, or an officer or director ofthe Company or any Subsidiary of the Company, or (ii) any Member of theImmediate Family of any Material Shareholder, officer or director of the Companyor any Subsidiary. “Intellectual Property Rights” means (i) rights in patents, patentapplications and patentable subject matter, whether or not the subject of anapplication, (ii) rights in trademarks, service marks, trade names, trade dress,internet domains and other designators of origin, registered or unregistered,(iii) rights in copyrightable subject matter or protectable designs andSoftware, registered or unregistered, (iv) trade secrets, (v) rights in internetdomain names, uniform resource locators and e-mail addresses, (vi) rights insemiconductor topographies (mask works), registered or unregistered, (vii)know-how and (viii) all other intellectual and industrial property rights ofevery kind and nature and however designated, whether arising by operation ofLaw, Contract, license or otherwise. “Interim Period” has the meaning set forth in Section 7.1(b)(ii). “Intermediate LLC” has the meaning set forth in the Recitals. “Intermediate LLC Latest Balance Sheet” has the meaning set forth inSection 4.6(d). “Intermediate LLC Latest Financial Statements” has the meaning set forth inSection 4.6(d). “Intermediate LLC Prior Period Financial Statements” has the meaning setforth in Section 4.6(d). “IRS” means the United States Internal Revenue Service. “Knowledge of the Company” means the knowledge, following due inquiry, ofthe executive officers listed in Annex I. “Latest Financial Statements” means, collectively, the Company LatestFinancial Statements, the Intermediate LLC Latest Financial Statements and theTCI Latest Financial Statements. 9 “Law” means any constitution, law, ordinance, principle of common law,regulation, statute or treaty of any Governmental Entity. “Legal Proceeding” means any judicial, administrative or arbitration,action, suit, proceeding (public or private), claim or governmental proceeding. “Leased Real Property” has the meaning set forth in Section 4.11(c). “Liability” means any liability or obligation whether accrued, absolute,contingent, unliquidated or otherwise, whether due or to become due, whetherknown or unknown, and regardless of when asserted. “Licensed-In Intellectual Property Rights” means Third-Party IntellectualProperty Rights used or held for use by the Company or any Subsidiary with thepermission of the owner. “List” has the meaning set forth in Section 4.21(a)(iv). “Litigation” means any claim, action, arbitration, mediation, hearing,proceeding, litigation or suit (whether civil, criminal, administrative orinvestigative) commenced, brought, conducted or heard by or before, or otherwiseinvolving, any Governmental Entity or arbitrator or mediator. “LLC SEC Reports” has the meaning set forth in Section 4.6(a). “Losses” means any and all losses, damages, judgments, settlements, debts,liabilities, penalties, fines, obligations, interest (including, withoutlimitation, prejudgment interest), costs, and expenses (including, withoutlimitation, court costs and reasonable attorneys’ fees and expenses and costs ofinvestigation). “Material Adverse Effect” means any change, effect, event or condition,individually or in the aggregate, that has had, or, with the passage of time,could have, a material adverse effect on the business, assets, properties,financial condition or results of operations of the Company and itsSubsidiaries, taken as a whole, other than any change, effect, event orcondition relating to (a) the economy or the financial markets in general, (b)the industry in which the Company and its Subsidiaries operate in general, (c)war, outbreak of hostilities or terrorist attacks, (d) the execution anddelivery of this Agreement, the announcement of this Agreement or thetransactions contemplated hereby, (e) changes in applicable Laws or regulationsafter the date hereof or (f) changes in GAAP or regulatory accounting principlesafter the date hereof, except, however, in the case of each of clauses (a) and(b), to the extent that the Company is disproportionately affected thereby. “Material Contracts” has the meaning set forth in Section 4.17(a). “Material Shareholder” means, at any time, a shareholder of the Companythat owns at such time 10% or more of the then outstanding Common Shares(including, for such calculation Common Shares for which any Stock Options(whether or not vested) or Warrants are exercisable), calculated on a fullydiluted basis. 10 “Member of the Immediate Family” of a Person means a spouse, parent, child,sibling, mother- or father-in-law, son- or daughter-in-law, and brother- orsister-in-law of such Persons. “Merger” has the meaning set forth in the Recitals and Section 2.1. “Merger Consideration” has the meaning set forth in Section 3.1(b). “Merger Sub” has the meaning set forth in the first paragraph of thisAgreement. “Off-the-Shelf Software” means Software that is widely commerciallyavailable for a price of less than $150,000.00 per year for any number of usersor less than a $1000.00 one time fee per seat, PC, CPU or user. “Ordinary Course of Business” means the ordinary course of business of theCompany and the Subsidiaries consistent with past custom and practice(including, if applicable, with respect to quantity and frequency). “Organizational Documents” means (i) the articles or certificate ofincorporation and the bylaws of a corporation, (ii) the partnership agreementand any statement of partnership of a general partnership, (iii) the limitedpartnership agreement and the certificate of limited partnership of a limitedpartnership, (iv) the limited liability company agreement and articles orcertificate of formation of a limited liability company, (v) any charter orsimilar document adopted or filed in connection with the creation, formation ororganization of a Person and (vi) any amendment to any of the foregoing. “Other Indebtedness” means the amount equal to the sum (without anydouble-counting) of the following obligations (whether or not then due andpayable), to the extent that they are of the Company or any Subsidiary orguaranteed by the Company or any Subsidiary: (i) all outstanding indebtednessfor borrowed money owed to third parties or for the deferred purchase price ofproperty payment for which is deferred six (6) months or more, but excludingobligations to trade creditors incurred in Ordinary Course of Business that areunsecured and not overdue by more than six (6) months unless being contested ingood faith (the “Trade Obligations”); (ii) all reimbursement and otherobligations with respect to letters of credit (other than those listed inSchedule 8.3 to the extent that replacement letters of credit therefor will beobtained by Buyer), bankers’ acceptances and surety bonds, whether or notmatured; (iii) all indebtedness created or arising under any conditional sale orother title retention agreement with respect to property acquired by such Person(even though the rights and remedies of seller or lender under such agreement inthe event of default are limited to repossession or sale of such property); (iv)accrued interest payable with respect to indebtedness referred to in clauses (i)and (ii); (v) all obligations evidenced by notes, bonds, debentures or othersimilar instruments (whether or not convertible), (vi) all obligations underindentures; and (vii) all obligations as lessee that would be capitalized inaccordance with GAAP. In addition, the Other Indebtedness shall include, withoutduplication of other amounts set out above, all amounts owing (whether or notthen due and payable) by the Company or any of its Subsidiaries to any of theCompany’s Material Stockholders or their Affiliates, including withoutlimitation, in respect of any management, advisory or other fees, or obligationsof any kind, other than pursuant to the provisions of this Agreement. OtherIndebtedness includes the Revolving Loan, letters of credit 11and other obligations under the Credit Agreement. Other Indebtedness shall notinclude the Indenture Indebtedness or any of the items set forth on Annex IIhereto. “Out-of-the-Money Stock Options” means stock options meeting the definitionof “Stock Options” (except for the proviso in such definition) whose exerciseprice per share immediately prior to the Effective Time exceeds the Per ShareInitial Merger Consideration, calculated on the assumption that the CommonShares issuable on the exercise of such stock options were outstanding at thattime. “Out-of-the-Money Warrants” means warrants meeting the definition of”Warrants” (except for the proviso in such definition) whose exercise price pershare immediately prior to the Effective Time exceeds the Per Share InitialMerger Consideration, calculated on the assumption that the Common Sharesissuable on the exercise of such warrants were outstanding at that time. “Owned Intellectual Property Rights” means Intellectual Property Rightsowned by the Company or any Subsidiary. “Owned Real Property” has the meaning set forth in Section 4.11(b). “Payment Fund” means a separate account of the Representative establishedfor the benefit of the Equity Holders. “Payoff Amount” has the meaning set forth in Section 6.4. “Per Share Initial Merger Consideration” means the quotient of (i) the sumof (A) the Initial Merger Consideration, plus (B) the Aggregate Stock OptionExercise Price, plus (C) the Aggregate Warrant Exercise Price, divided by (ii)the Aggregate Fully-Diluted Common Shares. “Percentage Interest” means, with respect to any holder of Common Shares,Stock Options and/or Warrants immediately prior to the Effective Time, a decimalamount, expressed as a percentage, equal to the quotient of (i) the sum of thenumber of Common Shares (A) owned of record by such holder and (B) into whichany Stock Options owned of record by such holder are exercisable, and (C) intowhich any Warrants owned by such holder are exercisable, in each case,immediately prior to the Effective Time; divided by (ii) the AggregateFully-Diluted Common Shares immediately prior to the Effective Time. “Permitted Encumbrances” means (i) Encumbrances for Taxes and othergovernmental charges and assessments (except assessments for public improvementslevied, pending or deferred against the Owned Real Property) that are not yetdue and payable or which are being contested in good faith by appropriateproceedings (provided required payments have been made in connection with anysuch contest), (ii) Encumbrances of carriers, warehousemen, mechanics’ andmaterialmen and other like Encumbrances arising in the Ordinary Course ofBusiness (provided lien statements have not been filed as of the Closing Date),(iii) easements, rights of way and restrictions, zoning ordinances and othersimilar Encumbrances affecting the Real Property and which do not unreasonablyrestrict the use thereof or Buyer’s proposed use thereof in the Ordinary Courseof Business, (iv) statutory Encumbrances in favor of lessors arising inconnection with any property leased to the Company or any Subsidiary, (v)Encumbrances 12reflected in the Latest Financial Statements or arising under MaterialContracts, (vi) Encumbrances in favor of the Trustees and Collateral Agentsunder the 11 1/2% TCI Indenture and the 13% Intermediate Indenture, which shallbe removed concurrently with the consummation of the Indenture IndebtednessSatisfaction and Discharge, (vii) Encumbrances in favor of the Agent, L/C Issuerand Lenders under the GECC Credit Agreement which shall be removed upon therepayment in full of all obligations under the GECC Credit Agreement prior to orconcurrently with the consummation of the Merger, and (viii) other Encumbrancesthat will be removed prior to or in connection with the Closing. “Person” means any individual, corporation (including any non-profitcorporation), general or limited partnership, limited liability company, jointventure, estate, trust, association, organization, labor union, GovernmentalEntity or other entity. “Plan” means every benefit and compensation plan, fund, contract, programand arrangement (whether written or not) (other than those plans, funds,contracts, programs and arrangements exclusively covering current or formeremployees of the Company or its Subsidiaries located in jurisdictions outside ofthe United States of America) for the benefit of present or former employees,including those intended to provide (i) medical, surgical, health care,hospitalization, dental, vision, workers’ compensation, life insurance, death,disability, legal services, severance, sickness or accident benefits (whether ornot defined in Section 3(1) of ERISA), (ii) pension, profit sharing, stockbonus, retirement, supplemental retirement or deferred compensation benefits(whether or not tax qualified and whether or not defined in Section 3(2) ofERISA) or (iii) salary continuation, unemployment, supplemental unemployment,severance, termination pay, change-in-control, vacation or holiday benefits(whether or not defined in Section 3(3) of ERISA), (w) that is maintained orcontributed to by the Company or any Subsidiary, (x) that the Company or anySubsidiary has committed to implement, establish, adopt or contribute to in thefuture, (y) for which the Company or any Subsidiary is or may be financiallyliable as a result of the direct sponsor’s affiliation with the Company, itsSubsidiaries or the Company’s shareholders (whether or not such affiliationexists at the date of this Agreement and notwithstanding that the Plan is notmaintained by the Company or any Subsidiary for the benefit of its employees orformer employees) or (z) for or with respect to which the Company or anySubsidiary is or may become liable under any common law successor doctrine,express successor liability provisions of Law, provisions of a collectivebargaining agreement, labor or employment Law or agreement with a predecessoremployer. Plan does not include any arrangement that has been terminated andcompletely wound up prior to the date of this Agreement and for which neitherthe Company nor any Subsidiary has any present or potential liability. “Pre-Closing Taxes” has the meaning set forth in Section 7.1(b)(ii). “Property” has the meaning set forth in Section 4.21(a)(v). “Purchase Price Adjustment Escrow Account” has the meaning set forth inSection 3.2(b)(iv). “Real Property” has the meaning set forth in Section 4.11(c). 13 “Registered Intellectual Property Rights” means Intellectual PropertyRights that are the subject of an issued patent, trademark, copyright, designright or other similar registration formalizing exclusive rights, or the subjectof a pending application for such a registration. “Regulatory Action” has the meaning set forth in Section 4.21(a)(vi). “Release” has the meaning set forth in Section 4.21(a)(vii). “Release Documents” have the meaning set forth in Section 3.7(b)(i)(H). “Remedies Exception,” when used with respect to any Person, means except aslimited by applicable bankruptcy, insolvency, reorganization, moratorium orother laws affecting the enforcement of creditors’ rights generally and bygeneral equitable principles. “Representative” has the meaning set forth in Section 12.1. “Required Consents” has the meaning set forth in Section 6.9. “Return” means any return, declaration, report, estimate, informationreturn and statement pertaining to any Taxes. “Revolving Loan” means the revolving loans made available to TCI under theCredit Agreement. “ROHS Directive” means Directive 2002/95/EC on the restriction of the useof certain hazardous substances in electrical and electronic equipment. “SEC” means the United States Securities and Exchange Commission. “SEC Reports” has the meaning set forth in Section 4.6(a). “Securities Act” means the Securities Act of 1933, as amended, and therules and regulations thereunder. “Seller Expenses” has the meaning set forth in Section 12.2(a). “Short Period” means any Tax Period that ends on the Closing Date. “SOA” means the Sarbanes-Oxley Act of 2002, and the rules and regulationspromulgated in connection therewith. “Software” means computer programs or data, data base and data libraries incomputerized form, whether in object code, source code or other form. “Specified Redemption Date” means: For the 11 1/2% TCI Notes: a Redemption Date of the later of (i) 30 days following the Closing Date; (ii) October 15, 2006, or (iii) such date as is designated by Buyer at least three Business Days prior to the Closing Date; provided that such date designated by 14 Buyer is within one (1) year of the Closing Date pursuant to Section 8.02 of the 11 1/2% TCI Indenture; and For the 13% Notes: a Redemption Date that is prior to the stated maturity thereof and is the later of (i) 30 days following the Closing Date; (ii) September 15, 2006, or (iii) such other date as is designated by Buyer at least three Business Days prior to the Closing Date, but on or after September 16, 2006 in the case of the 13% Intermediate Notes. “Statement of Closing Date Capital Expenditure Amount” has the meaning setforth in Section 3.5(b). “Statement of Closing Date Cash Amount” has the meaning set forth inSection 3.23.5(b). “Statement of Closing Date Net Working Capital” has the meaning set forthin Section 3.5(b). “Statement of Closing Date Other Indebtedness” has the meaning set forth inSection 3.5(b). “Statement of Estimated Closing Date Capital Expenditure Amount” has themeaning set forth in Section 3.2(a)(ii). “Statement of Estimated Closing Date Cash Amount” has the meaning set forthin Section 3.2(a)(ii). “Statement of Estimated Closing Date Net Working Capital” has the meaningset forth in Section 3.2(a)(ii). “Statement of Estimated Closing Date Other Indebtedness” has the meaningset forth in Section 3.2(a)(ii). “Stock Options” means all outstanding options to purchase Common Shares,whether vested or unvested, granted pursuant to the Company’s 2004 Stock OptionPlan; provided that Out-of-the-Money Stock Options shall not be deemed to beStock Options except for the purpose of Section 4.4(b). “Stock Option Account” has the meaning set forth in Section 3.2(b)(vii). “Stock Option Consideration” has the meaning set forth in Section 3.3(a). “Stockholder Written Consent” has the meaning set froth in the Recitals. “Straddle Period” means any Tax Period which begins before the Closing Dateand ends after the Closing Date. “Straddle Tax Returns” has the meaning set forth in Section 7.1(b)(ii). “Subsequent Merger Consideration” has the meaning set forth in Section3.1(b). 15 “Subsidiary” means any Person of which a majority of the outstanding votingsecurities or other equity interests are owned, directly or indirectly, byanother Person. When used without reference to a particular entity, Subsidiarymeans a Subsidiary of the Company. “Superior Proposal” means any Acquisition Proposal by a third party onterms which the Company’s Board of Directors determines in its good faithjudgment, after consultation with its financial advisors, to be more favorablefrom a financial point of view to its shareholders than the Merger and theTransactions, after taking into account the likelihood of consummation of suchtransaction on the terms set forth therein, taking into account all legal,financial (including the financing terms of any such proposal), regulatory andother aspects of such proposal, the likelihood of consummation of any suchproposal and any other relevant material factors permitted under applicable Law,after giving Buyer at least four (4) Business Days to respond to suchthird-party Acquisition Proposal once the Board of Directors of the Company hasnotified Buyer that in the absence of any further action by Buyer it wouldconsider such Acquisition Proposal to be a Superior Proposal, and then takinginto account any amendment or modification to this Agreement proposed by Buyer. “Surviving Corporation” has the meaning set forth in Section 2.1. “Target Closing Date Capital Expenditure Amount” means three milliondollars ($3,000,000). “Target NWC Amount” means seventy-three million two hundred thousanddollars ($73,200,000). “Tax Affiliate” shall mean, with respect to the Company, any corporation orother entity in which the Company has a direct or indirect equity or otherownership interest that represents more than fifty percent (50%) of theaggregate equity or other ownership interests in such entity (measured by valueor by voting power). “Tax Benefit” means a reduction in the amount of Taxes that would otherwisebe payable, whether resulting from a deduction, reduced gain or increased loss,including an increased net operating loss carryforward, or otherwise. “Tax Period” means any taxable year or any other period that is treated asa taxable year (or other period, in the case of a Tax imposed with respect tosuch other period; e.g., a quarter) (including any Short Period or InterimPeriod) with respect to which any Tax may be imposed under any applicable Laws. “Taxes” means all taxes, charges, fees, levies or other assessments,including all net income, gross income, gross receipts, sales, use, ad valorem,transfer, franchise, profits, license, withholding, payroll, employment, socialsecurity, unemployment, excise, estimated, severance, stamp, occupation,property or other taxes, customs duties, fees, assessments or charges of anykind whatsoever, including all interest and penalties thereon, and additions totax or additional amounts imposed by any Governmental Entity upon the Company orany Tax Affiliate. “TCI” has the meaning set forth in the Recitals. 16 “TCI Latest Balance Sheet” has the meaning set forth in Section 4.6(e). “TCI Latest Financial Statements” has the meaning set forth in Section4.6(e). “TCI Prior Period Financial Statements” has the meaning set forth inSection 4.6(e). “TCI SEC Reports” has the meaning set forth in Section 4.6(a). “Third-Party” means a Person other than a party to this Agreement. “Third-Party Claim” has the meaning set forth in Section 11.5(a). “Third-Party Environmental Claim” has the meaning set forth in Section4.21(a)(viii). “Third-Party Intellectual Property Rights” means Intellectual PropertyRights in which a Person other than the Company or a Subsidiary has anyownership interest. “Trade Obligations” has the meaning set forth in the definition of theOther Indebtedness. “Transactions” means the Indenture Indebtedness Satisfaction and Discharge,the repayment of Other Indebtedness and the other transactions contemplated bythis Agreement and the Ancillary Agreements. “Treasury Regulations” means the rules and regulations under the Code. “WARN Act” means the Worker Adjustment and Retraining Notification Act, orany comparable Law. “Warrant” means any warrant to purchase Common Shares outstandingimmediately prior to the Effective Time; provided that Out-of-the-Money Warrantsshall not be deemed to be Warrants except for the purpose of Section 4.4(b). “Warrant Account” has the meaning set forth in Section 3.2(b)(viii). “Warrant Consideration” has the meaning set forth in Section 3.3(b). II. THE MERGER 2.1 The Merger. On the terms and subject to the conditions set forth inthis Agreement, on the Closing Date, Merger Sub will be merged (the “Merger”)with and into the Company, the separate existence of Merger Sub will cease, andthe Company will continue as the surviving corporation under the corporate name”Telex Communications Holdings, Inc.” The Company, in its capacity as thecorporation surviving the Merger, is sometimes referred to as the “SurvivingCorporation.” 2.2 Effective Time. Subject to the provisions of this Agreement, on theClosing Date, the parties hereto shall cause the Merger to be consummated byfiling a certificate of merger (the “Certificate of Merger”) with the Secretaryof State of the State of Delaware, and make all other filings or recordingsrequired by the DGCL to be made in connection with the Merger. The 17Merger shall become effective upon the filing of the Certificate of Merger or,if agreed by Buyer and the Company, at such later time as is specified in theCertificate of Merger (the time the Merger becomes effective being the”Effective Time”). 2.3 Effects of the Merger. (a) From and after the Effective Time, theMerger shall have the effects set forth in Section 259 of the DGCL. Withoutlimiting the generality of the foregoing, and subject thereto, at the EffectiveTime, (i) the Surviving Corporation shall possess all assets and properties, andevery interest therein, of the Company and Merger Sub, (ii) all rights,privileges, immunities, powers, franchises and authority of the Company andMerger Sub shall vest in the Surviving Corporation, and (iii) all obligations,debts, liabilities and duties of the Company and Merger Sub shall become theobligations, debts, liabilities and duties of the Surviving Corporation. (b) Buyer, Merger Sub and the Company, respectively, will each take allsuch action as may be necessary or appropriate to effectuate the Merger underthe DGCL. If, at any time after the Closing Date, any further action isnecessary or desirable to carry out the purposes of this Agreement and to vestthe Surviving Corporation with full right, title and possession to allproperties, rights, privileges, immunities, powers and franchises of either ofthe constituent corporations, the officers of the Surviving Corporation areauthorized in the name of each constituent corporation or otherwise to take allsuch lawful and necessary action. 2.4 Directors; Officers; Certificate of Incorporation; Bylaws. (a) The directors of Merger Sub immediately prior to the Effective Timeshall be the directors of the Surviving Corporation from and after the EffectiveTime until their successors have been duly elected and qualified, or until theirearlier death, resignation or removal in accordance with the SurvivingCorporation’s certificate of incorporation and bylaws. (b) Prior to the Effective Time, Buyer shall inform the Company in writingof the individuals who shall be the officers of the Surviving Corporation fromand after the Effective Time and the offices which each such officer shall hold.Such officers shall hold such offices until their successors have been dulyappointed and qualified, or until their earlier death, resignation or removal inaccordance with the Surviving Corporation’s certificate of incorporation andbylaws. (c) At the Effective Time, the certificate of incorporation of the Company,as in effect immediately prior to the Effective Time, shall be amended andrestated to read in its entirety in the form annexed to the Certificate ofMerger, until thereafter changed or amended as provided therein or by the DGCL. (d) At the Effective Time, the bylaws of the Company, as in effectimmediately prior to the Effective Time, shall be amended and restated to readin the same form as the bylaws of Merger Sub, as in effect immediately prior tothe Effective Time, until thereafter changed or amended as provided by the DGCL,the Surviving Corporation’s certificate of incorporation and such bylaws. 18 III. EFFECT OF THE MERGER ON THE SHARES AND OTHER SECURITIES OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; MERGER CONSIDERATION; CLOSING 3.1 Effect on Capital Stock. Subject to the provisions of this Article III,at the Effective Time, by virtue of the Merger and without any action on thepart of the Company or any shareholder of the Company or Merger Sub: (a) Capital Stock of Merger Sub. Each share of Common Stock of Merger Suboutstanding immediately prior to the Effective Time shall be converted into andbecome one (1) fully paid and nonassessable share of Common Stock, par value$0.01 per share, of the Surviving Corporation. (b) Conversion of Common Shares. Each holder of Common Shares shall beentitled to receive (i) a portion of the Initial Merger Consideration promptlyafter the Effective Time in cash equal to (A) the Per Share Initial MergerConsideration, multiplied by (B) the number of Common Shares held by such holderimmediately prior to the Effective Time (but not including any Common Sharesissuable upon the exercise of any Stock Options or Warrants held by such holderimmediately prior to the Effective Time); and (ii) from time to time after theEffective Time, as and when such amounts, if any, become payable to holders ofCommon Shares pursuant to this Agreement, such further amounts distributed outof the Payment Fund by the Representative in respect of the Common Shares, whichshall be calculated pro rata based on the Percentage Interest represented bysuch Common Shares (the aggregate amount thereof together with further amountsso distributed in respect of the Stock Options and Warrants being the”Subsequent Merger Consideration” and collectively with the Initial MergerConsideration, the “Merger Consideration”). 3.2 Payment for Common Shares, Stock Options and Warrants. (a) Certain Calculations. (i) For the purpose of determining the amount required to be deposited pursuant to Section 3.2(b)(i) in the Payment Fund, the Representative shall calculate the Stock Option Consideration and the Warrant Consideration, if any, and the respective amounts payable to each holder of outstanding Stock Options or Warrants, as applicable, pursuant to Sections 3.3(a) and 3.3(b), respectively, and the Representative shall provide, no later than four (4) Business Days prior to the Closing Date and after providing Buyer with an opportunity for review and discussion, written notice to Buyer prior to the Closing of the Stock Option Consideration and the Warrant Consideration, if any, and the amount required to be deposited in the Payment Fund pursuant to Section 3.2(b)(i). (ii) No later than four (4) Business Days prior to the Closing Date, and after providing Buyer with an opportunity for review and discussion, the Company shall deliver to Buyer and Merger Sub (1) a statement of estimated Closing Date Net Working Capital (the “Statement of Estimated Closing Date Net Working Capital”) determined on a basis consistent with the methodology to be employed in the calculation of the Closing Date Net Working Capital pursuant to Section 3.5 below (such estimate, the “Estimated Closing Date Net Working Capital”), (2) a statement (the “Statement of Estimated 19 Closing Date Cash Amount”) of a good faith estimate of the Closing Date Cash Amount (such estimate, the “Estimated Closing Date Cash Amount”), (3) a statement (the “Statement of Estimated Closing Date Other Indebtedness”) of a good faith estimate of the Closing Date Other Indebtedness (such estimate, the “Estimated Closing Date Other Indebtedness”), and (4) a statement (the “Statement of Estimated Closing Date Capital Expenditure Amount”) of a good faith estimate of the Closing Date Capital Expenditure Amount (such estimate, the “Estimated Closing Date Capital Expenditure Amount”). The amounts to be reflected on such statements shall be calculated as of the final Business Day of the month in which the Closing is to occur, unless the Closing is to occur during the first five (5) Business Days of a month, in which event such statements shall be as of the final Business Day of the preceding month. (b) Closing Payments. At the Closing, the following deposits and paymentsshall be made: (i) Buyer or Merger Sub shall deposit or shall cause to be deposited in the Payment Fund, by wire transfer of immediately available funds, an amount equal to the Closing Date Net Stockholder Payment. (ii) Buyer or Merger Sub shall pay, or cause to be paid, by wire transfer of immediately available funds, to each of the lenders of the Other Indebtedness the Payoff Amount. (iii) Buyer or Merger Sub shall pay, or cause the Company, Intermediate LLC and TCI, as the case may be, to pay, by wire transfer of immediately available funds, to each Applicable Trustee such amount, as confirmed by such Applicable Trustee, necessary to satisfy and discharge the Indenture Indebtedness under such Indenture pursuant to the provisions of the relevant Indenture (collectively for all such Indentures, the “Indenture Satisfaction and Discharge Amount”). (iv) Buyer or Merger Sub shall deposit, or cause to be deposited with the Escrow Agent, pursuant to an escrow agreement to be executed at the Closing, substantially in the form annexed hereto as Exhibit C (the “Escrow Agreement”), the following amounts: (A) ten million dollars ($10,000,000) (such amount, as it may be adjusted in accordance with this Agreement and the Escrow Agreement, the “Indemnity Escrow Amount”), which shall be deposited in a separate interest-bearing escrow account established under the Escrow Agreement for the purpose of making funds available to satisfy claims for Losses with respect to which either or both of Buyer and the Surviving Corporation is entitled to indemnification under Article XI (the “Indemnity Escrow Account”); and (B) five million dollars ($5,000,000) (the “Purchase Price Adjustment Escrow Amount”), which shall be deposited in a separate interest-bearing escrow account established under the Escrow Agreement for the purpose of making funds available to satisfy any reduction in the Subsequent Merger Consideration as a result of any adjustment thereto pursuant to the provisions of Section 3.5(e) (the “Purchase Price Adjustment Escrow Account”). 20 (v) Buyer or Merger Sub shall deposit, or cause to be deposited with the Escrow Agent, pursuant to an escrow agreement to be executed at the Closing, substantially in the form annexed hereto as Exhibit D (the “Environmental Escrow Agreement”), five million dollars ($5,000,000) (such amount, as it may be adjusted in accordance with this Agreement and the Environmental Escrow Agreement, the “Environmental Escrow Amount”), which shall be deposited in a separate interest-bearing escrow account established under the Escrow Agreement for the purpose of making funds available to satisfy the costs and expenses of the Environmental Work (the “Environmental Escrow Account”). (vi) Buyer or Merger Sub shall deposit, or cause to be deposited, an amount equal to $500,000 as the Seller Expenses into a separate account to be designated by the Representative (the “Expense Account”). (vii) Buyer or Merger Sub shall deposit, or cause to be deposited, an amount equal to the Stock Option Consideration into a separate account of the Company to be established by the Company for the benefit of the holders of all Stock Options (the “Stock Option Account”) for the purpose of distributing such funds to the holders of all Stock Options pursuant to Section 3.3(a). (viii) Buyer or Merger Sub shall deposit, or cause to be deposited, an amount equal to the Warrant Consideration, if any, into a separate account of the Company to be established by the Company for the benefit of the holders of each unexpired Warrant reflected on Schedule 4.4(b) (the “Warrant Account”) for the purpose of distributing such funds to the holders of Warrants pursuant to Section 3.3(b); provided, however, that no such deposit or distribution shall occur if prior to the Effective Time all such Warrants have been converted in their entirety into Common Shares. (ix) If the Representative so instructs Buyer in writing prior to the Closing, Buyer or Merger Sub shall deposit, or cause to be deposited, an amount equal to the Closing Transaction Expenses into an account of the Company, and the Company shall pay all Closing Transaction Expenses at the Closing to the recipients thereof as directed by the Representative. (c) Surrender of Certificates. The Representative shall pay an amount equalto the Per Share Initial Merger Consideration out of the Payment Fund for eachCommon Share that is surrendered in accordance with this Section 3.2(c).Promptly after the Effective Time, subject to Section 3.6, upon surrender of aCertificate or Certificates (or affidavit of lost Certificate in form andsubstance reasonably satisfactory to the Representative and the SurvivingCorporation) representing Common Shares owned by such stockholder to theRepresentative or to such other agent or agents as may be appointed by theRepresentative, together with a duly executed letter of transmittal in a formreasonably acceptable to counsel for the Representative and Buyer, the holder ofsuch Certificate or Certificates shall be entitled to receive in exchangetherefor an amount in cash, without any interest thereon, equal to the productof the Per Share Initial Merger Consideration multiplied by the number of CommonShares represented by such Certificate or Certificates. From time to time afterthe Effective Time, as and when any amount of Subsequent Merger Consideration isdistributed out of the Payment Fund by the Representative to the Equity 21Holders pursuant to this Agreement, any holder of Common Shares that hassurrendered Certificates representing Common Shares to the Representative (or toany agent appointed by the Representative) shall have the right to receive itsPercentage Interest of the Subsequent Merger Consideration that is distributedout of the Payment Fund by the Representative to the Equity Holders in respectof all Certificates representing Common Shares so surrendered by such holderrelative to the aggregate amount of the entire Subsequent Merger Considerationso distributed. Such right to receive Subsequent Merger Consideration shall notbe transferable except by will or the laws of descent and distribution. (d) Unregistered Transfers of Capital Stock. In the event of a transfer ofownership of Common Shares which are not registered in the transfer records ofthe Company as of the Effective Time, the appropriate portion of the MergerConsideration, may be paid by the Representative to a transferee if theCertificate or Certificates representing such Common Shares are presented to theSurviving Corporation, accompanied by all documents reasonably required by theSurviving Corporation, including, without limitation, (i) documents to evidenceand effect such transfer and to evidence that any applicable stock transfertaxes have been paid and (ii) representations or warranties by the transferee tothe Surviving Corporation with respect to the ownership of such capital stock,in form reasonably acceptable to the Surviving Corporation. (e) No Further Ownership Rights in Company. At and after the EffectiveTime, each holder of Common Shares of the Company immediately prior to theEffective Time shall cease to have any rights as a stockholder of the Company,except for the right to surrender such stockholder’s Certificates in exchangefor its portion of the Initial Merger Consideration as set forth herein and theright to receive its Percentage Interest of the Subsequent Merger Considerationthat is distributed out of the Payment Fund by the Representative to the EquityHolders, and after the Effective Time no transfer of Common Shares of theCompany shall be made on the stock transfer books of the Company. AnyCertificates presented after the Effective Time for transfer shall be cancelledand exchanged for the holder’s portion of the Merger Consideration in accordancewith Section 3.2(c) above. (f) Tax Withholding. Each of the Surviving Corporation and the Companyshall be entitled to deduct and withhold from all amounts payable into thePayment Fund pursuant to this Agreement such amounts as are required to bededucted and withheld with respect to the making of payment of such amountsunder the Code, or any other provision of state, local or foreign Tax law. Tothe extent that amounts are so withheld by the Surviving Corporation or theCompany, it shall so advise the Representative in writing indicating the Personin respect of which such deduction is being made and the amount withheld, andsuch withheld amounts shall be treated for all purposes of this Agreement ashaving been paid into the Payment Fund. The Representative shall have the rightto deduct such withheld amounts from any payment contemplated to be made underSection 3.2(c) to such Person in respect of which such amount was deducted andwithheld by the Company or the Surviving Corporation pursuant to this Section3.2(f). 3.3 Company Stock Options; Company Warrants. (a) At the Effective Time, each then outstanding Stock Option that is notexercised prior to the Closing shall terminate and the holder thereof will havethe right to receive in 22exchange therefor an amount in cash equal to the difference between (x) the PerShare Initial Merger Consideration, multiplied by the aggregate number of CommonShares issuable upon exercise in full of all Stock Options (whether or not thenvested) held by such holder immediately prior to the Effective Time, minus (y)the aggregate cash exercise price payable upon exercise of all such StockOptions, net of applicable withholding Taxes. The aggregate amount payable tothe holders of all outstanding Stock Options pursuant to this Section 3.3(a),before giving effect to any applicable deductions or withholdings for Taxes, isreferred to herein as the “Stock Option Consideration.” Promptly after theClosing, the Surviving Corporation shall pay or cause to be paid to the holdersof all Stock Options all amounts due under this Section 3.3(a) without interestthereon out of the funds deposited by Buyer or Merger Sub into the Stock OptionAccount pursuant to Section 3.2(b)(vii). Additionally, from time to time afterthe Effective Time, as and when any amounts of Subsequent Merger Considerationshall become payable pursuant to this Agreement, holders of Stock Optionsoutstanding immediately prior to the Effective Time shall be entitled to receivea pro rata portion of such Subsequent Merger Consideration based on thePercentage Interest represented by such Stock Options. (b) At the Effective Time, each unexpired Warrant that is not exercisedprior to the Closing shall terminate and the holder thereof will have the rightto receive in exchange therefor an amount in cash equal to the differencebetween (x) the Per Share Initial Merger Consideration, multiplied by theaggregate number of Common Shares issuable upon exercise in full of all Warrantsheld by such holder immediately prior to the Effective Time, minus (y) theaggregate cash exercise price payable upon exercise of all such Warrants, net ofapplicable withholding Taxes. The aggregate amount payable to the holders of alloutstanding Warrants pursuant to this Section 3.3(b), before giving effect toany applicable deductions or withholdings for Taxes, is referred to herein asthe “Warrant Consideration.” Promptly after the Closing, the SurvivingCorporation shall pay or cause to be paid to the holders of all Warrants allamounts due under this Section 3.3(b) without interest thereon out of the fundsdeposited by Buyer or Merger Sub into the Warrant Account pursuant to Section3.2(b)(viii). Additionally, from time to time after the Effective Time, as andwhen any amounts of Subsequent Merger Consideration shall become payablepursuant to this Agreement, holders of Warrants outstanding immediately prior tothe Effective Time shall be entitled to receive a pro rata portion of suchSubsequent Merger Consideration based on the Percentage Interest represented bysuch Warrants. (c) To the extent there are any changes to Schedule 4.4(b) in order toreflect the exercise of Stock Options or Warrants prior to the Closing, theCompany shall provide an updated Schedule 4.4(b) to Buyer, Merger Sub and theRepresentative at the Closing, and the Surviving Corporation shall be entitledto rely on such schedule in making payments under Sections 3.3(a) and 3.3(b)above. (d) The Surviving Corporation shall be entitled to deduct and withhold fromall amounts payable pursuant to this Agreement to any holder of Stock Options orWarrants such amounts as are required to be deducted and withheld with respectto the making of payment of such amounts under the Code, or any provision ofstate, local or foreign Tax law. To the extent that amounts are so withheld bythe Surviving Corporation, such withheld amounts shall be treated for allpurposes of this Agreement as having been paid to the holder of the Stock Optionor Warrants, as applicable, in respect of which such deduction and withholdingwas made by the Surviving Corporation. 23 (e) Effective as of the Effective Time, the Company shall terminate allstock option plans granting rights in the Company’s capital stock. 3.4 Indemnity Escrow Amount. (a) The Indemnity Escrow Amount shall be held by the Escrow Agent in orderto provide funds for the payment of claims with respect to which any BuyerIndemnified Party is entitled to indemnification pursuant to Article XI. Buyerwill have a right to make claims against the Indemnity Escrow Account inaccordance with Article XI on behalf of any Buyer Indemnified Party for any andall amounts of Losses with respect to which such Buyer Indemnified Party isentitled to indemnification under Article XI. Any interest earned on theIndemnity Escrow Amount shall be deposited by the Escrow Agent into theIndemnity Escrow Account, but shall not constitute part of the Indemnity EscrowAmount. The amount of interest, reduced by any Taxes (as referred to in the nextsentence), brokerage fees and other expenses or losses incurred in connectionwith the investment of the Indemnity Escrow Amount, shall be paid to the Buyerand the Representative in proportion to the respective payments to them of theIndemnity Escrow Amount. The parties acknowledge that Buyer shall be treated asthe owner of the Indemnity Escrow Account and shall be responsible for any Taxesattributable to income earned in respect of the Indemnity Escrow Amount untilsuch Indemnity Escrow Amount is disbursed in accordance with the terms of theEscrow Agreement (with the Buyer being entitled to reimbursement out of suchinterest for any such Taxes paid). (b) The Escrow Agreement shall provide for releases from the IndemnityEscrow Account as follows: (i) $2,000,000 on the first anniversary of theClosing Date, and (ii) $2,000,000 on the second anniversary of the Closing Date,in each case to the extent that unresolved claims do not exceed the IndemnityEscrow Amount. (c) Subject to the provisions of the Escrow Agreement, on the next BusinessDay after the Indemnity Cut-Off Date, Buyer and the Representative shallinstruct the Escrow Agent to release from the Indemnity Escrow Account anddeposit into the Payment Fund the remaining balance of funds in the IndemnityEscrow Account; provided, however, that if, at 5:00 p.m. (New York City time) onthe Business Day immediately preceding the Indemnity Cut-Off Date, any portionof the Indemnity Escrow Account is subject to one or more pendingindemnification claims that have been timely asserted in accordance with ArticleXI and have not been paid in full or otherwise finally settled or adjudicated,or are subject to appeal or further proceedings, then an amount equal to suchportion of the Indemnity Escrow Amount attributable to such claims (includingaccrued interest earned on each such amount in the Indemnity Escrow Account fromthe date on which each such claim was made to the Indemnity Cut-Off Date) shallbe retained in the Indemnity Escrow Account until such claims are paid in fullor otherwise finally settled or adjudicated and no longer subject to appeal orfurther proceedings. Subject to the right of the Representative to retain fundsto cover the Seller Expenses, the Representative shall distribute to the EquityHolders all funds released from the Indemnity Escrow Account pursuant to thisSection 3.4 in accordance with their respective Percentage Interests; provided,however, that the Representative shall pay to the Surviving Corporation allamounts required pursuant to this Section 3.4 to be distributed from the PaymentFund to the holders of Stock Options and Warrants, and the Surviving Corporationshall distribute such amounts, net of applicable 24withholding Taxes, to such holders in accordance with their respectivePercentage Interests therein in accordance with the Representative’sinstructions. 3.5 Adjustment to the Merger Consideration. (a) The Purchase Price Adjustment Escrow Amount shall be held by the EscrowAgent until the final determination of the Closing Date Net Working Capital,Closing Date Cash Amount, Closing Date Other Indebtedness and Closing DateCapital Expenditure Amount in accordance with this Section 3.5 in order toprovide funds for the payment of all amounts (if any) required to be paid toBuyer pursuant to this Section 3.5 as a result of a difference between theClosing Date Net Working Capital, Closing Date Cash Amount, Closing Date OtherIndebtedness and Closing Date Capital Expenditure Amount, each as finallydetermined pursuant to this Section 3.5, and the respective correspondingamounts estimated pursuant to Section 3.2(a)(ii). Any interest earned on thePurchase Price Adjustment Escrow Amount shall be deposited by the Escrow Agentinto the Purchase Price Adjustment Escrow Account, but shall not constitute partof the Purchase Price Adjustment Escrow Amount. The amount of interest, reducedby any Taxes (as referred to in the next sentence), brokerage fees and otherexpenses or losses incurred in connection with the investment of the PurchasePrice Adjustment, shall be paid to the Buyer and the Representative inproportion to the respective payments to them of the Purchase Price AdjustmentEscrow Amount. The parties acknowledge that Buyer shall be treated as the ownerof the Purchase Price Adjustment Escrow Account and shall be responsible for anyTaxes attributable to income earned in respect of the Purchase Price AdjustmentEscrow Amount until such Purchase Price Adjustment Escrow Amount is disbursed inaccordance with the terms of the Escrow Agreement (with the Buyer being entitledto reimbursement out of such interest for any such Taxes paid). Upon finaldetermination of each of the Closing Date Net Working Capital, the Closing DateCash Amount, the Closing Date Other Indebtedness and the Closing Date CapitalExpenditure Amount, and the payment of all amounts (if any) required to be paidto Buyer pursuant to this Section 3.5, Buyer and the Representative shallinstruct the Escrow Agent to release from the Purchase Price Adjustment EscrowAccount and deposit into the Payment Fund the balance of funds remaining in thePurchase Price Adjustment Escrow Account, if any, and (subject to the right ofthe Representative to retain funds to cover Seller Expenses) the Representativeshall distribute such funds to the Equity Holders in accordance with theirrespective Percentage Interests. (b) Within sixty (60) days after the Closing Date, Buyer shall prepare anddeliver to the Representative (i) an unaudited consolidated balance sheet of theCompany and the Subsidiaries as of the close of business on the Closing Date(but without giving effect to the Closing) (the “Closing Balance Sheet”), (ii)an unaudited statement of the Closing Date Net Working Capital (the “Statementof Closing Date Net Working Capital”), (iii) an unaudited statement of theClosing Date Cash Amount (the “Statement of Closing Date Cash Amount”), (iv) anunaudited statement of the Closing Date Other Indebtedness (the “Statement ofClosing Date Other Indebtedness”) and (v) an unaudited statement of the ClosingDate Capital Expenditure Amount (the “Statement of Closing Date CapitalExpenditures”) (altogether, the “Closing Statements”). The Closing Statementsshall be prepared based upon the books and records of the Company and itsSubsidiaries. The Closing Balance Sheet and the Closing Statements shall beprepared in accordance with GAAP, applied on a basis consistent with that of theAudited Financial Statements (except to the extent that the definitions ofClosing Date Net 25Working Capital, Closing Date Cash Amount, Closing Date Other Indebtedness andClosing Date Capital Expenditure Amount specifically provide otherwise); withoutlimitation of the foregoing, the Closing Statements shall be prepared using thesame accounting methods, policies, practices and procedures, with consistentclassifications, judgments and estimation methodologies as were used in thepreparation of the Audited Financial Statements, to the extent they are, in eachcase, consistent with GAAP. (c) Following the delivery to the Representative of the Closing Statements,Buyer shall cause the Surviving Corporation to provide the Representative andits representatives with reasonable access during normal business hours and uponreasonable notice to books and records and relevant personnel to verify theaccuracy of the Closing Statements referred to in paragraph (b) above andattempt to resolve any disputes that may arise under this Section 3.5. (d) The Closing Statements shall be final and binding on the parties unlessthe Representative shall, within forty-five (45) days following the delivery ofthe Closing Statements deliver to Buyer written notice of disagreement, whichnotice shall describe the nature of any such disagreement in reasonable detail,identify the specific items involved and the dollar amount of each suchdisagreement. After the end of the forty-five (45) day period following thedelivery of the Closing Statements, neither Buyer nor the Representative mayintroduce additional disagreements with respect to any item in the ClosingStatements, except to the extent they arise out of or are related to thenpending disagreements. If the Representative shall raise any objections withinthe aforesaid forty-five (45) day period, then the disputed matters shall beresolved by the Representative, on behalf of the Equity Holders, and Buyer. Ifthe Representative and Buyer are unable to resolve all disagreements withinthirty (30) days, or such longer period as may be agreed by Buyer and theRepresentative, then, within thirty (30) days thereafter, the Representative andBuyer jointly shall select an arbiter from KPMG or such other accounting firm ofnational standing as may be agreed by the parties. If Buyer and theRepresentative are unable to select an arbiter within such time period, theAmerican Arbitration Association shall make such selection (the person soselected shall be referred to herein as the “Accounting Arbitrator”). TheAccounting Arbitrator so selected will consider only those items and amounts setforth in the Closing Statements as to which Buyer and the Representative havedisagreed within the time periods and on the terms specified above (except asprovided above) and must resolve the matter in accordance with the terms andprovisions of this Agreement. The Accounting Arbitrator shall issue a reportthat sets forth the resolution of all items in dispute and that contains a finalClosing Balance Sheet and/or a final Statement of Closing Date Net WorkingCapital and/or final Statement of Closing Date Cash Amount and/or a finalStatement of Closing Date Other Indebtedness and/or a final Statement of ClosingDate Capital Expenditures, as applicable. Such report shall be final and bindingupon Buyer and the Representative. The fees and expenses hereunder of theAccounting Arbitrator shall be paid one-half by Buyer and, as Seller Expenses,one-half by the Representative, on behalf of the Equity Holders. Buyer and theRepresentative shall, and Buyer shall cause the Surviving Corporation to,cooperate fully with the Accounting Arbitrator and respond on a timely basis toall requests for information or access to documents or personnel made by theAccounting Arbitrator or by other parties hereto, all with the intent to fairlyresolve all disputes relating to the Closing Balance Sheet and/or the Statementof Closing Date Net Working Capital and/or Statement of Closing Date Cash Amountand/or Statement of the Closing Date Other Indebtedness and/or 26Statement of the Closing Date Capital Expenditures, as applicable, as promptlyas reasonably practicable. (e) (i) If the Closing Date Net Working Capital as reflected in theStatement of Closing Date Net Working Capital as finally determined inaccordance with this Section 3.5 is less than the Estimated Closing Date NetWorking Capital, the payments of Subsequent Merger Consideration shall bedecreased by an amount equal to the amount of such shortfall, and if the ClosingDate Net Working Capital as reflected in the Statement of Closing Date NetWorking Capital is greater than the Estimated Closing Date Net Working Capital,the payments of Subsequent Merger Consideration shall be increased by an amountequal to the amount of such excess. (ii) If the Closing Date Cash Amount as reflected in the Statement ofClosing Date Cash Amount as finally determined in accordance with this Section3.5 is less than the Estimated Closing Date Cash Amount, the payments ofSubsequent Merger Consideration shall be decreased by an amount equal to theamount of such shortfall, and if the Closing Date Cash Amount as reflected inthe Statement of Closing Date Cash Amount as finally determined in accordancewith this Section 3.5 is greater than the Estimated Closing Date Cash Amount,the payments of Subsequent Merger Consideration shall be increased by an amountequal to the amount of such excess. (iii) If the Closing Date Other Indebtedness as reflected in theStatement of Closing Date Other Indebtedness as finally determined in accordancewith this Section 3.5 is less than the Estimated Closing Date OtherIndebtedness, the payments of Subsequent Merger Consideration shall be increasedby an amount equal to the amount of such difference, and if the Closing DateOther Indebtedness as reflected in the Statement of Closing Date OtherIndebtedness as finally determined in accordance with this Section 3.5 isgreater than the Estimated Closing Date Other Indebtedness, the payments ofSubsequent Merger Consideration shall be decreased by an amount equal to theamount of such excess. (iv) If the Closing Date Capital Expenditure Amount as reflected inthe Statement of the Closing Date Capital Expenditures as finally determined inaccordance with this Section 3.5 is less than the Estimated Closing Date CapitalExpenditure Amount, the payments of Subsequent Merger Consideration shall bedecreased by an amount equal to the amount of such shortfall, and if the ClosingDate Capital Expenditure Amount as reflected in the Statement of the ClosingDate Capital Expenditures as finally determined in accordance with this Section3.5 is greater than the Estimated Closing Date Capital Expenditure Amount, thepayments of Subsequent Merger Consideration shall be increased by an amountequal to the amount of such excess. (f) If the aggregate adjustments under paragraph (e) of this Section 3.5result in a reduction in the payments of Subsequent Merger Consideration, theRepresentative and Buyer shall instruct the Escrow Agent to pay to Buyer (bywire transfer to an account designated in writing by Buyer) from the funds heldin the Purchase Price Adjustment Escrow Account the amount of such reductionplus accrued interest earned on such amount in the Purchase Price AdjustmentEscrow Account from the Closing Date to the payment date within five (5)Business Days after the final determination of Closing Date Net Working Capital,Closing Date Cash 27Amount, Closing Date Other Indebtedness and Closing Date Capital ExpenditureAmount. Conversely, if the aggregate of such adjustments result in an increasein the payments of Subsequent Merger Consideration, then within five (5)Business Days after the final determination of Closing Date Net Working Capital,Closing Date Cash Amount, Closing Date Other Indebtedness and Closing DateCapital Expenditure Amount, Buyer shall deposit or shall cause to be depositedinto the Payment Fund the amount of such increase plus accrued interest thatwould have been earned on such amount had such amount been deposited in thePurchase Price Adjustment Escrow Account from the Closing Date to the paymentdate. (g) To the extent that any funds remain in the Purchase Price AdjustmentEscrow Account after all payments, if any, required to be made to Buyer pursuantto Section 3.5(f) above are made, the parties shall instruct the Escrow Agent topay into the Payment Fund the balance of funds remaining in the Purchase PriceAdjustment Escrow Account. Notwithstanding any other provision of this Agreementto the contrary, in the event that the net aggregate amount of the adjustmentsin Closing Date Net Working Capital, Closing Date Cash Amount, Closing DateOther Indebtedness and Closing Date Capital Expenditure Amount exceeds thePurchase Price Adjustment Escrow Amount, the remaining balance of such netaggregate amount (plus accrued interest that would have been earned on suchamount had such amount been deposited in the Purchase Price Adjustment EscrowAccount from the Closing Date to the payment date) shall be paid to Buyer out ofthe Indemnity Escrow Account. (h) Judgment upon the award rendered by the accounting firm may be enteredin any court of competent jurisdiction. (i) Notwithstanding the foregoing provisions of this Section 3.5, theRepresentative shall pay to the Surviving Corporation all amounts requiredpursuant to this Section 3.5 to be distributed from the Payment Fund to theholders of Stock Options and the holders of Warrants, and the SurvivingCorporation shall distribute such amounts, net of applicable withholding Taxes,to such holders in accordance with their respective Percentage Interests inaccordance with the Representative’s instructions. 3.6 Dissenting Shares. (a) Notwithstanding anything in this Agreement to the contrary, if Section262 of the DGCL is applicable to the Merger, Common Shares that are issued andoutstanding immediately prior to the Closing Date and which are held bystockholders who have not voted such shares in favor of the Merger, who willhave delivered, prior to any vote on the Merger, a written demand for theappraisal of such Common Shares in the manner provided in Section 262 of theDGCL and who, as of the Closing Date, will not have effectively withdrawn orlost such right to dissenters’ rights (“Dissenting Shares”) will not beconverted into or represent a right to receive any portion of the MergerConsideration. The holders thereof will be entitled only to such rights as aregranted by Section 262 of the DGCL. Each holder of Dissenting Shares who becomesentitled to payment for such shares pursuant to Section 262 of the DGCL shall beentitled to receive payment of the appraised value of such Common Shares held bythem in accordance with the provisions of such Section 262 of the DGCL;provided, however, that if any such holder of Dissenting Shares will haveeffectively withdrawn such holder’s demand for appraisal of such shares or lostsuch holder’s right to appraisal and payment of such shares under Section 262 of 28the DGCL, such holder will forfeit the right to appraisal of such shares andeach such Common Share will thereupon be deemed to have been canceled,extinguished and converted, as of the Effective Time, into and represent theright to receive the portion of the Merger Consideration to which such holdershall be entitled, without any interest thereon, in accordance with this ArticleIII, upon surrender in the manner provided in Section 3.2(c), of the Certificateor Certificates that, immediately prior to the Effective Time, evidenced thenumber of shares of Common Shares owned by such stockholder. (b) The Company will give Buyer (i) prompt notice of any written demand forappraisal, any withdrawal of a demand for appraisal and any other instrumentserved pursuant to Section 262 of the DGCL received by the Company and (ii) theopportunity to direct all negotiations and proceedings with respect to demandsfor appraisal under such Section 262 of the DGCL. (c) In the event that any stockholder properly demands relief in accordancewith Section 262 of the DGCL and the rights to obtain such relief are notwithdrawn or otherwise lost prior to the Effective Time, the Representativeshall withhold payment out of the Payment Fund of, and pay over to Buyer, suchamounts that would otherwise be paid pursuant to Section 3.2(c) to holders ofCommon Shares. The Buyer and the Representative shall instruct the Escrow Agentto pay over to Buyer the amounts allocable to the Common Shares referred to inclause (i) of this paragraph and held pursuant to the Escrow Agreement and theEnvironmental Escrow Agreement, based on the Percentage Interests attributableto such Dissenting Shares. 3.7 Closing. (a) Unless this Agreement shall have been terminated and the Merger and theTransactions shall have been abandoned pursuant to Section 10.1, the closing ofthe Merger (the “Closing”) shall take place at 10:00 a.m., New York City time atthe offices of Dorsey & Whitney LLP, located at 250 Park Avenue, New York, NewYork 10177, on the final Business Day of the month in which the last of theconditions set forth in Article IX is satisfied or waived by the party entitledto waive such condition (other than those conditions that by their terms are tobe satisfied at the Closing, but subject to the satisfaction or waiver of thoseconditions at such time), unless the satisfaction and waiver of such conditionsshall have occurred fewer than five (5) Business Days prior to such finalBusiness Day in which event the Closing shall take place on the fifth (5th)Business Day after such conditions shall have been waived or satisfied, andunless another time, date or place is agreed to in writing by Buyer and theCompany (it being understood that the parties hereto will use their commerciallyreasonable efforts to hold the Closing on or prior to August 28, 2006). The dateon which the Closing shall be held is referred to in this Agreement as the”Closing Date.” (b) Subject to the conditions set forth in this Agreement, on the ClosingDate: (i) the Company will deliver to Buyer: (A) a certificate of the Company dated the Closing Date stating that the conditions set forth in Sections 9.2(a) through (g) and Section 9.2(k) have been satisfied; 29 (B) a copy of the text of the resolutions adopted by the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and declaring its advisability, certified by an appropriate officer of the Company; (C) a copy of the Stockholder Consent, certified by an appropriate officer of the Company; (D) resignations in writing (effective as of the Closing Date) from the officers and directors of each of the Company and the Subsidiaries whose resignations shall have been requested by Buyer at least five (5) Business Days prior to the Closing; (E) a copy, duly executed by the Representative, of the Escrow Agreement; (F) a copy, duly executed by the Representative, of the Environmental Escrow Agreement; (G) duly executed copies of all Required Consents; (H) evidence of payment or cancellation of the Other Indebtedness that is to be canceled prior to the Closing Date and termination or satisfaction and discharge of all related loan agreements and indentures, as well as duly executed copies of all agreements, instruments, certificates and other documents necessary or appropriate, in the reasonable opinion of Buyer’s counsel, to release any and all Encumbrances against the assets of the Company, other than Permitted Encumbrances of the types set forth in clauses (i) through (v) and clause (viii) of the definition thereof (the “Release Documents”); (I) evidence of satisfaction and discharge of all Indenture Indebtedness and the Indentures and the Release Documents therefor; (J) an affidavit from the Company and each domestic Tax Affiliate dated as of the Closing Date, in the form required by Treasury Regulations Section 1.897-2(h) and signed under penalties of perjury, stating that the Company or such Tax Affiliate is not and has not been a United States real property holding corporation during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code; (K) releases of all Encumbrances on the Real Property, other than Permitted Encumbrances of the types set forth in clauses (i) through (v) and clause (viii) of the definition thereof, including releases of each mortgage of record and reconveyances of each deed of trust with respect to each parcel of real property included in the Real Property; (L) certificates dated as of a date not earlier than the tenth Business Day prior to the Closing as to the good standing of the Company and each of the 30 domestic Subsidiaries, executed by the appropriate officials of the State of incorporation or organization thereof and each jurisdiction in which the Company and each of the Subsidiaries is licensed or qualified to do business as a foreign corporation as specified in Schedule 4.1.1; (M) spreadsheets showing the amounts referred to in Section 3.2(b); (N) such other certificates, documents and instruments that Buyer reasonably requests for the purpose of facilitating the consummation of the Merger and the Transactions; (ii) Buyer and Merger Sub will deliver to the Company: (A) a certificate of Buyer dated the Closing Date stating that the conditions set forth in Section 9.3(a) through 9.3(c) have been satisfied; (B) a certificate of an appropriate officer of Robert Bosch GmbH stating that the execution, delivery and performance of this Agreement has been duly authorized by all required corporate action of such company; (C) a copy of the texts of the resolutions adopted by the Board of Directors of Buyer authorizing the execution, delivery and performance of this Agreement, certified by an appropriate officer of Buyer; (D) a copy of the text of resolutions adopted by the sole shareholder of Merger Sub approving the Merger, certified by an appropriate officer of Merger Sub; (E) a copy, duly executed by Buyer and the Escrow Agent, of the Escrow Agreement; (F) a copy, duly executed by Buyer and the Escrow Agent, of the Environmental Escrow Agreement; (G) a list of the officers of the Surviving Corporation as provided in Section 4.4(b); and (H) such other certificates, documents and instruments that the Company reasonably requests for the purpose of facilitating the consummation of the Merger and the Transactions. (c) All items delivered by the parties at the Closing will be deemed tohave been delivered simultaneously, and no items will be deemed delivered orwaived until all have been delivered. (d) The Confidentiality Agreement shall terminate effective as of theClosing Date. 31 IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as disclosed in the SEC Reports and except as disclosed in theDisclosure Schedule, the Company represents and warrants to Buyer as follows: 4.1 Incorporation; Power and Authority. (a) Each of the Company and each of its Subsidiaries is a legal entity dulyorganized, validly existing and in good standing under the laws of thejurisdiction of its organization, and has all necessary power and authoritynecessary to own, lease and operate its assets and to carry on its business asconducted. Each of the Company and each of its Subsidiaries is duly qualified todo business and is in good standing in each jurisdiction in which the nature ofits business or its ownership of property requires it to be so qualified, exceptwhere the failure to be so qualified and in good standing would not, when takentogether with all other such failures, have a Material Adverse Effect. Schedule4.1.1 lists, for the Company and each of its active Subsidiaries, thejurisdiction of its organization, its form as a legal entity and eachjurisdiction in which it is so qualified. Schedule 4.1.2 lists each dormantSubsidiary of the Company. Each such dormant Subsidiary has no material assetsand the aggregate Liabilities of all such dormant Subsidiaries do not exceed$10,000. The Company has all necessary power and authority to execute, deliverand perform this Agreement and the Ancillary Agreements to which it will becomea party and to consummate the Transactions. (b) Each of the Company and its active Subsidiaries is in compliance in allmaterial respects with all provisions of its Organizational Documents. 4.2 Valid and Binding Agreement. The execution, delivery and performance bythe Company of this Agreement and the Ancillary Agreements to which it willbecome a party have been duly and validly authorized by all necessary corporateaction. This Agreement has been duly executed and delivered by the Company andconstitutes the valid and binding obligation of the Company, enforceable inaccordance with its terms, subject to the Remedies Exception. Each AncillaryAgreement to which the Company will become a party, when executed and deliveredby the Company, will constitute the valid and binding obligation of the Company,enforceable against the Company in accordance with its terms, subject to theRemedies Exception. The board of directors of the Company, at a meeting dulycalled and held at which a quorum was present throughout, by the requisite voteof the directors, has determined this Agreement and the Transactions to beadvisable and fair to and in the best interest of the Company and itsstockholders, has approved this Agreement and the Transactions and has resolvedto recommend the approval by the Company’s stockholders of this Agreement andthe Transactions, and no such declaration, approval, adoption or recommendationhas been changed, withdrawn or revoked. 4.3 No Breach; Consents. (a) The execution, delivery and performance of this Agreement and theAncillary Agreements to which the Company will become a party will not (i)contravene any provision of the Organizational Documents of the Company or anySubsidiary; (ii) violate any Law, Governmental Order or GovernmentalAuthorization; (iii) result in any breach of any of the 32provisions of, constitute a default (or any event that would, with the passageof time or the giving of notice or both, constitute a default) under, result inthe termination, amendment, suspension, modification, abandonment oracceleration of payment (or any right to terminate) or require a Consent, underany Contract that is either binding upon or enforceable against the Company orany Subsidiary (other than the Contracts governing the Other Indebtedness andthe Indenture Indebtedness to be cancelled at the Closing) or any GovernmentalAuthorization that is held by the Company or any Subsidiary; (iv) result in thecreation of any Encumbrance upon the Company or any Subsidiary or any of theassets of the Company or any Subsidiary; (v) require any GovernmentalAuthorization (subject to the making of the filings and the expiration ofwaiting periods required under the HSR Act and the EU antitrust Laws andregulations (the “Antitrust Clearance”)); (vi) give any Governmental Entity orother Person the right to challenge any of the Transactions or to exercise anyremedy or obtain any relief under any Law, Governmental Order or GovernmentalAuthorization (subject to the Antitrust Clearance); or (vii) cause Buyer tobecome subject to, or to become liable for the payment of, any Tax, (x) exceptfor, in the case of clauses (ii) to (vii) above, any such items, individually orin the aggregate, which would not have a Material Adverse Effect, and (y)subject to, in the case of clauses (ii), (iii) and (vi), required Consents, asdescribed on Schedule 4.3. (b) The approval of holders of a majority of the outstanding Common Sharesis the only vote or Consent of the holders of any class or series of theCompany’s capital stock necessary to approve the Merger and the consummation ofthe Transactions. 4.4 Capitalization. (a) The authorized capital stock of the Company consists of (i) 10,000,000Common Shares, of which 6,675,708 Common Shares are issued and outstanding andnone of which are held in treasury, (ii) 900 shares of Series A Preferred Stock,par value $0.01 per share (“Series A Preferred”), none of which are issued andoutstanding, and (iii) 5,000,000 shares of Series B Preferred Stock, par value$0.01 per share (“Series B Preferred”), none of which are issued andoutstanding. By resolution of the Board of Directors of the Company dated April16, 2002, each outstanding share of Series A Preferred and Series B Preferredwas converted, effective as of such date, into one Common Share in accordancewith the terms of the Company’s Restated Certificate of Incorporation, asamended, and each outstanding certificate evidencing shares of Series APreferred and Series B Preferred was thereafter deemed to represent an equalnumber of Common Shares. Schedule 4.4(a) lists any repurchase or redemptionrights in favor of the Company for any Common Shares, the vesting schedule andforfeiture provisions for any of such Common Shares that are “restricted stock,”and the extent to which vesting will or may be accelerated by the Transactionsand any limitations on the ability of the holder of such Common Shares to voteor dispose of such Common Shares. All Common Shares are duly authorized, validlyissued, fully paid and nonassessable, free of preemptive rights or any otherthird party rights, liens or Encumbrances created by the Company or any of itsSubsidiaries and are in certificated form, and have been offered, sold andissued by the Company in compliance with applicable securities and corporateLaws, Contracts applicable to the Company and the Company’s OrganizationalDocuments and in compliance with any preemptive rights, rights of first refusalor similar rights. 33 (b) As of the date of this Agreement, Stock Options of the Company withrespect to 195,000 Common Shares are outstanding. Schedule 4.4(b) lists the nameand addresses of each holder of an outstanding Stock Option and whether suchholder is an employee of the Company and, with respect to each Stock Optionheld, the date of grant of such Stock Option, the number of Common Sharessubject to such Stock Option, the exercise price of such Stock Option, thevesting schedule (and any provisions for acceleration or deferral of vesting)for such Stock Option, the extent vested as of the date of this Agreement, theextent to which exercisability of such Stock Option will or may be acceleratedby the Merger and Transactions and whether such Stock Option is an “incentivestock option.” As of the date of this Agreement, Warrants with respect to25,333.64 Common Shares are outstanding. Schedule 4.4(b) lists the name andaddresses of each holder of record of an outstanding Warrant, the number ofCommon Shares subject to such Warrant, the exercise price of such Warrant, theexpiration date of such Warrant and any effect of the Merger and Transactions onsuch Warrant. All outstanding Stock Options and Warrants have been offered, soldand delivered in compliance with applicable securities and corporate Laws,Contracts applicable to the Company and the Company’s Organizational Documents.All Common Shares issuable upon exercise of the Stock Options and Warrants havebeen offered in compliance with applicable securities and corporate Laws,Contracts applicable to the Company and the Company’s Organizational Documentsand, upon issuance in accordance with their terms, will be duly authorized,validly issued, fully paid and nonassessable. Schedule 4.4(b) shall indicatewhich, if any, of such Stock Options and Warrants are Out-of-the-Money StockOptions and Out-of-the-Money Warrants. (c) Except for the Stock Options and Warrants listed on Schedule 4.4(b),there is no option, warrant, call, subscription, convertible security, right(including preemptive right) or Contract of any character to which the Companyis a party or by which it is bound obligating the Company to issue, exchange,transfer, sell, repurchase, redeem or otherwise acquire any capital stock of theCompany or obligating the Company to grant, extend, accelerate the vesting of orenter into any such option, warrant, call, subscription, convertible security,right or Contract. There are no outstanding or authorized stock appreciation,phantom stock or similar rights with respect to the Company. Except ascontemplated by this Agreement, there are no registration rights agreements, novoting trust, proxy or other Contract and no restrictions on transfer withrespect to any capital stock of the Company. (d) As of the date of this Agreement, there are no bonds, debentures, notesor other indebtedness of the Company having the right to vote (or convertibleinto, or exchangeable for, securities having the right to vote) on any matterson which holders of the Company’s capital stock may vote. (e) The authorized capital of Intermediate LLC consists of MembershipInterests having a 100% Allocation Percentage, all of which are outstanding andno Membership Interests are held in treasury. All of the outstanding MembershipInterests of Intermediate LLC are duly authorized, validly issued, fully paidand nonassessable, free of preemptive rights or any other third party rights,liens or Encumbrances (other than Permitted Encumbrances) and are incertificated form, and have been issued by Intermediate LLC in compliance withapplicable securities and limited liability company Laws, Contracts applicableto Intermediate LLC and its Organizational Documents and in compliance with anypreemptive rights, rights of first refusal or similar rights. All of theoutstanding Membership Interests of Intermediate LLC are owned 34beneficially and of record by the Company, subject only to PermittedEncumbrances. The authorized capital stock of TCI consists of one thousand(1,000) shares of Common Stock, of which five hundred (500) shares are issuedand outstanding and none of which are held in treasury. All shares of CommonStock of TCI are duly authorized, validly issued, fully paid and nonassessable,free of preemptive rights or any other third party rights, liens or Encumbrances(other than Permitted Encumbrances) and are in certificated form, and have beenissued by TCI in compliance with applicable securities and corporate Laws,Contracts applicable to TCI and its Organizational Documents and in compliancewith any preemptive rights, rights of first refusal or similar rights. All ofthe outstanding shares of Common Stock of TCI are owned beneficially and ofrecord by Intermediate LLC, subject only to Permitted Encumbrances. (f) There are no outstanding contractual obligations of the Company or anySubsidiary to (i) repurchase, redeem or otherwise acquire any shares of capitalstock of or other equity or voting interest in the Company or any Subsidiary or(ii) vote or dispose of any shares of the capital stock of, or other equity orvoting interests in any of the Company’s Subsidiaries. 4.5 Subsidiaries. Except as listed on Schedules 4.1.1 and 4.1.2, neitherthe Company nor any Subsidiary owns any Subsidiary. For each of the Company’sSubsidiaries, Schedules 4.1.1 and 4.1.2 show the equity interests owned by theCompany or any Subsidiary, the names of the other Persons owning such equityinterests and the percentage of the outstanding equity interests so owned. Allissued and outstanding equity interests of each Subsidiary of the Company areduly authorized, validly issued, fully paid and nonassessable, free ofpreemptive rights or any other third-party right created by the Company or anySubsidiary (other than Permitted Encumbrances), free and clear of allEncumbrances created by the Company or any Subsidiary (other than PermittedEncumbrances), and in certificated form and have been offered, sold and issuedby such Subsidiary in compliance with applicable securities and corporate Laws,Contracts applicable to such Subsidiary’s Organizational Documents and incompliance with any preemptive rights, rights of first refusal or similarrights. There is no option, warrant, call, subscription, convertible security,right (including preemptive rights) or Contract of any character to which theCompany or any Subsidiary is a party or by which it is bound obligating anySubsidiary of the Company or the Company to issue, exchange, transfer, sell,repurchase, redeem or otherwise acquire any equity interest of such Subsidiaryor obligating the Company or such Subsidiary to grant, extend, accelerate thevesting of or enter into any such option, warrant, call, subscription,convertible security, right or Contract. 4.6 SEC Filings; Financial Statements. (a) During the time it was required to do so, the Company filed all reportsrequired to be filed by it with the SEC under applicable Law (the “Company SECReports”). The Company is not currently required to file any reports with theSEC. Intermediate LLC has timely filed all reports required to be filed by itwith the SEC under applicable Law (the “LLC SEC Reports”) since its formation.TCI has timely filed all reports required to be filed by it with the SEC underapplicable Law (the “TCI SEC Reports,” and together with the LLC SEC Reports andthe Company SEC Reports, the “SEC Reports”) since its incorporation. As of theirrespective dates, each of the SEC Reports complied with the requirements of theSecurities Act or the Securities Exchange Act, as the case may be, in allmaterial respects. Except as set forth on Schedule 4.6, and to the extentcorrected prior to the date hereof by a subsequently filed SEC Report, none of 35the SEC Reports, as of their respective dates, contained any untrue statement ofa material fact or omitted to state a material fact necessary in order to makethe statements made therein, in light of the circumstances under which they weremade, not misleading. (b) Each of Intermediate LLC and TCI (to the extent required under theExchange Act) has implemented and maintains a system of internal accountingcontrols sufficient to provide reasonable assurances regarding the reliabilityof financial reporting and the preparation of financial statements in accordancewith GAAP, including such reporting and preparation by each such company. Eachof Intermediate LLC and TCI (to the extent required under the Exchange Act) (i)has implemented and maintains disclosure controls and procedures (as defined inRule 13a-15(e) of the Exchange Act) designed to ensure that material informationrelating to each such company, including its consolidated Subsidiaries, is madeknown to the principal executive officer and the principal financial officer ofeach such company by others within each such company, and (ii) has disclosed toits outside auditors and the audit committee (if any) of the board of directorsor other governing bodies of each such company, (A) any significant deficienciesand material weaknesses in the design or operation of internal controls overfinancial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which arereasonably likely to adversely affect any of such company’s ability to record,process, summarize and report financial information and (B) any fraud, whetheror not material, that involves management or other employees who have asignificant role in each such company’s internal controls. For the purpose ofthis Section 4.6(b), “principal executive officer” and “principal financialofficer” shall have the same meanings given to such terms in the SOA, asamended. (c) The unaudited consolidated balance sheet as of March 31, 2006 of theCompany and its consolidated Subsidiaries (the “Company Latest Balance Sheet”)and the unaudited consolidated statements of income and cash flows of theCompany and its consolidated Subsidiaries for the three-month period then ended(such statements and the Company Latest Balance Sheet, the “Company LatestFinancial Statements”) and the unaudited consolidated balance sheets, as ofDecember 31, 2005, 2004 and 2003, of the Company and its consolidatedSubsidiaries and the unaudited consolidated statements of income and cash flowsof the Company and its consolidated Subsidiaries for each of the two (2) fiscalyears ended on December 31, 2005 and 2004 and the one month period ended onDecember 31, 2003, and the audited consolidated statements of income and cashflows of the Company and its consolidated Subsidiaries for the eleven-monthperiod ended on November 30, 2003 (collectively, the “Company Prior PeriodFinancial Statements”) have been made available by the Company to Buyer. TheCompany Latest Financial Statements and the Company Prior Period FinancialStatements are based upon the books and records of the Company and itsSubsidiaries, have been prepared in accordance with GAAP consistently appliedduring the periods indicated and present fairly in all material respects, thefinancial position, results of operations and cash flows of the Company and itsconsolidated Subsidiaries on a consolidated basis at the respective dates andfor the respective periods indicated, except that the Company Latest FinancialStatements and the Company Prior Period Financial Statements may not contain allfootnote disclosures and are subject to normal recurring year-end auditadjustments as applicable to the periods audited, none of which are material. (d) The (i) unaudited consolidated balance sheet as of March 31, 2006 ofIntermediate LLC and its consolidated Subsidiaries (the “Intermediate LLC LatestBalance 36Sheet”) and unaudited condensed consolidated statements of operations and cashflows of Intermediate LLC and its consolidated Subsidiaries for the three-monthperiod then ended (such statements and the Intermediate LLC Latest BalanceSheet, the “Intermediate LLC Latest Financial Statements”) and (ii) auditedconsolidated balance sheets, as of December 31, 2005, 2004 and 2003 ofIntermediate LLC and its consolidated Subsidiaries and audited consolidatedstatements of operations, changes in member’s deficit and comprehensive incomeand cash flows, including the notes, of Intermediate LLC and its consolidatedSubsidiaries for the years ended December 31, 2005 and 2004 and the one monthperiod ended on December 31, 2003 (collectively, the “Intermediate LLC PriorPeriod Financial Statements”) have been made available to Buyer. TheIntermediate LLC Latest Financial Statements and the Intermediate LLC PriorPeriod Financial Statements are based upon the books and records of IntermediateLLC and its Subsidiaries, have been prepared in accordance with GAAPconsistently applied during the periods indicated and present fairly, in allmaterial respects, the financial position, results of operations and cash flowsof Intermediate LLC and its consolidated Subsidiaries on a consolidated basis atthe respective dates and for the respective periods indicated, except that theIntermediate LLC Latest Financial Statements may not contain all footnotedisclosures and are subject to normal recurring year-end audit adjustments, noneof which are material. (e) The (i) unaudited consolidated balance sheet as of March 31, 2006 ofTCI and its consolidated Subsidiaries (the “TCI Latest Balance Sheet”) andunaudited condensed consolidated statements of operations and cash flows of TCIand its consolidated Subsidiaries for the three-month period then ended (suchstatements and the TCI Latest Balance Sheet, the “TCI Latest FinancialStatements”) and (ii) audited consolidated balance sheets, as of December 31,2005, 2004 and 2003, of TCI and its consolidated Subsidiaries and the auditedconsolidated statements of operations, changes in shareholder’s equity (deficit)and comprehensive income and cash flows, including the notes, of TCI and itsconsolidated Subsidiaries for the years ended December 31, 2005 and 2004 and theone (1) month ended December 31, 2003 (collectively, the “TCI Prior PeriodFinancial Statements”) have been made available to Buyer. The TCI LatestFinancial Statements and the TCI Latest Financial Statements are based upon thebooks and records of TCI and the Subsidiaries, have been prepared in accordancewith GAAP consistently applied during the periods indicated and present fairly,in all material respects, the financial position, results of operations and cashflows of TCI and its consolidated Subsidiaries on a consolidated basis at therespective dates and for the respective periods indicated, except that the TCILatest Financial Statements may not contain all footnote disclosures and aresubject to normal recurring year-end audit adjustments, none of which arematerial. 4.7 Absence of Undisclosed Liabilities. Except as reflected or expresslyreserved against in the Financial Statements or in the notes thereto, and exceptfor normal or recurring liabilities incurred since December 31, 2005 in theOrdinary Course of Business, neither the Company nor any Subsidiary has anyLiability of a nature required to be reflected in financial statements inaccordance with GAAP, and whether due or to become due, which individually or inthe aggregate would have a Material Adverse Effect. 4.8 Other Indebtedness. Except (i) as reflected in the Financial Statementsor in the notes thereto, (ii) for the Other Indebtedness that has been incurredby the Company and its Subsidiaries since December 31, 2005 in the OrdinaryCourse of Business, none of the Company 37or its Subsidiaries has, or is a party to any Contracts relating to,indebtedness owed to any Person (other than to or among the Company and any ofits Subsidiaries). 4.9 Books and Records. The books of account of the Company and theSubsidiaries are complete and correct in all material respects and have beenmaintained in accordance with the requirements of Section 13(b)(2) of theExchange Act (to the extent that the Company or any Subsidiary is subject tothat section). Each transaction is properly and accurately recorded in allmaterial respects on the books and records of the Company or a Subsidiary, andeach document upon which entries in the Company’s or a Subsidiary’s books andrecords are based, is complete and accurate in all material respects. The minutebooks and stock or equity records of each of the Company and its Subsidiaries,since January 1, 2003, are complete and correct in all material respects. Theminute books of each of the Company and the Subsidiaries since January 1, 2003contain materially accurate records of all meetings held and actions taken bythe holders of stock or equity interests, the boards of directors and committeesof the boards of directors or other governing body of each of the Company andthe Subsidiaries, and no meeting of any such holders, boards of directors orother governing body or committees since January 1, 2003 has been held for whichminutes are not contained in such minute books. 4.10 Absence of Certain Developments. Except as set forth on Schedule 4.10,since December 31, 2005, the Company and each of its Subsidiaries has conductedtheir respective businesses in all material respects in the Ordinary Course ofBusiness. Since December 31, 2005, each of the Company and each of itsSubsidiaries has, in all material respects, preserved their respective businessrelationships with employees, suppliers, creditors, customers and otherstransacting business with it. Without limiting the generality of the foregoing,since December 31, 2005: (a) the Company and its Subsidiaries have not suffered any Material AdverseEffect and there has not been any change, change in condition, event ordevelopment that would have a Material Adverse Effect; (b) the Company has not declared, set aside for or paid, any dividend on,or other distribution (whether in cash, stock or property), in respect of anycapital stock of the Company; (c) except as required by Financial Accounting Standards Boardpronouncements that become, or have become, effective as to the Company afterDecember 31, 2005, no material change in accounting methods, principles orpractices employed by the Company or any of its Subsidiaries has been made; or (d) no action or event has occurred that would have required the Consent ofBuyer pursuant to Section 6.1 of this Agreement had such action or eventoccurred after the date of this Agreement. 4.11 Real Estate and Personal Property. (a) The real properties owned by the Company or any Subsidiary or demisedby the leases listed on Schedule 4.11 constitute all of the real property owned,leased, used or occupied by the Company or any Subsidiary (other than any realproperty of any Third-Party where any 38consigned inventory or components of the Company or a Subsidiary thereof ismaintained in the Ordinary Course of Business). (b) The Company or a Subsidiary owns good and marketable title to eachparcel of real property identified on Schedule 4.11 as being owned by theCompany or a Subsidiary (the “Owned Real Property”), free and clear of allEncumbrances, except for (i) Permitted Encumbrances, (ii) Encumbrances listed onSchedule 4.11 and (iii) other Encumbrances which would not, individually or inthe aggregate, have a Material Adverse Effect. (c) The leases of real property listed on Schedule 4.11 as being leased bythe Company or any Subsidiary (the “Leased Real Property” and together with theOwned Real Property, the “Real Property”) are in full force and effect, and theCompany or a Subsidiary holds a valid and existing leasehold interest under eachof the leases for the term listed on Schedule 4.11. To the Company’s Knowledge,the Leased Real Property is subject to no ground lease, master lease, mortgage,deed of trust or other Encumbrance or interest that would entitle the holderthereof to interfere with or disturb use or enjoyment of the Leased RealProperty or the exercise by the lessee of its rights under such lease so long asthe lessee is not in default under such lease. (d) Each parcel of Real Property has access sufficient for the conduct ofthe business as conducted or as proposed to be conducted by the Company or anySubsidiary on such parcel of Real Property to public roads and to all utilities,including electricity, sanitary and storm sewer, potable water, natural gas,telephone, fiberoptic, cable television, and other utilities used in theoperation of the business at that location. The zoning for each parcel of OwnedReal Property and, to the Company’s Knowledge each parcel of Leased RealProperty, permits the existing improvements and the continuation of the businessbeing conducted thereon as a conforming use. Neither the Company nor anySubsidiary is in material violation of any applicable zoning ordinance or otherLaw relating to the Real Property, and neither the Company nor any Subsidiaryhas received any written notice of any violation of any such ordinance of otherLaw or the existence of any condemnation or other proceeding with respect to anyof the Real Property. The buildings and other improvements are located withinthe boundary lines of each parcel of Owned Real Property and do not encroachover applicable setback lines. (e) Each of the Company and the Subsidiaries has good and marketable titleto, or a valid leasehold interest in, the buildings, machinery, equipment andother tangible assets and properties used by it, located on its premises orshown in the Latest Balance Sheets or acquired after the date thereof, free andclear of all Encumbrances, except for Permitted Encumbrances, Encumbranceslisted on Schedule 4.11 and properties and assets disposed of in the OrdinaryCourse of Business since the date of the Latest Balance Sheets. (f) Except as set forth on Schedule 4.11, (i) the buildings, improvements,building systems, machinery, equipment and other tangible assets and propertiesused in the conduct of the business of each of the Company and the Subsidiariesare in good condition and repair, ordinary wear and tear excepted, and areusable in the Ordinary Course of Business, and (ii) each such asset is suitablefor the purposes for which it is used and is proposed to be used, and is freefrom material defects. Each of the Company and the Subsidiaries owns, or leasesunder valid 39leases, all buildings, machinery, equipment and other tangible assets andproperties necessary for the conduct of its respective business as currentlyconducted. 4.12 Tax Matters. (a) Except as set forth on Schedule 4.12, each of the Company and any TaxAffiliate has (i) timely filed (or has had timely filed on its behalf) eachReturn required to be filed or sent by it to any Governmental Entity in respectof any Taxes, each of which was correctly completed and accurately reflected anyLiability for Taxes of the Company and any Tax Affiliate covered by such Return,(ii) timely and properly paid (or had paid on its behalf) all Taxes due andpayable for all Tax Periods or portions thereof whether or not shown or requiredto be shown on such Returns, (iii) established in the books of account of theCompany and the Tax Affiliates and the SEC Reports, in accordance with GAAP andconsistent with past practices, adequate reserves for the payment of any Taxesnot then due and payable and (iv) complied with all applicable Laws relating tothe withholding of Taxes and the payment thereof. (b) Each of the Company and any Tax Affiliate has made (or caused to bemade on its behalf) all estimated tax payments required to have been made. (c) There are no Encumbrances for Taxes upon any assets of the Company orany Tax Affiliate, except Permitted Encumbrances. (d) Except as set forth on Schedule 4.12, neither the Company nor any TaxAffiliate has requested any extension of time within which to file any Return,which Return has not since been filed. (e) No deficiency for any Taxes has been proposed, asserted or assessed inwriting against the Company or any Tax Affiliate that has not been resolved orpaid in full. No waiver, extension or comparable consent given by the Company orany Tax Affiliate regarding the application of the statute of limitations withrespect to any Taxes or any Return is outstanding, nor is any request for anysuch waiver or consent pending. (f) Except as set forth on Schedule 4.12, to the Knowledge of the Companyor any Tax Affiliate, no additional Taxes will be assessed against the Companyor any Tax Affiliate for any Tax period or portion thereof ending on or prior tothe Closing Date, and there are no unresolved questions, claims or disputesconcerning the Liability for Taxes of the Company or any Tax Affiliate thatwould exceed the estimated reserves established on the books of account of theCompany and the Tax Affiliates or in the SEC Reports. (g) Schedule 4.12 lists all federal, state, local and foreign Returns filedwith respect to the Company or any Tax Affiliate for Tax Periods ended afterDecember 31, 1999, indicates those Returns that have been audited and indicatesthose Returns that currently are the subject of audit. Except as set forth onSchedule 4.12, there has been no Tax audit or other administrative proceeding orcourt proceeding with regard to any Taxes or any Return for any Tax Periodsubsequent to the Tax Period ended December 31, 1999, nor is any such Tax auditor other proceeding pending, nor has there been any written notice to theCompany or any Tax Affiliate by any Governmental Entity regarding any such Taxaudit or other proceeding, or, to the 40Knowledge of the Company or any Tax Affiliate, is any such Tax audit or otherproceeding threatened with regard to any Taxes or Returns. (h) Except as set forth on Schedule 4.12, neither the Company nor any TaxAffiliate has any Liability for Taxes, or any obligation to file a Return, in ajurisdiction where it does not file a Return, nor has the Company or any TaxAffiliate received written notice from a taxing authority in such a jurisdictionthat it is or may be subject to taxation by that jurisdiction. (i) Neither the Company nor any Tax Affiliate is a party to any Contractthat would result, separately or in the aggregate, in the payment of any “excessparachute payments” within the meaning of Section 280G of the Code. (j) Neither the Company nor any Tax Affiliate is a party to any Taxallocation or sharing agreement other than (i) the Tax Sharing Agreement datedas of November 19, 2003 by and among the Company, Intermediate LLC and TCI (the”Company Tax Sharing Agreement”) and (ii) the Profit and Loss AbsorptionAgreement effective as of January 1, 2003 between EVI Holding (Deutschland) GmbHand EVI Audio GmbH. (k) Since November 19, 2001, neither the Company nor any Tax Affiliate (i)has been a member of an affiliated group filing a consolidated Return (otherthan a group the common parent of which was the Company or any Tax Affiliate) or(ii) has any Liability for the Taxes of any Person (other than the Company orany Subsidiary) under Treasury Regulations Section 1.1502-6 (or any similarprovision of Law), as a transferee or successor, by Contract, or otherwise. (l) Neither the Company nor any Tax Affiliate constitutes either a”distributing corporation” or a “controlled corporation” (within the meaning ofSection 355(a)(1)(A) of the Code) in a distribution of shares qualifying fortax-free treatment under Section 355 of the Code (i) that took place during thetwo-year period ending on the date of this Agreement or (ii) that couldotherwise constitute part of a “plan” or “series of related transactions”(within the meaning of Section 355(e) of the Code) in conjunction with theMerger. (m) Except as set forth on Schedule 4.12, neither the Company nor any TaxAffiliate has an “overall foreign loss” within the meaning of Section 904 of theCode or a “dual consolidated loss” within the meaning of Treasury RegulationsSection 1.1503-2. (n) Neither the Company nor any Tax Affiliate is or has at any time been a”passive foreign investment corporation” as defined in Section 1297 of the Codeor a “foreign personal holding company” as defined in Section 552 of the Code.. (o) Neither the Company nor any Tax Affiliate participates in or cooperateswith (or has at any time participated in or cooperated with) an internationalboycott within the meaning of Section 999(b)(3) of the Code. (p) Since their formation, each of the Company and the Tax Affiliates otherthan Intermediate LLC has been a corporation or association taxable as acorporation for United States income tax purposes. 41 (q) Neither the Company nor any domestic Tax Affiliate has been a U.S. realproperty holding corporation (within the meaning of Section 897(c)(2) of theCode) during the applicable period specified in Section 897(c)(1)(A)(ii) of theCode. (r) There is no indebtedness (or other obligation that might becharacterized as debt for U.S. federal income Tax purposes) between the Companyand any Tax Affiliate or between any Tax Affiliates that is characterized asdebt for Tax purposes in one or more jurisdictions and characterized as otherthan debt in one or more other jurisdictions. (s) Neither the Company nor any Tax Affiliate has engaged in anytransaction that is subject to disclosure under present or former TreasuryRegulations Sections 1.6011-4 or 1.6011-4T, as applicable. (t) The Company and each Tax Affiliate have timely prepared or caused to beprepared all reports and other documentation necessary to avoid the impositionof any penalty under the provisions of Section 6662(e) of the Code. (u) Other than as set forth on Schedule 4.12, no gain recognition agreementhas been entered into and no private letter ruling or other ruling has beenobtained that might affect the Returns, Tax positions or other filings of theCompany or any Tax Affiliate. (v) The Company has provided the Buyer with copies of all material Taxopinions relating to the Company or any Tax Affiliate. 4.13 Governmental Authorization. The Company and its Subsidiaries hold allof the Governmental Authorizations that are necessary for the lawful conduct ofthe businesses of the Company and its Subsidiaries as currently conducted in allmaterial respects, and are in compliance with the terms thereof, except wherethe failure to hold any such Governmental Authorization or to be in compliancewith the terms thereof would not have, individually or in the aggregate, aMaterial Adverse Effect. None of the Company and any of its Subsidiaries hasreceived any written notice of any action pending or threatened by anyGovernmental Entities to revoke, withdraw or suspend any GovernmentalAuthorization, except where such revocation, withdrawal or suspension would nothave, individually or in the aggregate, a Material Adverse Effect. 4.14 Government Contracts. (a) Except as set forth in Schedule 4.14(a) or as, individually or in theaggregate, would not have a Material Adverse Effect, with respect to anyGovernment Contracts, there is no (i) civil fraud or criminal act or bribery, orany other violation of law, by the Company or any of its Subsidiaries or anydirector, officer or employee of the Company or its Subsidiaries, or, to theCompany’s Knowledge, criminal investigation by any Governmental Entity, (ii) anyirregularity, misstatement or omission by the Company or any of its Subsidiariesarising under or relating to such Government Contracts, (iii) request by aGovernmental Entity for a contract price adjustment based on a claimeddisallowance by any applicable Governmental Entity or claim of defectivepricing, (iv) dispute between the Company or any of its Subsidiaries and aGovernmental Entity which, since January 1, 2003, has resulted in a finaldecision of a 42contracting officer of such Governmental Entity, or (v) any termination by aGovernmental Entity for default of any Government Contract or claim or requestfor equitable adjustment by the Company or any of its Subsidiaries against aGovernmental Entity. (b) Except as set forth in Schedule 4.14(b), or where the resultindividually or in the aggregate would not have a Material Adverse Effect, notermination for default or convenience, cure notice, or show cause notice hasbeen issued by the United States Government or by any prime contractor orsubcontractor, in writing, with respect to performance by the Company or any ofits Subsidiaries as a subcontractor of any portion of the obligation of aGovernment Contract. (c) The Company and its Subsidiaries have complied with all material termsand conditions of any Government Contracts, except where any failure to socomply, individually or in the aggregate, would not have a Material AdverseEffect. (d) Neither the Company nor any of its Subsidiaries is a party to anyGovernment Contract which is expected to result in a loss in excess of $100,000to the Company or its Subsidiaries. (e) Neither the Company nor any of its Subsidiaries or any of its or theirrespective directors, officers, or employees is or for the last five (5) yearshas been debarred or suspended from participation in the award of contracts withany Governmental Entity or has been declared nonresponsible (it being understoodthat debarment and suspension and nonresponsibility does not includeineligibility to bid for certain Government Contracts due to generallyapplicable bidding requirements) which, individually or in the aggregate, wouldhave a Material Adverse Effect. 4.15 Relations with Governments. Except as set forth in Schedule 4.15, tothe Knowledge of the Company during the last 5 years, neither the Company norany of its Subsidiaries, nor, in connection with the business of the Company orany of its Subsidiaries, any director, officer, agent or employee of the Companyor any of its Subsidiaries, has (a) used any funds for unlawful contributions,gifts, entertainment or other unlawful expenses related to political activity,(b) made any unlawful payment or offered anything of value to foreign ordomestic government officials or employees or to foreign or domestic politicalparties or campaigns, (c) made any other unlawful payment, (d) violated in anymaterial respect any applicable export control law or regulation, or (e)violated any applicable money laundering or anti-terrorism law or regulation,nor has any of them otherwise taken any action which would cause the Company orany of its Subsidiaries to be in violation of the Foreign Corrupt Practices Actof 1977, as amended, or any applicable law of similar effect. 4.16 Intellectual Property Rights. (a) Schedule 4.16(a)(i) lists all Owned Intellectual Property Rights thatare Registered Intellectual Property Rights. Schedule 4.16(a)(ii) lists allContracts relating to Licensed-In Intellectual Property Rights other thanSoftware; to the extent there is no written Contract covering a Licensed-InIntellectual Property Right. Schedule 4.16(a)(ii) lists the licensor anddescribes the Intellectual Property Rights so licensed. Schedule 4.16(a)(iii)lists all 43Contracts relating to Licensed-In Intellectual Property Rights that are Software(other than Off-the-Shelf Software); to the extent there is no written Contractcovering any Software, Schedule 4.16(a)(iii) lists the licensor and describesthe Software so licensed. The Owned Intellectual Property Rights and theLicensed-In Intellectual Property Rights constitute all Intellectual PropertyRights necessary for the business of the Company and its Subsidiaries ascurrently conducted. (b) The Company and/or the applicable Subsidiary or Subsidiaries own allright, title and interest in the Owned Intellectual Property Rights free andclear of all Encumbrances (including royalty or other payments), except forthose licenses of the Owned Intellectual Property Rights to Persons, paymentsfor use of the Owned Intellectual Property Rights and other Encumbrances listedon Schedule 4.16(b)(i). The Company and/or the applicable Subsidiary orSubsidiaries are the sole owner of record of all Registered IntellectualProperty Rights that are Owned Intellectual Property Rights, other than aslisted in Schedule 4.16(b)(ii). To the Knowledge of the Company, no OwnedIntellectual Property Right is currently being infringed by any Person, otherthan as listed on Schedule 4.16(b)(iii). To the knowledge, following due inquiryof any of the persons listed in Schedule 4.16(f)(i), no employee or formeremployee or independent contractor of the Company or any Subsidiary has anyclaim with respect to any Intellectual Property Right of the Company, other thanas listed in Schedule 4.16(b)(iv). (c) To the Knowledge of the Company, no Person is currently asserting anylegal claim against the Company alleging that any Owned Intellectual PropertyRight is invalid or not enforceable, other than as listed on Schedule4.16(c)(i). To the Knowledge of the Company, all Owned Intellectual PropertyRights that are Registered Intellectual Property Rights (with the expressexception of pending applications therefore) are in full force and effect, andall payments of annuities, maintenance fees and filing of renewals that are duehave been made. The Company and each of its Subsidiaries have taken all suchactions required to keep such applications pending and to diligently pursue,where commercially reasonable, the granting of any Registered IntellectualProperty Right applied for by such pending applications. Neither the Company norany of its Subsidiaries have received any written notice with regard to any suchRegistered Intellectual Property Right that such Registered IntellectualProperty Right is the subject of any interference, opposition, cancellation,nullity, re-examination or other proceeding placing in question the validity orscope of such rights, other than as listed on Schedule 4.16(c)(ii). (d) All reasonable precautions have been taken to protect theconfidentiality of the trade secrets used by the Company or any Subsidiary. Eachof the Company and its Subsidiaries has an unqualified right to use all tradesecrets currently used in its business, subject to any Contract relating toLicensed-In Intellectual Property Rights. To the Knowledge of the Company, nosuch trade secret is part of the public knowledge or literature, nor has beenused, divulged or appropriated either for the benefit of any Person other thanthe Company or a Subsidiary or to the detriment of the Company or anySubsidiary. (e) Schedule 4.16(e) sets forth the Licensed-in Intellectual PropertyRights which require consent or approval of the licensor thereof in connectionwith the Merger or the Transactions and the name and address of the licensor. 44 (f) To the knowledge, following due inquiry, of any of the persons listedin Schedule 4.16(f)(i), neither the Company nor any Subsidiary has received anywritten notice of any infringement, misappropriation or violation by the Companyor any Subsidiary of any Third-Party Intellectual Property Right, other than aslisted on Schedule 4.16(f)(ii). (g) All Software that is used by the Company or any Subsidiary or is on anyequipment of the Company or any Subsidiary is owned by the Company or aSubsidiary or is subject to a current license agreement that covers the use ofthe Software in the business of the Company or any Subsidiary, as currentlyconducted, or each of the Company or the Subsidiaries has the right to use theSoftware used in its business as it is being used, without any infringement ofthe rights of others. Neither the Company nor any Subsidiary is in breach of anylicense to, or license of, any Software. The Company and its Subsidiaries do notuse, rely on or contract with any Person to provide service bureau, outsourcingor other computer processing services to the Company or any Subsidiary, in lieuof or in addition to their respective use of the Software, other than as listedon Schedule 4.16(g). (h) The change of control of the Company contemplated in this Agreementwill not affect adversely the ownership interest of the Company or anySubsidiary in any Owned Intellectual Property Rights, or the right of theCompany or any Subsidiary to continue to use any Licensed-in IntellectualProperty Rights on the same terms as were applicable prior to the Closing, otherthan as listed on Schedule 4.16(h). 4.17 Material Contracts. (a) Schedule 4.17 lists (or, as applicable, provides a cross-reference toanother Schedule that lists) the following Contracts to which the Company or anySubsidiary is a party or subject or by which it is bound (such Contracts and theContracts filed as exhibits to the SEC Reports prior to the date hereof,collectively, the “Material Contracts”): (i) each Contract with respect to the employment of, or payment to, employees, consultants or independent contractors (each an “Employment Contract”), in each case that provides for annual payments in excess of $100,000; (ii) each collective bargaining Contract; (iii) each Contract with any Insider (other than any Contracts described in or disclosed pursuant to Sections 4.4(b), 4.4(c), 4.19, 4.23, 4.24, 4.25 and 4.26); (iv) each distributor, reseller, dealer, manufacturer’s representative or sales agency Contract, pursuant to which the Company or a Subsidiary thereof grants any exclusive distributor, reseller, dealer, manufacturer’s representative or sales agency rights to any Person in any geographic area; (v) each OEM, broker, advertising agency, finder’s, manufacturing or assembly Contract, in each case that provides for annual payments in excess of $100,000; (vi) each franchise agreement; 45 (vii) each Contract or group of related Contracts with the same party for the purchase of products or services with a undelivered balance in excess of $500,000; (viii) each Contract or group of related Contracts with the same party for the sale of products or services with an undelivered balance in excess of $500,000; (ix) any Governmental Contract or Government Bid, in each case that provides for annual sales by the Company or a Subsidiary thereof in excess of $100,000; (x) each lease of real or personal property with aggregate annual payments in excess of $150,000; (xi) each Contract entered into after January 1, 2003 relating to the sale of any capital assets in excess of $500,000; (xii) each guaranty or other similar undertaking with respect to contractual performance extended by the Company or any Subsidiary other than in the Ordinary Course of Business, and each Contract relating to any surety bond or letter of credit required to be maintained by the Company or any Subsidiary; (xiii) each Contract that contains or provides for the Company’s or any of its Subsidiaries’ right to be indemnified against Environmental Costs or obligation to indemnify third parties against such third parties’ Environmental Costs; (xiv) each Contract concerning a partnership or joint venture to which the Company or any Subsidiary is a party; (xv) each Contract providing for (A) the licensing of any Intellectual Property Rights to or from any third party, or (B) the development of any products, Software or Intellectual Property Rights by, for or with any third party, other than any licenses of Intellectual Property incidental to the sale of inventory in the Ordinary Course of Business; (xvi) each Contract containing provisions that would prohibit the Company or any Subsidiary from freely engaging in business anywhere in the world or prohibiting the solicitation of the employees or contractors of any other entity; (xvii) each Capital Lease; and (xviii) each Contract terminable by any other party upon a change of control of the Company or any Subsidiary, in each case that provides for annual payments in excess of $100,000. (b) Each Material Contract is valid and binding, currently in force andenforceable in accordance with its terms, subject to the Remedies Exception.Neither the Company nor any Subsidiary nor, to the Knowledge of the Company, anyother party is in breach of or in default under any Material Contract exceptwhere such breach or default would not have a Material Adverse Effect. Neitherthe Company nor any Subsidiary has received any written notice of any 46claim of default by it under or termination of any Material Contract. There isno renegotiation of, attempt to renegotiate or outstanding right to renegotiateany material terms of any Material Contract and no Person has made writtendemand for such renegotiation. Neither the Company nor any Subsidiary has anyobligation to refund payments received for work not yet performed under aMaterial Contract where the percentage of work completed is less than thepercentage of revenues received to date. 4.18 Litigation. Schedule 4.18 lists all Litigation pending or, to theKnowledge of the Company, threatened against the Company or any Subsidiary, allinvestigations to the Knowledge of the Company pending or threatened in writingby any Governmental Entity against the Company or any Subsidiary, and eachGovernmental Order to which the Company or any Subsidiary is subject. None ofthe items listed on Schedule 4.18 would result in any Material Adverse Effect. 4.19 Insurance. Each of the Company and the Subsidiaries has at all timesmaintained material insurance policies relating to its business and coveringproperty, fire, casualty, liability, workers’ compensation and all other formsof insurance customarily obtained by businesses in the same industry. Suchinsurance (i) is in full force and effect, (ii) is sufficient for compliancewith all requirements of applicable Law and of any Contract to which the Companyor any Subsidiary is subject, and (iii) is valid and enforceable. Schedule 4.19lists each policy of insurance in effect. Neither the Company nor any Subsidiaryis in material breach or default under, and neither the Company nor anySubsidiary has failed to take any required action under, or permitted anytermination or modification of, any insurance policies. 4.20 Compliance with Laws. (a) Each of the Company and the Subsidiaries has complied with all Laws andGovernmental Orders applicable to their operations, except for instances ofnoncompliance that, individually and in the aggregate, would not have a MaterialAdverse Effect. Neither the Company nor any Subsidiary is relying on anyexemption from or deferral of any Law, Governmental Order or GovernmentalAuthorization that would not be available to it after the Closing. There is andhas been no failure on the part of Intermediate LLC, TCI or any of theirdirectors or officers, in their capacities as such, to comply in all materialrespects with any applicable provision of the SOA, including Section 402 relatedto loans and Section 302 and 906 related to certifications. (b) All products sold by the Company and its Subsidiaries comply in allmaterial respects with applicable Laws and regulations promulgated byGovernmental Entities thereunder relating to product safety or productcertification in the relevant jurisdictions where such products are sold (otherthan the ROHS Directive). Except as set forth in Schedule 4.20(b), there are nofacts or circumstances reasonably likely to prevent or significantly delay theability of the Company or any of its Subsidiaries to comply in all materialrespects, when and to the extent required in the applicable jurisdictions, withthe ROHS Directive. 4.21 Environmental Matters. The representations and warranties set forth inparagraphs (b) through (j) and paragraph (l) below are subject to any exceptionslisted in Schedule 4.21. 47 (a) As used in this Section 4.21(a), the following terms have the followingmeanings: (i) “Environmental Costs” means any and all costs and expenditures, including any fees and expenses of attorneys and of environmental consultants or engineers incurred in connection with investigating, defending, remediating or otherwise responding to any Release of Hazardous Materials, any violation or alleged violation of Environmental Law, any fees, fines, penalties or charges associated with any Governmental Authorization, or any actions necessary to comply with any Environmental Law. (ii) “Environmental Law” means any Law, Governmental Authorization or Governmental Order in force at the date of this Agreement relating to pollution, contamination, Hazardous Materials or protection of the environment. (iii) “Hazardous Materials” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any Law relating to such substance or otherwise relating to the environment or human health or safety, including any waste, material, substance, pollutant or contaminant that might cause any injury to human health or safety or to the environment or might subject the owner or operator of the Property to any Environmental Costs or liability under any Environmental Law. (iv) “List” means the United States Environmental Protection Agency’s National Priorities List of Hazardous Waste Sites or any other publicly available list, schedule, log, inventory or record, however defined, maintained by any Governmental Entity with respect to sites from which there has been a Release of Hazardous Materials. (v) “Property” means real property owned, leased, controlled or occupied by the Company or any Subsidiary at any time. (vi) “Regulatory Action” means any Litigation with respect to the Company or any Subsidiary brought or instigated by any Governmental Entity in connection with any Environmental Costs, Release of Hazardous Materials or any Environmental Law. (vii) “Release” means the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material. (viii) “Third-Party Environmental Claim” means any Litigation (other than a Regulatory Action) based on negligence, trespass, strict liability, nuisance, toxic tort or any other cause of action or theory relating to any Environmental Costs, Release of Hazardous Materials or any violation of Environmental Law. (b) No Third-Party Environmental Claim or Regulatory Action is pending or,to the Knowledge of the Company, threatened against the Company or anySubsidiary. (c) No Property is listed on a List. 48 (d) All transfer, transportation or disposal of Hazardous Materials by theCompany or any Subsidiary to properties not owned, leased or operated by theCompany or any Subsidiary has been in compliance with applicable EnvironmentalLaw. To the Knowledge of the Company, the Company has not transported orarranged for the transportation of any Hazardous Materials to any location thatis (i) listed on a List, (ii) listed for possible inclusion on any List or (iii)the subject of any Regulatory Action or Third-Party Environmental Claim. (e) To the Knowledge of the Company, at no time during the ownership oroperation of any Property by the Company or a Subsidiary of the Company, has aProperty ever been used as a landfill, dump or other disposal, storage,transfer, handling or treatment area for Hazardous Materials, or as a gasolineservice station or a facility for selling, dispensing, storing, transferring,disposing or handling petroleum and/or petroleum products. (f) To the Knowledge of the Company, there has not been any Release of anyHazardous Material on, under, about, from or in connection with the Property,including the presence of any Hazardous Materials that have come to be locatedon or under the Property from another location. (g) The Property has at all times during the ownership and operationthereof by the Company or a Subsidiary of the Company been used and operated incompliance in all material respects with all applicable Environmental Law. (h) Each of the Company and the Subsidiaries has obtained all GovernmentalAuthorizations relating to the Environmental Law necessary for operation of theCompany. All such Governmental Authorizations will be valid and in full forceand effect upon consummation of the Merger and the Transactions. Each of theCompany and the Subsidiaries has filed all reports and notifications required tobe filed under and pursuant to all applicable Environmental Law. (i) No Hazardous Materials have been generated, treated, contained,handled, located, used, manufactured, processed, buried, incinerated, depositedor stored on, under or about any part of the Property, except in compliance withEnvironmental Law. To the Knowledge of the Company, the Property currently ownedor operated by the Company or any of its Subsidiaries contains no asbestos, ureaformaldehyde, radon at levels above natural background or PCBs. No abovegroundor underground storage tanks are located on, under or about the Propertycurrently owned or operated by the Company or any of its Subsidiaries, or, tothe Knowledge of the Company have been located on, under or about such Propertyand then subsequently been removed or filled. If any such storage tanks existon, under or about the Property, such storage tanks have been duly registeredwith all appropriate Governmental Entities and are otherwise in compliance withall applicable Environmental Law. (j) Except as set forth on Schedule 6.2, no expenditure will be required inorder for Buyer, the Company or any Subsidiary to comply with any EnvironmentalLaw in effect at the time of Closing in connection with the operation orcontinued operation of the Property in a manner consistent with the presentoperation thereof. 49 (k) All environmental audits and investigations in the possession orcontrol of the Company or any Subsidiary with respect to the Company, anySubsidiary or the Property are listed on Schedule 4.21. (l) No Encumbrance has been attached or filed against the Company or anySubsidiary in favor of any Person for (i) any Liability under or violation ofany applicable Environmental Law, (ii) any Release of Hazardous Materials or(iii) any imposition of Environmental Costs. 4.22 Warranties. Schedule 4.22 lists all claims pending or, to theKnowledge of the Company, threatened for product liability or breach of anywarranty relating to any products sold or services performed by the Company orany Subsidiary. Such claims in the aggregate are not in excess of the reservefor product warranty claims set forth in the Latest Balance Sheets. Schedule4.22 describes the warranties for products sold or services performed by each ofthe Company and the Subsidiaries, in each case where the term of such warrantyexceeds three (3) years. Except as listed on Schedule 4.22, none of the productsmanufactured, sold, leased or delivered by the Company or any Subsidiary hasbeen the subject of any product recall (whether voluntary or involuntary) orgeneral service action during the past five years. 4.23 Employees. (a) To the Knowledge of the Company, no executive employee of the Companyand no group of employees of the Company or any Subsidiary has any plans toterminate his, her or their employment. Since March 1, 1998, each of the Companyand the Subsidiaries has complied at all times with all applicable Laws relatingto employment and employment practices and those relating to the calculation andpayment of wages, equal employment opportunity, affirmative action and otherhiring practices, occupational safety and health, workers compensation,unemployment, the payment of social security and other Taxes, and unfair laborpractices under the National Labor Relations Act or applicable state law, exceptfor instances of noncompliance that, individually and in the aggregate, wouldnot have a Material Adverse Effect. Neither the Company nor any Subsidiary hasany labor relations problem pending or, to the Knowledge of the Company,threatened that in either case, individually or in the aggregate would have aMaterial Adverse Effect and its labor relations are satisfactory. To theKnowledge of the Company, no employee of the Company or any Subsidiary issubject to any secrecy or noncompetition agreement or any other agreement orrestriction of any kind with a third party that would impede in any way theability of such employee to carry out fully all activities of such employee infurtherance of the business of the Company. (b) Since March 1, 1998, the employment of any terminated former employeeof the Company or any Subsidiary has been terminated in accordance with anyapplicable Contract terms and applicable Law, except for instances ofnoncompliance that, individually or in the aggregate, would not have a MaterialAdverse Effect. Neither the Company nor any Subsidiary has any Liability underany Contract or applicable Law toward any such terminated employee, except forinstances of noncompliance that, individually or in the aggregate, would nothave a Material Adverse Effect. The Merger and the Transactions will not causethe Company or any Subsidiary to incur or suffer any Liability relating to, orobligation to pay, severance, termination 50or other payment to any Person, except for instances that, individually or inthe aggregate, would not have a Material Adverse Effect. (c) Since March 1, 1998, neither the Company nor any Subsidiary has madeany loans (except advances for business travel, lodging or other expenses in theOrdinary Course of Business) to any employee of the Company or any Subsidiary. (d) Except as disclosed in Schedule 4.23(d), since March 1, 1998, neitherthe Company nor any Subsidiary has experienced and, to the Knowledge of theCompany, there has not been threatened, any strike, work stoppage, slowdown,lockout, picketing, leafleting, boycott, other labor dispute, union organizationattempt, demand for recognition from a labor organization or petition forrepresentation under the National Labor Relations Act or applicable state law.Except as disclosed in Schedule 4.23(d), no grievance, demand for arbitration orarbitration proceeding arising out of or under any collective bargainingagreement is pending or, to the Knowledge of the Company, threatened. Except asdisclosed in Schedule 4.23(d), no Litigation is pending or, to the Knowledge ofthe Company, threatened respecting or involving any applicant for employment,any current employee or any former employee, or any class of the foregoing. (e) Except as set forth on Schedule 4.23(e), no employee of the Company orany Subsidiary is covered by any collective bargaining agreement, and nocollective bargaining agreement is being negotiated. (f) Since March 1, 1998, each of the Company and the Subsidiaries has paidin full to all employees all wages, salaries, bonuses and commissions due andpayable to such employees and has fully reserved on its books all amounts forwages, salaries, bonuses and commissions due but not yet payable to suchemployees. 4.24 Employee Benefits – U.S. (a) Schedule 4.24 lists all Plans (other than Employment Contracts or thosePlans listed on Schedule 4.17) by name and separately identifies each plan thathas received a favorable determination or opinion letter from the IRS. (b) No corporation, trade or business other than those that are parties tothis Agreement is (or was during the preceding five years) under common controlwith the Company within the meaning of Section 414(b) or (c) of the Code. Nocorporation, trade or business (i) is (or was during the preceding five years)in an affiliated service group with the Company within the meaning of Section414(m) of the Code, or (ii) is (or was during the preceding five years) thelegal employer of Persons providing services to the Company as leased employeeswithin the meaning of Section 414(n) of the Code. Neither the Company nor anySubsidiary has become, during the preceding six years, a successor employer forpurposes of group health or other welfare plan continuation rights (includingSection 601 et seq, of ERISA) or the Family and Medical Leave Act. (c) The Company has made available to Buyer (i) the most recentdetermination letter received by the Company from the IRS regarding each Planthat is intended to be qualified and 51tax exempt under Sections 401(a) and 501(a) of the Code, or the most recentpending application therefor, (ii) the most recent determination or opinionletter ruling from the IRS that each trust established in connection with Plansthat are intended to be tax exempt under Section 501(c) of the Code (if any) areso tax exempt, (iii) all pending applications for rulings, determinations,opinions, no action letters and the like filed with any governmental agency(including the Department of Labor, IRS, Pension Benefit Guaranty Corporationand the SEC) with respect to any Plan, (iv) the three most recent annualfinancial statements for each Plan (in audited form if required by ERISA) and,where applicable, Annual Report/Return (Form 5500) with disclosure schedules, ifany, and attachments for each Plan, (v) the most recently prepared actuarialvaluation report for each Plan (including reports prepared for funding,deduction and financial accounting purposes), (vi) plan documents, trustagreements, insurance contracts, any service agreement or other related contractthat provides for annual payments by the Company or a Subsidiary in excess of$30,000 and any employee summaries and material employee communications withrespect to each Plan and (vii) collective bargaining agreements (including sideagreements and letter agreements) relating to the establishment, maintenance,funding and operation of any Plan. (d) Prior to the Closing Date, the Company will provide Buyer with a listidentifying each employee of the Company or any Subsidiary who is, as of thedate of this Agreement, (i) absent from active employment due to short or longterm disability, (ii) absent from active employment on a leave pursuant to theFamily and Medical Leave Act or a comparable state Law, (iii) absent from activeemployment on any other leave or approved absence (together with the reason foreach leave or absence) or (iv) absent from active employment due to militaryservice (under conditions that give the employee rights to re-employment).Within 10 Business Days of the Closing Date, the Company will provide Buyer withan updated version of such list which will be, in all material respects,accurate as of the Closing Date. (e) With respect to continuation rights arising under federal or state Lawas applied to Plans that are group health plans (as defined in Section 601 etseq. of ERISA), the Company will, prior to the Closing Date, provide to Buyer alist identifying, as of the date of this Agreement, (i) each employee, formeremployee or qualifying beneficiary who has elected continuation and as to whomthe continuation period has not ended and (ii) each employee, former employee orqualifying beneficiary who has not elected continuation coverage but is stillwithin the period in which such election may be made. (f) (i) All Plans intended to be Tax qualified under Section 401(a) orSection 403(a) of the Code have received a favorable determination letter fromthe IRS covering all tax law changes prior to the Economic Growth and Tax ReliefReconciliation Act of 2001 or has applied to the IRS for such favorabledetermination letter within the applicable remedial amendment period underSection 401(b) of the Code, (ii) the Company is not aware of any circumstanceslikely to result in the loss of the qualification of such Plan under Section401(a) of the Code, (iii) to the extent required either as a matter of Law or toobtain the intended Tax treatment and Tax benefits, all Plans are in substantialcompliance with the requirements of ERISA and the Code. Except as would not,individually or in the aggregate, reasonably be expected to have a MaterialAdverse Effect, (i) all Plans have been administered in accordance with thedocuments and instruments governing the Plans, (ii) all reports and filings withGovernmental Entities (including the Department of Labor, the IRS, PensionBenefit Guaranty Corporation and the 52SEC) required in connection with each Plan have been timely made, (iii) alldisclosures and notices required by Law or Plan provisions to be given toparticipants and beneficiaries in connection with each Plan have been properlyand timely made and (iv) each of the Company and the Subsidiaries has made agood faith effort to comply with the reporting and taxation requirements forFICA taxes with respect to any deferred compensation arrangements under Section3121(v) of the Code. The Company has not contributed to nor been obligated tocontribute to any multiemployer plan as defined in Section 3(37) of ERISA. (g) (i) All contributions, premium payments and other payments required tobe made in connection with the Plans as of the date hereof have been made, (ii)as of the date hereof a proper accrual has been made on the books of account ofthe Company or applicable Subsidiaries for all contributions, premium paymentsand other payments under or pursuant to the Plans, (iii) no contribution,premium payment or other payment has been made in support of any Plan in thecurrent fiscal year that is in excess of the allowable deduction for federalincome Tax purposes for the year with respect to which the contribution was made(whether under Section 162, Section 280G, Section 404, Section 419, Section 419Aof the Code or otherwise), (iv) with respect to each Plan that is subject toSection 301 et seq. of ERISA or Section 412 of the Code, as of the date hereof,none of the Company or any of its Subsidiaries is liable for any “accumulatedfunding deficiency” as that term is defined in Section 412 of the Code and (v)except as set forth on Schedule 4.24, under each “employee pension benefit plan”within the meaning of Section 3(2) of ERISA (“Pension Plan”) that is asingle-employer plan subject to ERISA, as of the last day of the most recentplan year ended prior to the date hereof, the actuarially determined presentvalue of all “benefit liabilities,” within the meaning of Section 4001(a)(16) ofERISA (as determined on the basis of the actuarial assumptions contained in thePension Plan’s most recent actuarial valuation), did not exceed the then currentvalue of the assets of such Pension Plan. (h) Except as set forth on Schedule 4.24, the consummation of theTransactions will not (i) cause any Plan to increase benefits payable to anyparticipant or beneficiary, (ii) entitle any current or former employee of theCompany or any Subsidiary to severance pay, unemployment compensation or anyother benefit, award or payment except for merger consideration or (iii)accelerate or modify the time of payment or vesting, or increase the amount ofany benefit, award or compensation due any such employee. (i) As of the date hereof, (i) no material Litigation is pending withregard to any Plan other than routine uncontested claims for benefits, (ii)except as set forth on Schedule 4.24, no Plan is currently under examination oraudit by the Department of Labor, the IRS or the Pension Benefit GuarantyCorporation, (iii) neither the Company nor any Subsidiary has any actual orexpected Liability arising under Title IV of ERISA as a result of any Plan thathas terminated or is in the process of terminating, (iv) neither the Company norany Subsidiary has any actual or expected Liability under Section 4201 et seq.of ERISA for either a complete withdrawal or a partial withdrawal from amultiemployer plan and (v) with respect to the Plans, the Company and anySubsidiaries has not incurred or reasonably expects to incur: (A) any materialexcise Taxes under Section 4971 through Section 4980B, Section 4999, Section5000 or any other Section of the Code, (B) any penalty under Section 502(i),Section 502(l), Part 6 of Title I or any other provision of ERISA in an amountthat would be material or (C) any excise Taxes, penalties, damages or equitablerelief as a result of any prohibited transaction, breach of fiduciary duty or 53other violation under ERISA or any other applicable Law in an amount that wouldbe material; (vi) all accruals required under FAS 106 and FAS 112 have beenproperly accrued on the Latest Financial Statements, (vii) except as set forthin Schedule 4.24, no condition, agreement or Plan provision limits the right ofthe Company or any Subsidiary to amend, cut back or terminate any Plan (exceptto the extent such limitation arises under ERISA) and (viii) except as set forthon Schedule 4.24, the Company and any Subsidiaries have no liability withrespect to any current or former employees of the Company or its subsidiarieslocated in the United States of America for life insurance, death or medicalbenefits after separation from employment other than (A) death benefits underthe Plans and (B) health care continuation benefits described in Section 4980Bof the Code. 4.25 Foreign Benefit Plans. Schedule 4.25 sets forth, as of the datehereof, a true and complete list of all incentive plans, long term incentiveplans, stock option agreements and pension plans of the Company and itsSubsidiaries (other than plans, agreements or other benefits arising under thelaws of countries other than the United States of America) governed by theapplicable Laws of countries other than the United States of America which havea material financial impact on the business of the Company or any Subsidiary(taken as a whole) (all such plans and agreements, “Foreign Benefit Plans”).Except as would not, individually or in the aggregate, reasonably be expected tohave a Material Adverse Effect (i) to the extent legally required, all ForeignBenefit Plans have been approved by the competent Governmental Entities, (ii)neither the Company nor any Subsidiary has received any notice of any materialnon-compliance of any Foreign Benefit Plan with the Laws, if any, applicablethereto, and (iii) all obligations arising under Laws of countries other thanthe United States of America to provide or pay for social security or otherinsurances, benefits, contributions or funds relating to the employment ofpersons employed, hired or used by the Company or any Subsidiary, whether basedon individual or collective agreements, oral promises or legal requirements,have been fulfilled. 4.26 Customers. Schedule 4.26 lists the five (5) largest customers of theCompany and the Subsidiaries on a consolidated basis for the fiscal year endedon December 31, 2005 in each of the United States, the United Kingdom, Japan andGermany and sets forth opposite the name of each such customer the percentage ofnet sales by the Company and the Subsidiaries attributable to such customer forsuch period. No customer listed on Schedule 4.26 has notified the Company or anyof its Subsidiaries in writing that it will stop or materially decrease the rateof business done with the Company or any Subsidiary. 4.27 Suppliers. Schedule 4.27 lists the five (5) largest suppliers of theCompany and the Subsidiaries on a consolidated basis for the fiscal year endedon December 31, 2005 in each of the United States, the United Kingdom andGermany and sets forth opposite the name of each such supplier the approximatepercentage of purchases by the Company and the Subsidiaries attributable to suchsupplier for such period. No supplier listed on Schedule 4.27 has notified theCompany or any of its Subsidiaries in writing that it will stop or materiallydecrease its volume of business done with the Company or any Subsidiary ormaterially increase the prices of the items supplied to the Company or itsSubsidiaries. 4.28 Affiliate Transactions. Except as set forth on Schedule 4.28 orotherwise expressly disclosed in the notes to the Financial Statements, noInsider has any Material Contract 54with the Company or any Subsidiary (other than employment agreements listed inSchedule 4.17), not represented by a written Contract and terminable at will);or any interest in any assets used in or pertaining to the business of theCompany or any Subsidiary (other than ownership of capital stock of theCompany). No officer or director of the Company (other than a director who is adesignee of an investment fund or other institutional shareholder) and no Memberof the Immediate Family of an officer or such a director has any direct orindirect interest in any competitor, supplier or customer of the Company or anySubsidiary or in any Person from whom or to whom the Company or any Subsidiaryleases any property, or in any other Person with whom the Company or anySubsidiary otherwise transacts business of any nature (other than less than onepercent (1%) of the outstanding shares of capital stock of any corporation whosestock is listed on a national securities exchange or publicly traded on theNasdaq National Market). As of the Closing, no Insider will have anyindebtedness owing to or from the Company or any Subsidiary. 4.29 Brokerage. Except as set forth on Schedule 4.29, no Person will beentitled to receive any brokerage commission, finder’s fee, fee for financialadvisory services or similar compensation in connection with the Merger and theTransactions based on any Contract made by or on behalf of the Company for whichBuyer or the Company is or could become liable or obligated. 4.30 Project Contracts. Except as set forth on Schedule 4.30, neither theCompany nor any Subsidiary in a party to any Contract with a customer pursuantto which the Company or such Subsidiary has any performance obligation otherthan the obligation to deliver products to the customer in a timely mannerpursuant to the terms of the Contract (including, without limitation, anyobligation with regard to planning or consulting on system design,responsibility for system installation or integration, or responsibility forsystem functionality). 4.31 Derivative Transactions. Except for currency hedging transactions inthe Ordinary Course of Business, neither the Company nor any Subsidiary thereofis party to any financial hedging arrangements or other derivative transactions. V. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to the Company as follows: 5.1 Incorporation; Power and Authority. Each of Buyer and Merger Sub is acorporation duly organized, validly existing and in good standing under the Lawsof its jurisdiction of organization, with all necessary power and authority toexecute, deliver and perform this Agreement and the Ancillary Agreements towhich it will become a party. 5.2 Valid and Binding Agreement. The execution, delivery and performance ofthis Agreement and the Ancillary Agreements to which it will become a party byBuyer and Merger Sub have been duly and validly authorized by all necessarycorporate action on the part of Buyer and Merger Sub and no other corporateproceedings on the part of Buyer or Merger Sub are necessary to authorize theexecution and delivery of this Agreement or to consummate the Merger and theother transactions contemplated hereby, subject only to the adoption of thisAgreement by Buyer as the sole stockholder of Merger Sub and the filing of theCertificate of 55Merger pursuant to Delaware Law. This Agreement has been duly executed anddelivered by Buyer and Merger Sub and constitutes the valid and bindingobligation of Buyer and Merger Sub, enforceable against them in accordance withits terms, subject to the Remedies Exception. Each Ancillary Agreement to whichBuyer will become a party, when executed and delivered by Buyer, will constitutethe valid and binding obligation of Buyer, enforceable against Buyer inaccordance with its terms, subject to the Remedies Exception. 5.3 No Breach; Consents. The execution, delivery and performance of thisAgreement and the Ancillary Agreements to which it will become a party by Buyerand Merger Sub will not (a) contravene any provision of the OrganizationalDocuments of Buyer or Merger Sub; (b) violate or conflict with any Law,Governmental Order or Governmental Authority; (c) conflict with, result in anybreach of any of the provisions of, constitute a default (or any event thatwould, with the passage of time or the giving of notice or both, constitute adefault) under, result in a violation of, increase the burdens under, result inthe termination, amendment, suspension, modification, abandonment oracceleration of payment (or any right to terminate) or require a Consent,including any Consent under any Contract or Governmental Authorization that iseither binding upon or enforceable against Buyer or Merger Sub (subject to theAntitrust Clearance); or (d) require any Governmental Authorization (subject tothe Antitrust Clearance). 5.4 Brokerage. No Person will be entitled to receive any brokeragecommission, finder’s fee, fee for financial advisory services or similarcompensation in connection with the Merger and the Transactions based on anyContract made by or on behalf of Buyer for which any shareholder of the Companyis or could become liable or obligated. VI. AGREEMENTS OF THE COMPANY 6.1 Conduct of the Business. From the date of the Agreement to andincluding the Closing Date, (1) except with respect to any obligations expresslyset forth in this Agreement and in accordance with applicable Law, (2) with theprior written consent of the Buyer, which consent shall not be unreasonablywithheld, conditioned or delayed, and (3) except as set forth on Schedule 6.1hereto: (a) each of the Company and the Subsidiaries will conduct its business onlyin the Ordinary Course of Business; (b) neither the Company nor any Subsidiary will amend or modify anyMaterial Contract in any manner materially adverse to the Company or suchSubsidiary; (c) each of the Company and the Subsidiaries will (i) use commerciallyreasonable efforts to preserve its business organization and goodwill, keepavailable the services of its officers, employees and consultants and maintainsatisfactory relationships with vendors, customers and others having businessrelationships with it, (ii), subject to applicable Laws, confer withrepresentatives of Buyer relating to the general status of ongoing operations asreasonably requested by Buyer and (iii) not take any action that would renderany representation or warranty made by the Company in this Agreement untrue atthe Closing as though then made, including any actions referred to in Section4.10; 56 (d) neither the Company nor any Subsidiary will change in any materialrespect any of its methods of accounting in effect on March 31, 2006, other thanchanges required by GAAP (or, with reference to non-U.S. Subsidiaries, otherapplicable accounting standards); (e) neither the Company nor any Subsidiary will cancel or terminate itscurrent insurance policies or allow any of the coverage thereunder to lapse,unless replaced by a policy providing substantially similar coverage to thepolicy being replaced; (f) neither the Company nor any Subsidiary will (i) amend or propose toamend its certificate of incorporation or by-laws, (ii) split, combine orreclassify its outstanding capital stock, (iii) declare, set aside or pay, anydividend or distribution payable in stock or property, or (iv) repurchase,redeem or otherwise acquire any of its outstanding shares of capital stock; (g) neither the Company nor any Subsidiary will issue, sell, pledge ordispose of, or agree to issue, sell, pledge or dispose of, any additional sharesof, or any options, warrants or rights of any kind to acquire any shares of itsor its Subsidiaries’ capital stock, or any debt or equity securities convertibleinto, exchangeable for or exercisable for such capital stock, or enter into anyContract with respect to any of the foregoing, except for issuances of CommonShares pursuant to the exercise of Stock Options or Warrants outstanding as ofthe date of this Agreement; (h) neither the Company nor any Subsidiary will (i) incur or becomecontingently liable with respect to any Other Indebtedness other than the OtherIndebtedness shown in the Disclosure Schedule or otherwise disclosed in theFinancial Statements, (ii) redeem, purchase, acquire or offer to purchase oracquire any shares of its capital stock, Stock Options or Warrants, (iii) makeany acquisition of any assets or businesses or any other capital expendituresother than expenditures for fixed or capital assets in the Ordinary Course ofBusiness, (iv) sell, pledge, dispose of or encumber any assets or businessesother than sales in the Ordinary Course of Business, (v) loan, advance funds ormake any investment in or capital contribution to any other Person other than toany Subsidiary, or (vi) enter into any Contract with respect to any of theforegoing; (i) neither the Company nor any Subsidiary will enter into any plan ofcomplete or partial liquidation, dissolution, merger, consolidation,restructuring, recapitalization or other reorganization of the Company or any ofits Subsidiaries (other than the Merger and the Transactions); (j) neither the Company nor any Subsidiary will alter the corporatestructure or ownership of any of the Company’s Subsidiaries; (k) neither the Company nor any Subsidiary will enter into any sale, leaseor license or offer to extend any Encumbrance (except for PermittedEncumbrances) in respect of any of its assets, other than in the Ordinary Courseof Business; (l) neither the Company nor any Subsidiary will (i) grant any severance,retention or termination pay to, or amend any existing severance, retention ortermination arrangement with, any current or former director or officer of theCompany or any of its Subsidiaries (other than 57pursuant to agreements currently in effect), or except in the Ordinary Course ofBusiness, any employee of the Company or any of its Subsidiaries, (ii) except asrequired by Law or agreements or Plans or policies currently in effect, increaseor accelerate the payment or vesting of, benefits payable under any existingseverance, retention or termination pay policies or employment agreements, (iii)enter into or amend any employment, consulting, deferred compensation or othersimilar agreement with any director, officer, consultant or employee of theCompany or any of its Subsidiaries, (iv) establish, adopt or amend (except asrequired by applicable Law) any collective bargaining agreement, bonus,profit-sharing, thrift, pension, retirement, post-retirement medical or lifeinsurance, retention, deferred compensation, compensation, stock option,restricted stock or other benefit plan or arrangement covering any present orformer director, officer or employee, or any beneficiaries thereof, of theCompany or any of its Subsidiaries or (v) increase the compensation, bonus orother benefits payable to any officer or employee of the Company or any of itsSubsidiaries, other than in the Ordinary Course of Business, or any director; (m) neither the Company nor any Subsidiary will repay, redeem, repurchaseor make any offer (including any change of control offer provided in theIndentures) of repayment, redemption or repurchase of any IndentureIndebtedness, except as required by Section 6.3; (n) neither the Company nor any Subsidiary will settle or enter into anysettlement agreement with respect to any outstanding Litigation, except that,notwithstanding the foregoing, the Company may settle or enter into anysettlement agreement with respect to any outstanding Litigation where the amountof such settlement is less than $500,000; and (o) neither the Company nor any Subsidiary will enter into or authorize anagreement with respect to any of the foregoing actions. 6.2 Environmental Work. (a) The Company currently is performing, or may be obligated to perform,work in respect of each of the environmental matters identified on Schedule 6.2attached hereto (the “Environmental Work”). Subject to the terms of theEnvironmental Escrow Agreement, from and after the Closing, Buyer shall controland perform the balance of the Environmental Work, provided that allEnvironmental Work shall be performed on a basis consistent with the Company’spast practices; provided, however, that Buyer shall provide periodic updates tothe Representative regarding all Environmental Work performed by Buyer from andafter the Closing no less frequently than once per calendar quarter. Costs andexpenses in respect of any Environmental Work shall be paid out of theEnvironmental Escrow Amount upon the joint written instructions of Buyer and theRepresentative following the certification by the Company to the Representativein reasonable detail (together with such supporting documentation as theRepresentative may reasonably request) specifying such costs and expenses,pursuant to the terms and conditions set forth in the Environmental EscrowAgreement, it being understood that (i) to the extent such costs and expensesexceed the amount of funds in the Environmental Escrow Account, then Buyer shallbe responsible for any such excess costs and expenses and (ii) if any fundsremain available in the Environmental Escrow Account after completion of theEnvironmental Work and payment therefor in full, such remaining funds shall bereleased from the Environmental Escrow Account and disbursed in accordance withthe instructions of the 58Representative. Any interest earned on the Environmental Escrow Amount shall bedeposited by the Escrow Agent into the Environmental Escrow Account, but shallnot constitute part of the Environmental Escrow Amount. The amount of interest,reduced by any Taxes (as referred to in the next sentence), brokerage fees andother expenses or losses incurred in connection with the investment of theEnvironmental Escrow Amount, shall be paid to the Buyer and the Representativein proportion to the respective payments to them of the Environmental EscrowAmount. The parties acknowledge that Buyer shall be treated as the owner of theEnvironmental Escrow Account and shall be responsible for any Taxes attributableto income earned in respect of the Environmental Escrow Amount until suchEnvironmental Escrow Amount is disbursed in accordance with the terms of theEnvironmental Escrow Agreement (with the Buyer being entitled to reimbursementout of such interest for any such Taxes paid). (b) The Environmental Escrow Agreement shall provide for the release of$2,000,000 from the Environmental Escrow Account on the second anniversary ofthe Closing Date to the extent that unresolved claims do not exceed theEnvironmental Escrow Amount. (c) Subject to the right of the Representative to retain funds to cover theSeller Expenses, the Representative shall distribute to the Equity Holders allfunds released from the Environmental Escrow Account pursuant to this Section6.2 in accordance with their respective Percentage Interests; provided, however,that the Representative shall direct the Escrow Agent to pay to the SurvivingCorporation all amounts required pursuant to this Section 6.2 to be distributedfrom the Payment Fund to the holders of Stock Options and Warrants, and theSurviving Corporation shall distribute such amounts, net of applicablewithholding Taxes, to such holders in accordance with their respectivePercentage Interests therein in accordance with the Representative’sinstructions. (d) Notwithstanding anything to the contrary set forth in this Agreement,the conditions giving rise to the conducting of or otherwise being remedied bythe Environmental Work shall not be deemed to be a breach of any representationor warranty contained in this Agreement. 6.3 Redemption of the Notes; Indenture Indebtedness Satisfaction andDischarge. (a) The Company shall, and shall cause Intermediate LLC and TCI to,effectuate the Indenture Indebtedness Satisfaction and Discharge immediatelyprior to or simultaneously with the Effective Time and shall: (i) notify Buyer, no later than two (2) Business Days prior to the Closing Date, of the Indenture Satisfaction and Discharge Amount for each series of Indenture Indebtedness and the wire transfer instructions to the accounts designated by the Applicable Trustee; (ii) prepare appropriate notices or instructions to the Applicable Trustee in form and substance reasonably satisfactory to Buyer directing it to apply the appropriate portions of the Indenture Satisfaction and Discharge Amount to full payment of each series of Indenture Indebtedness on the applicable Specified Redemption Date; 59 (iii) deliver an officers’ certificate for each of the 11 1/2% TCI Notes and the 13% Notes of each series, reasonably satisfactory in form and substance to Buyer and the Applicable Trustee, stating that all conditions precedent to the satisfaction and discharge of such Indenture Indebtedness have been satisfied; (iv) deliver an opinion of counsel for each of the 11 1/2% TCI Notes, the 13% Notes of each series, reasonably satisfactory in form and substance to Buyer and the Applicable Trustee, stating that all conditions precedent to the satisfaction and discharge of such Indenture Indebtedness have been satisfied; (v) obtain and deliver to Buyer on the Closing Date an instrument of Satisfaction and Discharge of each Indenture resulting in a complete release of each applicable Issuer and its Subsidiaries from all obligations under such Indenture and the Indenture Indebtedness and all Encumbrances relating thereto executed by the Applicable Trustee and the applicable Issuer and reasonably satisfactory in form and substance to Buyer; and (vi) take all other actions and prepare all other documents (which shall be reasonably satisfactory in form and substance to Buyer and the Applicable Trustee), necessary or appropriate to redeem the Indenture Indebtedness on the applicable Specified Redemption Dates. 6.4 Repayment of Other Indebtedness. The Company will promptly notify Buyerof any change in the ordinary course of repayment of Other Indebtedness. TheCompany shall deliver (i) at least three Business Days prior to the ClosingDate, executed payoff letters from each lender, creditor, noteholder or othercounterparty (each, a “lender”) to whom an Other Indebtedness obligation, exceptfor the Other Indebtedness obligations described on Schedule 6.4, is owing(whether or not due and payable) with respect to each item of such OtherIndebtedness, together with any and all prepayment premiums, penalties, breakagecosts, “make whole amounts,” costs, expenses and other payment obligationsrelating to such items of such Other Indebtedness and owing (whether or not thendue and payable) to such lender (collectively, the “Payoff Amount”, in each case(A) that sets forth the amount to be paid on the Closing Date, together withwire transfer instructions, (B) evidencing that the payment of such amount shallresult in a complete release of the Company and each of its Subsidiaries fromall obligations and of all Encumbrances relating to such item of the OtherIndebtedness and all related transaction expenses, and (C) authorizing theCompany to file UCC-3 termination statements, mortgage releases and otherRelease Documents upon receipt by such lender of the applicable Payoff Amountand (ii) immediately prior to or concurrently with the Closing, UCC-3termination statements, mortgage releases and other Release Documents (to beheld by Buyer’s counsel in escrow until the Closing or by lender’s counsel andreleased concurrently with the Closing) that when filed or recorded, as the casemay be, will be sufficient to release any and all Encumbrances relating to suchOther Indebtedness and the Indenture Indebtedness and all related transactionexpenses. 6.5 Notice of Developments. The Company will promptly notify Buyer of (i)any change in the Ordinary Course of Business of the Company or any Subsidiarythat could reasonably be expected to have a Material Adverse Effect or (ii) tothe Knowledge of the 60Company, the commencement or threat in writing of Litigation naming the Companyor any Subsidiary as a party. 6.6 Pre-Closing Access to Information; Confidentiality. Through the ClosingDate, the Company and each of its Subsidiaries will afford to Buyer and itsauthorized representatives reasonable access at all reasonable times and uponreasonable notice, and subject to exclusion to comply with applicable Laws orpreserve attorney-client privilege, to the facilities, offices, properties,technology, processes, books, business and financial records, those officers andexecutive-level employees named on Schedule 6.6, business plans, budgets andprojections, information in the possession of the Company and its Subsidiarieswith respect to their customers and other information of each of the Company andthe Subsidiaries as Buyer may reasonably request, and the workpapers of Ernst &Young LLP, the Company’s independent accountants. Subject to Law andpreservation of the attorney-client privilege, Buyer will have reasonable accessto the personnel records of the Company and the Subsidiaries. The Company willprovide such Plan documents and summary plan descriptions, employee data orother information as may be reasonably required by Buyer. The ConfidentialityAgreement, dated September 21, 2005 (the “Confidentiality Agreement”), betweenthe Company and Buyer will apply with respect to information obtained by Buyerunder this Section 6.6. 6.7 Commercially Reasonable Efforts. Subject to the terms and conditionsherein provided, the Company and its Subsidiaries hereto shall use itscommercially reasonable efforts to take, or cause to be taken, all action and todo, or cause to be done, all things necessary, proper or advisable underapplicable Laws to consummate and make effective the Transactions. 6.8 Securityholder Litigation. The Company and each Subsidiary shall keepBuyer informed of, and cooperate with Buyer in connection with, anysecurityholder Litigation or claim against the Company and/or its directors orofficers relating to the Merger or the Transactions, provided, however, that, nosettlement in connection with such securityholder Litigation shall be agreed towithout Buyer’s prior written consent, which consent shall not be unreasonablywithheld, conditioned or delayed; provided, further, that all obligations inthis Section shall be subject to the obligations of the Company or suchSubsidiary under applicable Laws relating to attorney-client communication andprivilege. 6.9 Consents and Authorizations; Regulatory Filings. The Company will useits commercially reasonable efforts to obtain, as soon as reasonably practicableafter the date of this Agreement, all Consents and Governmental Authorizations(the “Required Consents”) listed on Schedule 6.9. The Company and eachSubsidiary will keep Buyer reasonably advised of the status of obtaining theRequired Consents. Without limiting the foregoing, no later than the tenth dayafter the date of this Agreement, the Company will make, and will cause each ofthe Subsidiaries to make, all filings and submissions required by them or itunder the HSR Act, the EU antitrust Laws and regulations and any other Lawapplicable to the Company or any Subsidiary required for the consummation of theMerger and the Transactions. The Company and each Subsidiary will use itscommercially reasonable efforts to obtain an early termination of the applicablewaiting period under, and will make any additional filings required pursuant to,the HSR Act and other applicable Laws. 61 6.10 No Solicitation. (a) The Company and each Subsidiary will not, and will cause itsrepresentatives and Affiliates not to, directly or indirectly, (i) solicit,initiate, encourage, induce or facilitate the making, submission or announcementof any Acquisition Proposal or take any action that could reasonably be expectedto lead to an Acquisition Proposal, (ii) furnish any information regarding theCompany or any Subsidiary to any Person in connection with or in response to anAcquisition Proposal or an inquiry or indication of interest that couldreasonably be expected to lead to an Acquisition Proposal, (iii) engage indiscussions or negotiations with any Person with respect to any AcquisitionProposal or that could reasonably be expected to lead to an AcquisitionProposal, (iv) approve, endorse or recommend any Acquisition Proposal or (v)enter into any letter of intent or similar document or any Contractcontemplating or otherwise relating to any Acquisition Transaction; provided,however, that this Section 6.10(a) will not prohibit the Company from furnishingnonpublic information regarding the Company or any Subsidiary to, or enteringinto discussions or negotiations with, any Person in response to a SuperiorProposal that is submitted to the Company or any Subsidiary by such Person (andnot withdrawn) if (1) neither the Company nor any Subsidiary, nor anyrepresentative of the Company or any Subsidiary, will have violated any of therestrictions set forth in this Section 6.10, (2) the board of directors of theCompany concludes in good faith, after having consulted with and considered theadvice of outside counsel to the Company, that such action is required in orderfor the board of directors of the Company to comply with its fiduciaryobligations to the Company’s shareholders under applicable Law, (3) at least twoBusiness Days prior to furnishing any such nonpublic information to, or enteringinto discussions with, such Person, the Company gives Buyer written notice ofthe identity of such Person and of the Company’s intention to furnish nonpublicinformation to, or enter into discussions with, such Person, and the Companyreceives from such Person an executed confidentiality agreement containingcustomary limitations on the use and disclosure of all nonpublic written andoral information furnished to such Person by or on behalf of the Company andcontaining “standstill” provisions and (4) at least two Business Days prior tofurnishing any such nonpublic information to such Person, the Company furnishessuch nonpublic information to Buyer (to the extent such nonpublic informationhas not been previously furnished by the Company to Buyer). Without limiting thegenerality of the foregoing, the Company acknowledges and agrees that anyviolation of or the taking of any action inconsistent with any of therestrictions set forth in the preceding sentence by any representative of theCompany, whether or not such representative of the Company is purporting to acton behalf of the Company, will be deemed to constitute a breach of this Section6.10 by the Company. (b) The Company will promptly (and in no event later than 24 hours afterreceipt of any Acquisition Proposal, any inquiry or indication of interest thatcould lead to an Acquisition Proposal or any request for nonpublic information)advise Buyer orally and in writing of any Acquisition Proposal, any inquiry orindication of interest that could lead to an Acquisition Proposal or any requestfor nonpublic information relating to the Company or Subsidiary (including theidentity of the Person making or submitting such Acquisition Proposal, inquiry,indication of interest or request, and the terms thereof) that is made orsubmitted by any Person prior to the Closing Date. The Company will keep Buyerfully informed with respect to the status of any such Acquisition Proposal,inquiry, indication of interest or request and any modification or proposedmodification thereto. 62 (c) The Company shall, and shall cause each of its Subsidiaries and theRepresentative to, immediately cease and cause to be terminated any existingdiscussions with any Person that relate to any Acquisition Proposal subject toSection 6.10(a). (d) Neither the Company nor any Subsidiary will release or permit therelease of any Person from, or waive or permit the waiver of any provision of,any confidentiality, “standstill” or similar agreement to which the Company is aparty, and will enforce or cause to be enforced each such agreement at therequest of Buyer. 6.11 Checks. The Company shall, and shall cause each of its Subsidiariesto, use its commercially reasonable efforts to cause all checks received by theCompany or any Subsidiary prior to the Closing Date to be deposited into theCompany’s or the Subsidiaries’ bank accounts prior to the close of business onthe Closing Date. VII. TAX MATTERS 7.1 Tax Matters. (a) If the Company or any Tax Affiliate is permitted but not required,under applicable Tax laws, to treat the Closing Date as the last day of any TaxPeriod, the parties shall treat the Tax Period as ending, as the case may be, atthe close of business on the Closing Date. (b) Tax Returns. (i) The Company (use of the defined term “Company” in this Section 7.1 shall also include each Tax Affiliate) shall, at the Company’s expense, prepare or cause to be prepared and file or cause to be filed all Returns for the Company which are due on or before the Closing Date, and the Company shall pay all Taxes with respect to such Returns. All such Returns shall be accurate and complete in accordance with applicable Laws and shall be prepared on a basis consistent with the Returns filed by or on behalf of the Company for the preceding Tax Period. The Company shall submit copies of all income Tax Returns to Buyer at least 30 days prior to their extended due date for Buyer’s review and approval. (ii) Buyer shall prepare or cause to be prepared and file or cause to be filed all Returns of the Company which are due after the Closing Date, and Buyer shall cause the Company, at the Surviving Corporation’s expense, to pay all Taxes with respect to such Returns. The Company shall reserve on the Closing Balance Sheet in a manner that is consistent with past practice and is in accordance with GAAP an appropriate amount to reflect the obligation to pay any such Taxes. Buyer shall permit the Representative to review and comment, prior to filing, on each Return for Tax Periods which begin before the Closing Date (“Straddle Tax Returns”). Any portion of any Tax which must be paid in connection with the filing of a Straddle Tax Return, to the extent attributable to any period or portion of a period ending on or before the Closing Date (the “Interim Period”), shall be referred to herein as “Pre-Closing Taxes.” The Escrow Agent shall remit to Buyer, in accordance with the Escrow Agreement, an amount from the Escrow Amount equal to the Pre-Closing Taxes due with any Straddle Tax Returns (to the extent such 63 Taxes are not reflected on the Closing Balance Sheet) at least ten (10) Business Days before Buyer is required to cause to be paid the related Tax liability; it being understood that the Company will accrue on the Closing Balance Sheet all Pre-Closing Taxes. Where the Pre-Closing Taxes involve a period which begins before and ends after the Closing Date, such Pre-Closing Taxes shall be calculated as though the taxable year of the Company terminated as of the close of business on the Closing Date; provided, however, that in the case of a Tax not based on income, receipts, proceeds, profits or similar items, Pre-Closing Taxes shall be equal to the amount of Tax for the Tax Period multiplied by a fraction, the numerator of which shall be the number of days from the beginning of the Tax Period through the Closing Date and the denominator of which shall be the number of days in the Tax Period. All Straddle Tax Returns shall be prepared, and all determinations necessary to give effect to the foregoing allocations shall be made, in a manner consistent with prior practice of the Company. (c) Audits. Each party shall promptly notify the other in writing uponreceipt by such party (or any of its Tax Affiliates) of any pending orthreatened Tax proceeding with respect to the Company for any (i) Tax Periodending on or before the Closing Date or (ii) Tax Period which begins before theClosing Date and ends after the Closing Date. The Representative shall have thesole right to represent the interests of the Company in any Tax proceedingsrelating to Tax Periods ending on or prior to the Closing Date and to employcounsel of its choice at its expense. Buyer shall have the right to participateat its expense in any such Tax proceeding which may have the effect ofincreasing Buyer’s or the Company’s Tax Liability for any Tax Period endingafter the Closing Date, and the Representative and the Company shall not settleor compromise any such proceeding without Buyer’s prior written consent, whichconsent will not be unreasonably withheld, conditioned or delayed; provided,however, that Buyer shall consent to any settlement or compromise if the EquityHolders fully indemnify Buyer for any increase in Buyer’s or the Company’s TaxLiability. Buyer shall have the sole right to represent the interest of theSurviving Corporation in any Tax proceedings relating to Tax Periods which endafter the Closing Date and to employ counsel of its choice at its expense. TheRepresentative shall have the right to participate at the Equity Holders’expense in any such Tax proceedings which may have the effect of increasing theCompany’s Tax Liability for any Tax period ending before the Closing Date, andBuyer and the Surviving Corporation shall not settle or compromise any suchproceeding without prior written consent of the Representative, which consentwill not be unreasonably withheld, conditioned or delayed. Notwithstanding anyother provision to the contrary, Buyer in its sole and absolute discretion maynotify the Representative at any time that any defense and settlement of any Taxproceeding relating to Taxes for which the Equity Holders are required toindemnify Buyer pursuant to this Agreement must be immediately terminated inwhich case any obligation with respect to the Equity Holders to makeindemnification payments to Buyer with respect to such Tax proceeding shallthereupon terminate. (d) Cooperation. The Representative and Buyer shall cooperate fully, as andto the extent reasonably requested by the other party, in connection with thepreparation and filing of Returns pursuant to Section 7.1 and any audit,Litigation or other proceeding with respect to Taxes. Such cooperation shallinclude signing any Returns, amended Returns, claims or other documentsnecessary to settle any Tax controversy, the retention and (upon the otherparty’s request) the provision of records and information (including any prioryears’ Returns, workpapers or memoranda, whether prepared internally or by athird-party) which are reasonably 64relevant to any such audit, Litigation or other proceeding and making employees(and, to the extent relevant, outside advisors) available on a mutuallyconvenient basis to provide additional information and explanation of anymaterial provided hereby. In addition, each party agrees to (i) furnish to theother, on a timely basis, copies of all correspondence received from any Taxauthority and (ii) promptly inform the other party of any other communicationfrom a Tax authority, in connection with any Tax audit, information request, orother proceeding with respect to any Tax Period which may result in the paymentof, or affect the amount payable of, any Tax by such other party.Notwithstanding any other provision hereof, each party will bear its ownexpenses in complying with the foregoing provisions. (e) Tax Refunds. Any refund of Taxes (which for purposes of this provisionshall include any entitlement to a credit against Tax) relating to the Companywith respect to Tax Periods (or portions thereof) ending on or before theClosing Date and received by the Surviving Corporation within three (3) yearsfollowing the Closing shall be for the account of the Equity Holders afterpayment of any and all applicable Taxes. Buyer shall pay over to theRepresentative (after payment of any and all applicable Taxes) for the accountof the Equity Holders any such refunds that Buyer may receive within five (5)days of such receipt; provided, however, that Buyer shall be entitled to (i) anyrefunds and interest arising from the carryback of a Tax item from a Tax Periodthat ends after the Closing Date to a Tax Period that begins before the ClosingDate and (ii) any refund of a Tax, regardless of the Tax Period to which itrelates, if Buyer is responsible for and has paid such Tax and has not otherwisebeen indemnified for the payments of such Tax. (f) Pre-Closing Actions. Prior to the Closing, the Company will not (i)make or rescind any express or deemed election or take any other discretionaryposition relating to Taxes, (ii) amend any Return, (iii) settle or compromiseany Litigation relating to Taxes, (iv) make any change in the composition of anyaffiliated group of which the Company is a member, or (v) change any of itsmethods of reporting income or deductions for federal or state income Taxpurposes from those employed in the preparation of the last filed federal orstate income Tax Returns, which may have the effect of increasing Buyer’s or theCompany’s Tax Liability for any Tax Period ending after the Closing Date. (g) Post-Closing Actions. The Surviving Corporation will not amend (i) anyReturn attributable to a Tax Period ending on or before the Closing Date or (ii)any Straddle Tax Return that includes a Tax Period that begins before and endsafter the Closing date if such amendment may have the effect of increasing theCompany’s Tax Liability for any Tax Period (or portion thereof) that ends on orbefore the Closing Date. (h) Transfer Taxes. Except as otherwise provided in this Section 7.1(h),all transfer (including real estate transfer), documentary, sales, stamp,registration and other such Taxes and fees (including any penalties andinterest) incurred in connection with this Agreement (and the transactionscontemplated hereby) shall be paid by Buyer when due, and Buyer shall, at itsown expense, file all necessary Returns and other documentation with respect toall such transfer, documentary, sales, use, stamp, registration and other Taxesand fees, and, if required by applicable Law, the Representative shall, andshall on behalf of the Equity Holders, join in the execution of any such Returnsand documentation. Notwithstanding the foregoing, any German real propertytransfer Taxes incurred in connection with this Agreement (and the transactions 65contemplated hereby) shall be borne one-half by Buyer and one-half by the EquityHolders by (i) including fifty percent (50%) of the estimated German realproperty transfer Taxes in the Closing Transaction Expenses and (ii) if theamount of German real property transfer Taxes actually paid is more than or lessthan the amount estimated, by either (A) permitting Buyer to collect fiftypercent (50%) of the excess from the Indemnity Escrow Amount or (B) requiringBuyer to remit fifty percent (50%) of the shortfall to the Equity Holders bydepositing such amount into the Payment Fund, in either case, promptly followingthe actual payment of such Taxes. The parties agree that the total amount ofestimated German real property transfer Taxes to be incurred in connection withthis Agreement (and the transactions contemplated hereby) is Euro 150,000. (i) Tax Sharing Agreements. All tax sharing agreements, other than theCompany Tax Sharing Agreement, to which the Company is a party shall beterminated effective as of the Closing Date. VIII. AGREEMENTS OF BUYER 8.1 Indemnification of Officers and Directors. (a) All rights to indemnification, whether pursuant to the OrganizationalDocuments of the Company or a Subsidiary of the Company, by Contract, by Law orotherwise, existing in favor of those Persons who are, or were, directors,officers and employees of the Company and its Subsidiaries at or prior to thedate of this Agreement (the “Indemnified Persons”) will survive the Merger andwill be observed by the Surviving Corporation and its Subsidiaries to thefullest extent permitted by Law, including the DGCL, for a period of six yearsfrom the Closing Date (the “Indemnification Period”). (b) During the Indemnification Period, the Surviving Corporation willmaintain in effect, for the benefit of the Indemnified Persons with respect toacts or omissions occurring prior to the Closing Date, the existing policy ofdirectors’ and officers’ liability insurance maintained by the Company as of thedate of this Agreement in the form disclosed by the Company to Buyer prior tothe date of this Agreement (the “Existing Policy”); provided, however, that (i)the Surviving Corporation may substitute for the Existing Policy a policy orpolicies of comparable coverage, (ii) the Surviving Corporation will not berequired to pay annual premiums for the Existing Policy (or for any substitutepolicies for which premiums are payable on an annual basis) in excess of 125% ofthe per annum rate of premium paid as of the date hereof for the ExistingPolicy, and (iii) in the case of any substitute policy such as a “runoff policy”for which the applicable premium is payable on a one time basis to obtaincoverage for the entire Indemnification Period, the Surviving Corporation willnot be required to pay an aggregate amount in respect of such premium in excessof 750% of the per annum rate of premium paid as of the date hereof for theExisting Policy. In the event the future premiums for the Existing Policy (orany substitute policies) exceed the threshold amounts set forth in clauses (ii)and (iii) of the preceding sentence, the Surviving Corporation will be entitledto reduce the amount of coverage of the Existing Policy (or any substitutepolicies) to the amount of coverage that can be obtained for premium amountsthat are within threshold amounts set forth in clauses (ii) or (iii), as thecase may be. 8.2 Employment; Employee Benefits. 66 (a) Nothing in this Agreement will be construed to create a right in anyemployee of the Company or any Subsidiary to employment with Buyer, theSurviving Corporation or any other Subsidiary of Buyer (including the Company),and, subject to any agreement between an employee and Buyer, the SurvivingCorporation or any other Subsidiary of Buyer (including the Company), theemployment of each employee of the Company or any Subsidiary who continuesemployment with Buyer, the Surviving Corporation or any Subsidiary of theSurviving Corporation (including the Company) after the Closing Date (a”Continuing Employee”) will be “at will” employment, except as otherwiseprovided under applicable Law. (b) The Parties agree that the Company shall be responsible for anyrequired notices and other obligations under the WARN Act or any comparable Lawfor any terminations by it up to and including the date and time of Closing, andthe Buyer shall be responsible for any required notices and any otherobligations under the WARN Act or any comparable Law for any terminations by itafter the date and time of Closing. 8.3 Replacement of Letters of Credit. Prior to the Closing, Buyer shall (i)make arrangements to obtain as of the Closing Date one or more letters of creditto replace each of the existing letters of credit set forth on Schedule 8.3 (andany replacements thereof obtained by the Company prior to the Closing), suchreplacement letters of credit to be in a form and substance acceptable to theintended beneficiaries thereof and (ii) use its commercially reasonable effortsto obtain the release of the letters of credit set forth on Schedule 8.3 (or anyreplacements thereof obtained by the Company prior to the Closing) from thebeneficiaries thereof, such release to take effect as of the Closing Date orcash collateralize such letters of credit until such letters of credit shall beso released by the beneficiaries thereof. 8.4 Commercially Reasonable Efforts. Subject to the terms and conditionsherein provided, Buyer shall use its commercially reasonable efforts to take, orcause to be taken, all action and to do, or cause to be done, all thingsnecessary, proper or advisable under applicable Laws to consummate and makeeffective the Transactions. Without limiting the foregoing, no later than thetenth business day after the date of this Agreement, Buyer and Merger Sub willmake all filings and submissions required by them under any Law applicable toBuyer or Merger Sub required for the consummation of the Merger and theTransactions, if any. Buyer and Merger Sub will use their commerciallyreasonable efforts to obtain an early termination of any applicable waitingperiod under, and will make any additional filings required pursuant to, anyapplicable Laws. 8.5 Access to Information. In connection with Buyer’s and its authorizedrepresentatives’ obtaining access, pursuant to Section 6.6 hereunder, to thefacilities, offices, properties, technology, processes, books, business andfinancial records, officers, business plans, budgets and projections,information in the possession of the Company and its Subsidiaries with respectto their customers and other information of each of the Company and theSubsidiaries, and the workpapers of Ernst & Young LLP, the Company’s independentaccountants, Buyer agrees to use commercially reasonable efforts to attempt tominimize the disruption of the ongoing business of the Company and itsSubsidiaries caused by any such access. 67 IX. CONDITIONS TO CLOSING 9.1 Conditions to the Obligations of the Company, Buyer and Merger Sub. Theobligation of the Company, Buyer and Merger Sub to take the actions required tobe taken by them at the Closing is subject to the satisfaction or waiver, inwriting, of each of the following conditions at or prior to the Closing: (a) The applicable waiting periods under the HSR Act, the InternationalTraffic in Arms Regulations (ITAR), 22 C.F.R. Sections 120-130 promulgated underthe Arms Export Control Act (AECA), 22 U.S.C. 2751 et al, and the applicable EUantitrust Laws and regulations will have expired or been terminated; and (b) No Law or Governmental Order will have been enacted, entered, enforced,promulgated, issued or deemed applicable to the transactions contemplated bythis Agreement by any Governmental Entity that prohibits the Closing. 9.2 Conditions to Buyer’s Obligations. The obligation of Buyer and MergerSub to take the actions required to be taken by them at the Closing is subjectto the satisfaction or waiver, in writing, of each of the following conditionsat or prior to the Closing: (a) The representations and warranties set forth in Article IV that are notsubject to materiality or Material Adverse Effect qualifications shall be trueand correct in all material respects as of the Closing Date as though then madeand as though the Closing Date had been substituted for the date of thisAgreement in such representations and warranties and the representations andwarranties set forth in Article IV that are subject to materiality or MaterialAdverse Effect qualifications will be true and correct in all respects at and asof the Closing Date as though then made and as though the Closing Date had beensubstituted for the date of this Agreement in such representations andwarranties, except that any representation or warranty expressly made as of aspecified date will only need to have been true on and as of such date (withouttaking into account any supplemental disclosures after the date of thisAgreement by Company or the discovery of information by Buyer); (b) The Company shall have performed and complied with each of itsagreements contained in this Agreement in all material respects; (c) The Stockholder Consent shall have been executed and delivered to theCompany, and the Company shall have complied in all material respects with allrequirements under Section 228 of the DGCL; (d) Each Required Consent shall have been obtained and be in full force andeffect; (e) Buyer shall have obtained each Governmental Authorization required toown the Surviving Corporation or operate the business of the Company in themanner it was operated prior to the Closing Date; (f) no Litigation instituted by a Governmental Authority shall be pendingor threatened in writing (i) challenging or seeking to prevent or delayconsummation of any of the Transactions, (ii) asserting the illegality of orseeking to render unenforceable this Agreement, 68(iii) seeking to prohibit direct or indirect ownership, combination or operationby Buyer of any portion of the business or assets of the Company or anySubsidiary, or to compel Buyer or any of its Subsidiaries or the Company or anySubsidiary to dispose of, or to hold separately, or to make any change in anyportion of the business or assets of Buyer or its Subsidiaries or of the Companyor its Subsidiaries, as a result of the Merger and Transactions that woulddeprive Buyer of the benefits reasonably expected by it as a result of theMerger, (iv) seeking to require direct or indirect transfer or sale by Buyer of,or to impose material limitations on the ability of Buyer to exercise fullrights of ownership of, the Company or (v) imposing or seeking to imposematerial damages or sanctions directly arising out of the Merger and theTransactions on Buyer or the Company or any of their respective officers ordirectors; (g) After the date of this Agreement, no Material Adverse Effect shall haveoccurred; (h) Buyer shall not have discovered any fact or circumstance existing as ofthe date of this Agreement not disclosed on the Disclosure Schedule that has aMaterial Adverse Effect; (i) The Company shall have delivered each of the agreements, certificates,instruments and other documents that it is obligated to deliver pursuant toSection 3.7(b)(i) and such agreements so delivered will be in full force andeffect; (j) The Indenture Indebtedness Satisfaction and Discharge shall haveoccurred pursuant to the respective Indentures and Indenture Indebtedness shallhave been duly called for redemption as provided in Section 6.3 and Buyer shallhave received an instrument of Satisfaction and Discharge of each Indenture, inform and substance reasonably satisfactory to Buyer, executed by the ApplicableTrustee and the applicable issuer; (k) Intermediate LLC and TCI shall have filed SEC Form 15 suspending theirreporting obligations under Section 15(d) of the Exchange Act; (l) The repayment of the Other Indebtedness shall have occurred and theEncumbrances securing such Other Indebtedness shall have been released; and (m) Dissenting Shares shall represent no more than ten percent (10%) of theCommon Shares outstanding on the date of this Agreement. 9.3 Conditions to the Company’s Obligations. The obligation of the Companyto take the actions required to be taken by it at the Closing is subject to thesatisfaction or waiver, in whole or in part, in the Company’s sole discretion(but no such waiver will waive any right or remedy otherwise available underthis Agreement), of each of the following conditions at or prior to the Closing: (a) The representations and warranties set forth in Article V that are notsubject to materiality qualifications will be true and correct in all materialrespects at and as of the Closing Date as though then made and as though theClosing Date had been substituted for the date of this Agreement in suchrepresentations and warranties and the representations and warranties set forthin Article V that are subject to materiality qualifications will be true andcorrect in all respects at and as of the Closing Date as though then made and asthough the Closing Date had been substituted for the date of this Agreement insuch representations and warranties, except 69that any representation or warranty expressly made as of a specified date willonly need to have been true on and as of such date; (b) Buyer and Merger Sub will have performed and complied with each oftheir agreements contained in this Agreement in all material respects; (c) Buyer and Merger Sub will have delivered each of the certificates,instruments and other documents that they are obligated to deliver pursuant toSection 3.7(b)(ii); and (d) no Litigation instituted by a Governmental Authority shall be pendingor threatened in writing (i) challenging or seeking to prevent or delayconsummation of any of the Transactions, (ii) asserting the illegality of orseeking to render unenforceable this Agreement, or (iii) imposing or seeking toimpose material damages or sanctions directly arising out of the Merger and theTransactions on the Company or any Subsidiary or any of their respectiveofficers or directors. X. TERMINATION 10.1 Termination of Agreement. This Agreement may be terminated prior tothe Closing as follows: (a) by mutual written consent of the Company and Buyer; (b) at the election of the Company or Buyer on or after December 28, 2006,if the Closing shall not have occurred by the close of business on such date,provided that the terminating party is not in default of any of its obligationshereunder such that there would be a failure of condition under Section 9.2(a)or (b) or Section 9.3(a) or (b), as the case may be, if the Closing were tooccur on the date of such termination; provided, further, that if a request foradditional information is received from a Governmental Entity pursuant to theHSR Act or any applicable EU antitrust Laws, such date shall be extended to the60th day following acknowledgment by such Government Entity that the Company andBuyer shall have complied with such request, but in any event not later thanDecember 31, 2006; (c) by Buyer or the Company, if any Litigation set forth in Section 9.2(f)is pending or threatened; (d) by the Company or Buyer, if there shall be in effect a finalnon-appealable Governmental Order of a Governmental Entity of competentjurisdiction restraining, enjoining or otherwise prohibiting the consummation ofthe Merger and the Transactions; (e) by the Company, if (A) the Company will have delivered to Buyer awritten notice of the Company’s intent to enter into a merger, acquisition orother agreement (including an agreement in principle) to effect a SuperiorProposal based on an Acquisition Proposal received by it, (B) five business dayshave elapsed following delivery to Buyer of such written notice by the Company,(C) during such five business-day period the Company has fully cooperated withBuyer, including, without limitation, informing Buyer of the terms andconditions of such Acquisition Proposal and the identity of the Person makingsuch Acquisition Proposal, with the intent of enabling Buyer to agree to amodification of the terms and conditions 70of this Agreement so that the transactions contemplated hereby may be effected,(D) at the end of such five business-day period the Board of Directors of theCompany will have reasonably concluded that such Acquisition Proposalconstitutes a Superior Proposal, (E) the Company pays to Buyer an amount equalto the aggregate of all out-of-pocket expenses incurred by Buyer in connectionwith the Transactions (including, without limitation, travel expenses of Buyerpersonnel and fees and disbursements of external advisors to Buyer), and (F) theCompany will have entered into a merger, acquisition or other agreement(including an agreement in principle) to effect a Superior Proposal or the Boardof Directors of the Company will have resolved to do so; or (f) if the party seeking to terminate is not then in material breach ofthis Agreement, (i) by Buyer, if there has been a material breach by the Companyof its representations, warranties, agreements or obligations under thisAgreement, which breach is not cured within fifteen (15) days following writtennotice of such breach by Buyer to the Company, (ii) by the Company, if there hasbeen a material breach by Buyer or Merger Sub of any of their respectiverepresentations, warranties, agreements or obligations under this Agreement,which breach is not cured within fifteen (15) days following written notice ofsuch breach by the Company to Buyer, or (iii) by any party if any of theconditions to its obligations to consummate the Merger and the Transactions setforth in Article IX shall have become impossible to satisfy and suchimpossibility is not due to its own action or omission. 10.2 Procedure Upon Termination. In the event of termination by Buyer orthe Company, or both, pursuant to Section 10.1, written notice thereof shallforthwith be given to the other party or parties, and this Agreement shallterminate, and the Merger and the Transactions shall be abandoned, withoutfurther action by Buyer or the Company. If this Agreement is terminated asprovided herein each party shall return all documents, work papers and othermaterial of any other party relating to the Merger and the Transactions, whetherobtained before or after the execution hereof, to the party furnishing the same. 10.3 Effect of Termination. In the event that this Agreement is validlyterminated as provided herein, then each of the parties shall be relieved oftheir duties and obligations arising under this Agreement after the date of suchtermination and such termination shall be without Liability to Buyer, Merger Subor the Company; provided, however, that all obligations of the parties underthis Agreement will terminate except that the provisions of (i) Section 6.6(pre-closing access to information); (ii) Article XIII; (iii) Sections 10.2(procedure upon termination); and this Section 10.3 (effect of termination) willsurvive indefinitely unless sooner terminated or modified by the parties inwriting; provided, further, however, that, to the extent this Agreement isterminated pursuant to Section 10.1(f)(i) or (ii), nothing in this Section 10.3shall relieve any party hereto from any Liability for a material breach of thisAgreement which resulted in such termination. XI. INDEMNIFICATION 11.1 Survival of Representation and Warranties. Notwithstanding anyinvestigation made by or on behalf of any of the parties hereto or the resultsof any such investigation and notwithstanding the participation of such party inthe Closing, the representations and warranties of each of Buyer, Merger Sub andthe Company contained in this Agreement shall survive the 71Closing and the Effective Time and such representations and warranties shallterminate at 5:00 p.m. (New York City time) on the second anniversary of theClosing Date; provided, however, (i) the representations and warranties setforth in Sections 4.12 and 4.21 shall survive the Closing until, and shallterminate at, 5:00 p.m. (New York City time) on the third anniversary of theClosing Date (each, an “Indemnity Cut-Off Date”). Any claim for indemnificationmade under Section 11.2 which is not asserted by notice in writing given asherein provided relating thereto within the above-specified period of survivalmay not be pursued and is hereby irrevocably waived after the applicableIndemnity Cut-Off Date. Any claim for indemnification of a Loss asserted withinthe period of survival as herein provided will be timely made for purposeshereof. 11.2 General Indemnification. (a) As an inducement to Buyer and Merger Sub to enter into this Agreement,and acknowledging that Buyer and Merger Sub are relying on the indemnificationprovided in this Section 11.2 in executing and performing this Agreement, theEquity Holders, by their acceptance of Merger Consideration pursuant to thisAgreement, shall be deemed to have authorized the Representative to act onbehalf of the Equity Holders in connection with all matters relating to thisAgreement, the Escrow Agreement and the Environmental Escrow Agreement,including, without limitation, the Indemnity Escrow Account, the Purchase PriceAdjustment Escrow Account, and the Environmental Escrow Account. (b) Subject to Sections 11.3 and 11.4 below, after the Closing each ofBuyer, the Surviving Corporation and its Subsidiaries and their respectiveofficers, directors, employees and successors and assigns (collectively, the”Buyer Indemnified Parties”) shall be indemnified and held harmless (in anyevent, without duplication) solely out of the Indemnity Escrow Account from andagainst: (i) subject to Section 11.1, any and all Losses resulting from, arising from, relating to or constituting the failure of any representation or warranty of the Company set forth in Article IV (other than those representations and warranties relating to Taxes), to be true and correct as of the date made; and (ii) any and all Losses resulting from, arising from, relating to or constituting the breach of any covenant or other agreement (other than those covenants or other agreements relating to Taxes) on the part of the Company under this Agreement. (c) Subject to Sections 11.3 and 11.4 below, after the Closing each of theBuyer Indemnified Parties shall be indemnified and held harmless (in any event,without duplication) solely out of the Indemnity Escrow Account from and againstany and all Losses arising out of or attributable to (i) any misrepresentation,inaccuracy or breach of any representation, warranty, covenant, agreement orpromise related to Taxes by the Company contained in this Agreement or (ii) anyLiability of the Company or any of its Tax Affiliates with respect to Taxes forany Tax Period, or portion thereof, ending on or before the Closing Date,including, without limitation any Interim Period; provided, that the Lossesshall be reduced (but not below zero) to the extent reserved in the ClosingBalance Sheet; and provided, further, that a valuation allowance or reserve withrespect to net operating losses, Tax basis of assets and other similar Taxattributes shall not be considered a reserve on the Closing Balance Sheet forthis purpose. 72 (d) Notwithstanding any provision in this Agreement to the contrary: (i) the Buyer Indemnified Parties shall not be indemnified under Section 11.2(c) with respect to any Losses or Taxes for any Taxable Period that begins after the Closing Date, including without limitation, the portion of any Straddle Period that begins after the Closing Date; and (ii) the Buyer Indemnified Parties shall not be indemnified under Section 11.2(c) with respect to any Losses or Taxes that would not have been generated but for any election made by the Buyer under Section 338(g) of the Code with respect to the Company and one or more Tax Affiliates. (e) Subject to Sections 11.3 and 11.4 below, Buyer and the SurvivingCorporation hereby, jointly and severally, agree to indemnify and hold theEquity Holders and the Representative and their respective officers, directors,employees and successors and assigns (collectively, the “Equity HoldersIndemnified Parties”) harmless from and against: (i) subject to Section 11.1, any and all Losses resulting from, arising from, relating to or constituting the failure of any representation or warranty of Buyer or Merger Sub set forth in Article V to be true and correct as of the date made; and (ii) any and all Losses resulting from, arising from, relating to or constituting the breach of any covenant or other agreement on the part of Buyer or Merger Sub under this Agreement. (f) Notice of all claims made by any Buyer Indemnified Party pursuant tothis Article XI shall be given exclusively to the Representative, not in itspersonal capacity, but solely in its capacity as the representative of theEquity Holders, and the Representative shall have full and exclusive power andauthority to represent the interests of the Equity Holders in respect of suchclaims. Notwithstanding anything contained herein to the contrary, no BuyerIndemnified Party shall be entitled to make any claim for indemnification underthis Article XI against the Representative or any Equity Holder. (g) To the extent that Buyer, the Surviving Corporation or any Subsidiarysuffers any Losses for which it is entitled to be indemnified under Section11.2(a), then (without limiting any of the rights of the Surviving Corporationor such Subsidiary as a Buyer Indemnified Party, but in any event withoutduplication) Buyer shall be entitled to make an indemnification claim for suchLosses on behalf of the Surviving Corporation or such Subsidiary. 11.3 Limits on Indemnification. Notwithstanding anything herein to thecontrary: (a) no indemnified party shall be entitled to indemnification underSections 11.2(b)(i), 11.2(c) or 11.2(e)(i) unless the aggregate amount of allLosses to the Equity Holders Indemnified Parties or the Buyer IndemnifiedParties, as applicable, finally determined to arise thereunder exceeds$2,500,000 (the “Basket Amount”), and then only to the extent of the aggregateLosses which exceed that amount; provided that (i) for the purpose ofcalculating the Losses to the Buyer Indemnified Parties herein any materialityor Material Adverse Effect qualifications in the representations and warrantiesset forth in Article IV shall be disregarded, 73and (ii) any obligation to pay the Initial Merger Consideration or anySubsequent Merger Consideration, and indemnification for any breach of therepresentations set forth in Sections 4.29 and 5.4 shall not be entitled to thebenefit of the Basket Amount; (b) no Party shall be indemnified for any Losses under Sections 11.2(b),11.2(c) or 11.2(e) to the extent (i) that such Party receives or is entitled toreceive any insurance proceeds or other amounts from third parties in respect ofsuch Losses or (ii) of the Tax Benefits allowable with respect to such Losses; (c) to avoid double-counting as to any matter, the term “Losses” shall notinclude any Loss suffered with respect to any Liability or obligation of theCompany or any Subsidiary, to the extent that such Liability or obligation (or areserve therefor (to the extent of such reserve)) is reflected in any of theClosing Statements, or, in the event of any dispute with respect thereto, inaccordance with the final determination of such dispute, even if the events,facts or circumstances giving rise to such Loss would also constitute a breachof any of the Company’s representations or warranties hereunder; (d) claims by Buyer Indemnified Parties against the Indemnity EscrowAccount for indemnification for any Losses shall be made on or prior to theapplicable Indemnity Cut-Off Date. Any claim made for indemnification for Losseswhich is not asserted by notice in writing given as herein provided relatingthereto within such time period may not be pursued and is hereby irrevocablywaived after such time; (e) no Party shall be entitled to indemnification under any Section of thisAgreement in respect of any Loss unless the amount of such Loss exceeds $30,000;provided that any and all Losses for which indemnification is excluded underthis Section 11.3(e) shall be counted in determining whether the Basket Amounthas been reached. 11.4 Exclusive Remedy. (a) Notwithstanding anything herein to the contrary, the partiesacknowledge and agree that the sole recourse of the Buyer Indemnified Partiesfor any claim under this Article XI that is validly established shall be to makeclaims against and to collect amounts solely from the Indemnity Escrow Account(all as more particularly set forth in the Escrow Agreement and this ArticleXI), to the extent of the amounts remaining therein, and the Buyer IndemnifiedParties shall have no other recourse against the Representative or the EquityHolders or any of their respective assets and properties for any such claim. Noclaim against any of the Equity Holders or the Representative in respect of theTransactions shall be available or be asserted, and none of such Persons shallhave any Liability of any nature whatsoever to any of the Buyer IndemnifiedParties, other than for their respective interests in the Indemnity EscrowAccount. (b) Prior to or in connection with the Closing, the parties will haveavailable to them all remedies available under Law, including specificperformance or other equitable remedies. The parties agree that, after theClosing, their respective remedies under this Article XI are their exclusiveremedies under this Agreement, including without limitation with respect to anymatter based on the inaccuracy, untruth, incompleteness or breach of anyrepresentation or warranty of any party hereto contained herein or based uponthe failure to perform any covenant, agreement 74or undertaking herein. Notwithstanding anything herein to the contrary, nothingin this Agreement will prevent any party from bringing an action, other thanunder this Article XI, based upon allegations of fraud by any other party inconnection with this Agreement. 11.5 General Indemnification Procedures. (a) Subject to Section 11.5(e), in the event that any Legal Proceedingsshall be instituted or that any claim or demand shall be asserted by any ThirdParty (a “Third Party Claim”) in respect of which indemnification may be soughtunder Section 11.2, any indemnified party shall reasonably and promptly causewritten notice of the assertion of any Third Party Claim of which it has orobtains knowledge which is covered by this indemnity to be forwarded to theindemnifying party. Such notice shall identify specifically the basis underwhich indemnification is sought pursuant to Section 11.2 and enclose true andcorrect copies of any written document furnished to the indemnified party by thePerson that instituted the Third Party Claim. The indemnifying party shall havethe right to defend against, negotiate or otherwise deal with such Third PartyClaim. The indemnified party may, at its own cost, participate in theinvestigation, trial and defense of such claim, any lawsuit or action arisingtherefrom and any appeal thereof; provided, however, if the named parties to theaction or proceeding include both the indemnifying party and the indemnifiedparty and representation of both parties by the same counsel would beinappropriate under applicable standards of professional conduct, the expense ofseparate counsel for the indemnified party shall be paid by the indemnifyingparty, but the indemnifying party shall not be liable for the reasonable feesand expenses of more than one separate counsel (and one local counsel in eachapplicable jurisdiction other than the jurisdiction in which the primary claim,lawsuit or action is being conducted). If the indemnifying party fails to assumethe defense of such claim within thirty (30) days after receipt of the notice ofa Third Party Claim (or such earlier date, if the failure to assume the defenseon such earlier date would materially impair the ability of such indemnifiedparty to defend such claim), or if the indemnifying party fails to diligentlyconduct the defense of such claims, the indemnified party against which suchclaim has been asserted will (upon delivering notice to such effect to theindemnifying party) have the right to undertake the defense, compromise orsettlement of such claim (all at the cost and expense of the indemnifying party)and the indemnifying party shall have the right to participate therein at itsown cost. If the indemnifying party is the Representative, acting on behalf ofthe Equity Holders hereunder, and has assumed the obligation to defend,negotiate, settle or otherwise deal with such Third Party Claim, all expensesincurred by the Representative in defending against, negotiating, settling orotherwise dealing with such Third Party Claim shall be paid out of the IndemnityEscrow Account established therefor under the Escrow Agreement and, to theextent that there are sufficient funds in the Indemnity Escrow Account, theRepresentative and Buyer shall instruct the Escrow Agent to make the requiredpayment to the indemnifying party out of the Indemnity Escrow Account and, tothe extent that there are insufficient funds in the Indemnity Escrow Account,such expenses shall be paid by Buyer. The parties hereto agree to cooperatefully with each other in connection with the defense, negotiation or settlementof any such Third Party Claim; provided, that such cooperation will not undulydisrupt the operations of the business of the Buyer Indemnified Party (otherthan the Surviving Corporation and its Subsidiaries) or cause the BuyerIndemnified Party (other than the Surviving Corporation and its Subsidiaries) tobreach any confidentiality obligations owed to third parties. The partydefending such Third Party Claim shall promptly supply to the other party copiesof all correspondence and documents relating to or in connection 75with such Third Party Claim and keep the other party fully informed of alldevelopments relating to or in connection with such Third Party Claim(including, without limitation, providing to the other party on request updatesand summaries as to the status thereof). (b) Neither the indemnified party nor the indemnifying party may concede,settle or compromise any Third Party Claim without the consent of the otherparty (which consent will not be unreasonably withheld, conditioned or delayed)unless (A) such concession, settlement or compromise shall constitute a completeor unconditional discharge and release of all parties indemnified hereunder, (B)such judgment, discharge, settlement or compromise shall provide for no reliefother than the payment of monetary damages and the Indemnity Escrow Amount shallbe sufficient pay such monetary damages in full, and (C) no indemnified partyshall be required to admit criminal liability. Notwithstanding the foregoing,(i) if a Third Party Claim seeks the issuance of an injunction, the specificelection of an obligation or similar remedy against a Buyer Indemnified Party or(ii) if the subject matter of a Third Party Claim relates to the ongoingbusiness of any Buyer Indemnified Party, which Third Party Claim, if decidedagainst any Buyer Indemnified Party, would materially adversely affect theongoing business or reputation of any Buyer Indemnified Party, the BuyerIndemnified Party alone will be entitled to settle such Third Party Claim(provided that no such settlement shall be evidence of Losses incurred by suchparty) in the first instance and, if the Buyer Indemnified Party does not settlesuch Third Party Claim, the Representative will then have the right to contestand defend (but not settle) such Claim; provided that if Representative presentsa settlement of such claim to the Buyer Indemnified Party and the BuyerIndemnified Party refuses to consent to such settlement, subsequent expenses inrespect of such claim and amounts payable with respect thereto in excess of theamount of such settlement shall not be Losses. (c) With respect to claims for indemnification pursuant to this Article XIother than Third Party Claims, the indemnified party shall promptly notify inwriting the indemnifying party of such claims of which it has or obtainsknowledge. (d) Subject to Section 11.5(e), no later than ten (10) Business Days afterany final judgment or award shall have been rendered by a court, arbitrationboard or administrative agency of competent jurisdiction and the expiration ofthe time in which to appeal therefrom, or a settlement shall have beenconsummated, or the indemnified party and the indemnifying party shall havearrived at a mutually binding agreement with respect to a claim hereunder, theindemnifying party shall pay the amounts, if any, due and owing by theindemnifying party to the indemnified party by wire transfer of immediatelyavailable funds to an account designated in writing by the indemnified party. (e) All indemnity payments required under this Section 11.5 to be made bythe Representative, acting on behalf of the Equity Holders as indemnifying partyhereunder, to the indemnified party in respect of such claim (including withoutlimitation any reimbursement of expenses) shall be paid exclusively out of, andwith recourse limited to, the Indemnity Escrow Account, and to the extent thatthere are sufficient funds in the Indemnity Escrow Account the Representativeand Buyer shall instruct the Escrow Agent to make such payments to theindemnified party out of the Indemnity Escrow Account. All cost and expensesrequired under this Section 11.5 to be borne by the Representative, acting onbehalf of the Equity Holders as indemnifying party hereunder (including allreasonable attorneys’ fees and expenses of counsel 76to the Representative), which are incurred with respect to any Third Party Claimwhich is being defended, negotiated or settled, or otherwise dealt with, by theRepresentative at the request of the indemnified party, shall be paid out of theIndemnity Escrow Account, and (i) to the extent that there are sufficient fundsin the Indemnity Escrow Account, the Representative and Buyer shall instruct theEscrow Agent to advance all funds required to cover all such costs and expensesout of the Indemnity Escrow Account to the Representative and (ii) to the extentthat there are insufficient funds in the Indemnity Escrow Account, Buyer shalladvance all funds required to cover the balance of such costs and expenses tothe Representative. The Representative, acting on behalf of the Equity Holdersas indemnifying party hereunder, shall be entitled (i) to decline any request ofany Buyer Indemnified Party to defend against, negotiate, settle or otherwisedeal with any Third Party Claim unless and until all cost and expenses referredto in the immediately preceding sentence are advanced to the Representative and(ii) at any time cease to defend against, negotiate, settle or otherwise dealwith any such Third Party Claim if all such cost and expenses are not advancedby the Escrow Agent or Buyer to the Representative after a request therefor ismade in writing by the Representative. 11.6 Tax Treatment of Indemnity Payments. The parties hereto agree to treatany indemnity payment made pursuant to this Article XI as an adjustment to theMerger Consideration for federal, state, local and foreign income Tax purposesto the extent permitted by Law. XII. THE REPRESENTATIVE 12.1 Authorization of the Representative. FS Private Investments III LLC, aDelaware limited liability company (and each successor appointed in accordancewith Section 12.6), is hereby appointed, authorized and empowered to act as therepresentative (the “Representative”) of and for the benefit of the EquityHolders in connection with and to facilitate the consummation of the Merger andthe Transactions, and in connection with the performance of the various actionsrequired or permitted to be performed on behalf of the Equity Holders under thisAgreement and the Ancillary Agreements, for the purposes and with the powers andexclusive authority hereinafter set forth in this Article XII and in theAncillary Agreements, which shall include the sole and exclusive power andauthority: (a) To execute and deliver each of this Agreement, the Escrow Agreement,the Environmental Escrow Agreement and other Ancillary Agreements (each withsuch modifications or changes therein as to which the Representative shall haveconsented) and to agree to such amendments or modifications thereto as theRepresentative determines to be desirable; (b) To execute and deliver such waivers and consents in connection withthis Agreement, the Escrow Agreement, the Environmental Escrow Agreement andother Ancillary Agreements and the consummation of the Transactions as theRepresentative may deem necessary or desirable; (c) To collect and receive all moneys and other proceeds and propertypayable to the Equity Holders pursuant to the terms of this Agreement, theEscrow Agreement and the Environmental Escrow Agreement, including, withoutlimitation, the Payment Fund and any 77portion of or interest accrued on the Indemnity Escrow Account, the WorkingCapital Escrow Account and the Environmental Escrow Account that aredistributable to Equity Holders and, subject to (i) the Escrow Agreement, (ii)the Environmental Escrow Agreement and (iii) the withholding and retentionprovisions hereinafter set forth in this Article XII, to disburse and pay thesame to each of the Equity Holders (other than with respect to holders of StockOptions or Warrants who will be paid by the Surviving Corporation pursuant tothe provisions of this Agreement) to the extent of and in accordance with theirrespective Percentage Interests; (d) As the Representative of the Equity Holders, to enforce and protect therights and interests of the Equity Holders and to enforce and protect the rightsand interests of the Representative arising out of or under or in any mannerrelating to this Agreement, the Escrow Agreement and the Environmental EscrowAgreement and other Ancillary Agreements, and each other agreement, document,instrument or certificate referred to herein or therein or the transactionsprovided for herein or therein (including, without limitation, in connectionwith any and all claims for indemnification brought by any indemnifying partyunder Article XI) and, in connection therewith, to (i) assert any claim orinstitute any action, proceeding or investigation in the name of theRepresentative or, if the Representative so elects, in the names of one or moreof the Equity Holders; (ii) investigate, defend, contest or litigate any claim,action, proceeding or investigation initiated by Buyer, the SurvivingCorporation or any person, firm or corporation or by any Governmental Entityagainst the Representative and/or any of the Equity Holders and/or the IndemnityEscrow Account and/or the Working Capital Escrow Account and/or theEnvironmental Escrow Account, and receive process on behalf of any or all EquityHolders in any such claim, action, proceeding or investigation and compromise orsettle on such terms as the Representative shall determine to be appropriate,and give receipts, releases and discharges with respect to, any such claim,action, proceeding or investigation; (iii) file any proofs of debt, claims andpetitions as the Representative may deem advisable or necessary; (iv) settle orcompromise any claims asserted under the Escrow Agreement and the EnvironmentalEscrow Agreement and (v) file and prosecute appeals from any decision, judgmentor award rendered in any such action, proceeding or investigation in the name ofthe Representative or, if the Representative so elects, in the names of one ormore of the Equity Holders; (e) To enforce payment of the Payment Fund and amounts due to EquityHolders from the Indemnity Escrow Account, the Working Capital Escrow Accountand the Environmental Escrow Account, as applicable, and any other amountspayable to the Equity Holders, in each case on behalf of the Equity Holders andeach of them to the extent of their respective Percentage Interests therein, inthe name of the Representative or, if the Representative so elects, in the namesof one or more of the Equity Holders; (f) To cause to be paid out of the Indemnity Escrow Account the full amountof any judgment or judgments and legal interest and costs awarded in favor ofany Buyer Indemnified Party arising out of the indemnification provisions setforth in Section 11.2(a) or (b), the reimbursement provisions set forth inSection 11.6, or any amounts payable to any such Buyer Indemnified Party inrespect of any compromise or settlement of any claim for indemnification undersuch Section 11.2(a) or (b) or reimbursement under Section 11.6 as may be agreedto by the Representative; 78 (g) To cause to be paid, pursuant to Section 3.5, out of the Purchase PriceAdjustment Escrow Account, an amount equal to any difference between the ClosingDate Net Working Capital, Closing Date Cash Amount, Closing Date OtherIndebtedness and Closing Date Capital Expenditure Amount and the respectivecorresponding amounts estimated pursuant to Section 3.2(a)(ii); (h) To refrain from enforcing any right of the Equity Holders or any ofthem and/or of the Representative arising out of or under or in any mannerrelating to this Agreement, the Escrow Agreement, the Environmental EscrowAgreement or any other agreement, instrument or document in connection with theforegoing; provided, however, that no such failure to act on the part of theRepresentative, shall be deemed a waiver of any such right or interest by theRepresentative unless such waiver is in a writing signed by the Representative;and (i) To make, execute, acknowledge and deliver all such other agreements,guarantees, orders, receipts, endorsements, notices, requests, instructions,certificates, stock powers, letters and other writings, and, in general, to doany and all things and to take any and all action that the Representative mayconsider necessary or proper or convenient in connection with or to carry outthe Transactions, the Escrow Agreement, the Environmental Escrow Agreement andall other agreements, documents or instruments referred to herein or therein orexecuted in connection herewith or therewith.The grant of authority provided for in this Section 12.1: (i) is coupled with aninterest and shall be irrevocable and survive the death, incompetency,bankruptcy or liquidation of any Equity Holder; (ii) subject to the provisionsof Section 12.6 below, may be exercised by the Representative either by signingseparately as Representative of each of the Equity Holders or, after listing allof the Equity Holders executing an instrument, by the signature of theRepresentative acting in such capacity for all of them; and (iii) shall survivethe transfer by an Equity Holder of the whole or any fraction of its interesthereunder, including its Percentage Interest. 12.2 Payments of Expenses; Holdbacks. (a) The Representative shall withhold and retain from the Payment Fund, andshall have the right to withhold and retain from the funds distributed by theEscrow Agent to the Representative from the Indemnity Escrow Account, thePurchase Price Adjustment Escrow Account and the Environmental Escrow Account,ratably in accordance with each Equity Holder’s Percentage Interest, such amountor amounts as shall be sufficient to pay all known fees and expenses (the”Seller Expenses”) which are required to be paid or borne by the Representativeor the Equity Holders pursuant to this Agreement (including, without limitation,the fees and expenses of the Accounting Arbitrator payable by the Representativepursuant to Section 3.5(d) and pursuant to Section 13.2), the Escrow Agreementand the Environmental Escrow Agreement, and shall pay all such fees and expensesout of the amount or amounts so withheld. The Representative shall provide tothe Equity Holders a breakdown of the expenses for which the Equity Holders areresponsible as such expenses are withheld and retained from the Payment Fund,the Indemnity Escrow Account, the Purchase Price Adjustment Escrow Account andthe Environmental Escrow Account. In the event that the amounts so withheld areinsufficient to pay all expenses required to be paid or borne by the EquityHolders or incurred for 79the benefit of the Equity Holders, each Equity Holder, upon written notificationfrom the Representative of any such deficiency, shall promptly deliver to theRepresentative full payment of his or her ratable share of the amount of suchdeficiency in accordance with such Equity Holder’s Percentage Interest or theRepresentative, at its election, may deduct from the Expense Account all amountsrequired to compensate the Representative for such deficiency. (b) In connection with the performance of its obligations hereunder andunder the Escrow Agreement and the Environmental Escrow Agreement, theRepresentative shall have the right at any time and from time to time to selectand engage, at the cost and expense of the Equity Holders (to the extenthereinafter set forth), attorneys, accountants, investment bankers, advisors,consultants (including, without limitation, consultants specializing inenvironmental liability and similar matters), paying agents, and clericalpersonnel and obtain such other professional and expert assistance, and maintainsuch records, as the Representative may deem necessary or desirable and incurother out-of-pocket expenses. In furtherance of the foregoing and to enable theRepresentative to pay all costs and expenses payable pursuant to this Agreement,the Representative shall be authorized to withdraw funds from the ExpenseAccount (including such costs and expenses which are required to be paid orborne by the Equity Holders pursuant to this Agreement, the Escrow Agreement andthe Environmental Escrow Agreement), which Expense Account shall be maintainedby the Representative. To the extent that the balance in the Expense Accountshall decrease to below $100,000, the Representative shall have the right toreplenish the Expense Account by withholding amounts received for the account ofthe Equity Holders (including, without limitation, amounts otherwisedistributable to the Equity Holders from the Indemnity Escrow Account, thePurchase Price Adjustment Escrow Account, the Environmental Escrow Account) anddepositing such amounts into the Expense Account. Any income earned frominvestments of funds in the Expense Account shall be deposited in the ExpenseAccount. In the sole and absolute discretion of the Representative, any amountson deposit in the Expense Account, including, without limitation, any incomeearned from investments of funds in the Expense Account, may be distributed fromtime-to-time by the Representative to the Equity Holders in accordance withtheir respective Percentage Interests. Upon the final distribution of anyremaining amounts in the Indemnity Escrow Account and the Environmental EscrowAccount to the Equity Holders and the termination of each of the EscrowAgreement and the Environmental Escrow Agreement pursuant to its respectiveterms, all funds in the Expense Account, after payment of any remaining expensesincurred by the Representative, shall be distributed to the Equity Holders inaccordance with their respective Percentage Interests. 12.3 Percentage Interests, Disbursements. (a) All payments to Equity Holders out of the Payment Fund by theRepresentative hereunder, and all sums, proceeds and other property held by theRepresentative, on behalf of the Equity Holders, and all deductions or othersetoffs from such payments or other proceeds, shall be allocated among them inaccordance with their respective Percentage Interests. (b) All monies or other proceeds deposited into the Payment Fund orreceived by the Representative for distribution to Equity Holders shall bedistributed by the Representative as promptly as practicable to each EquityHolder in accordance with its Percentage Interest, subject, 80however, to the right of the Representative to deduct and withhold amounts ascontemplated by the provisions of this Article XII and to withhold amounts underSection 3.6. 12.4 Bank Accounts; Investments. (a) The Representative shall have the right to open such account oraccounts in its own name as the Representative in any bank or trust company asit may select in order to deposit all sums that it may receive and holdhereunder and to issue checks or draw money upon the signature of anythen-acting Representative (or the signature of one or more persons theRepresentative may designate) on each such account. (b) The Representative shall have the right to invest and reinvest any ofthe proceeds held by it under the terms of this Agreement (including sums heldin the Expense Account) in investments only of a type which the Escrow Agent ispermitted to make pursuant to the Escrow Agreement. Any securities or otherproperty at any time held by the Representative may be held by it in bearer orregistered form or in the name of any other person or persons it may designate,and the Representative may deal with such securities or other property to thesame extent and with the same powers as an individual owner thereof might do.Except to the extent provided in Section 12.5(b)(i), the Representative shallhave no responsibility or obligation whatsoever to any Equity Holder or to anyother party for the performance of any investments made in accordance with theprovisions of this Agreement or for any losses realized by any thereof. 12.5 Compensation; Exculpation; Indemnity; Security. (a) The Representative shall not be entitled to any fee, commission orother compensation for the performance of its services hereunder, but shall beentitled to the payment of all its expenses incurred as the Representative(including, without limitation, a reasonable allocation of the amount of salaryand other employment expenses paid to employees of the Representative actuallyengaged in the exercise of any of the powers conferred upon the Representativehereunder), and in furtherance of the foregoing, may pay or cause to be paid orreimburse itself for the payment of any and all such expenses, or may drawadvances in respect of anticipated expenses, from the Expense Account. TheRepresentative shall provide to the Equity Holders a breakdown of expensesdeducted from the Expense Account. (b) In dealing with this Agreement, the Escrow Agreement, the EnvironmentalEscrow Agreement and any instruments, agreements or documents relating thereto,and in exercising or failing to exercise all or any of the powers conferred uponthe Representative hereunder, (i) the Representative assumes and shall incur noresponsibility whatsoever by reason of any error in judgment or other act oromission performed or omitted hereunder or in connection with the EscrowAgreement, the Environmental Escrow Agreement or any such other agreement,instrument or document, excepting only responsibility for any act or failure toact which constitutes willful misconduct, and (ii) the Representative shall beentitled to rely on the advice of counsel, public accountants or otherindependent experts experienced in the matter at issue, and any error injudgment or other act or omission of the Representative pursuant to such adviceshall in no event subject the Representative to liability to any Equity Holder,the Company, Buyer, Merger Sub, the Surviving Corporation or any other Person. 81 (c) Each Equity Holder, severally, shall indemnify the Representativeagainst all damages, liabilities, claims, obligations, costs and expenses,including reasonable attorneys’, accountants’ and other experts’ fees and theamount of any judgment against the Representative, of any nature whatsoever,arising out of or in connection with any claim, investigation, challenge, actionor proceeding or in connection with any appeal thereof, relating to the acts oromissions of the Representative hereunder, or under the Escrow Agreement or theEnvironmental Escrow Agreement or otherwise; provided, however, that theaggregate amount which any Equity Holder may be liable to indemnify theRepresentative under this Section 12.5(c) shall not exceed the aggregate MergerConsideration paid or payable to such Equity Holder hereunder, and theRepresentative shall be entitled to withhold and retain from amounts otherwisepayable to such Equity Holder hereunder any amount required to satisfy suchEquity Holder’s indemnification obligations hereunder. The foregoingindemnification shall not be deemed exclusive of any other right to which theRepresentative may be entitled apart from the provisions hereof. The foregoingindemnification shall not apply in the event of any action or proceeding whichfinally adjudicates the liability of the Representative hereunder for itswillful misconduct. In the event of any indemnification under this Section12.5(c), the Representative shall first proceed against any amounts then ondeposit in the Expense Account. Thereafter, upon written notice from theRepresentative to the Equity Holders as to the existence of a deficiency towardthe payment of any such indemnification amount, each Equity Holder shallpromptly deliver to the Representative full payment of his or her ratable shareof the amount of such deficiency, in accordance with such Equity Holder’sPercentage Interest. (d) Subject to Section 12.5(c) above, to the extent that theRepresentative, in its sole and absolute discretion, shall deem the amount thenon deposit in the Expense Account to be inadequate, the Representative mayrequire security and indemnity satisfactory to it to be provided by the EquityHolders against costs, expenses and liabilities to be incurred in connectionwith any action or actions proposed to be taken by the Representative, and theRepresentative shall be entitled to withhold and retain from amounts otherwisepayable to any Equity Holder hereunder any amount required to satisfy suchEquity Holder’s indemnification obligation hereunder. The Representative shallbe under no obligation to proceed with any such proposed action (and shall incurno liability whatsoever for its failure to so proceed) in the absence of suchsecurity. (e) All of the indemnities, immunities and powers granted to theRepresentative under this Agreement shall survive the Closing and/or anytermination of this Agreement and/or the Escrow Agreement and/or theEnvironmental Escrow Agreement. (f) Notwithstanding anything herein to the contrary, neither Buyer, MergerSub, the Surviving Corporation nor the Company shall have any responsibility orobligation whatsoever to any Equity Holder or to any other party with respect toor arising out of any actions taken or any inaction by the Representative. Eachof Buyer and the Surviving Corporation may rely entirely on its dealings with,and notices to and from, the Representative to satisfy any obligations it mighthave under this Agreement, the Escrow Agreement, the Environmental EscrowAgreement or any other agreement referred to in this Agreement or otherwise tothe Equity Holders. 82 12.6 Successor Representative; Termination of Representative. (a) In the event the original Representative shall be unable or unavailableto perform its duties hereunder, the Representative shall name a successorRepresentative that shall have all of the authority and responsibilitiesconferred upon or delegated to the Representative pursuant to this Article XII.In the event the Representative becomes unwilling to continue in its capacityhereunder, the Representative may resign at any time and be discharged from itsduties or obligations hereunder by giving a written resignation to Buyer and theEquity Holders, specifying the date when such resignation shall take effect;provided, however, that Representative will give not less than thirty (30) daysprior written notice of such resignation and that no such resignation shallbecome effective until the Representative appoints its successor Representativeand such successor Representative accepts such appointment. (b) Upon the later of: (i) the date on which all of the funds in theIndemnity Escrow Account, the Purchase Price Adjustment Escrow Account and theEnvironmental Escrow Account are distributed to the Equity Holders or Buyer, asapplicable, in accordance with the terms hereof and of the Escrow Agreement andthe Environmental Escrow Agreement; and (ii) the date on which all of the EquityHolders’ indemnification obligations under Section 11.1 shall have expired inaccordance with such Section, the Representative shall be entitled to resign atany time upon giving written notice to Buyer and the Equity Holders not lessthan ten (10) Business Days prior to such resignation, and upon theeffectiveness of such resignation, the provisions of this Article XII, and thecorresponding rights and obligations of the Representative under this Agreement,shall expire automatically; provided, however, that such resignation shall nothave the effect of releasing the Representative from (x) any obligation underthis Agreement existing as of the date of such resignation or (y) any liabilityto which the Representative would otherwise be subject for any act or omissionprior to such resignation which constitutes willful misconduct. 12.7 No Third Party Rights. Notwithstanding anything contained in thisAgreement or elsewhere to the contrary, no Person or Persons other than theRepresentative (and its successors) shall (i) be entitled to exercise any of therights or powers of the Representative hereunder or under the Escrow Agreementor the Environmental Escrow Agreement, (ii) have any access whatsoever to theExpense Account, (iii) have any right to make a call or demand upon any of theEquity Holders (including the Representative) to contribute any amounts to coverexpenses or otherwise, or (iv) as a result of the provisions of this Article XIIhave any claims or rights against any of the Equity Holders (including theRepresentative) other than any claims or rights that would exist in any eventabsent the provisions of this Article XII. XIII. GENERAL 13.1 Public Statements. The Company and its Subsidiaries, agree that, fromthe date hereof through the Closing Date, no public release or announcementconcerning the Merger and the Transactions shall be issued or made by any partywithout the prior consent of the other party or parties (which consent shall notbe unreasonably withheld, conditioned or delayed), except (a) as such release orannouncement may be required by Law, in which case the party required to makethe release or announcement shall allow, to the extent reasonably practicable,the other party or parties reasonable time to comment on such release orannouncement in advance of such 83issuance, and (b) that each of the Company and its Subsidiaries may make such anannouncement to their respective employees after consultation with the otherparties. 13.2 Expenses. Except as otherwise expressly provided for in thisAgreement, the Company, on the one hand, and Buyer, on the other hand, will eachpay all expenses incurred by each of them in connection with the Transactions,including legal, accounting, investment banking and consulting fees and expensesincurred in negotiating, executing and delivering this Agreement and the otheragreements, exhibits, documents and instruments contemplated by this Agreement(whether the Transactions are consummated or not). Neither the Company nor anySubsidiary has borne or will bear any of the expenses of its shareholders inconnection with the Transactions. The Company will pay all amounts payable tothe title insurer in respect of the title commitments, copies of exceptions andtitle policies, including premiums (including premiums for endorsements), searchfees and closing fees, and amounts payable to surveyors. Buyer will pay one-halfand the Company will pay one-half of (a) the HSR Act filing fee and other filingfees relating to the Antitrust Clearance and (b) the fees and expenses of theEscrow Agent under the Escrow Agreement and the Environmental Escrow Agreement. 13.3 Amendment and Waiver. This Agreement may not be amended, a provisionof this Agreement or any default, misrepresentation or breach of warranty oragreement under this Agreement be waived, and a consent may not be rendered,except in a writing executed by the party against which such action is sought tobe enforced. Neither the failure nor any delay by any Person in exercising anyright, power or privilege under this Agreement will operate as a waiver of suchright, power or privilege, and no single or partial exercise of any such right,power or privilege will preclude any other or further exercise of such right,power or privilege or the exercise of any other right, power or privilege. Inaddition, no course of dealing between or among any Persons having any interestin this Agreement will be deemed effective to modify or amend any part of thisAgreement or any rights or obligations of any Person under or by reason of thisAgreement. The rights and remedies of the parties to this Agreement arecumulative and not alternative. 13.4 Notices. All notices, demands and other communications to be given ordelivered under or by reason of the provisions of this Agreement will be inwriting and will be deemed to have been given (i) when delivered if personallydelivered by hand (with written confirmation of receipt), (ii) when received ifsent by a nationally recognized overnight courier service (receipt requested),(iii) five (5) business days after being mailed, if sent by first class mail,return receipt requested, or (iv) when receipt is acknowledged by an affirmativeact of the party receiving notice, if sent by facsimile, telecopy or otherelectronic transmission device (provided that such an acknowledgement does notinclude an acknowledgment generated automatically by a facsimile or telecopymachine or other electronic transmission device). Notices, demands andcommunications to Buyer, Merger Sub and the Company will, unless another addressis specified in writing, be sent to the address indicated below: If to Buyer or Merger Sub: Professional Communications Security & Imaging International Holdings BV c/o Bosch Sicherheitssysteme GmbH 84 Robert Koch Strasse 100 85521 Ottobrunn Gemany Attn: Christof Ziegler Facsimile: +49-89-6290-281100 With a copy to: Robert Bosch GmbH Robert Bosch Platz 1 70839 Gerlingen-Schillerhoehe Germany Attn: Legal Department (C/LS) and Dorsey & Whitney LLP 250 Park Avenue New York, New York 10177 Attn: Brian E. McGunigle, Esq. Facsimile: (212) 953-7201 If to the Company: Telex Communications Holdings, Inc. 12000 Portland Avenue South Burnsville, Minnesota 55337 Attn: Gregory Richter, Chief Financial Officer Facsimile: (952) 886-3712 With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attn: Melvin Epstein, Esq. Facsimile: (212) 806-7864 If to the Representative: FS Private Investments III LLC c/o Jefferies Capital Partners 520 Madison Avenue New York, New York 10022 Attn: Stuart B. Katz Facsimile: (212) 284-1717 With a copy to: 85 Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attn: Melvin Epstein, Esq. Facsimile: (212) 806-7864 13.5 Assignment. Neither this Agreement nor any of the rights, interests orobligations under this Agreement may be assigned by any party to this Agreementwithout the prior written consent of the other parties to this Agreement;provided, that in the case of any proposed assignment by Buyer of its rightsunder this Agreement to any of its Affiliates, the Company shall notunreasonably withhold its written consent to such assignment; and provided,further, that Buyer may assign any of its rights under this Agreement to eitherRobert Bosch GmbH or Robert Bosch Corporation without the prior consent of theCompany. Subject to the foregoing, this Agreement and all of the provisions ofthis Agreement will be binding upon and inure to the benefit of the parties tothis Agreement and their respective successors and permitted assigns. 13.6 No Third Party Beneficiaries. Nothing expressed or referred to in thisAgreement confers any rights or remedies upon any Person that is not a party orpermitted assign of a party to this Agreement. 13.7 Severability. Whenever possible, each provision of this Agreement willbe interpreted in such manner as to be effective and valid under applicable Law,but if any provision of this Agreement is held to be prohibited by or invalidunder applicable Law, such provision will be ineffective only to the extent ofsuch prohibition or invalidity, without invalidating the remainder of suchprovision or the remaining provisions of this Agreement. 13.8 Complete Agreement. This Agreement, the Confidentiality Agreement and,when executed and delivered, the Ancillary Agreements, contain the completeagreement between the parties and supersede any prior understandings, agreementsor representations by or between the parties, written or oral. The Companyacknowledges that Buyer has made no representations, warranties, agreements,undertakings or promises except for those expressly set forth in this Agreementor in agreements referred to herein that survive the execution and delivery ofthis Agreement. Buyer acknowledges that the Company has made no representations,warranties, agreements, undertakings or promises except for those expressly setforth in this Agreement or in agreements referred to herein that survive theexecution and delivery of this Agreement. 13.9 Disclosure Schedules. The Disclosure Schedule contains a series ofschedules corresponding to the Sections contained in Article IV. Reference inArticle IV to “Schedule [ ]” shall mean the portion of the Disclosure Schedulecorresponding to a Section of this Agreement. Information disclosed in a Sectionof the Disclosure Schedule shall be deemed to apply to each other Section ofthis Agreement to which its relevance is reasonably apparent on its face. Thefact that any item of information is disclosed in any Disclosure Schedule shallnot be construed to mean that such information is required to be disclosed bythis Agreement. Such information and the dollar thresholds set forth hereinshall not be used as a basis for interpreting the terms “material” or “MaterialAdverse Effect” or other similar terms in this Agreement, and will not be 86deemed an admission by any party that such listed matter is material or thatsuch listed matter has or would have a Material Adverse Effect. 13.10 Signatures; Counterparts. This Agreement may be executed in one ormore counterparts, any one of which need not contain the signatures of more thanone party, but all such counterparts taken together will constitute one and thesame instrument. A facsimile signature will be considered an original signature. 13.11 Governing Law. THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWSPRINCIPLES, OF THE STATE OF NEW YORK WILL GOVERN ALL QUESTIONS CONCERNING THECONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCEOF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT. 13.12 Specific Performance. Each of the Company and the Representativeacknowledges and agrees that the subject matter of this Agreement, including thebusiness, assets and properties of the Company and the Subsidiaries, is unique,that Buyer would be damaged irreparably in the event any of the provisions ofthis Agreement are not performed in accordance with their specific terms orotherwise are breached, and that the remedies at law would not be adequate tocompensate Buyer not in default or in breach. Accordingly, each of the Companyand the Representative agrees that Buyer will be entitled to an injunction orinjunctions to prevent breaches of the provisions of this Agreement and toenforce specifically this Agreement and the terms and provisions of thisAgreement in addition to any other remedy to which Buyer may be entitled, at lawor in equity (without any requirement that Buyer provides any bond or othersecurity). The Company and the Representative waive any defense that a remedy atlaw is adequate and any requirement to post bond or provide similar security inconnection with actions instituted for injunctive relief or specific performanceof this Agreement. 13.13 Jurisdiction. Subject to the procedures specified in Article III,each of the parties submits to the exclusive jurisdiction of any state orfederal court sitting in The Borough of Manhattan of The City of New York, NewYork, in any action or proceeding arising out of or relating to this Agreementand agrees that all claims in respect of the action or proceeding may be heardand determined in any such court. Each party also agrees not to bring any actionor proceeding arising out of or relating to this Agreement in any other court.Each of the parties waives any defense of inconvenient forum to the maintenanceof any action or proceeding so brought and waives any bond, surety or othersecurity that might be required of any other party with respect to any suchaction or proceeding. Any party may make service on any other party by sendingor delivering a copy of the process to the party to be served at the address setforth in Section 13.4. The parties agree that either or both of them may file acopy of this paragraph with any court as written evidence of the knowing,voluntary and bargained agreement between the parties irrevocably to waive anyobjections to venue or to convenience of forum. Nothing in this Section 13.13will affect the right of any party to serve legal process in any other mannerpermitted by law or in equity. 13.14 Construction. The parties and their respective counsel haveparticipated jointly in the negotiation and drafting of this Agreement. Inaddition, each of the parties acknowledges that it is sophisticated and has beenadvised by experienced counsel and, to the extent it deemed 87necessary, other advisors in connection with the negotiation and drafting ofthis Agreement. In the event an ambiguity or question of intent orinterpretation arises, this Agreement will be construed as if drafted jointly bythe parties and no presumption or burden of proof will arise favoring ordisfavoring any party by virtue of the authorship of any of the provisions ofthis Agreement. The parties intend that each representation, warranty andagreement contained in this Agreement will have independent significance. If anyparty has breached any representation, warranty or agreement in any respect, thefact that there exists another representation, warranty or agreement relating tothe same subject matter (regardless of the relative levels of specificity) thatthe party has not breached will not detract from or mitigate the fact that theparty is in breach of the first representation, warranty or agreement. Anyreference to any Law will be deemed to refer to all rules and regulationspromulgated thereunder, unless the context requires otherwise. The headingspreceding the text of Articles and Sections included in this Agreement and theheadings to the schedules and exhibits are for convenience only and are not bedeemed part of this Agreement or given effect in interpreting this Agreement.References to Sections, articles, schedules or exhibits are to the sections,articles, schedules and exhibits contained in, referred to or attached to thisAgreement, unless otherwise specified. The word “including” means “includingwithout limitation.” A statement that an action has not occurred in the pastmeans that it is also not presently occurring. When any party may take anypermissive action, including the granting of a consent, the waiver of anyprovision of this Agreement or otherwise, whether to take such action is in itssole and absolute discretion. The use of the masculine, feminine or neutergender or the singular or plural form of words will not limit any provisions ofthis Agreement. A statement that an item is listed, set forth disclosed ordescribed means that it is correctly listed, set forth disclosed or described,and a statement that a copy of an item has been delivered means a true andcorrect copy of the item has been delivered. 13.15 Time of Essence. With regard to all dates and time periods set forthor referred to in this Agreement, time is of the essence. [Signature pages follow.] 88 IN WITNESS WHEREOF, Buyer, Merger Sub, the Company and the Representativehave executed this Merger Agreement as of the date first above written.BUYER: THE COMPANY:PROFESSIONAL COMMUNICATIONS SECURITY TELEX COMMUNICATIONS HOLDINGS, INC.& IMAGING INTERNATIONAL HOLDINGS BVBy: /s/ Uwe Glock By: /s/ Raymond V. Malpocher ——————————— ————————————Name: Uwe Glock Name: Raymond V. MalpocherTitle: Authorized Signatory Title: President and CEOMERGER SUB: THE REPRESENTATIVE OF THE EQUITY HOLDERSSTHNL ACQUISITION CORP. FS PRIVATE INVESTMENTS III LLCBy: /s/ Robert Mulatz By: /s/ Stuart B. Katz ——————————— ————————————Name: Robert Mulatz Name: Stuart B. KatzTitle: Vice President Title: Managing Director 89 EXHIBIT A FORM OF STOCKHOLDER CONSENT ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS OF TELEX COMMUNICATIONS HOLDINGS, INC. PURSUANT TO SECTION 228 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE EFFECTIVE AS OF JUNE 27, 2006 The undersigned, constituting the beneficial holders of outstanding sharesof common stock of Telex Communications Holdings, Inc., a Delaware corporation(the “Company”) having not less than the minimum number of votes that would benecessary to authorize the Company to take action at a meeting at which allshares of common stock of the Company entitled to vote thereon were present andvoted, pursuant to Section 228 of the General Corporation Law of the State ofDelaware: (i) do hereby consent to the adoption of, and do hereby adopt, thefollowing resolutions which will be effective when the minimum number of sharesrequired to approve the action are obtained: WHEREAS, the Board of Directors of the Company has determined that theMerger Agreement and the transactions contemplated thereby are fair to and inthe best interest of the Company and its stockholders. WHEREAS, as of June 27, 2006, the record date established by the Board ofDirectors, each of the undersigned stockholders is the holder of record of thenumber of shares of common stock of the Company set forth underneath hissignature. WHEREAS, each of the undersigned stockholders of the Company has reviewedthe form of the Agreement and Plan of Merger (the “Merger Agreement”) to beentered into contemporaneously herewith, a copy of which is attached to thisconsent as Exhibit A, and other summary and background materials regarding themerger that have been previously provided to the stockholders. WHEREAS, each of the undersigned stockholders of the Company has reviewedthe form of director and officer indemnification agreement attached hereto asExhibit B (the “Indemnification Agreement”), which has been proposed to beentered into between the Company and each of the directors of the Company andeach of the officers set forth on Schedule I hereto. NOW, THEREFORE, BE IT: RESOLVED, that the terms and provisions of the Merger Agreement,substantially in the form attached to this consent as Exhibit A and thetransactions contemplated thereby, be, and hereby are, authorized, adopted andapproved in all respects, and any authorized officer of the Company (the”Officer”) is directed to execute and deliver the Merger Agreement, to make suchchanges, additions or deletions thereto and to do any and all other thingsnecessary in connectionwith the Merger Agreement as the Officer executing the same or performing suchacts may approve, such approval to be conclusively evidenced by his execution orperformance thereof. RESOLVED, that the terms and provisions of the Indemnification Agreement tobe entered into between the Company and each of its directors and each of theofficers set forth on Schedule I, substantially in the form attached to thisconsent as Exhibit B, be, and hereby are, authorized, adopted and approved inall respects, and any Officer of the Company is directed to execute and deliverany such Indemnification Agreement, to make such changes, additions or deletionsthereto and to do any and all other things necessary in connection with any suchIndemnification Agreement as the Officer executing the same or performing suchacts may approve, such approval to be conclusively evidenced by his execution orperformance thereof. RESOLVED, that the Officers of the Company be and each of them hereby isauthorized and directed to do or to cause to be done all further acts and thingsas they or any of them shall deem necessary or advisable or convenient andproper in connection with or incidental to the consummation and carrying intoeffect of the transactions contemplated by the foregoing resolutions, includingthe execution, acknowledgment and delivery of any and all agreements,certificates, instruments or documents which may be reasonably required or whichmay be considered supplemental thereto, and that all such actions so taken beand hereby are ratified, approved, confirmed and adopted; and (ii) in the case of each of the undersigned that is the beneficial but notthe record holder of the shares of outstanding common stock of the Company setopposite its name below, does hereby agree that it will cause the record holdersof such shares to execute a written consent on the same terms as set forth inclause (i) above and to deliver such consent to the Company not later than July10, 2006. [Remainder of this page intentionally left blank] EXHIBIT A Form of Merger Agreement EXHIBIT B Form of Indemnification AgreementEXHIBIT B – CLOSING DATE NET WORKING CAPITAL TEMPLATE TELEX COMMUNICATIONS HOLDINGS, INC. NET WORKING CAPITAL CALCULATION

DEC-05 WORKING CAPITAL ———— CashAccounts Receivable, Net $ 51,018,000Inventories, Net $ 51,742,000Recoverable Income TaxesPrepaid Expenses $ 3,233,000 Less: Japan VAT $ 0 Less: UK VAT ($517,177)Deferred Income TaxesOther Current $ 1,500,000 Less: Germany VAT ($399,269) Less: France VAT ($8,027) ———— TOTAL – CURRENT ASSETS $106,568,527 ============Revolving Lines of CreditCurrent Portion of LTDAccounts Payable $ 15,229,000Accrued Compensation $ 12,848,000Accrued Expenses $ 7,741,000 Less: UK VAT ($433,169) Less: Germany VAT ($289,864) Less: Japan VAT ($88,947) Less: China VAT ($64,543) Less: France VAT and other taxes ($60,201)Accrued InterestAccrued Taxes, Other Than IncomeIncome Taxes Payable ———— TOTAL – CURRENT LIABILITIES $ 34,881,276 ============CLOSING DATE NET WORKING CAPITAL AS OF DECEMBER 31, 2005 $ 71,687,251

EXHIBIT C FORM OF ESCROW AGREEMENT THIS AGREEMENT is entered into as of _______, 2006 (the “Closing Date”) byand among Professional Communications Security & Imaging International HoldingsBV, a corporation organized under the laws of the Netherlands (“Buyer”), [STHNLAcquisition Corp.], a Delaware corporation (“Merger Sub”) and FS PrivateInvestments III LLC, a Delaware limited liability company (the “Representative”)as the representative on behalf of the Equity Holders, and _____________, asescrow agent (the “Escrow Agent”). Capitalized terms used but not defined in this Agreement have the meaningsascribed to them in the Agreement and Plan of Merger dated as of _______, 2006(the “Merger Agreement”) by and among Buyer, Merger Sub, Telex CommunicationsHoldings, Inc., a Delaware corporation (the “Company”), and the Representativeon behalf of the Equity Holders. WITNESSETH: WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with andinto the Company, with the Company continuing as the Surviving Corporation; and WHEREAS, the Merger Agreement provides that, at the Closing, Buyer orMerger Sub shall deposit or cause to be deposited with the Escrow Agent thefollowing amounts to be held by the Escrow Agent in separate accounts: (i)$5,000,000 (the “Purchase Price Adjustment Escrow Amount”, together with anyinterest and other income earned thereon (it being understood that such interestor other income shall not constitute part of the Purchase Price AdjustmentEscrow Amount), the “Purchase Price Adjustment Escrow Funds”) as a source forsatisfaction of any reduction in the Subsequent Merger Consideration as a resultof any adjustment thereto pursuant to Section 3.5 of the Merger Agreement and(ii) $10,000,000 (such amount, as it may be adjusted in accordance with thisAgreement and the Merger Agreement, the “Indemnity Escrow Amount”, together withany interest and other income earned thereon (it being understood that suchinterest or other income shall not constitute part of the Indemnity EscrowAmount), the “Indemnity Escrow Funds”), as an additional source for satisfactionof any reduction referred to in (i) above and as the sole source forsatisfaction of the indemnification obligations to the Buyer Indemnified Partiesunder Article XI of the Merger Agreement; and WHEREAS, each of the Purchase Price Adjustment Escrow Amount and theIndemnity Escrow Amount is referred to herein as an “Escrow Amount,” andcollectively, the “Escrow Amounts” and the Purchase Price Adjustment EscrowFunds and the Indemnity Escrow Funds are collectively referred to herein as the”Escrow Funds”; and WHEREAS, the Escrow Funds are to be held and disposed of by the EscrowAgent as provided herein; and WHEREAS, the Equity Holders have appointed the Representative to act astheir representative under this Agreement and to exercise all rights, powers andprivileges thereof contemplated herein on behalf of the Equity Holders; and WHEREAS, Buyer and the Representative wish to appoint the Escrow Agent toserve as the escrow agent hereunder, and the Escrow Agent is willing to do soupon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the premises and the mutual obligationsand covenants set forth herein, the parties hereto agree as follows: ARTICLE I APPOINTMENT OF ESCROW AGENT; DEPOSIT AND INVESTMENT OF ESCROW FUNDS; ETC. 1.1 Appointment of the Escrow Agent. Buyer and the Representative herebyappoint the Escrow Agent, and the Escrow Agent hereby agrees to act, asdepository and administrator of the Escrow Funds upon the terms and conditionsset forth below. 1.2 Deposit of Escrow Amounts. At the Closing, Buyer or Merger Sub shalldeposit, or cause to be deposited, with the Escrow Agent, by wire transfer ofimmediately available funds: (i) the Purchase Price Adjustment Escrow Amount toa separate account to be designated by the Escrow Agent (the “Purchase PriceAdjustment Escrow Account”) and (ii) the Indemnity Escrow Amount to a separateaccount to be designated by the Escrow Agent (the “Indemnity Escrow Account”).All amounts deposited into any of the Escrow Accounts shall be evidenced by oneor more receipts therefor to be issued by the Escrow Agent. The Escrow Accountsshall be maintained by, and shall be under the exclusive dominion and controlof, the Escrow Agent and the Escrow Funds shall be disbursed by the Escrow Agentonly in accordance with the provisions of this Agreement. 1.3 Investment of Escrow Funds. Each of the Escrow Accounts shall besegregated by the Escrow Agent and the Escrow Funds therein shall be invested bythe Escrow Agent in ______________. All interest and other income earned on anyEscrow Account shall be added to, and become part of, such Escrow Account (butnot part of the Purchase Price Adjustment Escrow Amount or the Indemnity EscrowAmount, as the case may be), and the distribution thereof shall be subject tothe terms of this Agreement and the Merger Agreement, as applicable. The EscrowAgent shall have the right to liquidate any investments held in order to providefunds necessary to make required payments under this Agreement. 1.4 Instructions. The Escrow Agent in its capacity as escrow agenthereunder shall not have any liability for any loss sustained as a result of anyinvestment made pursuant to the instructions of the parties hereto or as aresult of any liquidation of any investment prior to its maturity or for thefailure of the parties to give the Escrow Agent instructions to invest orreinvest the Escrow Funds or any earnings thereon. 1.5 Obligations. The Escrow Amounts shall be the sole sources for thesatisfaction of any reduction in the Subsequent Merger Consideration as a resultof any adjustment thereto pursuant to Section 3.5 of the Merger Agreement andthe Indemnity Escrow Amount shall be the sole source for the satisfaction of anyindemnification obligations to Buyer Indemnified Parties 2under Article XI of the Merger Agreement, subject to the limitations, and in themanner provided, in this Agreement and the Merger Agreement. 1.6 Distribution Instructions. Distributions from any of the EscrowAccounts to Buyer, on behalf of itself or any other Buyer Indemnified Party, inaccordance with this Agreement shall be made by the Escrow Agent to an accountdesignated in writing by Buyer. Distributions from any of the Escrow Accounts tothe Representative, on behalf of itself and the Equity Holders, in accordancewith the terms of this Agreement shall be made by the Escrow Agent to an accountdesignated in writing by the Representative. Any distributions from any of theEscrow Accounts that, pursuant to the terms of this Agreement are to bedeposited by the Escrow Agent into the Payment Fund, shall be deposited into theaccount set forth on Exhibit A hereto. 1.7 Tax Reporting and Distributions. For federal income tax purposes and,to the extent permitted by applicable law, state and local tax purposes, theparties shall submit any required reports or returns prepared on the basis thatBuyer is the owner of the Escrow Funds and Buyer shall furnish any required taxforms consistent with the foregoing. The Escrow Agent shall report and, asrequired, withhold any taxes as it determines may be required by any law orregulation in effect at the time of the distribution and, in each case, inaccordance with the first sentence of this Section 1.7. 1.8 Accounting. The Escrow Agent shall provide a written account to Buyerand the Company at the end of each month ending on or before the last applicableIndemnity Cut-Off Date (and thereafter to the extent any amounts remain inescrow pursuant to Section 3.2 hereof) listing all transactions with respect toeach of the Escrow Accounts during the immediately preceding month. ARTICLE II DISPOSITION OF THE PURCHASE PRICE ADJUSTMENT ESCROW FUNDS 2.1 Purchase Price Adjustment Escrow Funds. No later than five (5) BusinessDays following the final determination of the Closing Date Net Working Capital,Closing Date Cash Amount, Closing Date Other Indebtedness and Closing DateCapital Expenditure Amount in accordance with Section 3.5 of the MergerAgreement, Buyer and the Representative shall deliver to the Escrow Agent ajoint written notice (the “Determination Notice”) in substantially the form ofExhibit B. Within three (3) Business Days of the date of the DeterminationNotice, the Escrow Agent shall release the Purchase Price Adjustment EscrowAmount and pay to Buyer and/or Buyer shall deposit or shall cause to bedeposited into the Payment Fund, as applicable, the amounts, if any, set forthin the Determination Notice to be paid to Buyer and/or deposited into thePayment Fund (including accrued interest and other income earned on each suchamount in the Purchase Price Adjustment Escrow Account from the Closing Date tothe payment date). 3 ARTICLE III DISTRIBUTION OF INDEMNITY ESCROW FUNDS 3.1 Indemnity Claims. Subject to Article XI of the Merger Agreement, at anytime prior to 5:00 p.m. (New York City time) on the applicable Indemnity Cut-OffDate, Buyer may give the Escrow Agent and the Representative written notice insubstantially the form of Exhibit C (an “Indemnity Claim Notice”) of a claim forwhich a Buyer Indemnified Party is entitled to indemnification pursuant toArticle XI of the Merger Agreement. If the Representative does not give theEscrow Agent and Buyer a written notice of disagreement (an “Indemnity ClaimDispute Notice”) with any matter or amount set forth in an Indemnity ClaimNotice within thirty (30) Business Days of the date of such Indemnity ClaimNotice, then the Escrow Agent shall, within ten (10) Business Days following thethirtieth (30th) Business Day after the date of the Indemnity Claim Notice,release the amount of the Indemnity Escrow Amount set forth in the IndemnityClaim Notice (together with accrued interest and other income earned thereonfrom the Closing Date to the applicable payment date), and pay such amount inthe manner directed by Buyer. In the event that the Representative shall give tothe Escrow Agent an Indemnity Claim Dispute Notice at any time during suchthirty (30) Business Day period, then the provisions of Section 4.4 shall applywith respect to the amount set forth therein. An indemnification claim as towhich an Indemnity Claim Dispute Notice has been given and which has not beenresolved pursuant to Section 4.4 of this Agreement is referred to hereinafter asan “Unresolved Indemnity Claim”. 3.2 Partial Release of Indemnity Escrow Funds. (a) Buyer and the Representative shall deliver a joint written noticeinstructing the Escrow Agent to immediately release from the Indemnity EscrowAccount and deposit into the Payment Fund: (i) on the first anniversary of theClosing Date, the lesser of (A) $2,000,000 or (B) the Indemnity Escrow Amount asof such date minus the aggregate dollar amount of all Unresolved IndemnityClaims; and (ii) on the second anniversary of the Closing Date, the lesser of(A) $2,000,000 or (B) the Indemnity Escrow Amount as of such date minus theaggregate dollar amount of all Unresolved Indemnity Claims, in each case,together with accrued interest and other income earned thereon. (b) On the last applicable Indemnity Cut-Off Date, Buyer and theRepresentative shall deliver a joint written notice instructing the Escrow Agentto release from the Indemnity Escrow Account and deposit into the Payment Fundthe remaining balance of funds in the Indemnity Escrow Account; provided,however, that if, at 5:00 p.m. (New York City time) on the Business Dayimmediately preceding the last applicable Indemnity Cut-Off Date, any portion ofthe Indemnity Escrow Amount is subject to one or more pending indemnificationclaims that have been timely asserted in accordance with Article XI of theMerger Agreement and have not been paid in full or otherwise finally settled oradjudicated, or are subject to appeal or further proceedings, then an amountequal to such portion of the Indemnity Escrow Amount attributable to such claims(including accrued interest and other income earned on each such amount in theIndemnity Escrow Account from the Closing Date to the last applicable IndemnityCut-Off Date) shall be retained in the Indemnity Escrow Account until Buyer andthe Representative deliver a joint written notice notifying the Escrow Agentthat such claims are paid 4in full or otherwise finally settled or adjudicated and no longer subject toappeal or further proceedings. ARTICLE IV ESCROW AGENT 4.1 Duties. The duties and obligations of the Escrow Agent shall bedetermined solely by the express provisions of this Agreement and shall belimited to the performance of such duties and obligations as are specificallyset forth in this Agreement, as it may be amended from time to time with theEscrow Agent’s written consent as provided in Section 5.8 hereof. The EscrowAgent shall not have any liability under, nor duty to inquire into the terms andprovisions of any agreement or instruction, other than those set forth in, orgiven pursuant to, this Agreement. 4.2 Reliance. In the performance of its duties hereunder, the Escrow Agentshall be entitled to rely, and shall be protected in acting or refraining fromacting, upon any document or instrument reasonably believed by it to be genuineand signed by Buyer and/or the Representative, as applicable, and the EscrowAgent shall be under no duty to inquire into or investigate the validity oraccuracy of any such document. The Escrow Agent may assume that any personpurporting to give any notice in accordance with the provisions hereof has beenduly authorized to do so. 4.3 Liability. The Escrow Agent shall not be liable for any error ofjudgment, or any action taken or omitted to be taken hereunder in good faith,except in the case of its bad faith, gross negligence or willful misconduct. Inthe administration of the Escrow Funds, the Escrow Agent shall be entitled toconsult with counsel of its choosing (including internal counsel). The EscrowAgent shall not be liable for any act suffered or omitted by it in good faith inaccordance with the advice or opinion of such counsel. 4.4 Disputes. In the event that the Escrow Agent shall receive an IndemnityClaim Dispute Notice, the Escrow Agent shall not release any Escrow Funds withrespect to any matter covered by such notice until there shall have been a finaldetermination of the rights of the parties with respect to such matter, and thenonly in accordance with the terms of such final determination. In the event thatthe Escrow Agent shall otherwise be uncertain as to its duties or rightshereunder, it shall be entitled to refrain from taking any action until suchtime as there has been a final determination of the rights of the parties withrespect to the Escrow Funds (or relevant portion thereof). For purposes of thisSection 4.4, there shall be deemed to have been a final determination of therights of the parties at such time as (i) any final judgment or award shall havebeen rendered by a court, arbitration board or administrative agency ofcompetent jurisdiction and the expiration of the time in which to appealtherefrom, or (ii) a settlement shall have been consummated, or Buyer and theRepresentative shall have arrived at a mutually binding agreement with respectto a claim thereunder, and the Escrow Agent shall have been notified thereof ina joint written direction from each of Buyer and the Representative. 4.5 Resignation. The Escrow Agent may resign at any time and be dischargedof the duties imposed hereunder (but without prejudice for any liability in thecase of its bad faith, 5gross negligence or willful misconduct hereunder) by giving notice to theRepresentative and Buyer at least thirty (30) Business Days prior to the datespecified for such resignation to take effect, in which case, upon the effectivedate of such resignation: (a) all funds then held by the Escrow Agent hereunder shall be delivered by it to such Person as may be designated in writing jointly by Buyer and the Representative, whereupon the Escrow Agent’s obligations hereunder shall cease and terminate; (b) if no such person has been designated by such date, all obligations of the Escrow Agent hereunder shall, nevertheless, cease and terminate, subject to clause (c) below; and (c) the Escrow Agent’s sole responsibility thereafter shall be to keep all funds then held by it (and to make the investments as hereinbefore provided) and to deliver the same to the successor escrow agent designated jointly by Buyer and the Representative in writing or, if no such successor escrow agent shall have been so designated, in accordance with the directions of a final order or judgment of a court of competent jurisdiction and the provisions of Section 4.7 and Section 4.8 shall remain in effect. Upon their receipt of notice of resignation from the Escrow Agent, Buyerand the Representative shall use their reasonable best efforts jointly todesignate a successor escrow agent. Notwithstanding anything to the contrary inthe foregoing, the Escrow Agent or any successor escrow agent shall continue toact as Escrow Agent until a successor is appointed and qualified to act asescrow agent. 4.6 Removal of Escrow Agent. Buyer and the Representative may, upon atleast thirty (30) Business Day’s prior written notice to the Escrow Agent,dismiss the Escrow Agent hereunder and appoint a successor. In such event, theEscrow Agent shall promptly account for and deliver to the successor escrowagent named in such notice the balance of the Escrow Funds. Upon acceptancethereof and of such accounting by such successor escrow agent, and uponreimbursement to the Escrow Agent of all expenses due to it hereunder throughthe date of such accounting and delivery, the Escrow Agent shall be released anddischarged from all of its duties and obligations hereunder, but withoutprejudice to any liability of the Escrow Agent for its bad faith, grossnegligence or willful misconduct hereunder. 4.7 Compensation. On the Closing Date and annually thereafter, Buyer andthe Representative shall each pay one-half of the Escrow Agent’s $___________annual fee (the “Annual Fee”) in full satisfaction of its engagement fee andcompensation, without pro-ration for partial years. All amounts payable by theRepresentative pursuant to this Section 4.7 shall be paid out of the ExpenseAccount to be maintained by the Representative under the Merger Agreement. 4.8 Indemnification. The Escrow Agent and its directors, officers, agentsand employees (the “Indemnified Parties”) shall be indemnified and held harmlessby each of the Representative and Buyer, severally and not jointly (with eachsuch indemnifying party liable up 6to a maximum of 50%), against any loss, liability, claim, damage, injury, demandor expense, including reasonable legal fees and expenses of in-house or outsidecounsel arising out of or in connection with the performance of the EscrowAgent’s obligations hereunder or pursuant to any written instructions of Buyeror the Representative given to the Escrow Agent pursuant to this Agreement,including the costs and expenses incurred in connection with the collection ofits fees and including the costs and expenses of defending itself against anyclaim or liability arising out of or in connection with the performance of itsduties hereunder, except for any loss, liability, claim, damage, injury, demandor expense resulting from any of the Indemnified Parties’ bad faith, grossnegligence or willful misconduct; provided, however, that promptly after thereceipt by any of the Indemnified Parties of notice of any claim or thecommencement of any suit, action or proceeding, such Indemnified Party shall, ifa claim of indemnification in respect thereof is to be made against any of theother parties hereto, notify such other parties thereof in writing; andprovided, further, however, that the indemnifying party or parties shall beentitled, at their own expense, to participate in or assume the defense of anysuch action, suit or proceeding. If the indemnifying party assumes control ofsuch defense and the indemnifying party and any of the Indemnified Parties havea conflict of interest with respect to such suit, action or proceeding, suchIndemnified Party shall be entitled to have separate legal representation inrespect thereof and the reasonable fees and expenses of counsel to the EscrowAgent shall be considered “damages” for the purposes of this Section 4.8. Thefailure of any of the Indemnified Parties to provide written notification to anindemnifying party shall not affect the rights of any of the Indemnified Partiesunder this Section 4.8 except (and only to the extent that) the indemnifyingparty incurs additional expenses or the indemnifying party is actuallyprejudiced by reason of such failure to give timely notice. The right of any ofthe Indemnified Parties (or any successor escrow agent appointed hereunder) toindemnification under this Section 4.8 shall survive the termination of thisAgreement or the earlier removal or resignation of the Escrow Agent or thetermination of this Agreement. Notwithstanding anything in this Agreement to thecontrary, in no event shall any of the Indemnified Parties be liable forspecial, indirect or consequential loss or damage of any kind whatsoever(including but not limited to lost profits), even if such Indemnified Party hasbeen advised of the likelihood of such loss or damage and regardless of the formof action. All amounts payable by the Representative pursuant to this Section4.8 shall be paid out of the Indemnity Escrow Fund pursuant to a jointinstruction signed by the Representative and Buyer. The parties hereby grant theEscrow Agent a lien on, right of set-off against and security interest in theEscrow Fund for the payment of any claim for indemnification, compensation,expenses and amounts due hereunder and payable by the Representative. 4.9 Merger. Any corporation into which the Escrow Agent in its individualcapacity may be merged or converted or with which it may be consolidated, or anycorporation resulting from any merger, conversion or consolidation to which theEscrow Agent in its individual capacity shall be a party, or any corporation towhich substantially all the corporate trust business of the Escrow Agent in itsindividual capacity may be transferred, shall be the successor escrow agentunder this Agreement without further action, and the provisions of thisAgreement shall continue to apply to such successor escrow agent as if suchsuccessor escrow agent was an original party hereto. 7 ARTICLE V TAXES 5.1 The Escrow Agent shall timely report to the Buyer and theRepresentative the aggregate amount of income earned, interest received andgains recognized (collectively, the “Escrow Interest”) from the investment ofthe Escrow Funds on which taxes imposed on any such income, interest or gains(such taxes, the “Escrow Taxes”) are then due and payable and the Buyer shallreport the amount of such Escrow Interest to the appropriate taxing authoritiesand shall pay the Escrow Taxes, in which event it may direct the Escrow Agent,by a reasonably detailed written notice to it with a copy to the Representative,to reimburse the Buyer in the amount of the Escrow Taxes out of the EscrowInterest. In the event any portion of an Escrow Fund is to be paid to the Buyeror deposited into the Payment Fund pursuant to Section 2.1, Section 3.1 orSection 3.2, such amount shall be reduced (and the amount of such reductionshall be paid over to the Buyer, but only to the extent not reimbursed to itpursuant to the preceding sentence) by an amount equal to the product of (i) theEscrow Taxes that are then due and payable and that the Buyer estimates (in areasonably detailed written notice to the Escrow Agent with a copy to theRepresentative) will be due and payable with respect to the taxable period inwhich such payment or deposit is made multiplied by (ii) a fraction, thenumerator of which is the amount otherwise to be paid to the Buyer or depositedinto the Payment Fund under this sentence, as the case may be, and thedenominator of which is the applicable Escrow Fund. The amount determinedpursuant to the preceding sentence shall be adjusted to the extent reasonablypractical to account for any duplication in payment and any timing differencesin payments into and disbursements from the Escrow Account. The provisions ofthis Section 5.1 shall be interpreted and applied in a manner that is consistentwith the provisions of Section 3.4(a) of the Merger Agreement. ARTICLE VI MISCELLANEOUS 6.1 Term. This Agreement shall continue in force until the finaldistribution of all amounts held by the Escrow Agent in escrow in accordancewith this Agreement. 6.2 Notices. All notices and other communications hereunder shall be givenin writing and shall be deemed given if delivered personally, by registered orcertified mail (postage prepaid, return receipt requested), by overnight courier(providing proof of delivery), by facsimile (which is confirmed), to the partyto receive such notices or communications at the address set forth below (orsuch other address as shall from time to time be designated by such party to theother parties in accordance with this Section 6.2): If to Buyer and/or Merger Sub, to: Professional Communications Security & Imaging International Holdings BV Address: ______________________ Attn: _________________________ 8 Facsimile: ____________________ With a copy to: Robert Bosch GmbH Robert Bosch Platz 1 70839 Gerlingen-Schillerhoehe Germany Attn: _________________________ and Dorsey & Whitney LLP 250 Park Avenue New York, New York 10177 Attn: Brian E. McGunigle, Esq. Facsimile: (212) 953-7201 If to the Representative, to: FS Private Investments III LLC c/o Jefferies Capital Partners 520 Madison Avenue New York, New York 10022 Attn: Stuart B. Katz Facsimile: (212) 284-1717 With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attn: Melvin Epstein, Esq. Facsimile: (212) 806-7864 If to the Escrow Agent, to: Address _______________________ Attn: _________________________ Facsimile: ____________________ 6.3 Assignment. Neither this Agreement nor any of the rights, interests orobligations under this Agreement may be assigned by any party to this Agreementwithout the prior written consent of the other parties to this Agreement, exceptthat Buyer may assign any of its rights under this Agreement to one or moreSubsidiaries of Buyer, so long as Buyer remains responsible for the performanceof all of its obligations under this Agreement. Subject to the foregoing, thisAgreement and all of the provisions of this Agreement will be binding upon and 9inure to the benefit of the parties to this Agreement and their respectivesuccessors and permitted assigns. 6.4 GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT, AND THERESPECTIVE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORKAPPLICABLE TO AGREEMENTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. 6.5 Jurisdiction; Waiver of Jury Trial. (a) Each of the parties hereto hereby agrees that all actions andproceedings arising out of or relating to this Agreement or any of thetransactions contemplated hereby shall be heard and determined in the SupremeCourt of the State of New York, New York County, or the United States DistrictCourt for the Southern District of New York, and the parties hereto herebyirrevocably submit to the exclusive jurisdiction of each such court in any suchaction or proceeding and irrevocably waive the defense of an inconvenient forumto the maintenance of any such action or proceeding. The parties hereto agreethat a final judgment in any such action or proceeding shall be conclusive andmay be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by applicable law. (b) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHTIT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY ORINDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF AGREEMENTSDELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATEDHEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NOREPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLYOR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEKTO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THEIMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv)IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THEWAIVERS AND CERTIFICATIONS IN THIS SECTION 6.5(b). 6.6 Counterparts. This Agreement may be executed in counterparts, each ofwhich shall be deemed an original. 6.7 Headings. The Section headings in this Agreement are for convenienceonly and do not constitute part of this Agreement. 6.8 Amendment. This Agreement may be amended only by a writing signed byBuyer, the Escrow Agent and the Representative. The Escrow Agent shall not berequired to enter into any amendment to this Agreement which affects its rights,duties or liabilities hereunder. 10 6.9 Facsimile Signatures. All signatures of the parties to this Agreementmay be transmitted by facsimile, and such facsimile will, for all purposes, bedeemed to be the original signature of such party whose signature it reproducesand will be binding upon such party. 6.10 Third Party Beneficiaries. Except as expressly contemplated in Section4.8 hereof, this Agreement is not intended to confer any rights or remedies uponany person other than the parties hereto or thereto. 6.11 Confirmation of Instructions. In the event funds transfer instructionsare given (other than in writing at the time of execution of the Agreement),whether in writing, by telecopier or otherwise, the Escrow Agent is authorizedto seek confirmation of such instructions by telephone call-back to the personor persons designated on Schedule 1 hereto, and the Escrow Agent may rely uponthe confirmations of anyone purporting to be the person or persons sodesignated. The persons and telephone numbers for individuals authorized to giveor confirm payment instructions may be changed only in a writing executed by therelevant party and actually received and acknowledged by the Escrow Agent. TheEscrow Agent and the beneficiary’s bank in any funds transfer may rely solelyupon any account numbers or similar identifying numbers provided by Buyer,Merger Sub or the Representative, as applicable, to identify (i) thebeneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank. TheEscrow Agent may apply any of the escrowed funds for any payment order itexecutes using any such identifying number, even when its use may result in aperson other than the beneficiary being paid, or the transfer of funds to a bankother than the beneficiary’s bank or an intermediary bank designated. Theparties to this Escrow Agreement acknowledge that these security procedures arecommercially reasonable. All funds transfer instructions must include thesignature of the person(s) authorizing said funds transfer. The parties to thisAgreement acknowledge that such security procedure is commercially reasonable. 6.12 No Liability for Instructions. The Escrow Agent shall not incur anyliability for following the instructions herein contained or expressly providedfor, or written instructions given by the parties hereto. 6.13 Force Majeure. In the event that the Escrow Agent is unable to performits obligations under the terms of this Agreement because of acts of God,terrorism, strikes, equipment or transmission failure or damage reasonablybeyond its control, or other cause reasonably beyond its control, the EscrowAgent shall not be liable for damages to the other parties for any unforeseeabledamages resulting from such failure to perform or otherwise from such causes.Performance under this Agreement shall resume when the Escrow Agent is able toperform substantially its duties. 6.14 Compliance with Court Orders. In the event that any escrow propertyshall be attached, garnished or levied upon by any court order, or the deliverythereof shall be stayed or enjoined by an order of a court, or any order,judgment or decree shall be made or entered by any court order affecting theproperty deposited under this Escrow Agreement, the Escrow Agent is herebyexpressly authorized, in its sole discretion, to obey and comply with all writs,orders or decrees so entered or issued, which it is advised by legal counsel ofits own choosing is binding upon it, whether with or without jurisdiction, andin the event that the Escrow Agent obeys or complies with any such writ, orderor decree it shall not be liable to any of the parties hereto or 11to any other person, firm or corporation, by reason of such compliancenotwithstanding such writ, order or decree be subsequently reversed, modified,annulled, set aside or vacated. 6.15 Entire Agreement. This Agreement, and with respect to Buyer, MergerSub and the Representative, the Merger Agreement, embody the entire agreementand understanding of the parties concerning the Escrow Funds, and, in the eventof any inconsistency between this Agreement and the Merger Agreement, thisAgreement shall control. [Signature page follows.] 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as ofthe date first set forth above. PROFESSIONAL COMMUNICATIONS SECURITY & IMAGING INTERNATIONAL HOLDINGS BV By: ———————————— Name: ———————————- Title: ——————————— [STHNL ACQUISITION CORP.] By: ———————————— Name: ———————————- Title: ——————————— REPRESENTATIVE OF THE EQUITY HOLDERS: FS PRIVATE INVESTMENTS III LLC By: ———————————— Name: ———————————- Title: ——————————— ESCROW AGENT: [________________________________] By: ———————————— Name: ———————————- Title: ——————————— EXHIBIT A [PAYMENT FUND ACCOUNT INFORMATION] A-1 EXHIBIT B(Insert Date and Address)Re: Determination NoticeDear ____________:This notice is being delivered in accordance with Section 2.1 of the EscrowAgreement dated as of ____________, 2006 (the “Agreement”) by and among by andamong Professional Communications Security & Imaging International ———Holdings BV, [STHNL Acquisition Corp.] and ___________ and _____________.We hereby inform you of the following: (a) that the Closing Date Net Working Capital, Closing Date CashAmount, Closing Date Other Indebtedness and Closing Date Capital ExpenditureAmount have been finally determined in accordance with Section 3.5(e) of theMerger Agreement; (b) the amount of Purchase Price Adjustment Escrow Amount (togetherwith accrued interest and other income earned thereon from the Closing Date tothe date of this payment), if any, to be paid by the Escrow Agent to Buyer is $(insert amount). Payment should be remitted using the following wire transferinstructions: ABA: ______________________________ Name of Bank ______________________ Account Name ______________________ Account Number: ___________________ (c) that the balance, if any, of remaining Purchase Price AdjustmentEscrow Funds shall be deposited by the Escrow Agent into the Payment Fund bywire transfer of immediately available funds to the account indicated on ExhibitA to the Agreement. Sincerely, PROFESSIONAL COMMUNICATIONS SECURITY & IMAGING INTERNATIONAL HOLDINGS BV By: ———————————— Name: ———————————- Title: ——————————— B-1 [STHNL ACQUISITION CORP.] By: ———————————— Name: ———————————- Title: ——————————— REPRESENTATIVE OF THE EQUITY HOLDERS: By: ———————————— Name: ———————————- Title: ——————————— B-2 EXHIBIT C(Insert Date and Addresses)Re: Indemnity Claim NoticeDear Sir/Madam:This notice is being delivered in accordance with Section 3.1 of the EscrowAgreement dated as of ___________, 2006 (the “Agreement”) by and among by andamong Professional Communications Security & Imaging International Holdings BV,[STHNL Acquisition Corp.] and ___________ and _____________.We hereby inform you of a claim for which an Indemnified Party is entitled toindemnification pursuant to Article XI of the Merger Agreement. The details areas follows: (a) the name of the [_____] Indemnified Party(ies) making such claimis (insert name); (b) the description of the claim and the basis for such claim is asfollows: (c) the total amount of such claim (or a good faith estimate of theamount of such claim, if such claim is not at that time liquidated) is (insertdollar amount). Sincerely, By: ———————————— Name: ———————————- Title: ——————————— C-1 SCHEDULE 1 Telephone Number(s) for Call-Backs and Person(s) Designated to Give or Confirm Funds Transfer InstructionsIf to Buyer, to:

Name Telephone Number Signature Specimen- —- ———————————–

If to the Representative, to:

Name Telephone Number Signature Specimen- —- ———————————–

Telephone call backs shall be made to both the Buyer and Representative if jointinstructions are required pursuant to the agreement. All funds transferinstructions must include the signature of the person(s) authorizing said fundstransfer.Periodically, the parties may issue payment orders to the Escrow Agent totransfer funds by federal funds wire. The Escrow Agent will review the orders todetermine compliance with the governing documentation and to confirm signatureby the appropriate party, in accordance with the incumbency list previouslysupplied to the Escrow Agent. Bank policy requires that, where practicable, theEscrow Agent undertake callbacks to a party other than the individual who signedthe payment order to verify the authenticity of the payment order.Inasmuch as the Person(s) designated on this schedule are the only employees insuch Person’s office who can confirm wire transfers, the Escrow Agent will callsuch Person to confirm any federal funds wire transfer payment order purportedlyissued by such Person. A party’s continued issuance of payment orders to theEscrow Agent and confirmation in accordance with this procedure will constitutesuch party’s agreement (1) to the callback security procedure outlined in theAgreement and (2) that the security procedure outlined therein constitutes acommercially reasonable method of verifying the authenticity of payment orders.Moreover, each party agrees to accept any risk associated with a deviation fromthis bank policy. S-1 EXHIBIT D FORM OF ENVIRONMENTAL ESCROW AGREEMENT THIS AGREEMENT is entered into as of _______, 2006 (the “Closing Date”), byand among Professional Communications Security & Imaging International HoldingsBV, a corporation organized under the laws of the Netherlands (“Buyer”), [STHNLAcquisition Corp.], a Delaware corporation (“Merger Sub”) and FS PrivateInvestments III LLC, a Delaware limited liability company (the”Representative”), as the representative on behalf of the Equity Holders, and______________, as escrow agent (the “Escrow Agent”). Capitalized terms used but not defined in this Agreement have the meaningsascribed to them in the Agreement and Plan of Merger (the “Merger Agreement”)dated as of _______, 2006 by and among Buyer, Merger Sub, Telex CommunicationsHoldings, a Delaware corporation (the “Company”) and the Representative onbehalf of the Equity Holders. WITNESSETH: WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with andinto the Company, with the Company continuing as the Surviving Corporation; and WHEREAS, the Merger Agreement provides that, at the Closing, Buyer orMerger Sub shall deposit or cause to be deposited with the Escrow Agent$5,000,000 (such amount, as it may be adjusted in accordance with this Agreementand the Merger Agreement, the “Environmental Escrow Amount”, and together withany interest and other income earned thereon (it being understood that suchinterest or other income shall not constitute part of the Environmental EscrowAmount), the “Environmental Escrow Funds”), for costs and expenses relating tothe Environmental Work to be performed pursuant to Section 6.2 of the MergerAgreement; and WHEREAS, the Environmental Escrow Funds are to be held and disposed of bythe Escrow Agent as provided herein; and WHEREAS, the Equity Holders have appointed the Representative to act astheir representative under this Agreement and to exercise all rights, powers andprivileges thereof contemplated herein on behalf of the Equity Holders; and WHEREAS, Buyer and the Representative wish to appoint the Escrow Agent toserve as the escrow agent hereunder, and the Escrow Agent is willing to do soupon the terms and conditions hereinafter set forth; and NOW THEREFORE, in consideration of the premises and the mutual obligationsand covenants set forth herein, the parties hereto agree as follows: ARTICLE I APPOINTMENT OF ESCROW AGENT; DEPOSIT AND INVESTMENT OF ENVIRONMENTAL ESCROW FUNDS; ETC. 1.1 Appointment of the Escrow Agent. Buyer and the Representative herebyappoint the Escrow Agent, and the Escrow Agent hereby agrees to act, asdepository and administrator of the Environmental Escrow Funds upon the termsand conditions set forth below. 1.2 Deposit of Environmental Escrow Amounts. At the Closing, Buyer orMerger Sub shall deposit, or cause to be deposited, with the Escrow Agent, bywire transfer of immediately available funds the Environmental Escrow Amount toa separate account to be designated by the Escrow Agent (the “EnvironmentalEscrow Account”). All amounts deposited into the Environmental Escrow Accountshall be evidenced by a receipt therefor to be issued by the Escrow Agent. TheEnvironmental Escrow Account shall be maintained by, and shall be under theexclusive dominion and control of, the Escrow Agent and the Environmental EscrowFunds shall be disbursed by the Escrow Agent only in accordance with theprovisions of this Agreement. 1.3 Investment of Environmental Escrow Funds. The Environmental EscrowAccount shall be segregated by the Escrow Agent and the Environmental EscrowFunds therein shall be invested in ___________. All interest and other incomeearned on the Environmental Escrow Account shall be added to, and become partof, the Environmental Escrow Account (but not part of the Environmental EscrowAmount), and the distribution thereof shall be subject to the terms of thisAgreement. The Escrow Agent shall have the right to liquidate any investmentsheld in order to provide funds necessary to make required payments under thisAgreement. 1.4 Instructions. The Escrow Agent in its capacity as escrow agenthereunder shall not have any liability for any loss sustained as a result of anyinvestment made pursuant to the instructions of the parties hereto or as aresult of any liquidation of any investment prior to its maturity or for thefailure of the parties to give the Escrow Agent instructions to invest orreinvest the Environmental Escrow Funds or any earnings thereon. 1.5 Obligations. The Environmental Escrow Amount shall be paid anddisbursed in accordance with this Agreement solely to Buyer with respect tocosts and expenses related to Environmental Work to be performed pursuant toSection 6.2 of the Merger Agreement, and if any portion of the EnvironmentalEscrow Fund remains in the Environmental Escrow Account on the third anniversaryof the Closing Date, such remaining amount shall be disbursed to theRepresentative in accordance with the instructions of the Representativepursuant to Section 2.2 hereof. 1.6 Distribution Instructions. Distributions from the Environmental EscrowAccount to Buyer in accordance with this Agreement shall be made by the EscrowAgent to an account designated in writing by Buyer. Distributions from theEnvironmental Escrow Account to the Representative, if any, in accordance withthis Agreement, shall be made by the Escrow Agent to the Payment Fund. 2 1.7 Tax Reporting and Distributions. For federal income tax purposes and,to the extent permitted by applicable law, state and local tax purposes, theparties shall submit any required reports or returns prepared on the basis thatBuyer is the owner of the Environmental Escrow Funds and Buyer shall furnish anyrequired tax forms consistent with the foregoing. The Escrow Agent shall reportand, as required, withhold any taxes as it determines may be required by any lawor regulation in effect at the time of distribution and, in each case, inaccordance with the first sentence in this Section 1.7. 1.8 Accounting. The Escrow Agent shall provide a written account to Buyerand the Representative at the end of each month of the relevant calendar yearlisting all transactions with respect to the Environmental Escrow Account duringthe immediately preceding month. ARTICLE II DISPOSITION OF THE ENVIRONMENTAL ESCROW FUNDS 2.1 Claims for Environmental Escrow Funds. (a) At any time during the term of this Agreement, Buyer and theRepresentative may deliver a joint written notice substantially in the form ofExhibit A to the Escrow Agent instructing the Escrow Agent to release from theEnvironmental Escrow Account the payments with respect to any Environmental Workcompleted in accordance with Section 6.2 of the Merger Agreement (“JointNotice”). Except as may otherwise be provided in this Agreement or in the MergerAgreement, within three (3) Business Days after the delivery by Buyer and theRepresentative to the Escrow Agent of a Joint Notice, the Escrow Agent shallrelease to Buyer the amount of Environmental Escrow Amount set forth in suchnotice to (together with accrued interest and other income earned thereon fromthe Closing Date to the applicable payment date). (b) At any time prior to 5:00 p.m. (New York City time) on the thirdanniversary of the Closing Date, Buyer may give the Escrow Agent and theRepresentative written notice in substantially the form of Exhibit ___ (a “FundsDisbursement Notice”) requesting the Escrow Agent to disburse funds for theperformance of Environmental Work (including Environmental Work which isrequired under Schedule 6.2 but which will occur and/or be completed after thethird anniversary of the Closing Date; provided, however, that no funds will bedisbursed for matters which Mark IV has, as of the date of disbursement of thefunds, continued to honor and perform the indemnity obligations set forth inSchedule 6.2) pursuant to the Merger Agreement. If the Representative does notgive the Escrow Agent and Buyer a written notice of disagreement (a”Disbursement Dispute Notice”) with any matter or amount set forth in the FundsDisbursement Notice within thirty (30) Business Days of the date of the FundsDisbursement Notice, then the Escrow Agent shall, within ten (10) Business Daysfollowing the thirtieth (30th) Business Day after the date of the FundsDisbursement Notice, release to Buyer the amount of the Environmental EscrowAmount set forth in the Funds Disbursement Notice. If the Representative shallgive a Disbursement Dispute Notice to the Escrow Agent and Buyer within suchthirty (30) Business Day period, the provisions of Section 3.4 shall apply withrespect to the amount set forth therein. A funds disbursement request as towhich a Disbursement Dispute Notice has been given and which has not been 3resolved pursuant to Section 3.4 of this Agreement is referred to hereinafter asan “Unresolved Disbursement Claim”. (c) Notwithstanding anything herein to the contrary, the amount of anydisbursement hereunder (i) shall be net of Tax Benefits (as defined in theMerger Agreement) and (ii) to the extent that it relates to remediation costs tobe incurred over a period in excess of one year, shall be discounted to presentvalue using customary financial practices and a discount rate equal to 8.5%. 2.2 Partial Release of Environmental Escrow Funds. Buyer and theRepresentative shall deliver a joint written notice instructing the Escrow Agentto immediately release from the Environmental Escrow Account and deposit intothe Payment Fund on the second anniversary of the Closing Date the lesser of:(i) $2,000,000 or (ii) $5,000,000 minus the aggregate dollar amount of allUnresolved Disbursement Claims. Within three (3) Business Days after the thirdanniversary of the Closing Date, the Escrow Agent shall release such portion ofthe Environmental Escrow Amount as may be remaining in the Environmental EscrowAccount as of such date (other than an amount equal to the aggregate dollaramount of all Unresolved Disbursement Claims), and shall pay such amount to theRepresentative in the manner directed by the Representative, together withaccrued interest and other income earned thereon from the Closing Date to theapplicable payment date. In the event that there are Unresolved DisbursementClaims remaining at the third anniversary of the Closing Date, the parties shallproceed to resolve such claims pursuant to the dispute resolution mechanism inSection 3.4 hereof within 30 days of the third anniversary date and payment orretention of funds related to such resolved claims shall be made in accordancewith this Agreement. ARTICLE III ESCROW AGENT 3.1 Duties. The duties and obligations of the Escrow Agent shall bedetermined solely by the express provisions of this Agreement and shall belimited to the performance of such duties and obligations as are specificallyset forth in this Agreement, as it may be amended from time to time with theEscrow Agent’s written consent as provided in Section 4.8 hereof. The EscrowAgent shall not have any liability under, nor duty to inquire into the terms andprovisions of any agreement (including the Merger Agreement) or instruction,other than those set forth in, or given pursuant to, this Agreement. 3.2 Reliance. In the performance of its duties hereunder, the Escrow Agentshall be entitled to rely, and shall be protected in acting or refraining fromacting, upon any document or instrument reasonably believed by it to be genuineand signed by Buyer and/or the Representative, as applicable, and the EscrowAgent shall be under no duty to inquire into or investigate the validity oraccuracy of any such document. The Escrow Agent may assume that any personpurporting to give any notice in accordance with the provisions hereof has beenduly authorized to do so. 3.3 Liability. The Escrow Agent shall not be liable for any error ofjudgment, or any action taken or omitted to be taken hereunder in good faith,except in the case of its bad faith, 4gross negligence or willful misconduct. In the administration of theEnvironmental Escrow Funds, the Escrow Agent shall be entitled to consult withcounsel of its choosing (including internal counsel). The Escrow Agent shall notbe liable for any act suffered or omitted by it in good faith in accordance withthe advice or opinion of such counsel. 3.4 Disputes. In the event that the Escrow Agent shall receive aDisbursement Dispute Notice, the Escrow Agent shall not release anyEnvironmental Escrow Funds with respect to any matter covered by such noticeuntil there shall have been a final determination of the rights of the partieswith respect to such matter, and then only in accordance with the terms of suchfinal determination. In the event that the Escrow Agent shall be otherwiseuncertain as to its duties or rights hereunder, it shall be entitled to refrainfrom taking any action until such time as there has been a final determinationof the rights of the parties with respect to the Escrow Funds (or relevantportion thereof). For purposes of this Section 3.4, there shall be deemed tohave been a final determination of the rights of the parties at such time as (i)an agreement shall have been reached between the Buyer and the Representativeregarding the amount to be disbursed pursuant to that particular FundsDisbursement Notice; or (ii) in the event that the Buyer and the Representativeare not able to reach an agreement, then the respective parties’ environmentalconsultants shall meet to attempt to reach agreement, or (iii) failing that, theenvironmental consultants shall jointly select a third environmental consultantwho shall review the available information and make a final determination as tothe reasonable costs which shall be reflected as the disbursement and the EscrowAgent shall have been notified thereof in a joint written direction from each ofBuyer and the Representative. Buyer and Representative agree to proceeddiligently upon notice by one party to the other that the dispute resolutionmechanism in this Section 3.4 are to be implemented. 3.5 Resignation. The Escrow Agent may resign at any time and be dischargedof the duties imposed hereunder (but without prejudice for any liability in thecase of its bad faith, gross negligence or willful misconduct hereunder) bygiving notice to Buyer and the Representative at least thirty (30) Business Daysprior to the date specified for such resignation to take effect, in which case,upon the effective date of such resignation: (a) all funds then held by the Escrow Agent hereunder shall be delivered by it to such Person as may be designated in writing by Buyer and the Representative, whereupon the Escrow Agent’s obligations hereunder shall cease and terminate; (b) if no such person has been designated by such date, all obligations of the Escrow Agent hereunder shall, nevertheless, cease and terminate, subject to clause (c) below; and (c) the Escrow Agent’s sole responsibility thereafter shall be to keep all funds then held by it (and to make the investments as hereinbefore provided) and to deliver the same to the successor escrow agent designated jointly by Buyer and the Representative in writing or, if no such successor escrow agent shall have been so designated, in accordance with the directions of a final order or judgment of a court of competent jurisdiction and the provisions of Section 3.7 and Section 3.8 shall remain in effect. 5 Upon their receipt of notice of resignation from the Escrow Agent, Buyerand the Representative shall use their reasonable best efforts jointly todesignate a successor escrow agent. Notwithstanding anything to the contrary inthe foregoing, the Escrow Agent or any successor escrow agent shall continue toact as Escrow Agent until a successor is appointed and qualified to act asescrow agent. 3.6 Removal of Escrow Agent. Buyer and the Representative may, upon atleast thirty (30) Business Day’s prior written notice to the Escrow Agent,jointly dismiss the Escrow Agent hereunder and appoint a successor. In suchevent, the Escrow Agent shall promptly account for and deliver to the successorescrow agent named in such notice the balance of the Environmental Escrow Funds.Upon acceptance thereof and of such accounting by such successor escrow agent,and upon reimbursement to the Escrow Agent of all expenses due to it hereunderthrough the date of such accounting and delivery, the Escrow Agent shall bereleased and discharged from all of its duties and obligations hereunder, butwithout prejudice to any liability of the Escrow Agent for its bad faith, grossnegligence or willful misconduct hereunder. 3.7 Compensation. On the Closing Date and annually thereafter, Buyer andthe Representative shall each pay one-half of the Escrow Agent’s $_______ annualfee (the “Annual Fee”) in full satisfaction of its engagement fee andcompensation, without pro-ration for partial years. All amounts payable by theRepresentative pursuant to this Section 3.7 shall be paid out of the ExpenseAccount to be maintained by the Representative under the Merger Agreement. 3.8 Indemnification. The Escrow Agent and its directors, officers, agentsand employees (the “Indemnified Parties”) shall be indemnified and held harmlessby each of Buyer and the Representative, severally and not jointly (with eachsuch indemnifying party liable up to a maximum of 50%), against any loss,liability, claim, damage, injury, demand or expense, including reasonable legalfees and expenses of in-house or outside counsel arising out of or in connectionwith the performance of the Escrow Agent’s obligations hereunder or pursuant toany written instructions of Buyer or the Representative given to the EscrowAgent pursuant to this Agreement, including the costs and expenses incurred inconnection with the collection of its fees and including the costs and expensesof defending itself against any claim or liability arising out of or inconnection with the performance of its duties hereunder, except for any loss,liability, claim, damage, injury, demand or expense resulting from any of theIndemnified Parties’ bad faith, gross negligence or willful misconduct;provided, however, that promptly after the receipt by any of the IndemnifiedParties of notice of any claim or the commencement of any suit, action orproceeding, such Indemnified Party shall, if a claim of indemnification inrespect thereof is to be made against any of the other parties hereto, notifysuch other parties thereof in writing; and provided, further, however, that theindemnifying party or parties shall be entitled, at their own expense, toparticipate in or assume the defense of any such action, suit or proceeding. Ifthe indemnifying party assumes control of such defense and the indemnifyingparty and any of the Indemnified Parties have a conflict of interest withrespect to such suit, action or proceeding, such Indemnified Party shall beentitled to have separate legal representation in respect thereof and thereasonable fees and expenses of counsel to the Escrow Agent shall be considered”damages” for the purposes of this Section 3.8. The failure of any of theIndemnified Parties to provide written notification to an indemnifying partyshall not affect the rights of any of the Indemnified Parties under this Section3.8 except (and only to the extent that) the indemnifying 6party incurs additional expenses or the indemnifying party is actuallyprejudiced by reason of such failure to give timely notice. The right of any ofthe Indemnified Parties (or any successor escrow agent appointed hereunder) toindemnification under this Section 3.8 shall survive the termination of thisAgreement or the earlier removal or resignation of the Escrow Agent or thetermination of this Agreement. Notwithstanding anything in this Agreement to thecontrary, in no event shall any of the Indemnified Parties be liable forspecial, indirect or consequential loss or damage of any kind whatsoever(including but not limited to lost profits), even if such Indemnified Party hasbeen advised of the likelihood of such loss or damage and regardless of the formof action. All amounts payable by the Representative pursuant to this Section3.8 shall be paid out of the Environmental Escrow Fund pursuant to a jointinstruction signed by the Representative and the Buyer. The parties hereby grantthe Escrow Agent a lien on, right of set-off against and security interest inthe Environmental Escrow Fund for the payment of any claim of indemnification,compensation, expenses and amounts due hereunder and payable by theRepresentative. 3.9 Merger. Any corporation into which the Escrow Agent in its individualcapacity may be merged or converted or with which it may be consolidated, or anycorporation resulting from any merger, conversion or consolidation to which theEscrow Agent in its individual capacity shall be a party, or any corporation towhich substantially all the corporate trust business of the Escrow Agent in itsindividual capacity may be transferred, shall be the successor escrow agentunder this Agreement without further action, and the provisions of thisAgreement shall continue to apply to such successor escrow agent as if suchsuccessor escrow agent was an original party hereto. ARTICLE IV TAXES 4.1 The Escrow Agent shall timely report to the Buyer and theRepresentative the aggregate amount of income earned, interest received andgains recognized (collectively, the “Escrow Interest”) from the investment ofthe Escrow Funds on which taxes imposed on any such income, interest or gains(such taxes, the “Escrow Taxes”) are then due and payable and the Buyer shallreport the amount of such Escrow Interest to the appropriate taxing authoritiesand shall pay the Escrow Taxes, in which event it may direct the Escrow Agent,by a reasonably detailed written notice to it with a copy to the Representative,to reimburse the Buyer in the amount of the Escrow Taxes out of the EscrowInterest. In the event any portion of the Environmental Escrow Fund is to bepaid to Buyer or deposited into the Payment Fund pursuant to Section 2.2, suchamount shall be reduced (and the amount of such reduction shall be paid over tothe Buyer, but only to the extent not reimbursed to it pursuant to the precedingsentence) by an amount equal to the product of (i) the Escrow Taxes that arethen due and payable and that the Buyer estimates (in a reasonably detailedwritten notice to the Escrow Agent with a copy to the Representative) will bedue and payable with respect to the taxable period in which such payment ordeposit is made multiplied by (ii) a fraction, the numerator of which is theamount otherwise to be paid to the Buyer or deposited into the Payment Fundunder this sentence, as the case may be, and the denominator of which is theEnvironmental Escrow Fund. The amount determined pursuant to the precedingsentence shall be adjusted to the extent reasonably practical to account for anyduplication in payment and any timing differences in payments into and 7disbursements from the Environmental Escrow Account. The provisions of thisSection 4.1 shall be interpreted and applied in a manner that is consistent withthe provisions of Section 3.4(a) of the Merger Agreement. ARTICLE V MISCELLANEOUS 5.1 Term. This Agreement shall continue in force until the finaldistribution of all amounts held by the Escrow Agent in the Environmental EscrowAccount in accordance with this Agreement. 5.2 Notices. All notices and other communications hereunder shall be givenin writing and shall be deemed given if delivered personally, by registered orcertified mail (postage prepaid, return receipt requested), by overnight courier(providing proof of delivery), by facsimile (which is confirmed), to the partyto receive such notices or communications at the address set forth below (orsuch other address as shall from time to time be designated by such party to theother parties in accordance with this Section 5.2): If to Buyer and/or Merger Sub, to: Professional Communications Security & Imaging International Holdings BV Address: ____________________ Attn: _______________________ Facsimile:___________________ With a copy to: Robert Bosch GmbH Robert Bosch Platz 1 70839 Gerlingen-Schillerhoehe Germany Attn: _______________________ and Dorsey & Whitney LLP 250 Park Avenue New York, New York 10177 Attn: Brian E. McGunigle, Esq. Facsimile: (212) 953-7201 If to the Representative, to: FS Private Investments III LLC c/o Jefferies Capital Partners 520 Madison Avenue New York, New York 10022 8 Attn: Stuart B. Katz Facsimile: (212) 284-1717 With a copy to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attn: Melvin Epstein, Esq. Facsimile: (212) 806-7864 If to the Escrow Agent, to: Address _____________________ Attn: _______________________ Facsimile: __________________ 5.3 Assignment. Neither this Agreement nor any of the rights, interests orobligations under this Agreement may be assigned by any party to this Agreementwithout the prior written consent of the other parties to this Agreement, exceptthat Buyer may assign any of its rights under this Agreement to one or moreSubsidiaries of Buyer, so long as Buyer remains responsible for the performanceof all of its obligations under this Agreement. Subject to the foregoing, thisAgreement and all of the provisions of this Agreement will be binding upon andinure to the benefit of the parties to this Agreement and their respectivesuccessors and permitted assigns. 5.4 GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT, AND THERESPECTIVE RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORKAPPLICABLE TO AGREEMENTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. 5.5 Jurisdiction; Waiver of Jury Trial. (a) Each of the parties hereto hereby agrees that all actions andproceedings arising out of or relating to this Agreement or any of thetransactions contemplated hereby shall be heard and determined in the SupremeCourt of the State of New York, New York County, or the United States DistrictCourt for the Southern District of New York, and the parties hereto herebyirrevocably submit to the exclusive jurisdiction of each such court in any suchaction or proceeding and irrevocably waive the defense of an inconvenient forumto the maintenance of any such action or proceeding. The parties hereto agreethat a final judgment in any such action or proceeding shall be conclusive andmay be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by applicable law. (b) EACH PARTY IS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANYRIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY ORINDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF AGREEMENTSDELIVERED IN 9CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ORTHEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENTOR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THATSUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHEROF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCHWAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCEDTO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS ANDCERTIFICATIONS IN THIS SECTION 5.5(b). 5.6 Counterparts. This Agreement may be executed in counterparts, each ofwhich shall be deemed an original. 5.7 Headings. The Section headings in this Agreement are for convenienceonly and do not constitute part of this Agreement. 5.8 Amendment. This Agreement may be amended only by a writing signed byeach of the parties hereto. The Escrow Agent shall not be required to enter intoany amendment to this Agreement which affects its rights, duties or liabilitieshereunder. 5.9 Facsimile Signatures. All signatures of the parties to this Agreementmay be transmitted by facsimile, and such facsimile will, for all purposes, bedeemed to be the original signature of such party whose signature it reproducesand will be binding upon such party. 5.10 Third Party Beneficiaries. Except as expressly contemplated by Section3.8 hereof, this Agreement is not intended to confer any rights or remedies uponany person other than the parties hereto or thereto. 5.11 Confirmation of Instructions. In the event funds transfer instructionsare given (other than in writing at the time of execution of the Agreement),whether in writing, by telecopier or otherwise, the Escrow Agent is authorizedto seek confirmation of such instructions by telephone call-back to the personor persons designated on Schedule 1 hereto, and the Escrow Agent may rely uponthe confirmations of anyone purporting to be the person or persons sodesignated. The persons and telephone numbers for individuals authorized to giveor confirm funds transfer instructions may be changed only in a writing executedby the relevant party and actually received and acknowledged by the EscrowAgent. The parties to this Agreement acknowledge that such security procedure iscommercially reasonable. The Escrow Agent and the beneficiary’s bank in anyfunds transfer may rely solely upon any account numbers or similar identifyingnumbers provided by Buyer or the Representative, as applicable, to identify (i)the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank. TheEscrow Agent may apply any of the escrowed funds for any payment order itexecutes using any such identifying number, even when its use may result in aperson other than the beneficiary being paid, or the transfer of funds to a bankother than the beneficiary’s bank or an intermediary bank designated. Theparties to this Escrow Agreement acknowledge that these security procedures arecommercially reasonable. All funds transfer instructions must include thesignature of the person(s) authorizing said funds transfer. 10 5.12 No Liability for Instructions. The Escrow Agent shall not incur anyliability for following the instructions herein contained or expressly providedfor, or written instructions given by the parties hereto. 5.13 Force Majeure. In the event that the Escrow Agent is unable to performits obligations under the terms of this Agreement because of acts of God,terrorism, strikes, equipment or transmission failure or damage reasonablybeyond its control, or other cause reasonably beyond its control, the EscrowAgent shall not be liable for damages to the other parties for any unforeseeabledamages resulting from such failure to perform or otherwise from such causes.Performance under this Agreement shall resume when the Escrow Agent is able toperform substantially its duties. 5.14 Compliance with Court Orders. In the event that any escrow propertyshall be attached, garnished or levied upon by any court order, or the deliverythereof shall be stayed or enjoined by an order of a court, or any order,judgment or decree shall be made or entered by any court order affecting theproperty deposited under this Escrow Agreement, the Escrow Agent is herebyexpressly authorized, in its sole discretion, to obey and comply with all writs,orders or decrees so entered or issued, which it is advised by legal counsel ofits own choosing is binding upon it, whether with or without jurisdiction, andin the event that the Escrow Agent obeys or complies with any such writ, orderor decree it shall not be liable to any of the parties hereto or to any otherperson, firm or corporation, by reason of such compliance notwithstanding suchwrit, order or decree be subsequently reversed, modified, annulled, set aside orvacated. 5.15 Entire Agreement. This Agreement, and with respect to Buyer, MergerSub and the Representative, the Merger Agreement, embody the entire agreementand understanding of the parties concerning the Environmental Escrow Funds, and,in the event of any inconsistency between this Agreement and the MergerAgreement, this Agreement shall control. [Signature page follows.] 11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as ofthe date first set forth above. PROFESSIONAL COMMUNICATIONS SECURITY & IMAGING INTERNATIONAL HOLDINGS BV By: ———————————— Name: ———————————- Title: ——————————— STHNL ACQUISITION CORP. By: ———————————— Name: ———————————- Title: ——————————— REPRESENTATIVE OF THE EQUITY HOLDERS: FS PRIVATE INVESTMENTS III LLC By: ———————————— Name: ———————————- Title: ——————————— ESCROW AGENT: [______________________________________] By: ———————————— Name: ———————————- Title: ——————————— 12 SCHEDULE 1 Telephone Number(s) for Call-Backs and Person(s) Designated to Give or Confirm Funds Transfer InstructionsIf to Buyer and/or Merger Sub, to:Name Telephone Number Signature SpecimenIf to Representative to:Name Telephone Number Signature Specimen Telephone call backs shall be made to both the Buyer and the Representative if joint instructions are required pursuant to the agreement. All funds transfer instructions must include the signature of the person(s) authorizing said funds transfer. Periodically, the parties may issue payment orders to the Escrow Agent to transfer funds by federal funds wire. The Escrow Agent will review the orders to determine compliance with the governing documentation and to confirm signature by the appropriate party, in accordance with the incumbency list previously supplied to the Escrow Agent. Bank policy requires that, where practicable, the Escrow Agent undertake callbacks to a party other than the individual who signed the payment order to verify the authenticity of the payment order. Inasmuch as the Person(s) designated on this schedule are the only employee in such Person’s office who can confirm wire transfers, the Escrow Agent will call such Person to confirm any federal funds wire transfer payment order purportedly issued by such Person. A party’s continued E2-1 issuance of payment orders to the Escrow Agent and confirmation in accordance with this procedure will constitute such party’s agreement (1) to the callback security procedure outlined in the Agreement and (2) that the security procedure outlined therein constitutes a commercially reasonable method of verifying the authenticity of payment orders. Moreover, each party agrees to accept any risk associated with a deviation from this bank policy. E2-2 EXHIBIT A(insert Date and Address)Re: Approval of Funds Requisition NoticeDear __________,This notice is being delivered in accordance with Section 2.1 of theEnvironmental Escrow Agreement dated __________, 2006 by and among ProfessionalCommunications Security & Imaging International Holdings BV, [STHNL AcquisitionCorp.] and ___________ and _____________.The Representative hereby approves of the payments described in the FundsRequisition Notice, dated (insert date) with respect to Environmental Work to becompleted in accordance with Section 6.2 of the Merger Agreement.The Escrow Agent is hereby directed to remit $ (insert amount) to Buyer usingthe following wire payment instructions: ABA: ______________________________ Name of Bank: _____________________ Account Number: ___________________ Account Name: _____________________ Ref: ______________________________The Escrow Agent is hereby instructed to remit such amount within three BusinessDays after receipt of this notice. Sincerely, PROFESSIONAL COMMUNICATIONS SECURITY & IMAGING INTERNATIONAL HOLDINGS BV By: ———————————— Name: ———————————- Title: ——————————— [STHNL ACQUISITION CORP.] By: ———————————— Name: ———————————- Title: ——————————— A-1 REPRESENTATIVE OF THE EQUITY HOLDERS: [______________________________________] By: ———————————— Name: ———————————- Title: ——————————— A-2