ASSET PURCHASE AGREEMENT

EXHIBIT 2.1

This Asset Purchase Agreement (this “Agreement”), dated as of October 1, 2004, is by and among Portfolio Recovery Associates, Inc., a Delaware corporation (“Parent”), PRA Location Services, LLC, a Delaware limited liability company and a subsidiary of the Parent (“Buyer”), IGS Nevada, Inc., a Nevada corporation (“Seller”), and Xxxxx Xxxxx, the sole stockholder of Seller (“Xxxxx”).

WHEREAS, Seller provides skip-tracing and automobile repossession coordination services to the auto lending industry (the “Business”).

WHEREAS, subject to the terms and conditions of this Agreement, Seller desires to sell to Buyer all or substantially all of the assets used by Seller in the Business together with the associated goodwill of the Business, and Buyer desires to purchase from Seller those assets and that goodwill, for the consideration specified in this Agreement and the assumption by Buyer of certain obligations of Seller with respect to the Business.

NOW, THEREFORE, in consideration of all of the terms and conditions set forth in this Agreement, the parties hereby agree as follows:

SECTION 1. DEFINITIONS.

For purposes of this Agreement, the following terms and variations thereof shall have the specified or referenced meanings:

1.1 “Accounts Receivable” shall have the meaning set forth in Section 2.1(c).

1.2 “Agreement” shall mean the Asset Purchase Agreement dated as of October 1, 2004, by and among Parent, Buyer and Seller.

1.3 “Ancillary Documents” shall have the meaning set forth in Section 3.2.

1.4 “A/R Dispute” shall have the meaning set forth in Section 2.5(c)(ii).

1.5 “A/R Dispute Notice” shall have the meaning set forth in Section 2.5(c)(ii).

1.6 “A/R Dispute Period” shall have the meaning set forth in Section 2.5(c)(ii).

1.7 “Arbitrating Accountant” shall mean FTI Consulting.

1.8 “Assumed Liabilities” shall have the meaning set forth in Section 2.3.

1.9 “Base Purchase Price” shall have the meaning set forth in Section 2.5(a).

1.10 “Books and Records” shall have the meaning set forth in Section 2.1(f).

1.11 “Business” shall have the meaning set forth in the recitals to this Agreement. When used in respect of Buyer after the Closing, “Business” shall mean the business formerly conducted by Seller.

1.12 “Buyer” shall mean PRA Location Services, LLC, a Delaware limited liability company and a subsidiary of the Parent.

1.13 “Claim Notice” shall have the meaning set forth in Section 6.3.

1.14 “Closing” shall have the meaning set forth in Section 2.6.

1.15 “Closing Date” shall have the meaning set forth in Section 2.6.

1.16 “Contingent Purchase Price” shall have the meaning set forth in Section 2.5(b).

1.17 “Contracts” shall have the meaning set forth in Section 2.1(b).

1.18 “Dispute” shall have the meaning set forth in Section 9.10.

1.19 “Earn-Out Period” shall mean either the First Earn-Out Period or the Second Earn-Out Period.

1.20 “Employees” shall have the meaning set forth in Section 3.20.

1.21 “Environmental Law” shall mean any federal, state, local or foreign law, rule, regulation, order or judgment relating to pollution or the protection of the environment, natural resources or health and safety, including those relating to the presence, ownership, use, handling, manufacture, generation, storage, treatment, discharge, release, transportation, disposal, investigation or remediation of any material, waste, chemical or byproduct defined as a hazardous or toxic substance, pollutant or waste.

1.22 “Excess” shall have the meaning set forth in Section 2.5(c)(i).

1.23 “Excluded Assets” shall have the meaning set forth in Section 2.2.

1.24 “Excluded Liabilities” shall have the meaning set forth in Section 2.4.

1.25 “Financial Statements” shall have the meaning set forth in Section 3.4.

1.26 “First Earn-Out Period” shall have the meaning set forth in Section 2.5(b)(i).

1.27 “Fixed Assets” shall have the meaning set forth in Section 2.1(a).

1.28 “GAAP” shall mean generally accepted accounting principles in the United States.

1.29 “Indemnified Party” shall have the meaning set forth in Section 7.3.

1.30 “Indemnifying Party” shall have the meaning set forth in Section 7.3.

1.31 “Intellectual Property” shall have the meaning set forth in Section 2.1(e).

1.32 “Key Persons” shall mean Xxxxx and each of Xxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxx Xxxxx.

1.33 “Lease” shall mean the Standard Office Modified Gross Lease dated October 16, 2002, by and between Park Properties, LLC (the “Landlord”) and the Seller.

1.34 “Losses” shall have the meaning set forth in Section 7.1.

1.35 “Material Adverse Effect” shall mean: A material adverse effect on (i) the financial condition, assets, liabilities, results of operations, or prospects of the Business of Seller or (ii) the financial condition, assets, liabilities, results of operations, or prospects of the business of Buyer.

1.36 “Objection Notice” shall have the meaning set forth in Section 7.4.

1.37 “Parent” shall mean Portfolio Recovery Associates, Inc., a Delaware corporation.

1.38 “Permits” shall have the meaning set forth in Section 2.1(h).

1.39 “Purchase Price” shall have the meaning set forth in Section 2.5.

1.40 “Purchased Assets” shall have the meaning set forth in Section 2.1.

1.41 “Revenue Dispute” shall have the meaning set forth in Section 2.5(b)(iii).

1.42 “Revenue Dispute Notice” shall have the meaning set forth in Section 2.5(b)(iii).

1.43 “Revenue Dispute Period” shall have the meaning set forth in Section 2.5(b)(iii).

1.44 “Revenues” shall mean the gross amount of sales revenue of the Business calculated in accordance with GAAP using the guidance of EITF Issue No. 99-19.

1.45 “Sale Documents” shall mean this Agreement, the Collection Agreement and the Assignment, Xxxx of Sale and Assumption Agreement.

1.46 “Second Earn-Out Period” shall have the meaning set forth in Section 2.5(b)(i).

1.47 “Seller” shall mean IGS Nevada, Inc., a Nevada corporation.

1.48 “Seller Facility” shall mean the real property leased by Seller pursuant to the Lease, which real property constitutes the sole location used by Seller in the conduct of the Business.

1.49 “Services” shall mean services that are currently or have at any time been performed by Seller in the conduct of the Business.

1.50 “Services Agreement” shall mean the Recovery and Post-Recovery Services Agreement dated November 5, 2001, by and between Household Automotive Finance Corporation, a Delaware corporation, and the Seller.

1.51 “Shortfall” shall have the meaning set forth in Section 2.5(c)(i).

1.52 “Xxxxx” shall mean Xxxxx Xxxxx, the sole stockholder of Seller.

1.53 “Survival Date” shall have the meaning set forth in Section 7.1.

1.54 “Taxes” shall mean any income, excise, sales, use, ad valorem, business license, goods and services, property, capital, value added, stamp, documentary, customs duty, severance, windfall profit, license, occupation, disability, unemployment, employment and payroll-related taxes and withholding taxes, and any similar assessment or charge, together with any interest, penalty or additional amount imposed by any taxing authority responsible for the imposition of any such tax.

1.55 “Tax Return” shall mean any report, return, form, declaration or other document or information required to be supplied to any authority in connection with Taxes.

1.56 “Uncollectible Accounts Receivable” shall have the meaning set forth in Section 8.2.

SECTION 2. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.

2.1 Purchased Assets. Upon the terms, subject to the conditions and in reliance upon the representations and warranties set forth in this Agreement, Seller shall sell, assign, transfer and deliver to Buyer at the Closing, and Buyer shall purchase and accept from Seller at the Closing, all of the assets, properties and rights of Seller included in the categories specifically identified in this Section 2.1 which are used by Seller in the conduct of the Business (collectively, the “Purchased Assets”), except for the Excluded Assets:

(a) all equipment, tangible personal property (except as set forth in Section 2.2(e)) and other fixed assets which are used in the Business, including those without book value and whether owned or leased, a summary of which is set forth in Section 2.1(a) of the Disclosure Schedule (collectively, the “Fixed Assets”);

(b) all written contracts to which Seller is a party and which (i) are to be performed after the Closing and are open Services orders entered into in the ordinary course of Business and which provide for the provision of Services by Seller, (ii) are licenses from and to third parties of Intellectual Property for use in the Business, (iii) constitute express or implied warranties by any manufacturer, vendor or other person with respect to any of the Purchased Assets, or (iv) are listed in Section 2.1(b) of the Disclosure Schedule (collectively, the “Contracts”);

(c) except as set forth in Section 2.5(c)(i), all accounts receivable which are outstanding and unpaid as of the Closing (both billed and unbilled) arising from the ordinary course of the Business (collectively, all accounts receivable not specifically excluded from the Purchased Assets in accordance with Section 2.5(c)(i) are referred to herein as the “Accounts Receivable”). A summary of the accounts receivable which are outstanding and unpaid as of the Closing is set forth in Section 2.1(c) of the Disclosure Schedule;

(d) all deposits and prepaid expenses (including prepaid lease and license payments relating to the Business;

(e) all inventions (patentable and unpatentable), patents, patent applications, copyrights, trade secrets, licenses, software including computer source and object codes (all versions and releases), libraries, design and development platforms, design and development tools and kits, program documentation, field trial information and reports, support documentation, protocols, help files, information and data related to development, enhancements, testing and quality control, testing applications, designs, drawings, specifications, technical literature, programmer manuals, technical manuals, training manuals, user manuals, engineering and design notebooks, developer notes, design and process methods and information, know-how, on-going research and development and confidentiality rights which relate to or are used in the Business other than off-the-shelf third party software (the “Intellectual Property”);

(f) all books, records, files, correspondence, computer tapes, diskettes or other storage media, manuals, catalogues, price lists, supplier lists and information, contact lists and information, customer lists and information, sales information, promotional information, market research and information, business plans, marketing materials, production data, warranty claim records and analyses and all other documents and business information, in the case of each of the above, solely to the extent they relate to the Business, including those in electronic format, but excluding personnel records relating to Employees whom Buyer is not employing immediately after the Closing (collectively, the “Books and Records”); and

(g) to the extent that the same are assignable, all permits, authorizations, licenses and approvals issued by any governmental agency, which are related to or used in the Business (collectively, the “Permits”).

2.2 Excluded Assets. Notwithstanding Section 2.1, the Purchased Assets shall not include any of the following assets of Seller (collectively, the “Excluded Assets”):

(a) organizational documents, bylaws, stock ledgers, meeting minutes and other organizational books and records which relate to Seller’s organization or capitalization;

(b) any rights of Seller under this Agreement or any other agreement between Seller and Buyer entered into on or after the date of this Agreement;

(c) all refunds of income taxes in respect of periods, or portions of periods, during which Seller owned the Purchased Assets;

(d) rights of Seller under any employee benefit plan or life insurance policies;

(e) the automobiles set forth in Section 2.2(e) of the Disclosure Schedule;

(f) all bank, deposit and brokerage accounts, and all cash, cash equivalents and securities included therein at Closing; and

(g) assets specifically excluded from the descriptions of Purchased Assets under Section 2.1.

2.3 Assumed Liabilities. At the Closing, Buyer shall assume and agree to pay or perform when due, in accordance with their respective terms, without any further responsibility or liability of or recourse to Seller (except as contemplated under Section 6 and Section 8.2(a)), the following obligations of Seller (collectively, the “Assumed Liabilities”):

(a) all obligations remaining to be performed after the Closing under the Contracts set forth in Section 2.1(b) of the Disclosure Schedule;

(b) liabilities incurred by Buyer with respect to the operation of the Business after the Closing; and

provided, however, that the assumption of the Assumed Liabilities by Buyer shall not expand any rights of third parties and shall not prohibit Buyer from contesting in good faith with any third party any of the Assumed Liabilities, subject to the provision of indemnification to Seller for any claims arising out of such contest.

2.4 Excluded Liabilities. Notwithstanding any other term of this Agreement, Buyer shall not assume and shall not be liable or responsible for, and Seller shall retain and be liable and responsible for, liabilities and obligations of Seller not expressly assumed by Buyer under Section 2.3, including the following (collectively, the “Excluded Liabilities”):

(a) without limiting Section 8.5, all liabilities and obligations of Seller with respect to Taxes, whether relating to periods before or after the Closing and whether incurred by Seller in connection with this Agreement or the transactions contemplated by this Agreement, including any liability for Taxes arising out of the inclusion of Seller in any group filing consolidated, combined or unitary tax returns or arising out of any transferee liability and any liability for Taxes that would be incurred if the books of the Business were closed as of the Closing, but not including any liability for Taxes arising out of or in connection with the operation of the Business by Buyer after the Closing;

(b) all liabilities and obligations of Seller arising under any applicable Environmental Law with respect to (i) the ownership or use of any of the Purchased Assets prior to the Closing, (ii) the rendering of any Services, prior to the Closing, (iii) the ownership, activities or operation of the Business prior to the Closing, or (iv) the ownership, lease, use or occupancy of any real property.

(c) all liabilities and obligations relating to any personal injury or property damage caused or alleged to have been caused by any Services rendered by, or other activities of, Seller prior to the Closing;

(d) all liabilities and obligations relating to any of Seller’s former, current or future employees, including any liability of Seller under any plan, policy or agreement, whether written or unwritten, providing for compensation, retirement benefits, loans, severance, bonuses, sales incentives or commissions (except as expressly assumed by Buyer under Section 2.3), fringe benefits, cafeteria benefits or other benefits which has been sponsored, maintained or contributed to by Seller for the benefit of any person who performs or who has performed Services for Seller for periods prior to the Closing or who continues to provide Services to Seller after the Closing.

(e) all liabilities and obligations relating to any of Seller’s former, current or future shareholders;

(f) all liabilities and obligations relating to any of the Excluded Assets;

(g) all trade payables;

(h) all liabilities and obligations relating to any violation or alleged violation by Seller prior to the Closing of any law, rule, regulation or governmental order, and any violation or alleged violation by Seller prior to the Closing of any permit, authorization, license or approval issued by any governmental agency (including any Permit); and

(i) all liabilities and obligations under any indebtedness of Seller to any of its employees or stockholders.

2.5 Purchase Price. In consideration of the sale, transfer and assignment of the Purchased Assets to Buyer, the representations, warranties, covenants and indemnities of Seller

as set forth in this Agreement and the other transactions contemplated by this Agreement, Buyer shall pay to Seller as provided in this Section 2.5 the aggregate of (a) the Base Purchase Price and (b) the Contingent Purchase Price, if any (collectively, the “Purchase Price”).

(a) Base Purchase Price. The purchase price to be paid at the Closing shall be total consideration of $14 million, consisting of (x) $12 million, which shall be paid by Buyer to Seller by wire transfer of immediately available funds to the account designated by Seller in writing at least two (2) business days prior to the Closing, and (y) 69,914 shares of common stock, par value $0.01 per share, of the Parent (valued at $2 million, calculated on the basis of the average closing price of such shares over a twenty (20) business day period ending on the fifth (5^th) business day prior to Closing) (collectively, the “Base Purchase Price”). Such shares will not be registered under the federal securities laws and will be subject to the placing of an appropriate legend on the stock certificate evidencing such shares with respect to the fact that such shares may only be sold pursuant to a registration statement under the federal securities laws or an exemption from registration thereunder.

(b) Contingent Purchase Price. The purchase price shall also be comprised of the following contingent payments (collectively, the “Contingent Purchase Price”):

(i) Pursuant to the provisions of this Section 2.5(b)(i), (x) Buyer shall pay to Seller $2 million in the event the Revenues of the Business for the calendar year 2005 (the “First Earn-Out Period”) meets the agreed-upon Revenues target for such Earn-Out Period, and/or (y) Buyer shall pay to Seller $2 million in the event the Revenues of the Business for the calendar year 2006 (the “Second Earn-Out Period”) meets the agreed-upon Revenues target for such Earn-Out Period.

(ii) As part of the overall audit of Parent’s financial statements, Parent shall cause the Revenues of the Business for calendar years 2005 and 2006 to be audited. On or prior to April 30 of the year immediately following each Earn-Out Period, Buyer shall prepare and deliver to Seller a statement setting forth the Revenues of the Business for such Earn-Out Period, which Revenues shall have been audited. If the Revenues of the Business for an Earn-Out Period exceed the target set forth in Section 2.5(b)(i) for such Earn-Out Period, Buyer shall, concurrently with the delivery of the statement, pay to Seller the Contingent Purchase Price with respect to such Earn-Out Period.

(iii) In the event the target Revenues of the Business for an Earn-Out Period are not reached, as set forth in the statement delivered in accordance with Section 2.5(b)(ii), Seller shall have forty-five (45) days after receipt of the statement relating to such Earn-Out Period from Buyer (the “Revenue Dispute Period”) to dispute the calculation of Revenues of the Business set forth therein (a “Revenue Dispute”). If Seller does not give written notice of a Revenue Dispute (a “Revenue Dispute Notice”) within the Revenue Dispute Period to Buyer, then

the calculation of Revenues of the Business shall be deemed to have been accepted and agreed to by Seller in the form in which it was delivered by Buyer and shall be final and binding upon the parties hereto. Any Revenue Dispute Notice issued by Seller shall set forth in reasonable detail the elements and amounts with which it disagrees. During the forty-five (45) day period following receipt by Buyer of such Revenue Dispute Notice, Seller and Buyer shall attempt to resolve such Revenue Dispute and agree in writing upon the final amount of Revenues of the Business and the appropriate Contingent Purchase Price payment based thereon. In connection with any Revenue Dispute, Seller shall have the full benefit of Section 8.3.

(iv) If Seller and Buyer are unable to resolve any Revenue Dispute within the forty-five (45) day period after Buyer’s receipt of a Revenue Dispute Notice, then the parties shall engage the Arbitrating Accountant to settle such Revenue Dispute as soon as practicable (but in any event within sixty (60) days). In connection with the resolution of any Revenue Dispute, the Arbitrating Accountant shall have access to all documents, records, work papers, facilities and personnel necessary to perform its function as arbitrator. The Arbitrating Accountant’s award with respect to any Revenue Dispute shall be final and binding upon the parties hereto, and judgment may be entered on the award. The costs and expenses of the Arbitrating Accountant shall be borne entirely by Buyer, unless it turns out that the calculation of Revenues of the Business does not lead to the payment of the full amount of the Contingent Purchase Price with respect to the Earn-Out Period, in which case such costs and expenses shall be borne entirely by Seller.

(v) Any payment required to be made under this Section 2.5(b) to Seller shall be made by wire transfer of immediately available funds to the account designated in writing by Seller.

(i) Within thirty (30) days after the Closing, Buyer shall prepare and deliver to Seller an unaudited statement setting forth the accounts receivable acquired from Seller and included in the Purchased Assets. In the event the statement delivered in accordance with this Section 2.5(c) shows that the amount of accounts receivable at the Closing was less than $850,000 (a “Shortfall”), there shall be a Purchase Price adjustment, and Seller and Xxxxx shall be required to pay an amount to Buyer equal to the Shortfall. In the event the statement delivered in accordance with this Section 2.5(c) shows that the amount of accounts receivable at the Closing exceeded $850,000 (an “Excess”), then accounts receivable having a face value equal to the amount of the Excess shall be deemed to be excluded from the Accounts Receivable and to be excluded from the Purchased Assets, and such excluded accounts receivable shall instead be

subject to the terms of the Collection Agreement annexed hereto as Exhibit 2.5(c). The specific accounts receivable to subject to the Collection Agreement shall be selected by Parent in its sole and absolute discretion.

(ii) Seller shall have thirty (30) days after receipt of the statement delivered in accordance with this Section 2.5(c) (the “A/R Dispute Period”) to dispute the calculation set forth therein (an “A/R Dispute”). If Seller does not give written notice of an A/R Dispute (an “A/R Dispute Notice”) within the A/R Dispute Period to Buyer, then the calculation shall be deemed to have been accepted and agreed to by Seller in the form in which it was delivered by Buyer and shall be final and binding upon the parties hereto. Any A/R Dispute Notice issued by Seller shall set forth in reasonable detail the elements and amounts with which it disagrees. During the thirty (30) day period following receipt by Buyer of such A/R Dispute Notice, Seller and Buyer shall attempt to resolve such A/R Dispute and agree in writing upon the final amount of the Shortfall or Excess and the appropriate action set forth in Section 2.5(c)(i) based thereon. In connection with any A/R Dispute, Seller shall have the full benefit of Section 8.3.

(iii) If Seller and Buyer are unable to resolve any A/R Dispute within the thirty (30) day period after Buyer’s receipt of a A/R Dispute Notice, then the parties shall engage the Arbitrating Accountant to settle such A/R Dispute as soon as practicable (but in any event within sixty (60) days). In connection with the resolution of any A/R Dispute, the Arbitrating Accountant shall have access to all documents, records, work papers, facilities and personnel necessary to perform its function as arbitrator. The Arbitrating Accountant’s award with respect to any A/R Dispute shall be final and binding upon the parties hereto, and judgment may be entered on the award. The costs and expenses of the Arbitrating Accountant shall be split equally by the parties.

(iv) In the event of a Shortfall, any payment required to be made under this Section 2.5(c) to Buyer shall be made within ten (10) days after the amount of the Shortfall is agreed upon by the parties or fixed by the Arbitrating Accountant, in each case by wire transfer of immediately available funds to the account designated in writing by Buyer.

(d) Purchase Price Allocation. The Base Purchase Price shall be allocated in accordance with Exhibit 2.5(d)(1). That allocation shall thereafter be used by Buyer and Seller in all reports and returns to all taxing authorities in which such allocation is required to be made. Seller and Buyer have agreed on the form of Internal Revenue Service Form 8594 annexed hereto as Exhibit 2.5(d)(2) and each shall file its Internal Revenue Service Form 8594 in the same form as Exhibit 2.5(d)(2).

2.6 Closing. The consummation of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities contemplated by this Agreement (the “Closing”)

shall take place at the place and time agreed upon by the parties hereto (such date, the “Closing Date”) but in no event shall the Closing occur later than October 8. All deliveries at the Closing shall be deemed to take place simultaneously and no deliveries shall be deemed to have occurred until the conclusion of the Closing, which shall be upon the concurrence of Buyer and Seller, and their respective legal counsel. By mutual written agreement of the parties, the Closing may take place by conference call and fax or electronic transmission of counterpart executed documents with exchange of original executed documents by overnight mail.

2.7 Full Possession; Consents. At the Closing, Seller shall put Buyer into full actual possession and control of the Purchased Assets free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, restriction or adverse claim. Notwithstanding the foregoing and any other term of this Agreement, but except with respect to the Services Agreement, if an attempted sale, assignment, transfer or delivery of any Contract would constitute a breach thereof or be unlawful without the waiver or consent of any other party to such Contract, and such waiver or consent has not been obtained prior to the Closing, this Agreement shall not constitute a sale, assignment, transfer or delivery, or an attempted sale, assignment, transfer or delivery of such Contract. In each such case, Seller shall use reasonable commercial efforts (which shall not include the payment of money) to obtain, as promptly as practicable, the waiver or consent of such other person or entity, and Seller and Buyer shall cooperate in any reasonable arrangement to provide for the assumption by Buyer of the benefits and obligations of such Contract. Except with respect to the Services Agreement, from and after the Closing, until such waiver or consent with respect to a Contract is obtained, Buyer shall assume and perform as a subcontractor or agent to Seller (to the extent permissible under such Contract to do so) all of the obligations of Seller under such Contract which are required to be performed after the Closing, and Seller shall, without further consideration, (a) promptly transmit to the other party to such Contract Seller’s invoices based upon invoices submitted by Buyer to Seller for such payments or reimbursements as are appropriate in accordance with the terms of such Contract, (b) receive payments tendered to Seller and promptly remit such payments to Buyer or the other party to such Contract, as the case may be, (c) maintain and enforce such Contract for the benefit of Buyer, and (d) take any other reasonable actions necessary to allow Buyer to perform the obligations and derive the benefits under such Contract.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.

Seller hereby represents and warrants to Buyer as follows:

3.1 Organization and Qualification; No Subsidiaries. (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has requisite corporate power and authority to own or lease the Purchased Assets and to conduct the Business in the manner and in the places where the Purchased Assets are owned or leased and the Business is currently conducted. Seller is duly licensed and/or qualified to do business in all jurisdictions in which it currently conducts the Business and is in good standing as a foreign corporation in all jurisdictions in which the Purchased Assets or the Business makes such licensing or qualification necessary. Seller has no direct or indirect subsidiaries. There are no persons or entities in which Seller owns, or has the right to acquire, any direct or indirect equity interest. Seller is not, directly or indirectly, a participant in any joint venture, partnership or other entity.

3.2 Authority; No Conflicts. Seller has the corporate authority and power to enter into this Agreement and all agreements and documents contemplated by or in this Agreement (collectively, the “Ancillary Documents”) and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance by Seller of this Agreement and the Ancillary Documents and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of Seller and its stockholders, and no other action on the part of Seller or its stockholders is required in connection therewith. This Agreement and the Ancillary Documents, when fully executed by and exchanged between Buyer and Seller, will constitute valid and binding obligations of Seller and Xxxxx Xxxxx, enforceable against each of them in accordance with their respective terms. The execution and delivery by Seller of this Agreement and the Ancillary Documents and the performance by Seller of the transactions contemplated hereby and thereby will not (a) violate any provision of Seller’s Articles of Incorporation or By-Laws, (b) violate any law, rule, regulation or governmental order applicable to Seller, or (c) result in a violation or any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under any note, contract, lease, permit or other instrument or obligation to which Seller is a party or under which its assets are bound (including any Contract or Permit).

3.3 Consents; Transferability.

(a) Except to the extent described in Section 3.3 of the Disclosure Schedule, and except as will not have a Material Adverse Effect on the Purchased Assets or the Business, no consent or waiver of, or filing with, any person or entity (governmental or otherwise) is required to be obtained in order for Seller to execute, deliver or perform any of its obligations under this Agreement or any of the Ancillary Documents.

(b) Subject to obtaining the consents set forth in Section 3.3 of the Disclosure Schedule, the interest of Seller in all Purchased Assets shall not, upon the consummation of the transactions contemplated in this Agreement, be terminated or subject to

termination in any manner whatsoever by said consummation, and such Purchased Assets shall be the property of Buyer immediately thereafter, and Buyer shall have all of the right, title and interest which Seller had available to it prior to the consummation of the Closing in and to such Purchased Assets. The interest of Seller in all Purchased Assets is sufficient to allow Buyer to operate the Business, as such Business was conducted immediately prior to the Closing.

3.4 Financial Statements; Books and Records. Section 3.4 of the Disclosure Schedule sets forth a compiled set of financial statements of Seller with respect to the Business for the one-month and six-month periods ended June 30, 2004, including (a) statement of assets, liabilities and equity-income tax basis as of June 30, 2004, and (b) statements of revenues and expenses-income tax basis and cash flows-income tax basis for the one-month and six-month periods ended June 30, 2004 (collectively, the “Financial Statements”). The Financial Statements were prepared in accordance with Seller’s accounting methods and policies, in each case applied consistently during the periods covered thereby, and present fairly in all material respects the financial condition of the Business as of June 30, 2004, and the results of the Business’ operations for the one-month and six-month periods then ended. The books of account and other financial records of Seller, based on the income Tax basis of accounting, are accurate and complete in all material respects. No expenses of the Business have been paid by anyone other than Seller, and all historical expenses of the Business have been accounted for in Seller’s statements of revenues and expenses for the appropriate periods.

3.5 Absence of Certain Changes. Since June 30, 2004, there has not been:

(a) any material adverse change in the financial condition, properties, assets, liabilities, business or operations of the Business, except for fluctuations of gross receipts and expenses of which Buyer is aware;

(b) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any material property or asset of the Business other than in the ordinary course of business;

(c) any material damage, destruction or loss, whether or not covered by insurance, with respect to any material property of the Business;

(d) any material obligation or liability incurred by Seller, whether absolute, contingent or otherwise, other than in the ordinary course of business; or

(e) any material change in accounting methods or policies, credit practices or collection practices used or followed by Seller in the Business.

For purposes of this Section 3.5, an adverse change, damage, destruction or loss, obligation or liability or change in accounting methods, policies or practices shall be deemed material if it involves an amount equal to $50,000 or more.

3.6 Stockholders; Transactions with Affiliates.

(a) Xxxxx is the sole stockholder of Seller and has been the sole stockholder since January 1, 2003. Seller does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Seller’s capital stock or any securities representing the right to purchase or otherwise receive any shares of Seller’s capital stock. There are no bonds, debentures, notes or other indebtedness of Seller having the right to vote (or convertible into, or exchangeable for securities having the right to vote) on any matters on which stockholders of Seller may vote.

(b) Neither Seller nor, to Seller’s knowledge, any of Seller’s directors, officers, employees or stockholders owns, directly or indirectly, any interest in, or serves as an officer, director, employee, partner, member or shareholder of, any person or entity (other than as a shareholder of a publicly traded company) which, since January 1, 2003, has (i) been a supplier, customer, consultant, competitor or distributor of Seller, (ii) directly or indirectly leased or otherwise acquired from Seller any property or services used in or provided by the Business, or (iii) other than pursuant to the Lease, directly or indirectly leased or otherwise transferred any property to Seller for use in its Business or furnished any services in connection with the Business.

3.7 Title and Location of Purchased Assets. Seller has good, marketable and legal title to the Purchased Assets. There are no outstanding options or rights in any person or entity to acquire any of the Purchased Assets. The Purchased Assets are not subject to any mortgage, lien, pledge, charge, security interest, encumbrance, restriction, lease or adverse claim. Except as described in Section 3.7(c) of the Disclosure Schedule, all of the Purchased Assets are located at Seller Facility. The Purchased Assets include all of the material assets used by Seller in the conduct of the Business.

3.8 Fixed Assets. Each of the Fixed Assets used in the operation of the Business is in good operating condition and repair, ordinary wear and tear excepted. The Fixed Assets are valued on the Tax basis Financial Statements at Seller’s actual cost less accumulated depreciation determined in accordance with Seller’s standard accounting methods and policies.

3.9 Contracts. Section 2.1(b) of the Disclosure Schedule lists all of the following contracts (whether written or oral) to which Seller is a party and which relate to the Business: (a) collective bargaining contracts or similar arrangements with any labor union; (b) contracts containing any covenant limiting the freedom of Seller to engage in the Business or any business similar to the Business; and (c) all other contracts used in the operation of the Business. Seller has delivered or made available to Buyer current and complete copies of each of such contracts and the Contracts. All Contracts were entered into in the ordinary course of business and are in full force and effect. There exists no default or breach on the part of Seller or, to Seller’s knowledge, any other party under any Contract, and there is no existing dispute or claim of default relating to any Contract. To Seller’s knowledge, no party to any Contract intends not to

consent to the assignment of such Contract to Buyer or intends to terminate such Contract before its complete performance or normal expiration.

3.10 Compliance with the Services Agreement. Without limiting Section 3.9 of this Agreement, the Services Agreement was entered into in the ordinary course of business and is in full force and effect. There exists no default or breach on the part of Seller or, to Seller’s knowledge, any other party to the Services Agreement, and there is no existing dispute or claim of default relating to the Services Agreement. All the requisite consents required to transfer the Services Agreement to the Buyer under this Agreement have been obtained by the Seller.

3.11 Accounts Receivable. Section 2.1(c) of the Disclosure Schedule lists all of the accounts receivable outstanding and unpaid as of the Closing and provides aging information as to each of such accounts receivable. Each of the accounts receivable arose from the ordinary course of business, has (except as set forth in Section 2.1(c) of the Disclosure Schedule) been invoiced to the customer and is valid, due and owing to Seller. With respect to each of the accounts receivable, all obligations required to be performed by Seller prior to the Closing Date have been performed.

3.12 Intellectual Property.

(a) Section 3.12(a) of the Disclosure Schedule lists (i) all patents, patent applications (including inventions under evaluation and applications in the process of being prepared), and registered copyrights used by Seller in the Business, stating as to each which are owned by Seller, licensed to Seller or licensed by Seller, and (ii) all other licenses relating to the Intellectual Property. The Seller owns, is licensed or otherwise has the right to use all Intellectual Property listed in Section 3.12(a) of the Disclosure Schedule.

(b) Seller has the right to use, sell and license the trade secrets that are currently used, sold or licensed, in the Business, in the manner currently used, sold or licensed, including know-how, process methods, protocols and computer software that are currently used in the Business.

(c) The rights in the Intellectual Property that is licensed by Seller to third persons do not restrict, prevent or otherwise interfere in any way with Seller’s rights therein.

(d) The conduct of the Business does not infringe upon any intellectual property right of any third person. Seller has not received any written notice and there has been no written claim, or to Seller’s knowledge any threatened claim or basis for any claim, (i) alleging that the conduct of the Business infringes upon any right (including any patent, trademark, registered trademark copyright, registered copyright or other intellectual property right) of any third person, (ii) contesting the validity, ownership or rights to use, sell, license or dispose of any of the Intellectual Property, or (iii) that

Seller’s use of the Intellectual Property violates any agreement between Seller and any third person.

(e) There is no unauthorized use, infringement or misappropriation by any third person of any of the Intellectual Property.

(f) Seller has the right to use all Intellectual Property used by Seller in the operation of the Business. No employee or consultant has created or developed any Intellectual Property during the course of his or her employment or retention by Seller that (i) is material to the Business and either (ii)(A) has not been assigned or licensed to, or is subject to a duty to be assigned or licensed to, Seller or (B) will not be transferred to Buyer pursuant to this Agreement.

(g) Seller has taken all reasonable and practicable steps to protect and preserve the confidentiality of Seller’s trade secrets, if any, and has not disclosed or otherwise caused the loss of the proprietary or trade secret status by release thereof to the public domain.

3.13 Seller Facility. The Seller Facility is leased from Landlord pursuant to the Lease. The Lease is in full force and effect, with no uncured defaults and with no acts or omissions having occurred which, but for the passing of time or giving of notice, would constitute a default. In accordance with Section 12.1 of the Lease, Landlord has consented in writing to the assignment of the Lease from Seller to Buyer, effective as of the Closing, and has (a) amended the Lease to provide that the term of the lease shall end on the date of termination (not later than December 31, 2008) as may be specified by Buyer at any time upon not less than ninety (90) days’ prior written notice or (b) agreed to the assignment of the lease to, and assumption of the lease by, Xxxxx upon ninety (90) days’ prior written notice by Buyer.

3.14 Commissions. There are no commissions, finder’s fees or similar payments which (a) are accrued for payment to any person (including Seller’s employees) or entity, and (b) other than pursuant to the Collection Agreement, would be owed to any person (including Seller’s employees) or entity upon collection after the Closing of any accounts receivable of the Business outstanding and unpaid as of the Closing.

3.15 Taxes. Seller is, and has been for each year for which the assessment of Taxes of Seller is not barred by the applicable statute of limitations, qualified as an S Corporation for both federal and state tax purposes. Seller has timely filed all of its Tax Returns with the appropriate Tax authority that were required to be filed under all applicable laws. All such Tax Returns were when filed, and continue to be, correct and complete in all respects. All Taxes due and payable by Seller (whether or not shown on any Tax Return) have been timely paid. All Taxes that Seller is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been timely paid to the proper governmental entity. Seller currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made against Seller by a Tax authority in a jurisdiction where Seller does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. No Tax authority is now

asserting or, to Seller’s knowledge, threatening to assert against Seller any material deficiency or material claim for additional Taxes or interest thereon or penalties in connection therewith. With respect to compensation, Seller has operated the Business in accordance with applicable Tax laws. There are no liens with respect to Taxes on any of the assets or property of Seller, except for liens with respect to Taxes not yet payable.

3.16 Environmental Matters. Seller is in compliance with all applicable Environmental Laws, and Seller has never generated, transported, used, stored, treated, disposed of, or managed any hazardous substance regulated under any Environmental Law other than in compliance with all applicable Environmental Laws. There have been no releases (as defined under any applicable Environmental Law) at or about the Seller Facility during the period of xxxx Xxxxxx has occupied those facilities, of any material, waste, chemical or byproduct regulated under any applicable Environmental Law.

3.17 Permits. Except as set forth in Section 3.17 of the Disclosure Schedule, to the best of Seller’s knowledge, no permit, authorization, license or approval by any governmental agency is required to be obtained or held by Seller in any jurisdiction in order for it to own or lease any of the Purchased Assets, sell or enable any Service or to conduct the Business as it is currently conducted by Seller, except where such failure to obtain such permit, authorization, or approval would not, in the aggregate, have a Material Adverse Effect on the Purchased Assets or Business.

3.18 Compliance with Laws; Absence of Certain Practices.

(a) Seller is in compliance with all laws, rules, regulations and governmental orders applicable to any of the Purchased Assets, the Services or the Business.

(b) Neither Seller nor any director, officer, agent, employee or other person or entity acting on its behalf has given or agreed to give any gift or similar benefit of more than nominal value to any customer, supplier or governmental employee or official or any other person or entity who is or may be in a position to help or hinder Seller in connection with any proposed transaction involving Seller Neither Seller nor any director, officer, agent, employee or other person or entity acting on behalf of Seller has (i) used any corporate or other funds for unlawful contributions, payments, gifts, or entertainment, or made any unlawful expenditures relating to political activity to, or on behalf of, government officials or others; (ii) accepted or received any unlawful contributions, payments, gifts or expenditures or (iii) had any transaction or payment which was not recorded in its accounting books and records or disclosed on its financial statements.

(c) Neither Seller nor Xxxxx has entered into any agreement, arrangement or understanding with, or made any promise to, any current or former director, officer or employee of Seller with respect to the direct or indirect payment of any portion of the Purchase Price to such person.

3.19 No Brokers; Financial Advisors. Other than Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, neither Seller nor any of its officers, directors or employees acting on its behalf has entered into any contract, agreement, arrangement or understanding with any financial advisor, broker, finder or similar agent or any person or entity which will result in the obligation of Seller or Buyer to pay any financial advisory fees, finder’s fee, brokerage fees or commission or similar payment in connection with this Agreement and the transactions contemplated hereby.

3.20 Employees and Labor Matters.

(a) Section 3.20 of the Disclosure Schedule lists all of Seller’s current employees involved in the Business (collectively, the “Employees”), with their date of hire by Seller and their current salary or wage rate. There is not currently, and to Seller’s knowledge there has not been, within the two-year period preceding the date of this Agreement, any strike, picketing, boycott, work stoppage or slow down or union organization activity by any of the Employees. The Seller has not received written notice within the two-year period preceding the date of this Agreement of any allegation, charge or complaint of unfair labor practice, sexual harassment or employment discrimination or that Seller has not complied with all applicable laws, rules, regulations and governmental orders relating to any of the Employees.

(b) To Seller’s knowledge, no Employee’s activities conducted with respect to the Business conflict with or would constitute a material breach of the terms of any employment agreement, intellectual property disclosure agreement, restrictive covenant or other agreement under which such Employee is obligated or bound, and Seller has received no written allegation to such effect. No Employee or other person currently employed by Seller that has or had access to confidential information of Seller is party to a confidentiality and/or a non-disclosure agreement.

3.21 Insurance. Seller has made available to Buyer true and complete copies of all binders or policies of insurance of Seller currently in effect. To Seller’s knowledge, all such insurance has been issued under valid and enforceable policies or binders for the benefit of Seller, and all such policies or binders are in full force and effect and none of the premiums therefor are past due and Seller has not received any notice of cancellation with respect thereto. Seller is in compliance with the terms of all such policies and binders. As of the date hereof, there are no pending or, to Seller’s knowledge, asserted claims outstanding against any insurance carrier.

3.22 Legal Proceedings. There is no legal action, arbitration or administrative or governmental proceeding or investigation in which Seller has been served or provided with actual notice, nor, to Seller’s knowledge, are any of the foregoing filed, issued or threatened, which relates to any of the Purchased Assets, the Services or the Business. There exists no governmental order or judgment currently in effect against Seller or relating to any of the Purchased Assets, the Services or the Business.

3.23 Securities Act Representations. Seller (i) is an “accredited investor” as that term is defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended, (ii) has such knowledge and experience of financial, business and investment matters as to be capable of evaluating the merits and risks of acquiring Parent’s common stock, (iii) has the ability to bear the economic risks of acquiring Parent’s common stock, (iv) was not organized or reorganized for the specific purpose of acquiring Parent’s common stock and (v) has been afforded the opportunity to ask questions of, and to receive answers from, Buyer and to obtain additional information, all as necessary for Seller to make an informed investment decision with respect to the acquisition of Parent’s common stock. Seller is acquiring Parent’s common stock for investment for its own account or the account of Xxxxx, Seller’s sole stockholder, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Seller understands that the shares of Parent’s common stock to be acquired have not been, and except as provided herein will not be, registered under the Securities Act of 1933, as amended. Seller acknowledges that the availability of an exemption from the registration provisions of the Securities Act depends upon, among other things, the bona fide nature of the investment intent. Seller understands and acknowledges that certificates representing Parent’s common stock will bear a legend with respect to the fact that such shares may only be sold pursuant to a registration statement under the federal securities laws or an exemption from registration thereunder. Seller acknowledges that Parent’s common stock must be held indefinitely unless subsequently registered under the Securities Act of 1933, as amended, or unless an exemption from such registration is available. Seller is aware of the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended, which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions.

3.24 Disclosure. As of the date of this Agreement, no representation, warranty or statement made by Seller in this Agreement, the Sale Agreements or the Disclosure Schedule contains any untrue statement of a material fact, or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.

Buyer hereby represents and warrants to Seller as follows:

4.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has requisite power and authority to own or lease the Purchased Assets and to conduct the Business in the manner and in the places where the Purchased Assets are owned or leased and the Business is currently conducted.

4.2 Authority; No Conflicts. Buyer has all requisite authority and power to enter into this Agreement and the Ancillary Documents and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action of Buyer and no other action

on the part of Buyer is required in connection therewith. This Agreement and the Ancillary Documents, when fully executed by and exchanged between Buyer and Seller, will constitute the valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents and the performance by Buyer of the transactions contemplated hereby and thereby will not (a) violate any provision of Buyer’s organizational documents, (b) violate any law, rule, regulation or governmental order applicable to Buyer, or (c) result in a violation or any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under any note, contract, lease, permit or other instrument or obligation to which Buyer is a party or under which any of its assets are bound.

4.3 Consents. No consent or waiver of, or filing with, any person or entity (governmental or otherwise) is required to be obtained in order for Buyer to execute, deliver or perform any of its obligations under this Agreement or any of the Ancillary Documents.

4.4 Litigation. There is no legal action, arbitration or administrative or governmental proceeding or investigation in which Buyer has been served or provided with formal notice, nor, to Buyer’s knowledge, are any of the foregoing filed, issued or threatened, which would reasonably be expected to have a material adverse effect on the consummation of the transactions contemplated by this Agreement or materially limit Buyer’s ability to perform any of its obligations under this Agreement or any of the Ancillary Documents.

4.5 Disclosure. As of the date of this Agreement, no representation, warranty or statement made by Buyer in this Agreement or the Sale Agreements contains any untrue statement of a material fact, or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, Parent’s filings under the Securities Exchange Act of 1934, as amended, in the aggregate, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.6 Shares. The shares issued to Seller under Section 2.5(a) are validly issued, fully paid and nonassessable. There are no outstanding liens, assessments or encumbrances against said shares.

4.7 No Brokers; Financial Advisors. Other than Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, neither Buyer nor any of its officers, directors or employees acting on its behalf has entered into any contract, agreement, arrangement or understanding with any financial advisor, broker, finder or similar agent or any Person which will result in the obligation of Seller or Buyer to pay any financial advisory fees, finder’s fee, brokerage fees or commission or similar payment in connection with this Agreement and the transactions contemplated hereby.

SECTION 5. CLOSING DELIVERIES.

5.1 Deliveries by Seller. Concurrently with the Closing, Seller is delivering, or causing to be delivered to Buyer, the following documents, each duly executed and dated as of the date of this Agreement and all in form and substance acceptable to Buyer:

(a) A Seller’s Certificate;

(b) An opinion of Seller’s counsel, in a form acceptable to Buyer’s counsel;

(d) An Assignment, Xxxx of Sale and Assumption Agreement;

(e) A Collection Agreement;

(f) An executed non-competition agreement between Buyer and Xxxxx Xxxxx;

(g) An executed employment and non-competition agreement between Buyer and each of the Key Persons;

(h) A letter agreement regarding Revenues targets for the Earn-Out Periods;

(i) The Lease, as amended, and the consent of the Landlord for the assignment of the Lease to Buyer as described in Section 3.13;

(j) Such documents, records, keys and other items as shall be necessary for the operating of the Purchased Assets and the Business; and

(k) Such other instruments of transfer, including such assignments and consents to assignments as have been reasonably requested by Buyer and necessary to transfer to Buyer good and marketable title to all of the Purchased Assets free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, restriction, lease or adverse claim, all in forms which are consistent with the terms of this Agreement and are usual and customary for transferring the type of Purchased Assets involved under the laws of the jurisdictions applicable to such transfers.

5.2 Deliveries by Buyer. Concurrently with the Closing, Buyer is delivering, or causing to be delivered to Seller, the following documents, each duly executed and dated as of the date of this Agreement and all in form and substance acceptable to Seller:

(a) The Base Purchase Price;

(b) A Buyer’s Certificate;

(d) An Assignment, Xxxx of Sale and Assumption Agreement;

(e) A Collection Agreement;

(f) An executed non-competition agreement between Buyer and Xxxxx Xxxxx;

(g) An executed employment and non-competition agreement between Buyer and each of the Key Persons; and

(h) A letter agreement regarding Revenues targets for the Earn-Out Periods.

SECTION 6. CONDITIONS TO CLOSING.

6.1 Conditions Precedent to Buyer’s Obligations. The obligations of Buyer are subject to the satisfaction, on or before the Closing Date, of the conditions set out below. The benefit of these conditions is for Buyer only and may be waived in writing by Buyer at any time in its sole discretion.

(a) Subject to any post-Closing adjustment required under Section 2.5(c), the amount of accounts receivable included in the Purchased Assets shall be at least $850,000 at Closing, and Buyer shall have received a certificate attesting thereto signed by a duly authorized officer of Seller.

(b) The representations and warranties of Seller shall be true and correct as of the date when made and as of the Closing Date as though made at that time, and Buyer shall have received a certificate attesting thereto signed by a duly authorized officer of Seller.

(c) Seller shall have performed, satisfied and complied with all covenants, agreements, and conditions required by this Agreement and Buyer shall have received a certificate signed by a duly authorized officer of Seller.

(d) Subject to Section 2.7 hereof, the Seller shall have obtained all consents (which, for the avoidance of doubt shall include a requisite consent or notice required to transfer the Services Agreement to Buyer) which are required for the consummation of the purchase, sale and transfer contemplated by this Agreement.

(e) Buyer shall have received the closing deliveries set forth in Section 5.1.

(f) There shall not have been issued and be in effect any judgment or order of any court or tribunal of competent jurisdiction which (i) makes the purchase by Buyer of the Purchased Assets illegal, or (ii) would impose limitations on the ability of Buyer to effectively exercise full rights of ownership of a material portion of the Purchased Assets or the Business, as a result of the transactions contemplated hereby.

(g) All legal and corporate proceedings in connection with the transactions contemplated by this Agreement shall be in form and substance reasonably satisfactory to Buyer and its counsel, and Buyer shall have received all such counterpart originals or certified or other copies of such documents and proceeding in connection with such transactions as Buyer reasonably requests, in form and substance as to certification and otherwise reasonably satisfactory to Buyer and its counsel.

6.2 Conditions Precedent to Seller’s Obligations.

The obligations of Seller are subject to the satisfaction, on or before the Closing Date, of the conditions set out below. The benefit of these conditions is for Seller only and may be waived by Seller in writing at any time in its sole discretion.

(a) The representations and warranties of Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date, as though made at that time, and Buyer shall have received certificates attesting thereto signed by duly authorized officers of Buyer.

(b) Buyer shall have performed, satisfied and complied with all covenants, agreements and conditions required by this Agreement and Seller shall have received certificates of duly authorized officers of Buyer to such effect.

(c) Buyer shall have obtained all consents which are required for the consummation of the purchase, sale and transfer contemplated by this Agreement.

(d) Seller shall have received the closing deliveries set forth in Section 5.2.

(e) There shall not have been issued and be in effect any judgment or order of any court or tribunal of competent jurisdiction which makes the sale by Seller of the Purchased Assets to Buyer illegal as a result of the transactions contemplated hereby.

(f) All legal and corporate proceedings in connection with the transactions contemplated by this Agreement shall be in form and substance reasonably satisfactory to Seller and the counsel to Seller, and Seller shall have received all such counterpart originals or certified or other copies of such documents and proceeding in connection with such transactions as Seller reasonably request, in form and substance as to certification and otherwise reasonably satisfactory to Seller and its counsel.

SECTION 7. INDEMNIFICATION.

7.1 Indemnification by Seller. Seller and Xxxxx shall, jointly and severally, defend, indemnify and hold harmless Buyer and its subsidiaries and affiliates, and their respective directors, officers, employees, agents and stockholders, from and against any damage, liability, loss, judgment, fine, penalty, cost and expense suffered by Buyer (including reasonable attorneys’ fees) (collectively, “Losses”) arising out of or resulting from, directly or indirectly,

any (a) breach of any representation or warranty of Seller in this Agreement or any of the other Sale Documents, (b) breach of any covenant of Seller or Xxxxx in this Agreement or any of the other Sale Documents (including, without limitation, the covenants set forth in Section 8.2 and 8.8 hereof), and (c) failure by Seller to perform or discharge any of the Excluded Liabilities. Neither Seller nor Xxxxx shall have any obligation to defend, indemnify and hold Buyer and any such person harmless under clauses (a) and (b) of Section 7.1 with respect to any matter for which notice has not been given to Seller pursuant to Section 7.3 on or before the second (2^nd) anniversary of the Closing Date (the “Survival Date”); provided, however, that with respect to the obligations under Section 7.1 relating to Seller’s representations and warranties set forth in Sections 3.7 (Title and Location of Purchased Assets), 3.18 (Taxes) and 3.19 (Environmental Matters), the Survival Date shall, in the case of each such Section, be extended until the expiration of all statutes of limitations applicable to the subject matter of the representations and warranties set forth in that Section. Indemnification pursuant to clause (c) of Section 7.1 is not subject to any Survival Date or other limitation.

7.2 Indemnification by Buyer. Buyer shall defend, indemnify and hold harmless Seller and its directors, officers, employees, agents and shareholders from and against any Losses arising out of or resulting from, directly or indirectly, any (a) breach of any representation or warranty of Buyer in this Agreement or any of the other Sale Documents, (b) breach of any covenant of Buyer in this Agreement or any of the other Sale Documents, and (c) failure by Buyer to perform or discharge any of the Assumed Liabilities. Buyer shall have no obligation to defend, indemnify and hold Seller and any such person harmless under clauses (a) and (b) of Section 7.2 with respect to any matter for which notice has not been given to Buyer pursuant to Section 7.3 on or before the Survival Date. Indemnification pursuant to clause (c) of Section 7.2 is not subject to any Survival Date or other limitation.

7.3 Notice and Defense of Claims.

(a) If any party entitled to indemnification under this Agreement (the “Indemnified Party”) receives notice or otherwise obtains knowledge of any matter with respect to which any other party required to provide indemnification under this Agreement (the “Indemnifying Party”) may become obligated to defend, indemnify and hold harmless under this Section 7, then the Indemnified Party shall promptly deliver to the Indemnifying Party a written notice describing such matter in reasonable detail and the total monetary damages sought to the extent reasonably discernable (a “Claim Notice”) as soon as practicable after such Indemnified Party becomes aware of any fact, condition or event which may give rise to Losses for which indemnification may be sought pursuant to Section 7. If the Indemnifying Party does not send a notice of disagreement to the Indemnified Party within thirty (30) days after receiving the Claim Notice, and such matter does not involve a third party, then the Indemnifying Party shall be deemed to have agreed to pay the Losses at issue.

(b) If such matter involves a third party, the Indemnifying Party shall have the right, at its option, to assume the defense of such matter at its own expense and with its

own counsel. If the Indemnifying Party elects to and does assume the defense of such matter, then (a) the Indemnified Party shall cooperate as reasonably requested by the Indemnifying Party (at the Indemnifying Party’s expense) in the defense of such matter, (b) the Indemnifying Party shall keep the Indemnified Party reasonably informed of developments and events relating to such matter, and (c) the Indemnified Party shall have the right to participate, at its own expense, in the defense of such matter. The Indemnifying Party may settle or compromise such matter, but only with the written consent of the Indemnified Party, which consent shall not be unreasonably withheld. In the event that the Indemnifying Party fails to assume the defense of such claim within fifteen (15) calendar days after the receipt of the Claim Notice, the Indemnified Party shall have the right (but not the obligation) to undertake, at the Indemnifying Party’s cost, risk and defense, the defense, compromise or settlement of such claim on behalf of and for the account and risk of the Indemnifying Party, provided, however, that such claim shall not be compromised or settled without the written consent of the Indemnifying Party. If the Indemnified Party assumes the defense of the claim, then the Indemnified Party shall keep the Indemnifying Party reasonably informed of the progress of any such defense, compromise or settlement. The Indemnifying Party shall be liable for any settlement of the claim effected pursuant to this Section 7.3, and for any final judgment.

7.4 Resolution of Conflicts and Claims. (a) If the Indemnifying Party objects in writing to any claim for indemnification made by the Indemnified Party in any written notice of a claim (an “Objection Notice”), then the Indemnifying Party and the Indemnified Party shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims, and the parties shall each provide information (as reasonably requested) to the other related to the issues set forth in the Objection Notice. If the Indemnified Party and the Indemnifying Party so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and, in the case of indemnification by Seller, the amount agreed upon by the parties shall be paid to Buyer by wire transfer of immediately available funds, and in the case of indemnification by Buyer, such amount shall be paid to Seller by wire transfer of immediately available funds. If the Indemnified Party and the Indemnifying Party do not agree upon the rights of the respective parties with respect to each of such claims, such dispute shall be resolved in accordance with Section 9.10.

7.5 Certain Calculations. The amount of any Losses for which indemnification is provided pursuant to this Section 7 shall be net of (a) any amounts recovered by the Indemnified Party pursuant to any indemnification agreement with any third party and (b) any insurance proceeds or other cash receipts or sources of reimbursement received as an offset against such Losses.

7.6 Survival of Representations and Warranties. The representations and warranties of the parties contained herein shall survive the Closing until the applicable Survival Date. Any claim under this Agreement with respect to a breach of a representation and warranty must be asserted by a Claim Notice delivered prior to 5:00 P.M., Eastern Time, on the applicable

Survival Date and, if such a notice is given, the survival period for such representation and warranty shall continue until the claim is fully resolved.

SECTION 8. ADDITIONAL COVENANTS OF BUYER AND SELLER.

8.1 Buyer’s Offers of Employment.

(a) Except with respect to Xxxxx Xxxxx and each of the Key Persons, Buyer may, but shall not be obligated to, offer employment to any of the Employees.

(b) Nothing in this Agreement is intended to or shall provide any rights or remedies to any of the Employees or any former or future employee of Seller (or any of their respective beneficiaries or dependents), including any rights or remedies with respect to continued employment with Seller or offers of employment with Buyer or the terms of any such employment.

8.2 Accounts Receivable. In the event that at the expiration of ninety (90) days after the Closing Date, Buyer has not collected in full any Accounts Receivable (net of any cash discounts resulting from early payment) not subject to the Collection Agreement, despite Buyer’s commercially reasonable efforts to collect such Accounts Receivable (the “Uncollectible Accounts Receivable”), Buyer may at its election (which election must be made in writing no later than one hundred twenty (120) days after the Closing Date) transfer and assign such Uncollectible Accounts Receivable to Seller, in which case Seller and Xxxxx shall promptly pay to Buyer the uncollected amount of such Uncollectible Accounts Receivable. Buyer’s obligation to use commercially reasonable efforts to collect the Accounts Receivable shall not require that Buyer file any lawsuit or initiate other legal proceedings against any party to any Accounts Receivable, and Seller and Xxxxx shall provide to Buyer, at Seller’s expense, assistance reasonably requested by Buyer in its efforts to collect such Accounts Receivable. Other than any Accounts Receivable transferred and assigned to Seller pursuant to the foregoing, Seller shall promptly remit to Buyer any payments received by Seller (other than from Buyer) on account of any Accounts Receivable. Buyer shall provide assistance as reasonably requested by Seller to collect any Accounts Receivable that have been transferred and assigned to Seller. Buyer shall remit to Seller any payments received by Buyer on account of any accounts receivable of Seller subject to the Collection Agreement in accordance with the terms thereof.

8.3 Access to Records and Personnel. From and after the Closing until the expiration of three (3) years after the Closing Date, Buyer and Seller shall each upon reasonable request from the other (a) make available and permit the other and its representatives and agents to inspect and copy books and records which relate to the Business as previously conducted by Seller other than personnel records for Seller’s employees other than the Employees whom Buyer has agreed to employ immediately after the Closing; and (b) arrange discussions with its current officers and employees regarding the Business as previously conducted by Seller; provided, however, that (i) all such inspection, copying and assistance shall be at the requested party’s place of business at reasonable times, (ii) all such inspection, copying and assistance shall be at the sole cost and expense of the requesting party, and (iii) the requesting party shall

treat all such records and information obtained from the other and the contents thereof as confidential and not disclose such records or information to any other person or entity except as required by applicable law.

8.4 Bulk Sales. Buyer waives compliance by Seller with the provisions of any applicable bulk sales, fraudulent conveyance or other law for the protection of creditors in connection with the transfer of the Purchased Assets under this Agreement; provided, however, that Seller shall pay and discharge when due all claims of creditors, other than Assumed Liabilities, which could be asserted against Buyer or any of the Purchased Assets by reason of such non-compliance.

8.5 Fees and Expenses; Taxes. Each of Buyer, on the one hand, and Seller, on the other hand, shall bear and pay its own expenses in connection with the negotiation and consummation of the transactions contemplated by this Agreement, including any broker’s commission or finder’s fee imposed on or incurred by such party and any Taxes imposed on such party by applicable law; provided, however, that any sales taxes that arise as a result of the transfer of any of the Purchased Assets to Buyer under this Agreement or any transaction contemplated by this Agreement shall be borne and paid by Seller.

8.6 Press Releases. Neither Buyer nor Seller shall issue any press release regarding this Agreement or the transactions contemplated hereby without the written consent of the others; provided, however, that Buyer may issue any press release to the extent required by law, but shall in such case, to the extent practicable, confer with the other parties to this Agreement prior to the issuance of such press release.

8.7 Change of Corporate Name. On the Closing Date or as soon as practicable thereafter, Seller shall change its corporate name to a new name which does not include the term “IGS Nevada” or an acronym or abbreviation of or any variations, translations or combinations thereof or similar names and otherwise is not likely to be confused with its present name, so as to make Seller’s present name available to Buyer. From and after the Closing, Seller shall not use the term “IGS Nevada” or an acronym or abbreviation of or any variations, translations or combinations thereof or similar names in connection with any business. Until the Survival Date, Seller shall not dissolve and shall continue as a validly existing corporation.

8.8 No Agreements with Respect to Purchase Price. Neither Seller nor Xxxxx shall enter into any agreement, arrangement or understanding with, or make any promise to, any current or former director, officer or employee of Seller with respect to the direct or indirect payment of any portion of the Purchase Price to such person, without the prior written consent of Buyer. Neither Seller nor Xxxxx shall cause any capital stock of Seller to be transferred or issued to anyone other than Xxxxx.

8.9 Further Assurances. From and after the Closing, Buyer and Seller shall each provide to the other such additional instruments and documents as the other may reasonably request for the purpose of carrying out or evidencing the transactions contemplated by this Agreement.

SECTION 9. MISCELLANEOUS.

9.1 Governing Law. This Agreement and the Ancillary Documents shall be construed under and governed by the laws of the State of Delaware without regard to its choice of law principles.

9.2 Notices. Any notice, request, demand or other communication required or permitted under this Agreement or any of the Ancillary Documents shall be in writing and shall be deemed to have been given (a) if delivered or sent by facsimile transmission or overnight courier, upon receipt, or (b) if sent by registered or certified mail, upon the sooner of the date on which receipt is acknowledged or the expiration of three days after deposit in U.S. post office facilities properly addressed with postage prepaid. All notices sent by facsimile transmission shall be also sent by overnight courier or U.S. mail. All notices to a party will be sent to the addresses set forth below or to such other address or person as such party may designate by written notice to the other party hereunder:


To Buyer:
		Portfolio Recovery Associates, Inc.
		Riverside Commerce Center
		000 Xxxxxxxxx Xxxxxxxxx
		Xxxxxxx, Xxxxxxxx 00000
		Attention:
		Fax:

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

		Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
		The Chrysler Building
		000 Xxxxxxxxx Xxxxxx
		Xxx Xxxx, Xxx Xxxx 00000
		Attention: Xxxx X. Xxx, Esq.
		Fax: (000) 000-0000

To Seller:
		IGS Nevada, Inc.
		0000 Xxxx Xxxxxxx Xxxx
		Xxx Xxxxx, Xxxxxx
		Attention: Xxxxx Xxxxx
		Fax:

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

		Xxxxx X. Xxxxxxxx, Esq.
		Xxxx & Xxxxxxxx
		00000 Xxxxxxxx Xxxx., Xxxxx 000
		Xxx Xxxxxxx, Xxxxxxxxxx 00000
		Fax: 000 000 0000

9.3 Entire Agreement. This Agreement, together with the Ancillary Documents, constitutes the entire agreement of the parties with respect to its subject matter, and supersedes all previous written or oral negotiations, commitments and writings.

9.4 Interpretation.

(a) The headings of Sections of this Agreement and the Sale Documents are included for convenience only and shall not affect the construction or interpretation of any term or provision of this Agreement or the Sale Documents.

(b) If any language in any of the Sale Documents is inconsistent with any language in this Agreement, the language in this Agreement shall govern and control.

(c) The meanings of terms defined in this Agreement and the Sale Documents shall be equally applicable to both the singular and plural forms of such terms.

(d) Any references in this Agreement to “Seller’s knowledge” shall mean the actual knowledge, after reasonable inquiry, of Xxxxx.

(e) References in this Agreement and the Sale Documents to Buyer or Seller shall include such person’s successors and permitted assigns.

(f) In this Agreement and the Sale Documents, the term “including” shall means including without limiting the generality of any description preceding such term.

(g) References in this Agreement and the Sales Agreement to documents, instruments or agreements shall be deemed to refer as well to all exhibits, schedules or amendments thereto.

9.5 Mutual Drafting. This Agreement and the Sale Documents are the mutual product of Buyer and Seller, each provision of this Agreement and of the Sale Documents have been subject to mutual consultation, negotiation and drafting, and the language of this Agreement and the Sale Documents shall therefore be interpreted without reference to which party prepared this Agreement, the Sale Documents or any portion of thereof.

9.6 Severability. If any provision, any part of any provision or the scope of any provision of this Agreement or any of the Sale Documents, is found to be contrary to law, invalid, illegal, unenforceable or unreasonable in any respect by any governmental authority, court of law or arbitrator(s) having competent jurisdiction over the subject matter of and over the parties to this Agreement or any of the Sale Documents, the remaining provisions, parts of such provision or reasonable scope of such provision shall be severable and in no way shall the validity, legality, enforceability or reasonableness of those remaining provisions, parts of such provision or reasonable scope of such provision be affected or impaired by that which was found to be contrary to law, invalid, illegal, unenforceable or unreasonable.

9.7 Amendments and Waivers. Neither this Agreement nor any of the Sale Documents may be amended or modified, nor may compliance with any condition or covenant set forth herein be waived, except by a writing duly and validly executed by each party hereto, or in the case of a waiver, the party waiving compliance. No failure on the part of either party to this Agreement to exercise any right or remedy under this Agreement or any of the Sale Documents and no delay on the part of either party to this Agreement in exercising any right or remedy under this Agreement or any of the Sale Documents shall constitute a waiver of such right or remedy, and no single or partial exercise of any such right or remedy shall preclude any other or further exercise of such right or remedy or of any other right or remedy.

9.8 Successors and Assigns. This Agreement and the Sale Documents shall be binding upon and inure to the benefit of Buyer and Seller, and their respective successors and permitted assigns. Seller shall not assign or otherwise transfer any of their respective rights or

obligations under this Agreement or any of the Sale Documents without the prior written consent of Buyer, and any attempted or purported assignment or other transfer in contravention of this Section 9.8 shall be null and void. Buyer may assign any or all of its rights under this Agreement or any of the Sales Agreements to a parent, wholly-owned subsidiary, or affiliate of Buyer, provided, however, that such assignee expressly assumes liability under this Agreement and such Sales Agreements and Buyer shall remain responsible for the performance of all its obligations hereunder or thereunder.

9.9 Parties. This Agreement is for the sole benefit of Buyer and Seller, and their respective successors and permitted assigns, and nothing in this Agreement or any of the Sale Documents is intended to or shall provide any rights or remedies to any person other than to Buyer and Seller, and their respective successors and permitted assigns.

9.10 Dispute Resolution. Any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, any of the Sale Documents or any agreement or document executed in connection with this Agreement or the transactions contemplated by this Agreement (or any amendment of any of the foregoing), including as to their existence, validity, enforceability, interpretation, performance, breach or termination, including claims in tort and claims raising questions of law, whether arising before or after any termination of this Agreement (collectively, a “Dispute”), shall be resolved solely in accordance with this Section 9.10. In the event of any Dispute, then, upon the written request of Buyer or Seller, each side shall designate a representative whose task it will be to meet and negotiate for the purpose of endeavoring to resolve such Dispute. The representatives shall meet as often as both parties reasonably deem necessary in order to gather and furnish to the other such information with respect to the Dispute that the parties reasonably believe to be appropriate and germane to the Dispute. During the course of the representatives’ negotiation, each party shall cooperate with reasonable requests from the other party for such information. No formal proceedings for the binding arbitration of such Dispute (as provided below) may be commenced until a period of thirty (30) days after the initial request by either party for resolution of the Dispute under this Section 9.10. If the parties are unable to resolve the Dispute in accordance with the foregoing, the Dispute shall be resolved exclusively by binding arbitration by an arbitrator mutually agreed upon by the parties. If the parties are unable to agree upon an arbitrator, each party shall submit the names of three arbitrators, in order of preference, with a brief description of the background and experience of each. Within seven (7) calendar days of the submission of the arbitrators’ names, the parties shall jointly select an arbitrator from the combined list of six arbitrators. If the parties are unable to agree upon an arbitrator from the combined list, the arbitrator shall be selected by a drawing of one name from the combined list. The arbitrator so determined may then proceed with scheduling the arbitration in accordance with the following: (a) the arbitration shall take place in Chicago, Illinois and in no other place; (b) the arbitration shall be conducted in accordance with the procedural laws of the U.S. Federal Arbitration Act, to the extent not inconsistent with this Section 9.10; (c) the arbitrator shall be instructed to make its rulings on financial issues in a manner consistent with GAAP; (d) subject to legal privileges, each party shall be entitled to conduct discovery in accordance with the Federal Rules of Civil Procedure; (e) at the arbitration hearing, each party shall be permitted to make written and oral presentations

to the arbitrator, to present testimony and written evidence and to examine witnesses; (f) the arbitrator shall have the power to grant temporary or permanent injunctive relief and to order specific performance; (g) the arbitrator shall issue a written decision explaining the bases for the final ruling, and such decision shall be final, binding on the parties hereto and enforceable in any court of competent jurisdiction; and (h) the parties shall share equally any fees and expenses of the arbitrator.

9.11 Jurisdiction. With respect to any arbitration arising out of or relating to this Agreement or any of the Sale Documents, Buyer and Seller each hereby (a) submits to the jurisdiction of the arbitrator selected in accordance with Section 9.10, (b) agrees that all claims with respect to any such arbitration shall be heard and determined in Chicago, Illinois and in no other place or forum, (c) waives the defense of an inconvenient forum, (d) consents to service of process by mailing or delivering such service to its agent and authorizes and directs that agent to accept such service, and (e) agrees that a final judgment in any such action or proceeding shall be final, binding and enforceable in any court of competent jurisdiction.

9.12 Signatures; Counterparts. Facsimile transmissions of any executed original document and/or retransmission of any executed facsimile transmission shall be deemed to be the same as the delivery of an executed original. At the request of any party hereto, the other parties hereto shall confirm facsimile transmissions by executing duplicate original documents and delivering the same to the requesting party or parties. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

[Remainder of page intentionally left blank. Signature page follows.]

The parties have executed this Agreement by their duly authorized representatives, in each case as of the date set forth above.


		PORTFOLIO RECOVERY ASSOCIATES, INC.

		By: /s/ Xxxxxx X. Xxxxxxxxxxx
		Name: Xxxxxx X. Xxxxxxxxxxx
		Title: President and CEO

		PRA LOCATION SERVICES, LLC

		By: /s/ Xxxxx X. Xxxxxxxxx
		Name: Xxxxx X. Xxxxxxxxx
		Title: Member Representative

		IGS NEVADA, INC.

		By: /s/ Xxxxx Xxxxx
		Name: Xxxxx Xxxxx

List of Exhibits, Schedules and Other Documents (per Item 601(b)(2) of Regulation S-K)

Exhibits

2.5(c) Collection Agreement
2.5(d)(1) Purchase Price Allocation
2.5(d)(2) Form of Internal Revenue Service Form 8594

Schedules

Disclosure Schedule

Document Metadata

Table of Contents

ASSET PURCHASE AGREEMENT

Document Metadata