ASSET PURCHASE AGREEMENT by and between ROCKWELL COLLINS, INC. and EVANS & SUTHERLAND COMPUTER CORPORATION

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

by and between

ROCKWELL ▇▇▇▇▇▇▇, INC.

and

▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER CORPORATION

Dated as of February 7, 2006

TABLE OF CONTENTS

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ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT dated as of February 7, 2006 by and between ROCKWELL ▇▇▇▇▇▇▇, INC., a Delaware corporation (“Buyer”), and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER CORPORATION, a Utah corporation (“Seller”).

W I T N E S S E T H :

WHEREAS, Seller desires to sell and cause to be sold, and Buyer desires to purchase, the Assets (as defined herein), and Seller desires to transfer and cause to be transferred, and Buyer desires to assume, the Assumed Liabilities (as defined herein), all pursuant to the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, covenants and agreements hereinafter contained, the parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1   Definitions.   Capitalized terms used in this Agreement shall have the meanings specified in Exhibit A.

ARTICLE II
SALE AND PURCHASE OF ASSETS

Section 2.1   Sale and Purchase of Assets.

(a)   Subject to the terms and conditions set forth herein and in reliance upon the representations and warranties contained herein, at the Closing, for the consideration specified in Section 4.1, Seller will sell, assign, convey, transfer and deliver, and cause Seller Subsidiary to sell, assign, convey, transfer and deliver, to Buyer, and Buyer will purchase and acquire from Seller and Seller Subsidiary, all of Seller’s and Seller Subsidiary’s right, title and interest in and to all assets, properties and rights (whether tangible or intangible, real, personal or mixed, fixed, contingent or otherwise, and wherever located) Related to the Business (except for Retained Assets), in each case free and clear of any Liens, other than Permitted Liens, including the following to the extent such assets are Related to the Business:

(i)    all real property (including land, plants, buildings and improvements) and real property interests (including Leases) set forth on Schedule 2.1(a)(i);

(ii)   all accounts, loans and notes receivable (whether current or past due), performance and surety bonds and letters of credit or other similar instruments in favor of Seller and/or Seller Subsidiary;

(iii)  all inventories, including finished products, work-in-process, materials, parts, components, production stock, accessories and supplies (including all such inventories that are held by third parties);

(iv)  all machinery, equipment, tooling, vehicles, furniture and fixtures, leasehold improvements, plant and office equipment, test equipment, laboratory equipment and supplies, repair parts, repair stock, tools, engineering and design equipment and other tangible personal property, together with any rights, claims and interests arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any such assets or any component part thereof;

(v)    the Business Intellectual Property owned or licensed by Seller or Seller Subsidiary;

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(vi)  all Business Software, including the software set forth on Schedule 2.1(a)(vi);

(vii) all computer hardware and computer networking equipment located in the buildings being conveyed or set forth on Schedule 2.1(a)(vii), together with any rights, claims and interests arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any such assets or any component part thereof;

(viii)  all Contracts, including all rights to receive payment for products sold or services rendered, to receive goods and services, to assert claims and to take other actions in respect of breaches, defaults and other violations thereunder (whether or not arising or asserted before, on or after the Closing Date);

(ix)  all credits, advances, prepaid expenses, deposits and retentions held by third parties, including those held by third parties under Contracts;

(x)    to the extent legally transferable or assignable, all Permits;

(xi)  all U.K. Bank Accounts and Lockboxes;

(xii) the benefits of coverage provided by insurance policies of Seller and Seller Subsidiary (with respect to the Business) in respect of matters occurring on or prior to the Closing Date as set forth in Section 8.9 (other than benefits in connection with the claims, causes in action, choses in action, rights of recovery and rights of set-off retained by Seller as set forth on Schedule 2.1(b)(ix)); provided, that Seller shall have no obligation to extend or renew any insurance coverage following the Effective Time, except as otherwise provided in any of the Transaction Documents;

(xiii)  all financial, accounting, operating, design, manufacturing, test and other data and records (in each case, in whatever form or medium, including electronic media), including all books, records, notes, sales and sales promotional material and data, advertising materials, credit information, cost and pricing information, customer and supplier lists, business plans, reference catalogs, payroll and personnel records and procedures, blue-prints, research and development files, data and laboratory books, sales order files, litigation files and other similar property, rights and information; provided, however, that Seller may retain originals or copies of any such records that are primarily related to, or necessary for the operation of, the Retained Assets or its general corporate, financial, accounting, tax and personnel functions, so long as Seller provides Buyer with copies of any such retained original records;

(xiv)      all rights in and to products sold or leased by the Business and products of the Business currently in development;

(xv)  all causes of action, choses in action, lawsuits, judgments, claims, rights under express or implied warranties, guarantees, indemnities and similar rights in favor of Seller and/or Seller Subsidiary, rights of recovery, rights of set-off, rights of subrogation and all other rights and demands of any nature available to or being pursued by Seller and/or Seller Subsidiary;

(xvi)      Seller’s equity ownership interest in, and all rights with respect to, the Joint Venture; and

(xvii)  all goodwill associated with the Business and the Assets.

The assets, properties and rights of Seller and Seller Subsidiary to be sold, assigned, conveyed, transferred and delivered to Buyer pursuant to this Agreement are herein collectively referred to as the “Assets”. The term “Assets” will include all additions and replacements to any of the items described in this Section 2.1(a) from the date of this Agreement through the Closing Date, and will exclude, to the extent permitted by this Agreement, all deletions, sales or other disposals of any of the foregoing from the date of this Agreement through the Closing Date.

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(b)   Anything contained herein to the contrary notwithstanding, the Assets to be sold, assigned, conveyed, transferred and delivered to Buyer hereunder will exclude, and Seller and Seller Subsidiary will retain, all of Seller’s and Seller Subsidiary’s right, title and interest in and to the following assets, properties and rights (the “Retained Assets”):

(i)    all real property (including land, plants, buildings and improvements) and real property interests (including Leases), other than real property and Leases set forth on Schedule 2.1(a)(i);

(ii)   all cash, cash equivalents, funds, certificates of deposit and similar instruments held by Seller or Seller Subsidiary at the Effective Time;

(iii)  all bank accounts and lock boxes (other than the U.K. Bank Accounts and Lockboxes);

(iv)  all insurance policies, other than the benefits of Occurrence Basis Policies and Claims Made Policies and other rights as described in Section 8.9;

(v)    all rights in and to the use of the name, trademark, trade name and service ▇▇▇▇ “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇” and all corporate symbols and logos related thereto and all names, trademarks, trade names, and service marks which include the words “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇” or any derivative thereof (other than as provided for in Section 8.8);

(vi)  all assets with respect to pension and savings plans of Seller and Seller Subsidiary, including the Seller Retirement Plans, the Seller Savings Plan and the Seller ESP;

(vii) all refunds of Taxes (i) attributable to payments of Taxes made prior to the Effective Time, whether or not any refund claims have been filed prior to the Effective Time, or (ii) for which Seller or Seller Subsidiary has made a payment in respect thereof, including any payment out of the Escrow Fund;

(viii)  all benefits of net operating loss carryforwards, carrybacks, credits or other Tax attributes for periods (or portions thereof) up to and including the Closing on the Closing Date (in the case of tax years including the Closing Date, benefits shall be determined on a closing-of-the-books basis through the Closing, except for periodic Taxes (such as real property Taxes) which shall be determined on a daily pro rata basis);

(ix)  all claims, causes in action, choses in action, rights of recovery and rights of set-off of any kind against any person to the extent described on Schedule 2.1(b)(ix);

(x)    the Intellectual Property set forth on Schedule 2.1(b)(x) (the “Retained Intellectual Property”);

(xi)  the Contracts set forth on Schedule 2.1(b)(xi);

(xii) Seller’s and Seller Subsidiary’s corporate charters, qualifications to conduct business as a foreign entity, arrangements with registered agents relating foreign qualifications, taxpayer and other identification numbers, tax returns, stock books, stock ledgers, minute books and corporate seals and other similar documents relating to the organization, maintenance, and existence of Seller and Seller Subsidiary as corporations;

(xiii)  all assets primarily used in or primarily related to, arising primarily from or held primarily for use in, Seller’s planetarium, digital theater or laser projector businesses or otherwise necessary for the operation, as presently conducted, of such businesses (other than any such assets that are Related to the Business);

(xiv)      all equity ownership interest in Seller Subsidiary and Seller’s and Seller Subsidiary’s respective Affiliates (other than in the Joint Venture); and

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(xv)     all other assets set forth on Schedule 2.1(b)(xv).

(c)   Anything contained herein to the contrary notwithstanding, this Agreement will not constitute an assignment, an attempted assignment or an agreement to assign any Contract or Permit if an assignment or attempted assignment of the same without the Consent of any other party or parties thereto would constitute a breach thereof or (A) result in any increase in any payment or change in any term, (B) give rise to any right of amendment, termination, cancellation or acceleration of any right or obligation or to a loss of benefit or (C) grant any repayment or repurchase rights to any Person, which, in the case of (A), (B) or (C) above, is adverse to Buyer. Seller will, and will cause Seller Subsidiary to, use its commercially reasonable efforts, and Buyer will reasonably cooperate with Seller and Seller Subsidiary, to obtain prior to the Closing all Consents necessary to sell, assign, convey, transfer and deliver to Buyer the Assets. If any such Consent is not obtained, then (1) Seller will, and will cause Seller Subsidiary to, use its commercially reasonable efforts to (x) cause the full benefits of any such Contract or Permit to be provided to Buyer, and (y) pay promptly or cause to be paid promptly to Buyer when received all monies and other properties received by Seller or Seller Subsidiary; and (2) in consideration of Seller and Seller Subsidiary providing or causing to be provided to Buyer the full benefits thereof, Buyer will use its commercially reasonable efforts to perform and discharge on behalf of Seller and Seller Subsidiary, as the case may be, all of Seller’s or Seller Subsidiary’s liabilities, obligations or commitments thereunder that are Assumed Liabilities in accordance with the provisions thereof. In addition, Seller will, and will cause Seller Subsidiary to, use its commercially reasonable efforts to place Buyer, insofar as reasonably possible, in the same position as if such Contract or Permit had been transferred as contemplated hereby and so that all the benefits relating thereto, including possession, use, risk of loss, potential for gain and dominion, control and command, shall inure to Buyer. Notwithstanding the foregoing, if any such Consent is not obtained prior to the Closing, Seller will continue to use and will cause Seller Subsidiary to continue to use its commercially reasonable efforts to obtain all such Consents (and, if and when such Consents are obtained, the transfer of the applicable Contract or Permit will be effected in accordance with the terms of this Agreement).

ARTICLE III
ASSUMPTION OF LIABILITIES

Section 3.1   Assumed Liabilities.   Subject to the terms and conditions set forth herein, and in reliance upon the representations and warranties contained herein, at the Closing, in consideration for the sale, assignment, conveyance, transfer and delivery of the Assets to Buyer, Buyer will assume and undertake to pay, perform and discharge, when due and otherwise in accordance with the terms thereof, only the following Liabilities of Seller and Seller Subsidiary Related to the Business or the Assets (other than the Liabilities listed in clauses (a) through (v) of Section 3.2) (the “Assumed Liabilities”):

(a)    Liabilities of Seller and Seller Subsidiary, as the case may be, under Contracts and Leases that constitute Assets, whether arising prior to, on or after the Closing Date;

(b)   Liabilities associated with accruals of deferred revenues, but only to the extent and in the amounts provided for on the Final Closing Net Assets Statement;

(c)    Liabilities to, or otherwise relating to the employment of, the Continued Employees and the UK Employees to the extent arising after the Effective Time and any other Liabilities expressly assumed by Buyer pursuant to Article IX;

(d)   Liabilities in respect of Continued Employees arising under the WARN Act or any similar state Law to the extent arising after the Effective Time;

(e)    all Liabilities under the sales representation agreements to be entered into by Buyer pursuant to Section 8.13;

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(f)    accounts payable and trade payables (whether current or past due), but only to the extent and in the amounts provided for on the Final Closing Net Assets Statement;

(g)    product warranty claims of third parties with respect to products sold or services rendered in the conduct of the Business, whether arising prior to, on or after the Closing Date;

(h)   product liability claims of third parties with respect to products of the Business, whether arising prior to, on or after the Closing Date;

(i)    Liabilities for and in respect of any Taxes relating to the Business, the Assets (including the Joint Venture) or the Assumed Liabilities for periods (or portions thereof) beginning after the Closing on the Closing Date (in the case of tax years including the Closing Date, Taxes shall be determined on a closing-of-the-books basis through the Closing, except for periodic Taxes (such as real property Taxes) which shall be determined on a daily pro rata basis). For the avoidance of doubt, Seller and Seller Subsidiary shall not be responsible for any Liabilities for or in respect of Taxes attributable to income or gain with respect to the Assets (including the Joint Venture) and the Business resulting from any action taken by Buyer that is not contemplated by this Agreement that occurs after the Closing on the Closing Date;

(j)     Liabilities with respect to the Joint Venture, including the Joint Venture Guaranties;

(k)   Liabilities based upon, arising out of, relating to or otherwise in connection with any pending, threatened or future Action with respect to any events, actions, occurrences, omissions, circumstances or conditions occurring or existing on or prior to the Closing Date (whether asserted prior to, on or after the Closing Date) (other than Liabilities based upon, arising out of, relating to or otherwise in connection with the Actions set forth on Schedule 3.2(a));

(l)    Liabilities based upon, arising out of, relating to or otherwise in connection with any tort, whether arising prior to, on or after the Closing Date;

(m)  Liabilities based upon, arising out of, relating to or otherwise in connection with claims of alleged infringement with respect to the Business Intellectual Property, whether arising prior to, on or after the Closing Date;

(n)   other Liabilities to the extent arising out of or resulting from the operation after the Effective Time by Buyer of the Business or the ownership or use after the Effective Time by Buyer of the Assets;

(o)   other Liabilities for which Buyer is made responsible pursuant to this Agreement or any other Transaction Document;

(p)   other Liabilities which are not included in clause (a) through (o) of this Section 3.1, but only to the extent and in the amounts provided for on the Final Closing Net Assets Statement; and

(q)   Liabilities relating to a successful claim by a UK Employee that the change of employer arising by reason of the operation of the Transfer Regulations is a significant change which is to his detriment or that a substantial change is proposed to be made to his working conditions on or after the Closing Date, which is to his detriment.

Buyer will assume no other Liabilities whatsoever.

Section 3.2   Retained Liabilities.   Anything contained herein to the contrary notwithstanding, Buyer shall not be obligated to assume or to undertake to pay, perform or discharge and will not be liable for, and Seller and Seller Subsidiary shall remain liable for and pay, perform and discharge when due, all Liabilities and obligations of Seller and Seller Subsidiary based upon, arising out of, relating to or otherwise in connection with the Business or the conduct or operation thereof on or prior to the Closing Date,

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including all Liabilities based upon, arising out of, relating to or otherwise in connection with any events, actions, occurrences, omissions, circumstances or conditions whatsoever occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date, and all other Liabilities of Seller and Seller Subsidiary, in each case other than Liabilities constituting Assumed Liabilities (the “Retained Liabilities”). Notwithstanding anything to the contrary contained herein, Retained Liabilities shall include all Liabilities of Seller and Seller Subsidiary:

(a)    based upon, arising out of, relating to or otherwise in connection with the Actions set forth on Schedule 3.2(a);

(b)   based upon, arising out of, relating to or otherwise in connection with any violation of, or noncompliance with, Law (whether civil or criminal) occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date (including any pending, threatened or future Actions with respect thereto), except to the extent such Liabilities result from any action of Buyer or any of its Affiliates (other than the purchase of the Assets and the assumption of the Assumed Liabilities) after the Closing Date);

(c)    in respect of accruals of deferred revenues to the extent such Liabilities exceed the amounts provided for on the Final Closing Net Assets Statement;

(d)   in respect of accounts payable and trade payables (whether current or past due) to the extent such payables exceed the amounts provided for on the Final Closing Net Assets Statement;

(e)    based upon, arising out of, relating to or otherwise in connection with claims for personal or bodily injury or injury to property (whether asserted prior to, on or after the Closing Date) caused by products delivered or sold on or prior to the Closing Date, except to the extent that (i) Buyer has made any modifications (other than modifications properly made in accordance with pre-existing field service bulletins) after the Closing Date to any such products or (ii) Buyer has failed to properly maintain such products after the Closing Date in accordance with Buyer’s contractual obligations;

(f)    constituting Environmental Liabilities to the extent based upon, arising out of, relating to or otherwise in connection with events, actions, occurrences, omissions, circumstances or conditions occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date (including such circumstances or conditions that may continue to exist after the Closing Date), except to the extent such Environmental Liabilities result from any action of Buyer or any of its Affiliates (other than the purchase of the Assets and the assumption of the Assumed Liabilities in accordance with this Agreement) after the Closing Date;

(g)    except for Liabilities assumed by Buyer under Article IX and Section 3.1(c) (other than as provided in the parenthetical at the end of this Section 3.2(g)), all liabilities in respect of employees, former employees, consultants and leased employees of the Business based upon, arising out of, relating to or otherwise in connection with employment, engagement or termination by Seller or Seller Subsidiary at any time on or prior to the Closing Date (including with respect to termination of employment of any UK Employee to whom notice was issued or by whom notice was submitted on or prior to the Closing Date), whether pursuant to benefit plans or otherwise, including (i) Liabilities for salary, bonuses, incentive payments and other compensation payments; (ii) Liabilities in respect of pension (including any controlled group Liabilities), supplemental retirement, savings, supplemental savings, profit-sharing, cash balance and deferred compensation benefits; (iii) Liabilities for employee welfare and fringe benefits (including medical, dental, retiree health, life insurance, retiree life insurance, travel, accident, short- and long-term disability, sick leave, hospitalization and other benefits); (iv) Liabilities in respect of severance pay, salary continuation and similar obligations relating to the termination or alleged termination (whether voluntary or involuntary) of employment or claims in respect thereof; (v) Liabilities under or in respect of employment agreements, severance

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agreements, change of control agreements and retention arrangements, including those agreements and arrangements set forth on Schedule 6.17(e); and (vi) Liabilities with respect to workplace safety (it being understood that, notwithstanding anything to the contrary contained in the Transfer Regulations or under Article IX, all such liabilities set forth in this Section 3.2(g) in respect of such employees, former employees, consultants and leased employees located in the United Kingdom shall constitute Retained Liabilities);

(h)   in relation to the operation of the Transfer Regulations on the contract of employment of any employee of Seller or Seller Subsidiary in the United Kingdom whose name is not listed in Schedule 6.17(f) and who Buyer has dismissed within 30 days of the earliest date on which Buyer knows or would reasonably be expected to know (including by paying any compensation or benefit to such employee) of the said employee claiming to have transferred under the Transfer Regulations to Buyer or its or its relevant United Kingdom Affiliate (it being understood and agreed that in the event of dismissal, Buyer shall, and shall cause its relevant United Kingdom Affiliate to, use commercially reasonable efforts to comply with the United Kingdom statutory dismissal procedures and shall not, and shall cause its relevant United Kingdom Affiliate not to, rehire the employee within 180 days of the said dismissal);

(i)    incurred by reason of the transfer of any pension and ancillary benefits in relation to the UK Employees pursuant to the Transfer Regulations (except reasonable administration costs and pension contributions payable after the Effective Time);

(j)     in respect of employees of the Business at or prior to the Effective Time arising under the WARN Act or any similar state Law to the extent arising at or prior to the Effective Time, or arising in connection with the Transaction;

(k)   for and relating to workers’ compensation claims (whether asserted prior to, on or after the Closing Date) resulting from injuries that occur on or prior to the Closing Date;

(l)    for and in respect of checks written by Seller or Seller Subsidiary outstanding at the Effective Time relating to the Business (including Liabilities to fund the same);

(m)  for and relating to indebtedness for borrowed money, including the Debentures and Seller’s letter of credit line, outstanding at any time on or prior to the Closing Date;

(n)   for and relating to the guarantee of any indebtedness, obligation or other Liability of any Person (other than the Joint Venture Guaranties);

(o)   based upon, arising out of, relating to or otherwise in connection with Former Businesses;

(p)   for and in respect of income Taxes arising in connection with the consummation of the transactions contemplated hereby;

(q)   for and in respect of any Taxes relating to the Business, the Assets (including the Joint Venture) or the Assumed Liabilities for periods (or portions thereof) up to and including the Closing on the Closing Date (in the case of tax years including the Closing Date, Taxes shall be determined on a closing-of-the-books basis through the Closing, except for periodic Taxes (such as real property Taxes) which shall be determined on a daily pro rata basis). For the avoidance of doubt, Buyer shall not be responsible for any Liabilities for or in respect of Taxes attributable to income or gain with respect to the Assets (including the Joint Venture) and the Business resulting from any action taken by Seller or Seller Subsidiary that occurs at or prior to the Closing on the Closing Date;

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(r)    for which Seller or Seller Subsidiary are made responsible pursuant to this Agreement or any other Transaction Document;

(s)    based upon, arising out of, relating to or otherwise in connection with Seller’s business operations in Dubai and China;

(t)    to stockholders or former stockholders of Seller based upon, arising out of, relating to or otherwise in connection with matters occurring on or prior to the Closing Date, including the transactions contemplated by this Agreement and the Proxy Statement;

(u)   based upon, arising out of, relating to or otherwise in connection with the Contracts set forth on Schedule 2.1(b)(xi), including any Liabilities related to the termination of such Contracts (other than the indemnification provided for in Section 13.2(d)); and

(v)    except as expressly agreed otherwise by Buyer, based upon, arising out of, relating to or otherwise in connection with the Retained Assets.

ARTICLE IV
PURCHASE PRICE

Section 4.1   Purchase Price.

(a)   Closing Payment.   Subject to the terms and conditions set forth herein, in consideration for the sale, assignment, conveyance, transfer and delivery of the Assets, Buyer will, at the Closing (i) pay to Seller, by wire transfer of immediately available U.S. Dollars to a bank account designated by Seller, Fifty-Nine Million Five Hundred Thousand Dollars ($59,500,000) (the “Closing Payment”), (ii) deliver to the Escrow Agent by wire transfer of immediately available U.S. Dollars to a bank account designated by the Escrow Agent, Seven Million Dollars ($7,000,000) (the “Escrow Amount”, and together with the Closing Payment, the “Purchase Price”) to be held by the Escrow Agent in an escrow fund (the “Escrow Fund”) pursuant to the Escrow Agreement, and (iii) assume and thereafter pay, perform, satisfy and discharge when due the Assumed Liabilities.

(b)   Closing Net Assets Statement.

(i)    Within 90 days after the Closing Date, Buyer will prepare and deliver to Seller a statement (the “Closing Net Assets Statement”) setting forth the amount of Assets and the amount of Assumed Liabilities which, in accordance with GAAP, would be set forth on a balance sheet of the Business operating on a stand-alone basis, in each case as of the Effective Time. The amounts set forth on the Closing Net Assets Statement will be determined utilizing the accounting principles, policies, practices and procedures set forth on Schedule 4.1(b)(i) and, with respect to matters not set forth on Schedule 4.1(b)(i), utilizing GAAP applied on a consistent basis with the Balance Sheet. The amount of Assets shown on the Closing Net Assets Statement minus the amount of Assumed Liabilities shown thereon is referred to herein as “Net Assets”. Anything contained herein to the contrary notwithstanding, the amounts set forth on the Closing Net Assets Statement will not reflect any purchase accounting adjustments as a result of the acquisition of the Assets or the assumption of the Assumed Liabilities by Buyer. No amount with respect to Taxes shall be treated as an Assumed Liability for purposes of determining Net Assets. Buyer will retain (at Buyer’s sole expense) Deloitte & Touche LLP (“D&T”) to audit the Closing Net Assets Statement and to render their report thereon stating that the Closing Net Assets Statement has been prepared in accordance with the terms of this Section 4.1(b)(i). Such report of D&T will be delivered to Seller together with the Closing Net Assets Statement. The date on which the Closing Net Assets Statement and the report thereon of D&T are delivered to Seller is referred to herein as the “Delivery Date”. Seller will cause its employees and the employees of Seller Subsidiary to provide reasonable assistance to Buyer and its Representatives in the preparation of the Closing Net Assets Statement and to provide reasonable assistance to D&T in connection with their audit of the Closing Net Assets Statement and their issuance of a report thereon,

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provided such assistance will not interfere with the normal work duties of such employees. Seller will cause Buyer, Buyer’s Representatives and D&T to be provided with reasonable access at all reasonable times, following reasonable notice, to the personnel, properties, books and records of Seller and Seller Subsidiary to the extent necessary for such purposes. Without limiting the generality of the foregoing, Seller will use commercially reasonable efforts to cause Seller’s Chief Executive Officer and Chief Financial Officer to execute and deliver customary representation letters in favor of D&T in connection with their audit of the Closing Net Assets Statement and their issuance of a report thereon. In addition, Seller will execute and deliver, and will cause Seller Subsidiary to execute and deliver, such customary documentation as D&T may reasonably request to evidence the waiver by Seller and its subsidiaries and Affiliates of any claim against D&T based upon D&T’s report on the Closing Net Assets Statement rendered pursuant to this Section 4.1(b)(i); provided that Seller and Seller Subsidiary shall not be obligated to execute a waiver that is more favorable to D&T than the waiver executed by Buyer.

(ii)   The Closing Net Assets Statement will be deemed to be the final, binding and conclusive Closing Net Assets Statement (the “Final Closing Net Assets Statement”) for all purposes on the forty-fifth day after the Delivery Date unless Seller delivers to Buyer written notice of its disagreement (a “Notice of Disagreement”) on or prior to such date specifying the nature of Seller’s objections to the Closing Net Assets Statement. Buyer will cause its employees to provide reasonable assistance to Seller and its Representatives (including any accounting firm retained by Seller) in the preparation of a Notice of Disagreement, provided such assistance will not interfere with the normal work duties of such employees. Buyer will cause Seller and Seller’s Representatives to be provided with reasonable access at all reasonable times, following reasonable notice, to the personnel, properties, books and records of Buyer and its subsidiaries to the extent necessary for such purposes. Buyer will provide that Seller will be afforded a reasonable opportunity to consult with D&T regarding the procedures undertaken by D&T in connection with the preparation of the Closing Net Assets Statement and will use commercially reasonable efforts to provide that Seller will have reasonable access to all readily available books, records and work papers prepared by D&T. To be assertable in a Notice of Disagreement, an objection by Seller with respect to any individual item on the Closing Net Assets Statement must assert that the Closing Net Assets Statement was not prepared in accordance with the terms of Section 4.1(b)(i) with respect to such item. Seller hereby waives the right to assert any objection to the Closing Net Assets Statement that is not asserted in a Notice of Disagreement delivered to Buyer within 45 days after the Delivery Date. If a Notice of Disagreement is delivered to Buyer within such 45 day period, then the Closing Net Assets Statement (as adjusted, if necessary) will be deemed to be the Final Closing Net Assets Statement for all purposes on the earlier of (x) the date Buyer and Seller resolve in writing all differences they have with respect to the Closing Net Assets Statement or (y) the date the disputed matters are resolved in writing by the Unaffiliated Firm. In the event that disputed matters are resolved by the Unaffiliated Firm (as set forth below in accordance with the terms hereof), the Final Closing Net Assets Statement will consist of the applicable amounts from the Closing Net Assets Statement (or amounts otherwise agreed to in writing by Buyer and Seller) as to items that have not been submitted for resolution to the Unaffiliated Firm, and the amounts determined by the Unaffiliated Firm as to items that were submitted for resolution by the Unaffiliated Firm.

(iii) During the 30 day period following the delivery of a Notice of Disagreement, Buyer and Seller will seek in good faith to resolve any differences they may have with respect to matters specified in the Notice of Disagreement. If, at the end of such 30 day period, Buyer and Seller have not reached agreement on such matters, Buyer will have an additional 15 days to advise Seller in writing of Buyer’s position with respect to each of Seller’s proposed adjustments that are in dispute (“Buyer’s Letter”). Seller will cause Buyer, Buyer’s Representatives and D&T to be provided with access at all reasonable times to the personnel, properties, books and records of Seller and its subsidiaries and Affiliates (including Seller Subsidiary) to enable Buyer to prepare Buyer’s Letter. Buyer’s Letter shall only contain Buyer’s position with respect to each of Seller’s proposed adjustments that are in dispute. Buyer’s Letter shall not rely upon any information to which Seller in writing specifically requested access in accordance with

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Section 4.1(b)(ii) in connection with the preparation of the Notice of Disagreement if and to the extent such access was not provided to Seller by Buyer. Promptly following the delivery to Seller of Buyer’s Letter, Buyer and Seller will jointly engage a single arbitrator, which arbitrator shall not have worked in any capacity on any matter for either Buyer or Seller, from the firm of Ernst & Young LLP (or, if a representative of such firm is unable or unwilling to act in such capacity, a single arbitrator, which arbitrator shall not have worked in any capacity on any matter for either Buyer or Seller, from the firm of PricewaterhouseCoopers LLP) (the “Unaffiliated Firm”) to resolve the matters which remain in dispute with respect to the Closing Net Assets Statement by arbitration in accordance with the procedures set forth in this Section 4.1(b). In connection with such engagement, each of Buyer and Seller agrees to execute, if requested by the Unaffiliated Firm, a reasonable joint engagement letter including customary indemnities. Promptly after such engagement of the Unaffiliated Firm, Buyer or Seller will provide the Unaffiliated Firm with a copy of this Agreement, the Closing Net Assets Statement, the Notice of Disagreement and Buyer’s Letter. The Unaffiliated Firm will have the authority to request in writing such additional written submissions from either Buyer or Seller as it deems appropriate, provided that a copy of any such submission will be provided to the other party at the same time as it is provided to the Unaffiliated Firm. Neither party will make (or permit any of its subsidiaries or Affiliates to make) any additional submission to the Unaffiliated Firm except pursuant to such a written request by the Unaffiliated Firm. Neither party will communicate (nor permit any of its subsidiaries or Affiliates to communicate) with the Unaffiliated Firm without providing the other party a reasonable opportunity to participate in such communication with the Unaffiliated Firm (other than with respect to written submissions in response to the written request of the Unaffiliated Firm). The Unaffiliated Firm will have 45 days to review the documents provided to it pursuant to this Section 4.1(b)(iii). Within such 45 day period, the Unaffiliated Firm will furnish simultaneously to both parties its written determination with respect to each of the adjustments in dispute submitted to it for resolution. The Unaffiliated Firm will resolve the differences regarding the Closing Net Assets Statement based solely on the information provided to the Unaffiliated Firm by Buyer and Seller pursuant to the terms of this Agreement (and not independent review). The Unaffiliated Firm’s authority will be limited to resolving disputes with respect to whether the Closing Net Assets Statement was prepared in accordance with Section 4.1(b)(i) with respect to the individual items on the Closing Net Assets Statement in dispute (it being understood that no adjustment will be made to the Purchase Price with respect to any adjustment made by the Unaffiliated Firm to any financial statements or amounts other than amounts set forth in the Closing Net Assets Statement that are in dispute). In resolving any disputed item, the Unaffiliated Firm may not assign a value to such item greater than the greatest value for such item asserted by either party or less than the smallest value for such item asserted by either party.

(iv)  The decision of the Unaffiliated Firm will be, for all purposes, conclusive, non appealable, final and binding upon Buyer and Seller. Such decision will be subject to specific performance pursuant to Section 15.17, and judgment may also be entered thereon as an arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. §§1-16, in any court of competent jurisdiction specified in Section 15.12. The fees of the Unaffiliated Firm will be borne by Buyer and Seller in the same proportion that the dollar amount of disputed items lost by a party bears to the total dollar amount in dispute resolved by the Unaffiliated Firm. Each party will bear the fees, costs and expenses of its own accountants and all of its other expenses in connection with matters contemplated by this Section 4.1(b).

(c)   Post Closing Adjustment.   Upon the Closing Net Assets Statement being deemed the Final Closing Net Assets Statement in accordance with Section 4.1(b), the Purchase Price will be adjusted, up or down, as follows:

(i)    if the amount of Net Assets shown on the Final Closing Net Assets Statement (the “Net Asset Amount”) is less than U.S. $18,958,659 (the “Benchmark Amount”), the Purchase Price will be reduced by the amount by which the Net Asset Amount is less than the Benchmark Amount and such amount by which the Purchase Price is reduced will be paid to Buyer first from the Escrow Fund, and

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Buyer and Seller hereby agree to give joint written instructions to the Escrow Agent for such disbursement within two (2) business days of such determination. In the event amounts held in the Escrow Fund are insufficient to cover such payment, Seller shall, simultaneously with executing any written instructions to the Escrow Agent as provided above, pay any deficiency to Buyer by wire transfer of immediately available funds to a bank account designated by Buyer; and

(ii)   if the Net Asset Amount is greater than the Benchmark Amount, the Purchase Price will be increased by the amount by which the Net Asset Amount is greater than the Benchmark Amount and, within two (2) business days of such determination, such amount by which the Purchase Price is increased will be paid by Buyer to Seller by wire transfer of immediately available funds to a bank account designated by Seller.

Section 4.2   Allocation of Purchase Price.   The parties agree that the Purchase Price and the Assumed Liabilities shall be allocated among the Assets in a manner consistent with Schedule 4.2. Buyer will, not later than 180 days after the Closing Date, prepare and deliver to Seller a proposed schedule for Seller’s review and approval in its reasonable discretion (the “Allocation Schedule”) allocating the Purchase Price and the Assumed Liabilities among the Assets, in accordance with Section 1060 of the Code and any Treasury Regulations pursuant thereto (or any comparable provisions of state or local tax law) or any successor provision. Seller will have the right to raise objections to the Allocation Schedule within 30 days after its receipt thereof, in which event Seller and Buyer will mutually agree upon revisions to the Allocation Schedule to resolve such objections. Except to the extent otherwise required by applicable Laws, Buyer and Seller will, and Buyer and Seller will cause each of their respective subsidiaries and Affiliates (including, in the case of Seller, Seller Subsidiary) to, make all tax returns, reports, forms, declarations, claims and other statements in a manner consistent with the Allocation Schedule (as revised in accordance with the preceding sentence) and will not make any inconsistent statement or adjustment on any returns or during the course of any IRS or other Tax audit.

ARTICLE V
CLOSING

Section 5.1   Closing.   The closing of the purchase and sale of the Assets and the assumption of the Assumed Liabilities (the “Closing”) will take place (i) at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. local time, on the third business day following the expiration or termination of the applicable waiting period under the HSR Act and the satisfaction or waiver of all other conditions set forth in this Agreement that are susceptible to being satisfied prior to the Closing, or (ii) at such other place, date and time as Seller and Buyer may agree. The date of the Closing is referred to herein as the “Closing Date”. The Closing will be deemed to be effective at 5:00 p.m. (Salt Lake City time) on the Closing Date (the “Effective Time”).

Section 5.2   Closing Deliveries of Seller.   At the Closing, Seller will deliver and cause to be delivered (i) such bills of sale and instruments of assignment, conveyance and transfer as shall be reasonably agreed upon by Buyer and Seller to effect or evidence the sale, assignment, conveyance, transfer and delivery of the Assets to Buyer, and (ii) all closing certificates, Ancillary Agreements and other documents required to be delivered by Seller, Seller Subsidiary and each if its and their Affiliates to Buyer at the Closing pursuant to this Agreement.

Section 5.3   Closing Deliveries of Buyer.   At the Closing, Buyer will deliver or cause to be delivered (i) the Purchase Price pursuant to Section 4.1(a), (ii) such instruments of assumption as shall be reasonably agreed upon by Buyer and Seller to effect or evidence the assumption by Buyer of the Assumed Liabilities and (iii) all closing certificates, Ancillary Agreements and other documents required to be delivered by Buyer to Seller or Seller Subsidiary at the Closing pursuant to this Agreement.

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Section 5.4   Transfer Taxes.   All applicable sales and transfer Taxes (including Taxes, if any, imposed upon the transfer of real or personal property, but excluding VAT) and filing, recording, registration, stamp, documentary and other similar Taxes and fees that are payable in connection with this Agreement, the transactions contemplated by this Agreement or the documents giving effect to such transactions, and the reasonable costs of preparing and filing transfer Tax returns with respect thereto, will be shared on an equal basis by Seller and Buyer. Seller shall prepare and timely file all Tax returns or other documentation relating to such transfer Taxes; provided, however, that to the extent required by Applicable Law, Buyer will join in the execution of any such Tax returns or other documents relating to such Taxes. Seller shall provide Buyer with copies of each such Tax return or other document at least fifteen (15) days prior to the date on which such Tax return or other document is required to be filed.

Section 5.5   U.K. Matters.

(a)   Seller and Buyer agree that the consideration given under this Agreement in respect of the sale of the Business based in the United Kingdom comprising the Assets located in the United Kingdom (the “U.K. Business”) is exclusive of any VAT.

(b)   Seller and Buyer intend that Article 5 of the Value Added Tax (Special Provisions) Order 1995 shall apply as between Seller Subsidiary and the relevant United Kingdom incorporated Affiliate of Buyer to the sale of the UK Business under this Agreement (which U.K. Business the relevant United Kingdom incorporated Affiliate of Buyer is purchasing with a view to carrying on in the United Kingdom as a going concern) and each of Seller and Buyer agrees to procure that their respective relevant United Kingdom Affiliates as soon as possible following signing of this Agreement use commercially reasonable efforts to secure that such sale is treated as neither a supply of goods nor a supply of services under that article.

(c)   Buyer warrants that the relevant United Kingdom incorporated Affiliate of Buyer is or will immediately become as a result of the transfer a taxable person for the purposes of VAT and agrees that in the period immediately following Closing (being a minimum period of 30 days) it will use the Assets acquired in carrying on the same kind of business, whether or not as part of its existing business, as Seller Subsidiary prior to Closing.

(d)   If, nevertheless, any VAT is payable on the sale of the U.K. Business or any of the Assets located in the United Kingdom under this Agreement, the relevant United Kingdom incorporated Affiliate of Buyer shall in addition to the consideration referred to in Section 5.5(a), pay to Seller Subsidiary to the extent that Seller Subsidiary has issued to such Affiliate an appropriate VAT invoice such VAT (and in addition, but subject to Section 5.5(f) below, any penalties and interest, other than penalties or interest arising solely from the failure of Seller Subsidiary (i) to issue an appropriate VAT invoice promptly following denial of (or clear failure to grant after adequate time has elapsed) relief for transfer as a going concern, (ii) following receipt of sufficient funds in accordance with an appropriate VAT invoice, to account promptly for VAT included in the above mentioned VAT invoice, (iii) to notify promptly the relevant United Kingdom incorporated Affiliate of Buyer of the amount of the relevant interest and/or penalties once HM Customs and Revenue have confirmed the sum(s) due, or (iv) immediately after receipt of sufficient funds as required by Seller Subsidiary, to discharge in full the interest and penalties to HM Revenue and Customs in which case and to that extent Seller Subsidiary shall be responsible for the incremental payments of interest and/or penalties attributable to its failure to issue the relevant VAT invoice promptly and/or demand appropriate funds from the relevant United Kingdom incorporated Affiliate of Buyer and/or account for and/or otherwise discharge promptly VAT, penalties and interest after having been put in funds to do so).

(e)   If any amount paid by the relevant United Kingdom incorporated Affiliate of Buyer to Seller Subsidiary in respect of VAT pursuant to this Agreement is subsequently found to have been paid in error, Seller shall procure that Seller Subsidiary shall if Seller Subsidiary has not yet accounted for such VAT to HM Revenue and Customs promptly repay such amount to the relevant United Kingdom incorporated

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Affiliate of Buyer, and that if Seller Subsidiary has already so accounted, then Seller shall procure that Seller Subsidiary shall use commercially reasonable efforts to obtain repayment thereof from HM Revenue and Customs and forthwith on receiving repayment from HM Revenue and Customs shall pay to the relevant United Kingdom incorporated Affiliate of Buyer the amount repaid and Buyer shall procure that the relevant United Kingdom incorporated Affiliates shall reimburse Seller Subsidiary 50% of the reasonable expenses, properly accrued by Seller Subsidiary in using such efforts.

(f)    Notwithstanding anything in Section 5.4 or 5.5, if VAT is paid on, or in connection with, the transfer of the U.K. Business or any of the Assets located in the United Kingdom under this Agreement, then to the extent that such VAT cannot be recovered as input by the relevant United Kingdom Affiliate of Buyer (whether by cash recovery or offset), Seller shall on demand pay to Buyer (i) 50% of such irrecoverable VAT (including VAT paid in error for which repayment is not obtained) upon Buyer providing evidence (reasonably satisfactory to Seller) of the amount of such irrecoverable tax and the fact that it is irrecoverable, (ii) VAT for which Seller Subsidiary is primarily liable to account for but for which the relevant United Kingdom Affiliate of Buyer becomes liable to HM Revenue and Customs as a result of the failure of Seller Subsidiary or an Affiliate of Seller to discharge it, otherwise than as a result of the relevant United Kingdom incorporated Affiliate of Buyer failing to pay VAT in accordance with Section 5.5(d) and which is irrecoverable for the United Kingdom Affiliate of Buyer, (iii) 50% of any interest and/or penalties payable by the relevant United Kingdom Affiliate of Buyer on the total amount of VAT payable under Section 5.5(d), and (iv) any interest and/or penalties for which the Seller Subsidiary is responsible under 5.5(d) which arises after it fails to issue an appropriate VAT invoice promptly and/or notify Buyer of the relevant amount of penalties and/or interest and/or account for and/or otherwise discharge the liability to VAT and/or interest and/or penalties promptly after having been put in funds to do so.

(g)   The relevant United Kingdom incorporated Affiliate of Buyer will be solely responsible for incremental interest and penalties arising as a result of its delay in putting Seller Subsidiary in funds promptly following the issue of an appropriate VAT invoice or notification of penalties and/or interest in accordance with Section 5.5(d).

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer, except as provided in the disclosures in the disclosure schedule delivered by Seller to Buyer concurrently herewith, which shall qualify the corresponding section of the representations and warranties set forth in this Agreement and any other Section to the extent that it is readily apparent that such disclosure is relevant, as follows:

Section 6.1   Organization.   Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah. Each of Seller Subsidiary and the Joint Venture is a company duly organized and validly existing under the laws of England and Wales. Seller is the record and beneficial owner of all of the issued and outstanding shares of capital stock of Seller Subsidiary. Each of Seller and Seller Subsidiary has all requisite corporate power and authority to own, lease and operate its Assets and to carry on the Business as presently conducted and as it will be conducted through the Closing Date. The Joint Venture has all requisite corporate power and authority to own, lease and operate the assets owned, leased and operated by it and to carry on its business as presently conducted and as it will be conducted through the Closing Date. Each of Seller and Seller Subsidiary is duly qualified to transact business and in good standing as a foreign corporation in each jurisdiction where the Business or the ownership, leasing or holding of Assets by it makes such qualification necessary, except where the failure to be so qualified would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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Section 6.2   Authority.   Each of Seller and Seller Subsidiary has all requisite corporate power and authority to execute and deliver each Transaction Document delivered or to be delivered by it and to perform all of its obligations hereunder and thereunder. The execution, delivery and performance by each of Seller and Seller Subsidiary of each Transaction Document delivered or to be delivered by it and the consummation by each of Seller and Seller Subsidiary of the Transaction has been duly authorized by all necessary and proper action on the part of Seller or Seller Subsidiary, as the case may be, except for the Required Seller Vote. This Agreement has been duly executed and delivered by Seller and, assuming due authorization, execution and delivery by the other parties hereto, constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity. Each other Transaction Document to be delivered by Seller or Seller Subsidiary will be duly executed and delivered by Seller or Seller Subsidiary, as the case may be, and, when so executed and delivered, assuming due authorization, execution and delivery by the other parties thereto, will constitute the legal, valid and binding obligation of Seller or Seller Subsidiary, as the case may be, enforceable against Seller or Seller Subsidiary, as the case may be, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

Section 6.3   No Breach.   Assuming receipt of the authorizations, approvals and consents referred to in Section 6.13 hereof and the approval of the stockholders of Seller by the Required Seller Vote, none of the execution, delivery or performance by Seller or Seller Subsidiary of any Transaction Document, or the consummation by Seller and Seller Subsidiary of the Transaction, with or without the giving of notice or the lapse of time or both, does or will result in the creation of any Lien upon any of the Assets (except for Permitted Liens), or result in a breach or violation of or a default under, or give rise to a right of amendment, termination, cancellation or acceleration of any obligation or to a loss of a benefit under (i) the Articles of Incorporation or By-laws (or similar governance document) of Seller, Seller Subsidiary or the Joint Venture, (ii) any Contract of Seller or Seller Subsidiary, or (iii) any Law or Permit (subject to compliance with the HSR Act) applicable to Seller, Seller Subsidiary or, to the Knowledge of Seller, the Joint Venture or to which their respective properties or assets is subject, except, in the case of items (ii) and (iii) above only, for those which would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 6.4   Financial Information.

(a)   The Financial Statements have been prepared in accordance with GAAP consistently applied, and fairly present, in conformity with GAAP applied on a consistent basis, the consolidated financial condition and results of operations and cash flows of Seller and Seller Subsidiary as of the dates thereof or the periods then ended, subject in the case of the unaudited financial statements to normal year-end adjustments.

(b)   Except for Liabilities (i) set forth on Schedule 6.4(b), (ii) set forth or reserved on the September 30, 2005 Balance Sheet (or referred to in the notes thereto) or (iii) which would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, neither Seller nor Seller Subsidiary, in respect of the Business, or, to the Knowledge of Seller, the Joint Venture has any Liabilities, contingent or otherwise, of any kind or nature.

(c)   All accounts and notes receivable and other receivables of the Business arose from bona fide sales and deliveries of goods or performance of services in the ordinary course of business. All such receivables outstanding as of September 30, 2005 have been adequately reserved in the September 30, 2005 Balance Sheet in accordance with GAAP.

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(d)   All inventories of the Business have been procured and produced for sale in the ordinary course of business and consistent with anticipated requirements as of the time commitments were made, and the volume of production or purchases thereof and of orders therefor have not been reduced or increased in anticipation of the transactions contemplated by this Agreement.

Section 6.5   Taxes.   Except as set forth on Schedule 6.5:

(a)   All federal and Utah state income Tax returns and all other material state, local and foreign Tax returns, reports, declarations, statements and other documents (“Tax Returns”) required to be filed by or on behalf of (i) Seller, Seller Subsidiary, any predecessor corporation of either of them or any consolidated, combined, affiliated or unitary group of which Seller is or has been a member (together the “Seller Affiliated Group”) with respect to (or which include) the Business or the Assets, and (ii) the Joint Venture, have been timely filed with the appropriate tax authorities or requests for extensions have been timely filed and any such extensions have been granted and have not expired. Each such Tax Return was complete and correct in all material respects.

(b)   All material Taxes with respect to taxable periods or portions thereof covered by such Tax Returns and all other material Taxes (without regard to whether a Tax Return was or is required) for which (i) Seller, Seller Subsidiary, any predecessor corporation of either of them or any member of the Seller Affiliated Group is otherwise liable with respect to (or which relate to) the Business or the Assets, and (ii) the Joint Venture is otherwise liable, that are due have been paid in full or adequate reserves have been established on the September 30, 2005 Balance Sheet, in accordance with GAAP as applied by Seller on a consistent basis with prior periods.

(c)   With respect to the Business or the Assets, all material Taxes due with respect to any completed and settled audit, examination or deficiency Action with any taxing authority for which (i) Seller, Seller Subsidiary, any predecessor corporation of either of them or any member of the Seller Affiliated Group is or might otherwise be liable with respect to (or which relate to) the Business or the Assets, and (ii) the Joint Venture is or might otherwise be liable, have been paid in full.

(d)   There is no audit by any taxing authority pending against (i) Seller, Seller Subsidiary, any predecessor corporation of either of them with respect to the Assets or the Business, or (ii) the Joint Venture, and such entities have not received any written notice from any taxing authority that it is conducting or intends to conduct an audit or investigation. To the Knowledge of Seller, no material issue has been raised in writing within the past three years by a taxing authority in any current or most recent prior examination which, by application of the same or similar principles, would reasonably be expected to affect in any material respect the Tax treatment of any of the Assets or the Business in any taxable period (or portion thereof) ending after the Closing Date.

(e)   No claim has ever been made in writing within the past three years by a taxing authority in a jurisdiction where Seller, Seller Subsidiary or the Joint Venture does not file Tax Returns that with respect to the Business or the Assets, Seller, Seller Subsidiary or the Joint Venture is or may be subject to taxation by that jurisdiction.

(f)    With respect to the Business or the Assets, each of Seller, Seller Subsidiary and the Joint Venture has complied in all material respects with all applicable Laws relating to withholding of Taxes and the payment thereof, and has in all material respects timely and properly withheld from employee wages (and from all other payments made by or on behalf of Seller, Seller Subsidiary and the Joint Venture) and paid to the proper authorities all amounts required to be withheld and paid over under applicable Laws.

(g)   Other than the Joint Venture, none of the Assets is (i) an interest in a partnership or other entity treated as a partnership for U.S. federal income tax purposes, (ii) an interest in an entity taxable as a corporation, trust or real estate mortgage investment conduit for U.S. federal income tax purposes, or

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(iii) an entity treated as a disregarded entity described in Treasury Regulation Section 301.7701-2(c)(2)(i). The Joint Venture has been treated by Seller as a corporation for U.S. federal income tax purposes.

(h)   None of the Assets (i) is tax-exempt use property within the meaning of Section 168(h) of the Code, (ii) directly or indirectly secures any debt the interest on which is exempt under Section 103(a) of the Code or (iii) is property that is required to be treated as being owned by any Person (other than Seller or Seller Subsidiary) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately before the enactment of the Tax Reform Act of 1986.

(i)    No Liens for Taxes exist with respect to any of the Assets, except for Permitted Liens.

Section 6.6   Proprietary Rights.

(a)   Set forth on Schedule 6.6(a) are all patents, patent applications, patent and invention disclosures available for filing, mask works and semiconductor chip rights, copyright applications and registrations, trademark applications and registrations and material unregistered trademarks which constitute Business Intellectual Property owned by Seller or Seller Subsidiary and the entity that owns such Business Intellectual Property.

(b)   Set forth on Schedule 6.6(b) are all Contracts of Seller and Seller Subsidiary by which Seller or Seller Subsidiary grants or receives rights in or to any Business Intellectual Property or Seller Non-Laser Intellectual Property, including the distribution or license of, or royalty payments with respect to, Business Intellectual Property or Seller Non-Laser Intellectual Property, whether as licensor or licensee, and excluding (i) non-material software (in object code form only) licenses to end-users; and (ii) software and database license agreements based on one of the forms included on Schedule 6.6(b), entered into in the ordinary course of business consistent with past practices granting (A) Seller’s or Seller Subsidiary’s customers the nonexclusive right to use, copy or merge software (in object code form only) or databases sold by, or incorporated in products sold by, Seller or Seller Subsidiary and (B) Restricted Rights (as defined in FAR 52.227-14) to software (in object code form only), Limited Rights (as defined in FAR 52.227-14) to associated technical data documentation or Government Purpose Rights (as defined in FAR 52.227-14) to databases to the United States Government, provided that such licenses in clauses (A) and (B) do not differ materially from such forms (the licenses in 6.6(b)(i) and 6.6(b)(ii), the “Excluded Licenses”).

(c)   Except as set forth on Schedule 6.6(c):

(i)    Seller or Seller Subsidiary owns all right, title and interest in and to (or, in the case of Business Intellectual Property or Seller Non-Laser Intellectual Property subject to license agreements in favor of Seller or Seller Subsidiary set forth on Schedule 6.6(b), has the right to use in accordance with the terms of such license agreements) all of the Business Intellectual Property and material Seller Non-Laser Intellectual Property, free and clear of any Liens (other than Permitted Liens) and free from any requirement of any past, present or future payments (other than maintenance and similar payments), charges or fees or conditions, rights or restrictions (except, in the case of Business Intellectual Property or Seller Non-Laser Intellectual Property subject to license agreements from or to Seller or Seller Subsidiary set forth on Schedule 6.6(b) and the Excluded Licenses, as otherwise provided pursuant to the terms of such license agreements);

(ii)   no Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property (other than Business Intellectual Property or Seller Non-Laser Intellectual Property subject to license agreements in favor of Seller or Seller Subsidiary set forth on Schedule 6.6(b)) or any service rendered by Seller or Seller Subsidiary in respect of the Business within the past six years, or any product, process or material developed, manufactured, produced or used by Seller or Seller Subsidiary in respect of the Business within the past six years, is alleged in writing to infringe upon or misappropriate in any material respect or, to the Knowledge of Seller, infringes or

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misappropriates in any material respect upon any Intellectual Property or other rights owned or held by any other Person, and no Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property subject to license agreements in favor of Seller or Seller Subsidiary set forth on Schedule 6.6(b) is alleged in writing to infringe in any material respect upon or, to the Knowledge of Seller, infringes in any material respect upon any Intellectual Property or other rights owned or held by any other Person;

(iii)  to the Knowledge of Seller, the rights of Seller and Seller Subsidiary in and to all Business Intellectual Property and Seller Non-Laser Intellectual Property are valid and enforceable and, no Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property is subject to any outstanding Lien (other than Permitted Liens), judgment, ruling, order, writ, decree, stipulation, injunction or determination by or with any Governmental Entity restricting the use of such Intellectual Property, nor is there (or has there been within the last three (3) years), pending or (to the Knowledge of Seller) threatened, any written claim, Action or other proceeding relating to any Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property, (including any interference, reissue, reexamination or opposition proceeding, which is contesting the rights of Seller or Seller Subsidiary to any Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property or the ownership, use, enforceability or validity of any such Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property);

(iv)  to the Knowledge of Seller, there is no infringement or misappropriation of any Business Intellectual Property or Seller Non-Laser Intellectual Property by any Person;

(v)    there are no material Contracts between Seller or Seller Subsidiary, on the one hand, and any other Person, on the other hand, which have been terminated or expired prior to the date hereof and under which Seller or Seller Subsidiary has granted rights or licenses in any Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property to such other Persons or granted an option to acquire such rights or licenses, which rights or licenses or the option to acquire the same survived such termination or expiration;

(vi)  neither Seller nor Seller Subsidiary is bound by any existing or contingent covenant or obligation not to ▇▇▇ or otherwise enforce any legal rights with respect to any Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property;

(vii) all Business Intellectual Property and, to the Knowledge of Seller, Seller Non-Laser Intellectual Property, in each case, owned by Seller or Seller Subsidiary (other than Business Intellectual Property and Seller Non-Laser Intellectual Property acquired by Seller or Seller Subsidiary in connection with the acquisition of a business from a third party) was developed entirely by employees of Seller or Seller Subsidiary during the time they were employees of Seller or Seller Subsidiary; and

(viii)  there are no actions that must be taken within six (6) months from the date hereof, including the payment of fees or the filing of documents, for the purposes of obtaining, maintaining, perfecting, preserving, or renewing any rights in any registered or applied-for Business Intellectual Property or, to the Knowledge of Seller, Seller Non-Laser Intellectual Property, in each case, owned by Seller or Seller Subsidiary.

(d)   Seller has taken and has caused Seller Subsidiary to take reasonable steps (including measures to protect secrecy and confidentiality) to protect its right, title and interest in and to, or its right to use (as applicable), all material Business Intellectual Property and, to the Knowledge of Seller, Seller Non-Laser Intellectual Property. All employees, agents, consultants and other Representatives of Seller or Seller Subsidiary who have access to material confidential or proprietary information of Seller or Seller

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Subsidiary included in the Business Intellectual Property or, to the Knowledge of Seller, the Seller Non-Laser Intellectual Property have a legal obligation of confidentiality to Seller or Seller Subsidiary with respect to such information. All relevant employees of the Business and all relevant employees of Seller or Seller Subsidiary (including all employees who create or develop or who have created or developed Intellectual Property) related to the Business have duly executed and delivered agreements with Seller or a Seller Subsidiary pertaining to the assignment, without additional consideration, to Seller or Seller Subsidiary of all inventions, discoveries and ideas, whether or not patented or patentable, conceived or reduced to practice during the course of their employment by Seller or Seller Subsidiary.

(e)   The Business Intellectual Property and the Intellectual Property licensed to Buyer pursuant to the Transaction Documents, together with the Intellectual Property rights under and arising from the Contracts that constitute Assets, constitute all of Seller’s Intellectual Property rights necessary to conduct the Business in the manner as currently conducted in all material respects and, assuming that such Intellectual Property rights are transferred in accordance with the terms of this Agreement and that all required third party consents to the transfer to Buyer of Contracts specified in Section 6.10(d) have been obtained, immediately after the Closing, Buyer will have the same rights to use such Intellectual Property to conduct the Business after the Closing as Seller did to conduct the Business immediately before the Closing.

(f)    Except as set forth in Schedule 6.6(f), neither Seller nor Seller Subsidiary has released, or escrowed for the benefit of others, any of the source code developed for the Business by Seller or Seller Subsidiary, and to the Knowledge of Seller, no Person other than Seller or Seller Subsidiary is in possession of such source code.

(g)   Except as set forth in Schedule 6.6(g), to the Knowledge of Seller, the software included in the Business Intellectual Property and the Seller Non-Laser Intellectual Property does not contain any open source code or any other components that are licensed under the GNU General Public License or other open source licenses.

Section 6.7   Equity Interest.

(a)   Except for the capital stock of Seller Subsidiary and the ownership interest in the Joint Venture, neither Seller nor Seller Subsidiary owns any capital stock or other equity interest in any Person that is Related to the Business.

(b)   True and complete copies of the Articles of Incorporation and By-laws (or similar governing documents) of the Joint Venture, in each case as amended to date, have been made available to Buyer. The capital stock of the Joint Venture consists of 950,000 shares of capital stock, of which 475,000 “A” Shares are owned by Quadrant Group plc. and 475,000 “B” Shares are owned by Seller. All such outstanding shares have been duly authorized and validly issued and are fully paid, non-assessable and free of pre-emptive rights. There are no outstanding (i) shares of capital stock of the Joint Venture other than the shares described in this Section 6.7(b), (ii) securities of the Joint Venture convertible into or exchangeable for shares of capital stock of the Joint Venture or (iii) options or other rights or agreements (other than this Agreement) to acquire, either directly or indirectly, from Seller, Quadrant Group plc or the Joint Venture, or other obligation of Seller, Quadrant Group plc or the Joint Venture to issue, any capital stock, or securities convertible into or exchangeable for capital stock, of the Joint Venture.

Section 6.8   Title.   Each of Seller and Seller Subsidiary has good and valid title to all of the Assets (other than the Leased Premises and the Owned Real Property), in each case free and clear of any Liens, other than Permitted Liens. Seller and Seller Subsidiary have valid and enforceable title to all Owned Real Property and a valid and enforceable leasehold estate in the Leased Premises, in each case free and clear of all Liens, other than Permitted Liens.

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Section 6.9   Real Property.

(a)   Schedule 6.9(a) sets forth a list of all real property (including improvements on Leased Premises) owned by Seller or Seller Subsidiary and included in the Assets (the “Owned Real Property”).

(b)   Schedule 6.9(b) contains a complete and accurate list of (i) all real estate leased, subleased or occupied by Seller or Seller Subsidiary Related to the Business pursuant to a Lease (the “Leased Premises”, and, together with the Owned Real Property, the “Real Property”), indicating the ownership, street address and use of each of the Leased Premises and (ii) all Leases related to or in respect of the Real Property.

(c)   Other than as set forth on Schedule 6.9(c), either Seller or Seller Subsidiary (and no other Person) is in actual occupancy of all Real Property and Seller and Seller Subsidiary enjoy peaceful and undisturbed possession thereof. Seller has not received written notice from a Governmental Entity of any restrictions imposed by Law which preclude or restrict the ability to use the Real Property for the purposes for which they are currently being used and, to, the Knowledge of Seller (without duty of inquiry), there are no such restrictions.

(d)   To the Knowledge of Seller (without duty of inquiry), all improvements on the Real Property were constructed in compliance in all material respects with all applicable Laws (including building, planning and zoning Laws) and Permits affecting such Real Property. Seller has not received written notice from a Governmental Entity that any improvement on the Real Property or any current use or condition thereof violates any applicable deed restrictions or other applicable covenants, restrictions, agreements, site plan approvals or variances or the certificate of occupancy for each of the improvements on the Real Property, and, to the Knowledge of Seller (without duty of inquiry), there are no such violations. All improvements on the Real Property are wholly within the boundaries of the real property covered by the deed or Lease relating thereto, and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.

(e)   Neither Seller nor Seller Subsidiary has received written notice of any pending or threatened Actions (including condemnation Actions) affecting any Real Property, and, to the Knowledge of Seller, there are no such pending or threatened Actions.

Section 6.10   Contracts.

(a)   Schedule 6.10(a) lists all Contracts of Seller or Seller Subsidiary Related to the Business (other than those set forth on Schedule 6.6(b), Schedule 6.9(b), Schedule 6.17(b) or Schedule 6.17(e)):

(i)    for the lease (whether as lessor or as lessee) of personal property from any Person providing for annual lease payments in excess of $25,000;

(ii)   for the sale or lease (as lessor) of inventories, materials, commodities, supplies, products, spare parts or real, personal or mixed property, or for the furnishing or receipt of services, including customer Contracts, which provide for aggregate future payments to Seller or Seller Subsidiary in excess of $50,000 per annum;

(iii)  establishing a partnership, joint venture or joint development arrangement and any Contracts of any such partnership, joint venture or joint development to which Seller, Seller Subsidiary or the United Kingdom Ministry of Defense is a party;

(iv)  providing for management services or for the services of independent contractors or consultants (or similar arrangements), which provide for aggregate future payments in excess of $25,000 per annum;

(v)    under which any Person has directly or indirectly guaranteed any indebtedness or other Liability of Seller or Seller Subsidiary in excess of $25,000;

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(vi)  under which Seller or Seller Subsidiary has directly or indirectly made any advance, loan or extension of credit to, or other investment in, any Person in excess of $50,000 (other than in respect of amounts paid for products or services) or any employee, or which involve a sharing of profits, losses, costs or Liabilities by Seller or Seller Subsidiary with any other Person;

(vii) providing for or granting a Lien (other than a Permitted Lien) upon any Assets;

(viii)     between or among Seller or Seller Subsidiary, on the one hand, and any Affiliate, officer, director or employee of Seller or Seller Subsidiary, on the other hand;

(ix)  with (A) any broker, distributor, dealer or sales representative relating to the distribution or sale of products pursuant to which in excess of $25,000 per annum is potentially payable or (B) any international sales representative;

(x)    with any supplier, manufacturer or other Person relating to the purchase or manufacture of products or the receipt of services which provide for aggregate future payments by Seller or Seller Subsidiary in excess of $50,000 per annum;

(xi)  all confidentiality and non-disclosure agreements (other than standard non-disclosure forms signed by employees generally, copies of which have been made available to Buyer);

(xii) for the purchase or sale of any business, corporation, partnership, joint venture, association or other business organization or any division, assets, operating unit or product line thereof;

(xiii)     which limit or purport to limit the ability of Seller or Seller Subsidiary or the Business to compete in any line of business or with any Person or in any geographic area or which limit or purport to limit or restrict the ability of Seller or Seller Subsidiary with respect to the development, manufacture, marketing, sale or distribution of any products or services;

(xiv)                      pursuant to which Seller or Seller Subsidiary has granted exclusive rights with respect to the distribution, sale, manufacture or other use of any products, Intellectual Property or other assets;

(xv)  with any Governmental Entity (other than Contracts under which Governmental Entities are customers which are disclosed or not required to be disclosed pursuant to clause (ii) above); and

(xvi)                      all foreign currency forward exchange Contracts.

Each Contract set forth or required to be set forth on Schedule 6.10(a), Schedule 6.6(b), Schedule 6.9(b), Schedule 6.17(b) or Schedule 6.17(e) and each Contract of the Joint Venture that is material to the Business is referred to herein as a “Material Contract”.

(b)   Each Material Contract is in full force and effect and, assuming due authorization, execution and delivery by the other parties thereto, is legal, valid, binding and enforceable against Seller or Seller Subsidiary and, to the Knowledge of Seller, each other party thereto, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

(c)   Except as set forth on Schedule 6.10(c), Seller, Seller Subsidiary or, to the Knowledge of Seller, the Joint Venture have performed in all material respects all obligations required to be performed by them under each Material Contract and are not in material default under any Material Contract. To the Knowledge of Seller, no party to any Material Contract has repudiated any provision thereof or terminated any Material Contract, and none of Seller or Seller Subsidiary has received written notice from the other party or parties to any such Material Contract of its intention to exercise any right of cancellation, termination or non-renewal thereof. Seller has heretofore made available to Buyer true and complete

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copies of all written Material Contracts. Neither Seller nor Seller Subsidiary is a party to any oral Contract that would fall within the definition of Material Contract.

(d)   Except as set forth on Schedule 6.10(d), none of the execution, delivery or performance of any Transaction Document or consummation of the Transaction will, under the terms, conditions or provisions of any Material Contract (A) require any Consent of, with or to any Person, (B) result in any increase in any payment or change in any term, (C) give rise to any right of amendment, termination, cancellation or acceleration of any right or obligation or to a loss of benefit or (D) grant any repayment or repurchase rights to any Person.

(e)   The current Estimates at Completion (EACs) prepared by Seller for existing Material Contracts providing for the sale of products by Seller or Seller Subsidiary have been made available to Buyer and reflect (i) all material costs incurred related to such Material Contracts in accordance with GAAP and (ii) reasonable and appropriate estimates to complete such Material Contracts based on actual costs incurred and estimates of the effort to complete such Material Contracts from Seller’s and Seller Subsidiary’s engineering and program management functions. The Material Contracts for which losses have been recorded or reserved against in the Financial Statements and the amount of such losses recorded or reserved for each such Material Contract are set forth on Schedule 6.10(e). Seller and Seller Subsidiary have no Material Contracts for which a material loss should be recorded or reserved in accordance with GAAP, other than Material Contracts for which losses have been recorded or reserved against in the Financial Statements.

Section 6.11   Litigation.

(a)   Except as set forth on Schedule 6.11(a) or Schedule 6.6(c), (i) there is no judgment, ruling, order, writ, decree, stipulation, injunction or determination by or with any arbitrator, court or other Governmental Entity to which Seller or Seller Subsidiary is party or by which Seller or Seller Subsidiary or any assets of any thereof is bound, and which relates to or affects the Business (or the operation thereof), the Assets, the Assumed Liabilities, any Transaction Document or the Transaction in effect, or, to the Knowledge of Seller, to which the Joint Venture is a party or by which the Joint Venture or any assets of the Joint Venture is bound, and which relates to or affects the business (or the operation thereof), the assets or the liabilities of the Joint Venture, and (ii) none of Seller or Seller Subsidiary is party to, engaged in, or, to the Knowledge of Seller, threatened with any Action which relates to or affects the Business (or the operation thereof), the Assets, the Assumed Liabilities, any Transaction Document or the Transaction, and, to the Knowledge of Seller, the Joint Venture is not a party to, engaged in or threatened with any Action which relates to or affects the business (or the operation thereof), the assets or the liabilities of the Joint Venture.

(b)   None of Seller, Seller Subsidiary or the Joint Venture is in default under or with respect to any judgment, ruling, order, writ, decree, stipulation, injunction or determination of the type described in Section 6.11(a)(i).

Section 6.12   Environmental Matters.

(a)   Except as disclosed on Schedule 6.12 or as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, to the Knowledge of Seller:

(i)    none of the Facilities has been used at any time (A) as a site for the storage, except as authorized under applicable Environmental Laws, or disposal of any Hazardous Material, or (B) so as to cause a material violation of, or to give rise to, a material removal, restoration or reimbursement Liability under any Environmental Law;

(ii)   neither Seller nor Seller Subsidiary has any material Environmental Liability whether directly or pursuant to any Contract, including with respect to or as a result of (A) the presence,

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discharge, generation, treatment, storage, handling, removal, disposal, transportation or Release of any Hazardous Material at, onto or from any Facility, (B) disposition of such removed Hazardous Material at any other location, (C) the Release, threatened Release or presence of Hazardous Materials at any location or (D) the discontinuance, sale or transfer of operations of any business conducted at any Facility;

(iii)  each of Seller and Seller Subsidiary has complied and remains in compliance in all material respects with all Environmental Laws related to or affecting the Business or the Assets, including in connection with the acquisition, storage, handling, transportation, processing, use or disposal of any goods or materials, whether as raw materials, work in process, finished goods or otherwise;

(iv)  no underground tanks, asbestos containing materials or polychlorinated biphenyls are, or have at any time while owned or operated by Seller or Seller Subsidiary been, present at any Facility; and

(v)    no environmental assessment reports with respect to any Facility are in the possession or control of Seller or Seller Subsidiary that have not been made available to Buyer.

(b)   The representations in this Section 6.12 constitute the sole and exclusive representations relating to environmental matters under this agreement.

Section 6.13   Governmental Approvals.   Except for the filings required under the HSR Act and as set forth on Schedule 6.13, no material Consent or order of, with or to any Governmental Entity is required to be obtained or made by or with respect to Seller, Seller Subsidiary or the Joint Venture in connection with the execution, delivery and performance by Seller or Seller Subsidiary of any Transaction Document or the consummation by Seller or Seller Subsidiary of the Transaction.

Section 6.14   Compliance With Applicable Laws.

(a)   Except as set forth on Schedule 6.14 (and except with respect to Intellectual Property), (i) each of Seller, Seller Subsidiary and the Joint Venture is in compliance in all material respects and has complied in all material respects with all Laws applicable to the Business, the Assets and the Joint Venture, (ii) within the past three (3) years, no written claims or complaints from any Governmental Entities have been asserted or received by Seller, Seller Subsidiary or the Joint Venture related to or affecting the Business, the Assets or the Joint Venture and, to the Knowledge of Seller, no written claims or complaints are threatened, alleging that Seller, Seller Subsidiary or the Joint Venture is in violation in any material respect of any Laws or Permits applicable to the Business, the Assets or the Joint Venture, and (iii) within the past three (3) years, to the Knowledge of Seller, no investigation, inquiry, or review by any Governmental Entity with respect to the Business, the Assets or the Joint Venture is pending or threatened, nor has any Governmental Entity indicated to Seller, Seller Subsidiary or the Joint Venture an intention to conduct any such investigation, inquiry or review.

(b)   To the Knowledge of Seller, none of Seller, Seller Subsidiary or the Joint Venture, with respect to the Business or the Joint Venture, nor any director, officer, agent, employee or other Person associated with or acting on behalf of Seller, Seller Subsidiary or the Joint Venture, with respect to the Business or the Joint Venture, has, directly or indirectly, used any corporate funds for any unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made any unlawful payment to any Governmental Entity or governmental, administrative or regulatory official or employee or to any political party or campaign from corporate funds or made any bribe, unrecorded rebate, payoff, influence payment, kickback or other unlawful payment.

Section 6.15   Permits.   Schedule 6.15 contains a complete and accurate list of all material Permits that are held by Seller or Seller Subsidiary with respect to the Business, the Assets or the Assumed Liabilities. Other than any material Permits held by the landlords of Seller or Seller Subsidiary under any

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Leases, the Permits listed on Schedule 6.15 constitute all the material Permits that are necessary to operate the Business and to operate, own and use the Assets in compliance in all material respects with all Laws applicable to such operation, ownership and use. To the Knowledge of Seller, no such material Permit will be subject to suspension, modification, revocation, cancellation, termination or nonrenewal as a result of the execution, delivery or performance of any Transaction Document or the consummation of the Transaction. Each of Seller and Seller Subsidiary has complied in all material respects with all of the terms and requirements of the Permits listed on Schedule 6.15.

Section 6.16   Sufficiency of Assets.   The Assets, together with Buyer’s rights under the Transition Agreement, the Intellectual Property Agreement, the Laser Supply Agreement and the Laser Agreement constitute and will constitute on the Closing Date (a) all of the material assets and rights that are used in the operation of the Business as it is being conducted as of the date hereof and as it will be conducted through the Closing Date and (b) all the material property, real and personal, tangible and intangible, reasonably necessary for the conduct of the Business following the Effective Time as it is being conducted as of the date hereof and as it will be conducted through the Effective Time, excluding (w) the Real Property listed on Schedule 6.9(a) or Schedule 6.9(b), but not included on Schedule 2.1(a)(i), (x) the power substation, (y) any differences between the international sales representative agreements entered into by Buyer pursuant to Section 8.13 and those of Seller as of the Effective Time, and (z) any Business Employee who elects not to accept employment with Buyer as of the Effective Time. Except as set forth on Schedule 6.16, no Affiliate of Seller (other than Seller Subsidiary) owns any assets, properties or rights Related to the Business.

Section 6.17   Employee Matters.

(a)   Neither Seller nor Seller Subsidiary is a party to any Contract regarding collective bargaining or other Contract with or to any labor union or other association representing any employee engaged in the Business, nor does any labor union or collective bargaining agent represent any employee engaged in the Business. No Contract regarding collective bargaining has been requested by, or is under discussion between management of Seller or Seller Subsidiary and, any group of employees engaged in the Business or others, nor are there any representation proceedings or petitions seeking a representation proceeding presently pending against Seller or Seller Subsidiary with the National Labor Relations Board, the Central Arbitration Committee under the Employment Relations ▇▇▇ ▇▇▇▇ or any labor relations tribunal related to the Business, nor are there any other current activities, to the Knowledge of Seller, to organize any employees engaged in the Business into a collective bargaining unit. There is no unfair labor practice charge or complaint pending or, to the Knowledge of Seller, threatened that is related to the Business. Except as set forth on Schedule 6.17(a), during the past four (4) years, there has not been any labor strike, slow-down, work stoppage, arbitration or material grievance involving Seller or Seller Subsidiary with respect to the Business or otherwise related to the Business, and no such action is now pending or, to the Knowledge of Seller, threatened against Seller, Seller Subsidiary or the Business.

(b)   Schedule 6.17(b) sets forth a complete and accurate list of each pension, retirement, savings, profit sharing, cash balance, money purchase, deferred compensation, medical, vision, dental, hospitalization, prescription drug and other health plan, cafeteria, flexible benefits, short-term and long-term disability, accident and life insurance plan, bonus, stock option, stock purchase, stock appreciation, phantom stock, restricted stock, stock appreciation rights, incentive and special compensation and other plan and each other employee benefit plan, program or contract, whether or not subject to ERISA, (i) which is related to the Business or which is otherwise applicable to employees or categories of employees engaged in the Business and (ii) to which Seller or Seller Subsidiary contributes or is required to contribute, or which Seller or Seller Subsidiary sponsors, maintains, administers or participates in (hereinafter referred to collectively as the “Plans”).

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(c)   Except as set forth on Schedule 6.17(c), none of the Plans is subject to Title IV of ERISA or Section 412 of the Code.

(d)   None of Seller, Seller Subsidiary or any ERISA Affiliate of any thereof is required to contribute to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) which is applicable to employees or categories of employees related to the Business.

(e)   Schedule 6.17(e) sets forth a complete and accurate list of each current employment, termination, retention and severance agreement, Contract and policy (whether written or oral) with or for the benefit of, or otherwise related to, any employees engaged in the Business. All such Contracts and policies are valid and enforceable, and neither Seller nor Seller Subsidiary is in default in any material respect thereunder. Except as separately set forth on Schedule 6.17(e), none of the execution, delivery and performance of any Transaction Document or the consummation of the Transaction will result in any obligation to pay any employees engaged in the Business severance pay or termination, retention or other benefits.

(f)    All employees employed by Seller Subsidiary in the United Kingdom engaged primarily in the Business of Seller Subsidiary immediately before the date of this Agreement (“UK Employees”) are set forth in Schedule 6.17(f) (which Schedule 6.17(f) may be updated before the Closing by Seller pursuant to Section 15.13(b)). No person is employed by Seller Subsidiary other than the UK Employees. Schedule 6.17(f) sets forth for each UK Employee: job title; date of commencement and date of continuous employment; current compensation payable and all other benefits provided by Seller or Seller Subsidiary or which Seller or Seller Subsidiary is bound to provide (whether now or in the future); vacation accrued; eligibility to participate under the Plans and all and any benefits being received under the Plans; and leave of absence, stating the durations and reasons for any absence (statutory or otherwise); receipt of sickness, disability or permanent health insurance payments that are not otherwise covered under the Plans.

(g)   None of the UK Employees have previously transferred to Seller or Seller Subsidiary pursuant to the Transfer Regulations. Except as set forth in Schedule 6.17(g), Seller and Seller Subsidiary have no obligation (other than to meet the reasonable administration costs of the UK Pension Plan) to provide “relevant benefits” (within the meaning of the Income and Corporation Taxes ▇▇▇ ▇▇▇▇, section 612 (as amended)) to or in respect of any Person who is now or who has been an officer or employee of the Business of Seller Subsidiary or spouse or dependent of such officer or employee.

Section 6.18   Absence of Material Adverse Effect and Certain Changes or Events.

(a)   Except as set forth on Schedule 6.18, since September 30, 2005 until the date of this Agreement, there has not been a Material Adverse Effect.

(b)   Without limiting the generality of the foregoing, except as set forth on Schedule 6.18, from and after September 30, 2005 until the date of this Agreement, Seller and Seller Subsidiary have caused the Business to be conducted in the ordinary course of business consistent with past practices, and neither Seller nor Seller Subsidiary has (to the extent Related to the Business):

(i)         suffered damages, destruction or casualty losses (whether or not covered by insurance) in excess of $100,000 in the aggregate;

(ii)       made any single capital expenditure in excess of $100,000, or a series of related capital expenditures in excess of $375,000 in the aggregate;

(iii)      except for increases in compensation to employees made in the ordinary course of business consistent with past practice, or as agreed with Buyer in writing, or as required pursuant to any existing Contract, Plan, program, policy, agreement or arrangement or as required by applicable Law (A) made any material change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable or to become payable to any of their respective employees or agents, or

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(B) agreed or promised (orally or otherwise) to pay, conditionally or otherwise, any additional material pension, profit sharing, incentive, deferred compensation, stock purchase, stock option, stock appreciation, group insurance, vacation pay, severance pay, retirement, bonus, extra compensation, or other employee benefit plan, agreement or arrangement to any of such employees or agents;

(iv)       (A) entered into any employment or consulting agreement (other than (x) any consulting agreement to which an international sales representative is not a party and pursuant to which less than $50,000 is potentially payable over the life of the agreement or (y) any employment agreement entered into the in ordinary course of business consistent with past practices in the United Kingdom) with or for the benefit of any Person referred to in subparagraph (iii) above, or (B) paid any pension, retirement allowance or other material employee benefit not required by any Plan, Contract, agreement or arrangement to any Person referred to in subparagraph (iii) above;

(v)        sold, assigned, leased or transferred any of its material Assets, other than inventories of obsolete equipment in the ordinary course of business consistent with past practices and licensing and other dispositions of Intellectual Property in the ordinary course of business consistent with past practices;

(vi)       amended or renegotiated in any material respect or terminated (other than by completion thereof) any Material Contract other than in the ordinary course of business consistent with past practices;

(vii)     made, incurred, assumed, created or guaranteed any loan or made any advance (other than the making of employee advances for travel and entertainment in the ordinary course of business consistent with past practices) to or investment in any Person (other than in respect of amounts paid for products or services);

(viii)    subjected any of its assets or properties to any Lien or permitted any of its assets or properties to be subjected to any Lien, other than Permitted Liens;

(ix)       made any material change in its accounting methods, policies, practices or principles affecting the Assets or Assumed Liabilities of the Business, whether or not required by GAAP;

(x)        waived or released any rights or claims of material value, including rights or claims under any Material Contract, or waived or released any material rights or material claims against any Affiliate or employee of Seller or Seller Subsidiary;

(xi)       other than in the ordinary course of business consistent with past practices, changed or modified any of the Business’s credit, collection or payment policies, procedures or practices, including acceleration of collections of receivables, failure to make or delay in making collections of receivables (whether or not past due), acceleration of payment of payables or other Liabilities or failure to pay or delay in payment of payables or other Liabilities;

(xii)     engaged in any discount activity with customers of the Business or other activity intended to accelerate to pre-Closing periods sales that would otherwise in the ordinary course of business consistent with past practices be reasonably expected to occur in post-Closing periods;

(xiii)    acquired or agreed to acquire by merging or consolidating with, or by purchasing a substantial portion of the capital stock or assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or Person, or division, operating unit or product line thereof;

(xiv)     revalued any of the Assets other than changes in reserves in the ordinary course of business consistent with past practices, or as a result of depreciation and amortization, in each case in accordance with GAAP;

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(xv)      purchased any real property or, other than Leases set forth on Schedule 6.9(b), entered into any Lease;

(xvi)     settled or compromised any Action other than the Actions set forth on Schedule 2.1(b)(ix); or

(xvii)   entered into any agreement or commitment (other than the Transaction Documents) to take any of the types of action described in subclauses (ii) through (xvi) of this Section 6.18(b).

Section 6.19   Product Warranty.   No product manufactured, sold, leased or delivered or service rendered by the Business is subject to any guarantee, warranty or other indemnity beyond those set forth in the terms and conditions of sale contained in the Contracts set forth on Schedule 6.10(a).

Section 6.20   Insurance.

(a)   Schedule 6.20(a) sets forth a complete and accurate list of all insurance policies and surety bonds which Seller or Seller Subsidiary maintains with respect to the Business (including those maintained with respect to the employees engaged in the Business and the Assets (“Insurance Policies”). Seller has made available to Buyer true and complete copies of all Insurance Policies.

(b)   The Insurance Policies: (i) are in full force and effect; (ii) insure the Business in reasonably sufficient amounts against all risks usually insured against by Persons operating similar businesses or properties of similar size and nature and (iii) are sufficient for compliance in all material respects with all applicable requirements of Law and Contracts. Each of Seller and Seller Subsidiary is current in all premiums or other payments due under each Insurance Policy and has otherwise performed in all material respects all of its respective obligations thereunder. Each of Seller and Seller Subsidiary has given timely notice to the insurer under each Insurance Policy of all claims with respect to the Business that may be insured thereby.

Section 6.21   No Brokers.   There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller who is or might be entitled to any fee, commission or payment in connection with the negotiation, preparation, execution or delivery of this Agreement or the consummation of the Transaction.

Section 6.22   Customers and Suppliers.   From December 31, 2004 to the date hereof, except as disclosed on Schedule 6.22, none of the ten (10) largest customers or ten (10) largest suppliers of the Business, as measured by the dollar amount of purchases therefrom or thereby (with respect to fiscal year ended December 31, 2004) (i) has terminated its relationship with Seller or Seller Subsidiary (with respect to the Business) or materially adversely changed the pricing or other terms of a substantial portion of its business with such Seller or Seller Subsidiary (with respect to the Business) or (ii) has notified in writing Seller or Seller Subsidiary (with respect to the Business) that it intends to terminate its relationship with Seller or Seller Subsidiary (with respect to the Business) or materially adversely change the pricing or other terms of a substantial portion of its business with such Seller or Seller Subsidiary or with Buyer following the Effective Time (with respect to the Business).

Section 6.23     Bank Accounts in the United Kingdom.   Schedule 6.23 sets forth a complete and accurate list of:  (a) all bank accounts, investment accounts, lock boxes and safe deposit boxes of Seller and Seller Subsidiary that are located in the United Kingdom and are related to or in respect of the Business, including the location and account numbers of all such accounts, lock boxes and safe deposit boxes and (b) the names of all Persons authorized to take action with respect to, or who have access to, such accounts, safe deposit boxes and lock boxes. The terms of all such accounts, lock boxes and safe deposit boxes have been made available to Buyer.

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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows:

Section 7.1   Organization.   Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

Section 7.2   Authority.   Buyer has all requisite corporate power and authority to execute and deliver each Transaction Document delivered or to be delivered by Buyer and to perform all of its obligations hereunder and thereunder. The execution, delivery and performance by Buyer of each Transaction Document delivered or to be delivered by Buyer and the consummation by Buyer of the Transaction have been duly authorized by all necessary and proper action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and, assuming due authorization, execution and delivery by the other party hereto, constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity. Each other Transaction Document to be delivered by Buyer will be duly executed and delivered by Buyer and, when so executed and delivered, assuming due authorization, execution and delivery by the other party thereto, will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

Section 7.3   No Breach.   Assuming the receipt of the authorizations, approvals and consents referred to in Section 6.13 hereof and the approval of the stockholders of Seller by the Required Seller Vote, none of the execution, delivery or performance by Buyer of any Transaction Document or the consummation by Buyer of the Transaction does or will, with or without the giving of notice or the lapse of time or both, conflict with, or result in a breach or violation of or a default under, or give rise to a right of amendment, termination, cancellation or acceleration of any right or obligation or to a loss of a benefit under (a) the Certificate of Incorporation or By-laws of Buyer, (b) any Contract of Buyer or (c) any Law or Permit (subject to compliance with the HSR Act) or other requirement to which Buyer or its properties or assets is subject, except, in the case of items (b) and (c) above only, for those which would not have or reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Buyer to consummate the Transaction.

Section 7.4   Governmental Approvals.   Except for the filings required under the HSR Act and as set forth on Schedule 7.4, no material Consent or order of, with or to any Governmental Entity is required to be obtained or made by or with respect to Buyer in connection with the execution, delivery and performance by Buyer of any Transaction Documents or the consummation by Buyer of the Transaction.

Section 7.5   No Brokers.   There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer or any of its Affiliates who is or might be entitled to any fee, commission or payment in connection with the negotiation, preparation, execution or delivery of this Agreement or the consummation of the Transaction.

Section 7.6   Financial Resources.   Buyer has, as of the date hereof, and at the Closing will have, sufficient funds, including cash on hand together with funds available under bank or other credit facilities currently in place, to consummate the transactions contemplated by this Agreement and the Transaction Documents and to fulfill its obligations hereunder and thereunder, including payment to Seller of the Purchase Price at Closing and any adjustments to the Purchase Price following the Closing.

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Section 7.7   Litigation.   No Actions or proceedings are pending or, to the knowledge of Buyer, threatened against Buyer which seek to delay or prevent the consummation of, or which would materially adversely affect Buyer’s ability to consummate, the Transaction.

Section 7.8   Proxy Statement.   None of the information concerning Buyer supplied or to be supplied by Buyer for inclusion or incorporation by reference in, and that is included or incorporated by reference with the prior written consent of Buyer in, the Proxy Statement or any amendment or supplement thereto, will, at the time provided, at the time of mailing to Seller’s stockholders or at the time of the meeting of stockholders, contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make statements therein, in light of the circumstances under which they were made, not misleading.

ARTICLE VIII
COVENANTS

Section 8.1   Covenants of Seller.

(a)   Conduct of Business.

(i)    From the date hereof through the Closing Date, other than with the prior written consent of Buyer or as expressly contemplated by this Agreement, Seller will, and will cause Seller Subsidiary to, conduct the Business only in the ordinary course consistent with past practices.

(ii)   From the date hereof through the Closing Date, other than with the prior written consent of Buyer or as expressly contemplated by this Agreement, Seller will, and will cause Seller Subsidiary to, use its commercially reasonable efforts to (A) preserve its business organization related to the Business intact, (B) retain the services of its present officers, employees and agents Related to the Business and (C) maintain good business relationships with third parties having business dealings with the Business.

(iii) From the date hereof through the Closing Date, Seller will not, and will cause Seller Subsidiary not to, without the prior written consent of Buyer, to the extent Related to the Business:

(A)  make any single capital expenditure in excess of $100,000, or a series of related capital expenditures in excess of $375,000 in the aggregate;

(B)   (1) enter into any employment or consulting agreement (other than (x) any consulting agreement to which an international sales representative is not a party and pursuant to which less than $50,000 is potentially payable over the life of the agreement or (y) any employment agreement entered into in the ordinary course of business consistent with past practices in the United Kingdom pursuant to which Buyer will be liable for costs not exceeding $100,000 per annum) with or for the benefit of any of their current or prospective employees or agents, or (2) pay any pension, retirement allowance or other material employee benefit not required by any Plan, Contract, agreement or arrangement to any of such employees or agents;

(C)   sell, assign, lease or transfer any of its material Assets, other than inventories of obsolete equipment in the ordinary course of business consistent with past practices and licensing and other dispositions of Intellectual Property in the ordinary course of business consistent with past practices;

(D)  make, incur, assume, create or guarantee any loan or make any advance (other than the making of employee advances for travel and entertainment in the ordinary course of business consistent with past practices) to or investment in any Person (other than in respect of amounts paid for products or services);

(E)   subject any of its assets or properties to any Lien or permit any of its assets or properties to be subjected to any Lien, other than Permitted Liens;

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(F)   waive or release any rights or claims of material value, including rights or claims under any Material Contract, or waive or release any material rights or material claims against any Affiliate or employee of Seller or Seller Subsidiary;

(G)  other than in the ordinary course of business consistent with past practices, change or modify any of the Business’s credit, collection or payment policies, procedures or practices, including acceleration of collections of receivables, failure to make or delay in making collections of receivables (whether or not past due), acceleration of payment of payables or other Liabilities or failure to pay or delay in payment of payables or other Liabilities;

(H)  engage in any discount activity with customers of the Business or other activity intended to accelerate to pre-Closing periods sales that would otherwise in the ordinary course of business consistent with past practices be reasonably expected to occur in post-Closing periods;

(I)    acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the capital stock or assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or Person, or division, operating unit or product line thereof;

(J)    revalue any of the Assets other than changes in reserves in the ordinary course of business consistent with past practices, or as a result of depreciation and amortization, in each case in accordance with GAAP;

(K)  purchase any real property or, other than Leases set forth on Schedule 6.9(b), enter into any Lease;

(L)   settle or compromise any Action other than the Actions set forth on Schedule 2.1(b)(ix); or

(M)  enter into any agreement or commitment (other than the Transaction Documents) to take any of the types of action described in subclauses (A) through (L) of this Section 8.1(a)(iii).

(iv)  From the date hereof through the Closing Date, Seller will not, and will cause Seller Subsidiary not to, without the prior written consent of Buyer (which consent shall not be unreasonably withheld), to the extent Related to the Business:

(A)  other than in the ordinary course of business consistent with past practices, enter into any Contract which would be a Material Contract if it were in existence on the date hereof;

(B)   other than in the ordinary course of business consistent with past practices, amend in any material respect or terminate (other than by completion thereof) any existing Material Contract;

(C)   enter into any Material Contract with a value in excess of $2,000,000;

(D)  amend in any material respect or terminate (other than by completion thereof) any existing Material Contract with a value in excess of $2,000,000; or

(E)   except as set forth on Schedule 8.1(a)(iv)(E), enter into any customer Contract for the sale of laser projectors for use in connection with the Business;

provided, however, that if (x) Seller has requested Buyer’s consent with respect to such action, and (y) Buyer has not responded to Seller’s request within three (3) business days of such request, then Seller shall have the right to undertake such action.

(v)   From the date hereof through the Closing Date, Seller will not, and will cause Seller Subsidiary not to, without the prior written consent of Buyer (which consent shall not be unreasonably withheld), to the extent Related to the Business, except for increases in compensation to Business Employees and UK Employees made in the ordinary course of business consistent with past practice, or as required pursuant

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to any existing Contract, Plan, program, policy, agreement or arrangement or as required by applicable Law (A) make any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable or to become payable to any of their respective Business Employees, UK Employees or agents, or (B) agree or promise (orally or otherwise) to pay, conditionally or otherwise, any additional pension, profit sharing, incentive, deferred compensation, stock purchase, stock option, stock appreciation, group insurance, vacation pay, severance pay, retirement, bonus, extra compensation, or other employee benefit plan, agreement or arrangement to any of such Business Employees, UK Employees or agents; provided, however, that if (x) Seller has requested Buyer’s consent with respect to such action, and (y) Buyer has not responded to Seller’s request within three (3) business days of such request, then Seller shall have the right to undertake such action.

(vi)  From the date hereof through the Closing Date, Seller will provide Buyer with prompt written notice if either Seller or Seller Subsidiary, to the extent Related to the Business:

(A)  in the ordinary course of business consistent with past practices, enters into any Contract which would be a Material Contract if it were in existence on the date hereof;

(B)   in the ordinary course of business consistent with past practices, amends in any material respect or terminates (other than by completion thereof) any existing Material Contract;

(C)   suffers damages, destruction or casualty losses (whether or not covered by insurance) in excess of $100,000 in the aggregate; or

(D)  makes any material change in its accounting methods, policies, practices or principles affecting the Assets or Assumed Liabilities of the Business, whether or not required by GAAP.

(b)   Books and Records.   Seller will use commercially reasonable efforts to not, and to cause Seller Subsidiary not to, dispose of or destroy any business records or files related to the Business which do not constitute Assets for seven years after the Closing Date. During such seven-year period, prior to disposing of or destroying any such business records or files in accordance with the preceding sentence, Seller will provide not less than 30 days’ prior written notice to Buyer, specifying the business records and files proposed to be disposed of or destroyed. If, prior to the scheduled date for such disposal or destruction, Buyer requests in writing that any of the business records or files proposed to be disposed of or destroyed be delivered to Buyer, Seller will arrange promptly for the delivery of the requested business records and files to a location specified by, and at the expense of, Buyer.

(c)   Receipt of Assets.

(i)    All assets, amounts and proceeds which are received (whether received in lock boxes, via wire transfer, by check or otherwise) or possessed by Seller or Seller Subsidiary after the Effective Time in respect of the Assets or the Assumed Liabilities will be received or possessed and held in trust for the benefit of Buyer and will be forthwith paid over to Buyer in the form so received or possessed (with any necessary endorsement). Without limiting the generality of the foregoing, Seller will, and will cause Seller Subsidiary to, wire transfer to an account designated by Buyer all payments in respect of accounts receivable which constitute Assets received by Seller or Seller Subsidiary within two business days after receipt of any individual payment in excess of $100,000 and within one week after receipt of any other payment. Any such payment not so transferred to Buyer within such time frames shall bear interest (payable by Seller to Buyer) thereafter until the date such payment is actually transferred (calculated based on actual days elapsed in a 365-day year) at a rate of 4% per annum. Effective as of the Effective Time, Seller, on behalf of itself and Seller Subsidiary, hereby grants to Buyer, subject to Buyer’s obligations under Section 8.1(c)(ii), the right and authority to endorse the name of Seller or Seller Subsidiary on any check or any other evidences of indebtedness or negotiable instruments received by Buyer on account of any Assets transferred to Buyer hereunder.

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(ii)   All assets, amounts and proceeds which are received (whether received in lock boxes, via wire transfer, by check or otherwise) or possessed by Buyer after the Effective Time in respect of the Retained Assets or the Retained Liabilities will be received or possessed and held in trust for the benefit of Seller and will be forthwith paid over to Seller, in the form so received or possessed (with any necessary endorsement). Without limiting the generality of the foregoing, Buyer will wire transfer to an account designated by Seller all payments in respect of accounts receivable which constitute Retained Assets received by Buyer within two business days after receipt of any individual payment in excess of $100,000 and within one week after receipt of any other payment. Any such payment not so transferred to Seller within such time frames shall bear interest (payable by Buyer to Seller) thereafter until the date such payment is actually transferred (calculated based on actual days elapsed in a 365-day year) at a rate of 4% per annum.

(d)   Acquisition Proposals.

(i)    Without limiting Seller’s other obligations under this Agreement (including under Section 8.1(a) hereof), Seller agrees that it will not, and will cause Seller Subsidiary and each of their respective officers, directors, employees, agents and representatives (including any investment banker, attorney or accountant retained by it) not to, directly or indirectly, (A) initiate, solicit, knowingly encourage or knowingly facilitate (including by way of furnishing information) any inquiries or the making of any proposal or offer with respect to any Acquisition Proposal, (B) provide any confidential information to any Person relating to an Acquisition Proposal, or engage in any discussions or negotiations concerning an Acquisition Proposal, (C) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal or (D) approve or recommend, or propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement or propose publicly or agree to do any of the foregoing related to any Acquisition Proposal.

(ii)   For purposes of this Agreement, “Acquisition Proposal” means any inquiry, proposal or offer from any Person with respect to (A) any purchase that constitutes 10% or more of the Assets or the Business of Seller and Seller Subsidiary, taken as a whole, (B) a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Seller or any of its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC), or (C) any purchase or sale of, or tender or exchange offer for, the equity securities of Seller that, if consummated, would result in any Person, or the stockholders of such Person (other than existing stockholders beneficially owning securities in excess of 10% of the total voting power of Seller, each of which existing stockholders may acquire beneficial ownership of up to an additional 5% of the total voting power of Seller), beneficially owning securities representing 10% or more of the total voting power of Seller (or of the surviving parent entity in such transaction) or any of its Significant Subsidiaries, including any single or multi-step transaction or series of related transactions (other than a proposal or offer made by Buyer or an Affiliate thereof); provided, however, the foregoing shall not prohibit Seller or Seller Subsidiary from negotiating, executing or consummating any proposed acquisition of a company in the digital theater business or from issuing shares of common stock of Seller up to an aggregate of 20% of the total voting power of Seller in connection with each such acquisition and up to an aggregate of 35% of the total voting power of Seller in connection with all such acquisitions.

(iii) Notwithstanding anything in this Agreement to the contrary, Seller or its Board of Directors shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal, (B) effect a Change in Seller Recommendation, or (C) engage in any discussions or negotiations with, or provide any information to, any Person in response to an unsolicited bona fide written Acquisition Proposal by any such Person, if and only to the extent that, in any such case referred to in clause (B) or (C), (1) the Seller Stockholders Meeting shall not have occurred, (2) (x) in the case of clause (B) above, it has received an unsolicited bona fide written

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Acquisition Proposal (for purposes of this clause (2), references to 10% in the definition of “Acquisition Proposal” shall be deemed to be references to 51%) from a third party and its Board of Directors concludes in good faith that such Acquisition Proposal constitutes a Superior Proposal and (y) in the case of clause (C) above, its Board of Directors concludes in good faith that there is a reasonable likelihood that such Acquisition Proposal would result in a Superior Proposal, (3) its Board of Directors, after consultation with outside counsel, determines in good faith that the failure to take such action would be reasonably likely to result in a breach of its fiduciary duties to stockholders under applicable Laws, (4) prior to providing any non-public information to any Person in connection with an Acquisition Proposal by any such Person, its Board of Directors receives from such Person an executed confidentiality agreement having provisions that are at least as restrictive to such Person as the comparable provisions contained in the Confidentiality Agreement and (5) prior to providing any information to any Person or entering into discussions or negotiations with any Person, it notifies Buyer promptly of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, it or any of its representatives indicating, in connection with such notice, and the material terms and conditions of any inquiries, proposals or offers. Seller agrees that it will promptly keep Buyer informed of the status and terms of any such inquiries, proposals or offers and the status and terms of any such discussions or negotiations. Seller agrees that it will, and will cause its officers, directors and representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of this Agreement with any Persons conducted heretofore with respect to any Acquisition Proposal. Seller agrees that it will use commercially reasonable efforts to promptly inform its directors, officers, key employees, agents and representatives of the obligations undertaken in this Section 8.1(d). Nothing in this Section 8.1(d) shall (x) permit Seller to terminate this Agreement (except as specifically provided in Article XI) or (y) affect any other obligation of Seller under this Agreement. Seller shall not submit to the vote of its stockholders any Acquisition Proposal other than the Transaction.

(iv)  For purposes of this Agreement, “Superior Proposal” means a bona fide written proposal made by a Person other than Buyer which is (A) for (x) a purchase of all or substantially all of the Assets and the assumption of all or substantially all the Assumed Liabilities, or (y) a merger, reorganization, consolidation, share exchange, business combination, recapitalization or similar transaction involving Seller as a result of which the other Person thereto or its stockholders will own 51% or more of the combined voting power of the entity surviving or resulting from such transaction (or the ultimate parent entity thereof), and (B) is not subject to any financing contingency or due diligence condition and is otherwise on terms which the Board of Directors of such party in good faith concludes (following receipt of the advice of its financial advisors and outside counsel), taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal, (x) would, if consummated, result in a transaction that is more favorable to its stockholders (in their capacities as stockholders), from a financial point of view, than the Transaction and (y) is reasonably capable of being completed.

(v)   Seller will promptly request all Persons who have heretofore executed a confidentiality agreement in connection with such Persons’ consideration of acquiring the Business (or any portion thereof) or any of the Assets to return or destroy all confidential information heretofore furnished to such Persons by or on behalf of Seller or Seller Subsidiary.

(e)   Software Licenses.   Seller will, at its sole cost and expense, cause to be transferred to Buyer at the Closing all licensee rights of Seller or Seller Subsidiary, as licensee, under the software license agreements included in the Assets. If any such license is not assignable, Seller will, at its sole cost and expense, procure for Buyer a new license that is similar in all material respects to the nonassignable license under a new software license agreement as of the Closing in replacement of such nonassignable license. In the event Seller is unable to procure such a substitute license as of the Closing from a vendor because of

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restrictions included in an existing license agreement between the vendor and Buyer, Seller shall be solely responsible for any costs and expenses incurred in connection with the modification of such existing license agreement of Buyer effective as of the Closing to provide for the usage of such license by the Business under Buyer’s existing license agreement; provided, however, that in no event will Seller be obligated to pay amounts in respect of any such modification in excess of the amounts that would otherwise be payable to procure a new license that is similar in all material respects to the applicable nonassignable license in replacement of such nonassignable license.

(f)    Tax Identification Number.   Prior to the Closing Date, Seller will, and will cause each Seller Subsidiary to, furnish to Buyer an affidavit stating, under penalties of perjury, either (i) such Person’s United States taxpayer identification number and confirming that such Person is not a foreign person pursuant to Section 1445(b)(2) of the Code, or (ii) the respective Assets sold by them hereunder do not constitute a “United States Real Property Interest” within the meaning of Section 897 of the Code.

(g)   Preparation of Proxy Statement.   As promptly as reasonably practicable following the date hereof, Seller shall prepare and file with the SEC proxy materials relating to obtaining the Required Seller Vote (such proxy materials, and any amendments or supplements thereto, the “Proxy Statement”). Seller shall, promptly after receipt thereof, but in no event later than two business days after receipt thereof, provide Buyer copies of any written comments and advise Buyer of any oral comments with respect to the Proxy Statement received from the SEC. Seller shall cooperate and provide Buyer with a reasonable opportunity to review and comment on the Proxy Statement and any amendment or supplement thereto prior to filing such with the SEC, and will provide Buyer with a copy of all such filings made with the SEC. Seller will cause the Proxy Statement to be mailed to Seller’s stockholders as promptly as practicable after it has been cleared by the SEC. The Proxy Statement shall conform in all material respects to all applicable Laws. Seller will advise Buyer, promptly after it receives notice thereof, of the time when the Proxy Statement is cleared by the SEC or any request by the SEC for amendment of the Proxy Statement. If at any time prior to the Effective Time any information relating to Seller, Buyer or any of their respective Affiliates, officers or directors, or the Transaction is discovered by Seller or Buyer which should be set forth in an amendment or supplement to the Proxy Statement so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other party hereto and, to the extent required by applicable Laws, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and disseminated to the stockholders of Seller.

(h)   Stockholders Meeting.   Seller shall use commercially reasonable efforts to call, give notice of, convene and hold a meeting of its stockholders as promptly as practicable in accordance with applicable Laws (the “Seller Stockholders Meeting”) for the purpose of obtaining the Required Seller Vote and shall use commercially reasonable efforts to solicit the Required Seller Vote; and the Board of Directors of Seller shall recommend approval of the Transaction by the stockholders of Seller as required by the Revised Business Corporation Act of the State of Utah (the “Seller Recommendation”), and shall not (i) withdraw (or propose to withdraw) the Seller Recommendation, (ii) modify or qualify (or propose to modify or qualify) in any manner adverse to Buyer the Seller Recommendation or (iii) take any action or make any statement in connection with the Seller Stockholders Meeting inconsistent with such recommendation (any of the actions described in clauses (i), (ii) or (iii), a “Change in Seller Recommendation”); provided, however, that the Board of Directors of Seller may make a Change in Seller Recommendation to the extent permitted under Section 8.1(d).

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(i)    Confidential Information.

(i)    From and after the Closing, Seller will, and will cause each of its Representatives to, (A) maintain in strict confidence any and all information concerning the Business and (B) refrain from using any and all such information for its own benefit or to compete with or otherwise to the detriment of Buyer or its Affiliates or the Business. From and after the Closing, Buyer will, and will cause each of its Representatives to, (A) maintain in strict confidence any and all information concerning Seller’s remaining business, and (B) refrain from using any and all such information for its own benefit or to compete with or otherwise to the detriment of Seller or its Affiliates or its remaining business. It is understood that neither party shall have any liability hereunder with respect to information that (x) is in or, through no fault of either party or any of their Representatives, comes into the public domain or (y) which either party is legally required to disclose.

(ii)   In the event that either party or any of its Representatives are required by Law to disclose any such information, such party will promptly notify the other party in writing so that they may seek a protective order and/or other motion to prevent or limit the production or disclosure of such information. If such motion has been denied, then the Person required to disclose such information may disclose only such portion of such information which (A) upon the advice of legal counsel is required by Law to be disclosed or (B) the other party consents in writing to having disclosed. Both parties will not, and will not permit any of its Affiliates or its or their Representatives to, oppose any motion for confidentiality. Both parties and their respective Representatives will continue to be bound by their obligations pursuant to this Section 8.1(i) for any information that is not required to be disclosed, or that has been afforded protective treatment, pursuant to such motion. Upon Closing, the Confidentiality Agreement will be terminated.

(j)    Satisfaction and Discharge of the Debentures. Prior to the Effective Time, Seller will use commercially reasonable efforts to call the Debentures for satisfaction and discharge the Debentures in accordance with the terms and conditions of the Indenture.

(k)   Power to Acquired Facilities. Prior to the Effective Time, Seller will, at its sole cost and expense, provide for the connection to the local power grid of the Real Property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ in Salt Lake City, Utah, which connection shall be sufficient to operate such Real Property following the Effective Time as it is being operated as of the date hereof and as it will be operated through the Effective Time.

Section 8.2   Advice of Changes.   Each of Seller, on the one hand and Buyer, on the other hand, will give prompt notice to the other upon becoming aware of (i) the occurrence, or failure to occur, of any event which would be likely to cause any representation or warranty of such party contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure on its part to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement on or prior to the Closing Date. The notifying party will use its commercially reasonable efforts to prevent or promptly remedy any matter which is or would be the subject of any such notice. No notice pursuant to this Section 8.2 will affect any representations or warranties, covenants, agreements, obligations or conditions set forth herein or limit or otherwise affect any available remedies.

Section 8.3   HSR Act Compliance; Foreign Governmental Approvals.   Each of Buyer and Seller will as promptly as practicable, make all necessary filings or submissions as are required under the HSR Act and to obtain all Foreign Governmental Approvals. For the purposes of this Agreement, the term “Foreign Governmental Approval” shall mean any Consent or order of, with or to any foreign Governmental Entity set forth on Schedule 6.13 or Schedule 7.4. Each of Buyer and Seller will promptly furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission which is necessary under the HSR Act or to obtain any necessary Foreign Governmental Approval. Each of Seller and Buyer will promptly provide the other with copies of all written communications (and memoranda setting forth the substance of all oral communications) between each of them or their Representatives, on the one hand, and any Governmental Entity, on the

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other hand, with respect to this Agreement or the transactions contemplated hereby. Without limiting the generality of the foregoing, each of Buyer and Seller will promptly notify the other of the receipt and content of any inquiries or requests for additional information made by any Governmental Entity in connection therewith and will (i) promptly comply with any such inquiry or request, (ii) promptly provide the other with a description of the information provided to any Governmental Entity with respect to any such inquiry or request and (iii) keep the other apprised of the status of any such inquiry or request.

Section 8.4   Public Announcements.   No press release or announcement concerning the Transaction will be issued by either party without the prior consent of the other party, except as such release or announcement may be required by law, rule or regulation (including the rules and regulations of any stock exchange or the Nasdaq National Market), in which case the party required to make the release or announcement will allow the other party, to the extent reasonably practicable, reasonable time to comment on such release or announcement in advance of such issuance.

Section 8.5   Access to Information.

(a)   From the date hereof through the Effective Time, Seller will provide, and will cause Seller Subsidiary to provide, to Buyer and its Representatives, reasonable access during normal business hours to the properties, books, records, employees and Representatives of Seller and Seller Subsidiary related to the Business (other than information which is legally privileged, subject to confidentiality obligations to third parties or the provision of which is prohibited by law) to make or cause to be made such investigation of the Business, the Assets and the Assumed Liabilities as Buyer reasonably deems necessary or advisable, provided that any such investigation shall not interfere unnecessarily with or adversely affect normal operations of the Business. From the date hereof through the Effective Time, Seller will furnish, and will cause Seller Subsidiary to furnish, to Buyer and its Representatives such financial and operating data and other information with respect to the Business, the Assets and the Assumed Liabilities (including access to employees and customers of the Business) as Buyer shall from time to time reasonably request (provided that such information is otherwise available or readily accessible). The Confidentiality Agreement will apply with respect to the information provided pursuant to this Section 8.5(a).

(b)   From and after the Effective Time, Buyer will make or cause to be made available to Seller and its Representatives all business records and files Related to the Business or constituting Assets and Assumed Liabilities (other than information which is legally privileged, subject to confidentiality obligations to third parties or the provision of which is prohibited by law) during regular business hours as may be reasonably necessary for (i) preparing tax returns and financial statements and responding to tax audits covering operations and transactions at or prior to the Effective Time, (ii) investigating, settling, preparing for the defense or prosecution of, defending or prosecuting any Action, (iii) preparing reports to stockholders and Government Entities or (iv) such other purposes for which access to such documents is reasonably necessary; provided, however, that access to such business records and files will not unnecessarily interfere with or adversely affect the normal operations of Buyer and its subsidiaries and Affiliates; provided, further, in connection with clause (ii) above, Buyer shall provide reasonable assistance, at Seller’s sole cost and expense, in the defense of claims for personal or bodily injury or injury to property caused by products of the Business delivered or sold on or prior to the Closing Date.

(c)   From and after the Effective Time, Seller will make or cause to be made available to Buyer and its Representatives all business records and files of Seller and Seller Subsidiary related to the Business which do not constitute Assets (other than information which is legally privileged, subject to confidentiality obligations to third parties or the provision of which is prohibited by law) during regular business hours for the same purposes, to the extent applicable, as set forth in Section 8.5(b); provided, however, that access to such business records and files will not unnecessarily interfere with or adversely affect the normal operations of Seller.

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Section 8.6   Commercially Reasonable Efforts; Further Assurances.

(a)   Each of Seller and Buyer will use its commercially reasonable efforts to cause to be fulfilled the conditions to the respective obligations of the other party set forth in Article X.

(b)   From time to time, as and when requested by either party to this Agreement, the other party will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, all such reasonable actions, as such other party may reasonably deem necessary or desirable to consummate the Transaction (including executing and delivering, or causing to be executed and delivered, such documents and instruments with respect to the purchase of the U.K. Business and the Assets located in the United Kingdom and the assumption of the Assumed Liabilities in respect of the U.K. Business and the Assets located in the United Kingdom from Seller Subsidiary by the relevant United Kingdom incorporated Affiliate of Buyer).

(c)   Anything contained in this Agreement to the contrary notwithstanding, none of the parties to this Agreement or their Affiliates will be required to commence litigation or divest or hold separate any business or assets or restrict its rights or ability to enter into any business (other than pursuant to Article XIV) in connection with the consummation of the Transaction.

Section 8.7   Non-Solicitation of Employees.

(a)   For a period of two years from and after the Closing Date, without the prior written consent of Buyer, Seller will not, and will cause Seller Subsidiary not to, solicit, hire or retain as an employee, independent contractor or consultant any UK Employee or any employee to whom Buyer is required to offer employment pursuant to Section 9.1(a) and will not, and will cause Seller Subsidiary not to, during such period, induce or attempt to induce any such employee to terminate his or her employment with Buyer by resignation, retirement or otherwise; provided, however, that nothing in this Section 8.7(a) shall (i) preclude Seller or Seller Subsidiary from soliciting for employment or hiring any such employee (A) after 180 days after such employee’s employment with Buyer terminates (provided such employee ceased to be employed by Buyer without inducement by Seller or Seller Subsidiary) or (B) after such employee’s employment with Buyer is terminated by Buyer without cause, or (ii) prohibit any general solicitation by Seller or Seller Subsidiary.

(b)   For a period of two years from and after the Closing Date, without the prior written consent of Seller, Buyer will not, and will cause each of its Affiliates not to, solicit, hire or retain as an employee, independent contractor or consultant any employee of Seller immediately after the Effective Time and will not, and will cause each of its Affiliates not to, during such period, induce or attempt to induce any such employee to terminate his or her employment with Seller by resignation, retirement or otherwise; provided, however, that nothing in this Section 8.7(b) shall (i) preclude Buyer or any Affiliate thereof from soliciting for employment or hiring any such employee (A) after 180 days after such employee’s employment with Seller terminates (provided such employee ceased to be employed by Seller without inducement by Buyer or any Affiliate thereof) or (B) after such employee’s employment with Seller is terminated by Seller without cause, or (ii) prohibit any general solicitation by Buyer or any Affiliate thereof offering employment.

Section 8.8   Use of Seller’s and Seller Subsidiary’s Trademarks, Trade Names and Corporate Symbols.

(a)   From and after the Closing Date, except as permitted in this Section 8.8, Buyer will not have any rights to use the name, trademark or trade name “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇” or any derivatives thereof, or any corporate symbol or logo related thereto. Buyer acknowledges that Buyer and its Affiliates shall have no statutory or common law rights (trade name, trademark, service ▇▇▇▇ or otherwise) in the “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇” name or marks, or any derivatives thereof. Buyer agrees never to, and shall cause its Affiliates never to, challenge Seller’s ownership of, or rights in, the “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇” name or marks, or any derivatives thereof.

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(b)   Buyer may utilize, solely in connection with the Business, and Seller hereby grants to Buyer a world-wide, irrevocable, nonexclusive, fully-paid, royalty-free license to utilize the name, trademark or trade name “▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇”, derivatives thereof or any corporate symbol or logo related thereto or any thereof for phase-out purposes in connection with stationery, supplies, labels, catalogs, vehicles, products, inventory, work-in-process and displays until the first anniversary of the Closing Date in a manner consistent with Seller’s quality standards in effect immediately prior to the Closing.

Section 8.9   Insurance.

(a)   Rights in Insurance Policies. Buyer will have the right to (i) assert claims (and Seller will use and cause Seller Subsidiary to use commercially reasonable efforts to assist Buyer in asserting claims) with respect to the Business under insurance policies of Seller and Seller Subsidiary which are “occurrence basis” policies (“Occurrence Basis Policies”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Occurrence Basis Policies so allow and (ii) continue to prosecute claims with respect to the Business asserted with the insurance carrier prior to the Closing (and Seller will use and cause Seller Subsidiary to use commercially reasonable efforts to assist Buyer in connection therewith) under insurance policies of Seller and Seller Subsidiary which are on a “claims made” basis (“Claims Made Policies”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Claims Made Policies so allow, provided that Buyer shall reimburse Seller and Seller Subsidiary for all of their reasonable out-of-pocket costs and expenses in connection with the foregoing. All recoveries in respect of such claims shall be for the account of Buyer to the extent that Buyer is responsible for such claims (either as Retained Liabilities or pursuant to Section 13.2).

(b)   Seller Actions. Seller will not, and will cause Seller Subsidiary and Seller Subsidiary not to, amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Occurrence Basis Policies or Claims Made Policies under which Buyer has rights to assert claims pursuant to Section 8.9(a) in a manner that would adversely affect any such rights of Buyer. In the event Buyer consents to any such action, Seller will pay to Buyer its equitable share (based on the amount of premiums paid by or allocated to the Business in respect of the applicable policy) of any proceeds received by Seller or Seller Subsidiary as a result of such action.

Section 8.10   Closing Date Agreements.

(a)   At the Closing, Buyer and Seller will enter into the Ancillary Agreements.

(b)   If applicable, pursuant to Rev. Proc. 2004-53, 2004-34 I.R.B. 320, Buyer and Seller (or Seller Subsidiary) shall report on a predecessor/successor basis in accordance with the “Standard Procedure” provided in Section 4 of such Revenue Procedure.

Section 8.11   Cash Management.

(a)   Notwithstanding anything to the contrary contained in this Agreement, all bank, investment or similar accounts and lock boxes set forth on Schedule 6.23, but not any cash held prior to the Effective Time in such accounts and lock boxes (the “U.K. Bank Accounts and Lockboxes”) will constitute Assets and all other bank accounts and lockboxes of Seller will constitute Retained Assets.

(b)   From and after the Effective Time, Seller will fund, without any right of reimbursement, all amounts in respect of checks and debit electronic fund transfers that are outstanding at the Effective Time and presented for payment at or after the Effective Time in bank, investment or similar accounts of Seller or Seller Subsidiary (other than accounts included in the U.K. Bank Accounts and Lockboxes).

(c)   From and after the Effective Time, subject to the following sentence, Buyer will fund all amounts in respect of checks and debit electronic fund transfers that are outstanding at the Effective Time and

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presented for payment at or after Effective Time in the accounts included in the U.K. Bank Accounts and Lockboxes. Within one week after Buyer’s request accompanied by proof of funding, Seller will reimburse Buyer (by wire transfer to Buyer’s bank account notified by Buyer to Seller) for all such amounts funded by Buyer in respect of checks or debit electronic funds transfers that are outstanding at the Effective Time and presented for payment at or after Effective Time in such accounts included in the U.K. Bank Accounts and Lockboxes.

Section 8.12   Joint Venture Guaranties.   Buyer will, at the Closing, execute guaranties in substitution of the Joint Venture Guaranties on terms no less favorable to Buyer than the Joint Venture Guaranties and in form and substance reasonably acceptable to Buyer. Buyer will use commercially reasonable efforts to effect, effective as of the Effective Time, the release of Seller from the Joint Venture Guaranties (it being understood that such cooperation will not require Buyer or any of its Affiliates to pay any consideration or, except as provided in the immediately preceding sentence, offer or grant any financial accommodation or other benefit or release any claim or right).

Section 8.13   International Sales Representation Agreements.   Buyer will use commercially reasonable efforts to enter into new contingent sales representation agreements, effective as of the Closing and containing Buyer’s standard terms and conditions for such agreements, with the international sales representatives of Seller set forth on Schedule 8.13 (other than any such international sales representative who is unable to satisfy Buyer’s standard screening process for international sales representatives after beginning such screening process for such international sales representative). Any such contingent sales representation agreement entered into by Buyer with an international sales representative will provide that Buyer shall have the right to terminate such contingent sales representation agreement, with no liability on the part of Buyer whatsoever (other than Buyer’s obligations under Section 13.2(d)), in the event such international sales representative is unable to satisfy such screening process after the Closing. Buyer will use commercially reasonable efforts to complete as soon as reasonably practicable its screening process for all such international sales representatives.

Section 8.14   AFRL.   From and after the Closing, Seller will provide Buyer with periodic status reviews in connection with the AFRL Contract, including reasonable advance notice of any development coordination, marketing or related meeting with AFRL with respect to the AFRL Contract. Seller shall use commercially reasonable efforts to provide Buyer with the right to have a representative of Buyer be present at, and participate in, any such meeting with AFRL. Seller and Buyer understand and agree that Buyer shall have all rights to any future production Contracts with AFRL arising out of or relating to the AFRL Contract.

Section 8.15   Title Insurance.   On the Closing Date, Buyer shall purchase title insurance on the Owned Real Property.

Section 8.16   Letters of Credit.   Buyer will cause the release to Seller at the Closing of any cash collateral securing Seller’s reimbursement obligation in respect of the letters of credit set forth in Schedule 8.16 (which Schedule 8.16 may be updated by Seller prior to the Closing to reflect any deletions and additional similar letters of credit provided by Seller in compliance with this Agreement). Such efforts shall include, if necessary in light of Buyer’s credit rating, either (a) arranging for the issuance of replacement letters of credit in an amount not to exceed the amount of each such letter of credit or (b) Seller assigning and Buyer assuming Seller’s rights and obligations with respect to such letters of credit arrangement.

Section 8.17   Agreement to Support Products.   Seller shall use its best efforts, subject to the terms set forth in Schedule 8.17, to negotiate as soon as reasonably practicable an agreement with the third party identified on Schedule 8.17 that conforms in all material respects to the terms set forth in Schedule 8.17 and is otherwise mutually satisfactory to Buyer, Seller and such third party; provided that Buyer shall reasonably cooperate with Seller’s efforts under this Section 8.17.

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ARTICLE IX
EMPLOYMENT MATTERS

Section 9.1   Employment.

(a)   Set forth on Schedule 9.1(a)(i) is a list of all employees of Seller and Seller Subsidiary engaged primarily in the Business (including those who are actively employed or on leave or short-term or long-term disability or other permitted absence from employment, but excluding UK Employees and those who are on layoff) (such employees listed on Schedule 9.1(a)(i), the “Business Employees”), setting forth for each Business Employee: job title; current compensation; vacation accrued; service credited for purposes of vesting and eligibility to participate under the Plans; and leave of absence, layoff or long-term or short-term disability status, to the extent applicable (which Schedule 9.1(a)(i) shall be deemed to be amended to the extent the employment of any Business Employee terminates prior to the Effective Time and which may be amended upon mutual agreement of Buyer and Seller from time to time after the date hereof to reflect changes after the date hereof and prior to the Effective Time). Buyer will offer employment in accordance with Buyer’s standard hiring procedures and policies set forth on Schedule 9.1(a)(ii), effective as of the Effective Time, to each Business Employee (other than employees on long-term disability who shall remain employees of Seller or Seller Subsidiary, subject to the last sentence of this Section 9.1(a) (“Retained Employees”)), and each Business Employee who accepts Buyer’s offer of employment shall be a “Continued Employee,” and Buyer shall provide, effective as of the Effective Time, to each Continued Employee compensation and benefits substantially comparable in the aggregate in all material respects to the employee compensation and benefits provided by Buyer to its similarly situated employees immediately prior to the Effective Time; provided, however, that nothing contained in this Section 9.1 is intended to confer upon any Continued Employee any right to continued employment by Buyer after the Effective Time or to prohibit Buyer from amending, modifying or terminating after the Effective Time any employee benefit plan or program for or for the benefit of Continued Employees in accordance with the terms thereof and applicable Laws. Buyer will offer employment in accordance with Buyer’s standard hiring procedures and policies set forth on Schedule 9.1(a) to those Retained Employees who are on long-term disability leave as of the Effective Time when such Retained Employee is released by his or her physician to return to active employment if such Retained Employee actually reports for active employment with Buyer immediately upon such medical release; provided, however, that Buyer shall not be required to offer employment under this provision after twelve (12) months from the Closing Date.

(b)   Buyer will credit each Continued Employee and each UK Employee with such employee’s unused vacation days accrued by such employee with Seller or Seller Subsidiary prior to the Effective Time in accordance with Seller’s or Seller Subsidiary’s personnel policies applicable to such employees on the date hereof, but in no event will any Continued Employee or any UK Employee receive a credit hereunder in excess of the number of vacation days such employee was eligible to accrue in one calendar year under such policies (it being understood that the liability in respect of such accrued vacation days to be credited by Buyer will be included on the Closing Net Assets Statement).

(c)   The parties confirm their understanding that the Transfer of Undertakings (Protection of Employment) Regulations 1981 (the “Transfer Regulations”) will apply to the Transaction and that the contracts of employment of each of the UK Employees remaining in the employ of Seller or Seller Subsidiary (save insofar as relating to benefits for old age, invalidity or survivors of an occupational pension scheme but including in relation to any obligation to make contributions into a pension scheme on behalf of that person) shall have effect after the Closing Date as if originally made with Buyer instead of Seller.

(d)   Buyer shall promptly inform Seller, in writing, of any “measures” (as contemplated in the Transfer Regulations) that it intends to take to allow Seller to comply with its obligations pursuant to Regulation 10 of the Transfer Regulations.

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(e)   On or before the Closing Date, Seller will issue a letter to each UK Employee informing them of the transfer. Such letter will be in a form approved by Buyer. Approval from Buyer in respect of such letter shall be provided in a timely manner.

Section 9.2   Pension Plans.

(a)   Seller Retirement Plans.   None of Buyer or its Affiliates shall have or acquire any interest in or right with respect to any of the assets of the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation Pension Plan or the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation Supplemental Executive Retirement Plan (the “Seller Retirement Plans”) by reason of the transactions contemplated by this Agreement, and Seller shall retain full power and authority with respect thereto. Seller will remain solely responsible for, and none of Buyer or its Affiliates will have any Liability under, relating to or arising out of the Seller Retirement Plans.

(b)   Seller Savings Plans.   Seller will remain solely responsible for, and none of Buyer or its Affiliates will have any Liability under, relating to or arising out of the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation 401(k) Deferred Savings Plan (the “Seller Savings Plan”) and the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation Executive Saving Plan by reason of the transactions contemplated by this Agreement.

(c)   Buyer Savings Plan.   Effective as of the Effective Time, Buyer will extend to each Continued Employee who is eligible or would have become eligible to participate in the Seller Savings Plan coverage under an applicable savings plan of Buyer or an Affiliate of Buyer. Any such Continued Employee will be credited under the applicable savings plan of Buyer or an Affiliate of Buyer for purposes of eligibility to participate and vesting with all service recognized for such purposes under the Seller Savings Plan immediately prior to the Effective Time. After the Effective Time, each such Continued Employee will be permitted to transfer his or her account balances (other than any participant loan account balances) from the Seller Savings Plan to the applicable savings plan of Buyer or an Affiliate of Buyer in accordance with the terms of the respective plans (as amended to the extent necessary) and applicable Laws.

(d)   UK Pension Plan.   Effective as of the Effective Time, Buyer will procure that it or one of its Affiliates becomes the principal employer of the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Limited Pension Scheme (the “UK Pension Plan”).

Section 9.3   Welfare Plans.

(a)   Effective as of the Effective Time, Buyer will provide to each Continued Employee benefits under Buyer’s “employee welfare benefit plans”, as defined in Section 3(1) of ERISA, and other employee benefit welfare or fringe benefit arrangements (collectively, “Buyer Welfare Benefit Plans”) that are substantially comparable in the aggregate in all material respects to such benefits provided by Buyer to its similarly situated employees immediately prior to the Effective Time; provided, however, nothing contained herein is intended to prohibit Buyer from amending, modifying or terminating after the Effective Time any employee benefit, benefit plan or program for or for the benefit of Continued Employees in accordance with the terms thereof and applicable Laws. The Buyer Welfare Benefit Plans, to the extent applicable:  (i) will recognize all amounts applied to deductibles, co-payments, out-of-pocket maximums and lifetime maximum benefits with respect to Continued Employees under the corresponding “employee welfare benefit plans” and other employee benefit welfare or fringe benefit arrangements maintained by Seller or Seller Subsidiary immediately prior to the Effective Time for the benefit of Continued Employees (“Seller Welfare Benefit Plans”) for the plan year that includes the Closing Date; (ii) will recognize all service credited to waiting periods with respect to Continued Employees under the corresponding Seller Welfare Benefit Plan; and (iii) will not impose any limitations on coverage of pre-existing conditions of Continued Employees except to the extent such limitations applied to such Continued Employees under the corresponding Seller Welfare Benefit Plan.

(b)   Seller, Seller Subsidiary, the Seller Welfare Benefit Plans or Seller’s workers’ compensation carrier will remain liable for, and pay, perform and discharge when due, all Liabilities relating to

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Continued Employees in respect of claims covered by the Seller Welfare Benefit Plans or by Seller’s workers’ compensation scheme with respect to medical and retiree medical (including vision care and prescription drugs), hospitalization and dental services and other workers’ compensation and welfare benefits (other than severance) rendered or expenses incurred on or prior to the Closing Date (whether such claims are submitted prior to, on or after the Closing Date). Buyer, the Buyer Welfare Benefit Plans or Buyer’s workers’ compensation carrier will be liable for, and pay, perform and discharge when due, all Liabilities relating to Continued Employees in respect of claims covered by the Buyer Welfare Benefit Plans or by Seller’s workers’ compensation scheme with respect to medical (including vision care and prescription drugs), hospitalization and dental services and other workers’ compensation and welfare benefits (other than severance) rendered or expenses incurred after the Closing Date.

(c)   Seller, Seller Subsidiary or the Seller Welfare Benefit Plans will remain liable for all Liabilities relating to employees and former employees of the Business who elect not to become Continued Employees, including with respect to claims relating to employee welfare benefits.

Section 9.4   Flexible Spending Accounts.   Except as set forth in the next sentence, effective as of the Effective Time, Continued Employees shall cease to participate in any and all plans of Seller or Seller Subsidiary that are flexible spending plans for medical and/or dependent care expenses (“Seller’s Flexible Spending Plan”). To the extent permitted by applicable Laws, Seller and Seller Subsidiary shall permit Continued Employees to submit claims for reimbursement of covered expenses incurred prior to the Effective Time, provided that such claims are properly submitted no later than ninety (90) days following the Effective Time (the “Reimbursement Deadline”). No later than sixty (60) days following the Reimbursement Deadline: (a) Buyer shall pay to Seller an amount equal to the excess, if any, of (i) the aggregate reimbursement payouts to or on behalf of the Continued Employees with respect to their accounts under Seller’s Flexible Spending Plan for the plan year in which the Effective Time occurs over (ii) the aggregate accumulated contributions made to the accounts of the Continued Employees under Seller’s Flexible Spending Plan prior to the Effective Time for the plan year in which the Effective Time occurs; and (b) Buyer shall pay to each Continued Employee, to the extent applicable, an amount equal to the excess, if any, of (i) the accumulated contributions made to the account of such Continued Employee under Seller’s Flexible Spending Plan prior to the Effective Time for the plan year in which the Effective Time over (ii) the reimbursement payouts to or on behalf of such Continued Employee with respect to such Continued Employee’s account under Seller’s Flexible Spending Plan for the plan year in which the Effective Time occurs. Effective as of the Effective Time, Continued Employees shall be eligible to participate in a new or existing plan of Buyer that provides flexible spending accounts for medical and/or dependent care expenses.

Section 9.5   Severance Benefits.   Seller will be responsible for and will pay when due all Liabilities in respect of any claim of any employee to whom Buyer is required to offer employment pursuant to Section 9.1 and who does not accept such employment with Buyer, but only to the extent required under Seller’s severance benefit plan.

Section 9.6   Employment Agreement.   Effective as of the Closing, Buyer shall assume any and all liabilities and obligations relating to the employment agreement set forth on Schedule 9.6, and Seller shall have no further obligations whatsoever with respect to such agreement.

ARTICLE X
CONDITIONS TO CLOSING

Section 10.1   Conditions to Each Party’s Obligations.   The respective obligations of each party to effect the Transaction are subject to the satisfaction or waiver in writing by such party at or prior to the Closing Date of each of the following conditions:

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(a)    Antitrust Laws.   The applicable waiting period under the HSR Act shall have expired or been earlier terminated, and either the applicable waiting period shall have expired under the German Act Against Restraints of Competition or the Transaction shall have been approved by the German Federal Cartel Office.

(b)   No Injunctions or Restraints.   No Law issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the Transaction shall be in effect.

(c)    Seller Stockholders Approval.   Seller shall obtain the Required Seller Vote.

(d)   Debentures.   Notice for redemption of the aggregate principal amount outstanding of the Debentures shall have been sent and the Debentures shall have been satisfied and discharged in accordance with the terms and conditions of the Indenture.

Section 10.2   Conditions to Obligations of Buyer.   The obligations of Buyer to effect the Transaction are subject to the satisfaction or waiver in writing by Buyer at or prior to the Closing Date of each of the following conditions:

(a)    Representations and Warranties.   The representations and warranties of Seller and Seller Subsidiary set forth in the Transaction Documents (x) that are qualified as to materiality shall be true and correct in all respects and (y) that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date (except for representations and warranties that relate to a specified date which shall be true and correct as of such specified date) with the same effect as though made on and as of the date of this Agreement and the Closing Date, and Seller shall have delivered to Buyer a certificate signed by an executive officer of Seller confirming the foregoing as of the Closing Date.

(b)   Performance of Obligations of Seller.   Each and all of the covenants and agreements of Seller and Seller Subsidiary to be performed or complied with pursuant to the Transaction Documents on or prior to the Closing Date shall have been fully performed and complied with in all material respects, and Seller shall have delivered to Buyer a certificate signed by an executive officer of Seller confirming the foregoing as of the Closing Date.

(c)    No Material Adverse Change.   There shall not have been a Material Adverse Effect.

(d)   Consents.   All material Consents and orders of all Persons (including Governmental Entities) required to be obtained prior to the Closing in connection with the execution, delivery and performance of the Transaction by each of Seller, Seller Subsidiary and Buyer or the consummation of the Transaction set forth on Schedule 10.2(d) shall have been obtained and shall be in full force and effect.

(e)    Tax Certificates.   Seller and Seller Subsidiary shall have furnished to Buyer all tax documents required under Section 8.1(f).

(f)    Ancillary Agreements.   Seller shall have executed and delivered the Transaction Agreement, the Intellectual Property Agreement, the Laser Supply Agreement, the Laser Agreement, the Transition Agreement, the Escrow Agreement and the Assignment and Assumption Agreement, and the Escrow Agent shall have executed and delivered the Escrow Agreement.

(g)    Litigation, Etc.   No Action shall have been instituted or is pending which (i) is reasonably likely to make illegal, or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the Transaction or to result in material damages to Buyer in connection with the Transaction, or (ii) seeks to and is reasonably likely to prohibit ownership or operation by Buyer of the Business or a material portion thereof, the Assets or a material portion thereof, or of the

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businesses or assets of Buyer or any of its Affiliates or a material portion thereof, or to compel Buyer to dispose of or hold separately, all or any portion of the Business or the Assets or all or a portion of the business or assets of Buyer or any of its Affiliates as a result of the Transaction; provided that Buyer shall have used commercially reasonable efforts to dismiss such Action.

Section 10.3   Conditions to Obligations of Seller.   The obligations of Seller to effect the Transaction are subject to the satisfaction or waiver in writing by Seller at or prior to the Closing Date of each of the following conditions:

(a)    Representations and Warranties.   The representations and warranties of Buyer set forth in the Transaction Documents (x) that are qualified as to materiality shall be true and correct in all respects and (y) that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date (except for representations and warranties that relate to a specified date which shall be true and correct as of such specified date), with the same effect as though made on and as of the date of this Agreement and the Closing Date, and Buyer shall have delivered to Seller a certificate signed by an executive officer of Buyer confirming the foregoing as of the Closing Date.

(b)   Performance of Obligations of Buyer.   Each and all of the covenants and agreements of Buyer to be performed or complied with pursuant to the Transaction Documents on or prior to the Closing Date shall have been fully performed and complied with in all material respects, and Buyer shall have delivered to Seller a certificate signed by an executive officer of Buyer confirming the foregoing as of the Closing Date.

(c)    Ancillary Agreements.   Buyer shall have executed and delivered the Transaction Agreement, the Intellectual Property Agreement, the Laser Supply Agreement, the Laser Agreement, the Transition Agreement, the Escrow Agreement and the Assignment and Assumption Agreement, and the Escrow Agent shall have executed and delivered the Escrow Agreement.

(d)   Litigation, Etc.   No Action shall have been instituted or is pending which is reasonably likely to make illegal, or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the Transaction or to result in material damages to Seller in connection with the Transaction; provided that Seller shall have used commercially reasonable efforts to dismiss such Action.

ARTICLE XI
TERMINATION

Section 11.1   Termination.   This Agreement may be terminated and the Transaction abandoned at any time prior to the Closing Date:

(a)    by the mutual written agreement of Buyer and Seller;

(b)   by written notice by either Seller or Buyer, if the Closing Date shall not have occurred on or before November 7, 2006 (the “End Date”) for any reason, except that such right to terminate this Agreement shall not be available to any such party whose material breach of any of its representations, warranties, covenants or agreements under this Agreement or any other Transaction Document is the cause of the delay;

(c)    by written notice by either Seller or Buyer, if there shall be any Law that makes consummation of the Transaction illegal or otherwise prohibited or if any court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Transaction, and such order, decree, ruling or other action shall have become final and unappealable (provided that the party seeking to terminate this Agreement pursuant to this Section 11.1(c) shall

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have complied with its obligations under Section 8.6(a), subject to Section 8.6(c), by using its commercially reasonable efforts to have any such order, decree, ruling or other action vacated or lifted);

(d)   by written notice by Buyer to Seller, if there shall have been a breach of any covenant or agreement on the part of Seller or Seller Subsidiary set forth in this Agreement, or if any representation or warranty of Seller set forth in this Agreement shall have become untrue, in each case such that the conditions set forth in Section 10.2(a) or Section 10.2(b), as the case may be, would not be satisfied as of such time, provided that if such breach is curable by Seller or Seller Subsidiary prior to the End Date through the exercise of its commercially reasonable efforts, then for so long as Seller or Seller Subsidiary continues to exercise such commercially reasonable efforts to cure the same, Buyer may not terminate this Agreement pursuant to this Section 11.1(d);

(e)    by written notice by Seller to Buyer, if there shall have been a breach of any covenant or agreement on the part of Buyer set forth in this Agreement, or if any representation or warranty of Buyer set forth in this Agreement shall have become untrue, in each case such that the conditions set forth in Section 10.3(a) or Section 10.3(b), as the case may be, would not be satisfied as of such time, provided that if such breach is curable by Buyer prior to the End Date through the exercise of its commercially reasonable efforts, then for so long as Buyer continues to exercise such commercially reasonable efforts to cure the same, Seller may not terminate this Agreement pursuant to this Section 11.1(e);

(f)    by written notice by Buyer or Seller if the Required Seller Vote shall not have been obtained upon the taking of such vote at a duly held meeting of stockholders of Seller or at any adjournment thereof;

(g)    by written notice by Buyer to Seller if (i) Seller’s Board of Directors shall have (A) failed to make the Seller Recommendation or (B) made a Change in Seller Recommendation (or resolved or proposed to take any such action referred to in clause (A) or (B)), in each case whether or not permitted by the terms hereof, or (ii) Seller shall have materially breached its obligations under this Agreement by reason of a failure to call the Seller Stockholders Meeting in accordance with Section 8.1(h) or a failure to prepare and mail to its stockholders the Proxy Statement in accordance with Section 8.1(g); or

(h)   by written notice by Seller to Buyer if (i) Seller is not in material breach of Section 8.1(d), (ii) the Seller Stockholders Meeting has not yet occurred, and (iii) Seller’s Board of Directors authorizes the entry into of a binding written agreement with respect to an Acquisition Proposal that constitutes a Superior Proposal; provided, however, that (x) not less than five business days prior to such termination Seller shall notify Buyer of its intention to terminate this Agreement pursuant to this Section 11.1(h), (y) to the extent reasonably requested by Buyer, Seller shall, and shall cause its financial and legal advisors to, negotiate during such five business day period with Buyer concerning adjustments in the terms and conditions of this Agreement as would enable Seller to proceed with the transactions contemplated herein on adjusted terms and (z) if Buyer makes a bona fide written offer of any such adjustments prior to the expiration of such five business day period, Seller’s Board of Directors in good faith concludes (following receipt of the advice of its financial advisors and outside counsel) that such Acquisition Proposal would, if consummated, result in a transaction that is more favorable to its stockholders (in their capacities as stockholders), from a financial point of view, than the Transaction, after taking into account such adjustments; provided, further, that this termination pursuant to this Section 11.1(h) shall not be effective until Seller has made to Buyer the payment required by Section 11.2(b)(ii).

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Section 11.2   Effect of Termination.

(a)   In the event of the termination of this Agreement pursuant to Section 11.1, this Agreement (other than with respect to Section 8.4, the last sentence of Section 8.5(a), this Section 11.2 and Section 15.6, which shall continue in effect) shall thereafter become void and have no effect, without any liability on the part of any party or its Representatives in respect thereof, except that nothing herein will relieve any party from Liability for any breach of this Agreement.

(b)   If:

(i)    Buyer shall terminate this Agreement pursuant to Section 11.1(g);

(ii)   Seller shall terminate this Agreement pursuant to Section 11.1(h); or

(iii)  (A) Buyer or Seller shall terminate this Agreement pursuant to Section 11.1(f), (B) at any time after the date of this Agreement and before the Seller Stockholders Meeting an Acquisition Proposal shall have been publicly announced and (C) within one year of such termination Seller enters into any definitive agreement with respect to, or consummates a transaction with respect to, any Acquisition Proposal;

then Seller shall promptly, but in no event later than one business day after the date of such termination (or in the cases of clauses (iii), the date Seller consummates a transaction with respect to such Acquisition Proposal), pay Buyer, by wire transfer of immediately available funds to an account designated by Buyer, an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000).

(c)   The parties acknowledge that the agreements contained in this Section 11.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Buyer would not enter into this Agreement; accordingly, if Seller fails promptly to pay any amount due pursuant to this Section 11.2, and, in order to obtain such payment, Buyer commences a suit which results in a judgment against Seller for the payment of the amounts set forth in this Section 11.2, Seller shall pay to Buyer its reasonable costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit.

ARTICLE XII
SURVIVAL

Section 12.1   Survival.   The respective representations and warranties of each of Seller and Buyer contained in this Agreement (other than Seller’s representations and warranties with respect to title contained in Section 6.8, Taxes contained in Section 6.5, Intellectual Property contained in Section 6.6, environmental matters contained in Section 6.12 and brokers contained in Section 6.21 and Buyer’s representations and warranties with respect to brokers contained in Section 7.5) will survive the Closing Date and will continue in full force and effect until eighteen months after the Closing Date and then terminate and expire subject to Section 13.5. Seller’s representations and warranties with respect to Taxes contained in Section 6.5 and environmental matters contained in Section 6.12 will not survive the Closing Date and will terminate and expire at the Effective Time. Seller’s representations and warranties with respect to Intellectual Property contained in Section 6.6 and with respect to brokers contained in Section 6.21 and Buyer’s representations and warranties with respect to brokers contained in Section 7.5 will survive the Closing Date and will continue in full force and effect until three years after the Closing Date and then terminate and expire subject to Section 13.5. Seller’s representations and warranties with respect to title contained in Section 6.8 will survive the Closing Date without time limitation.

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ARTICLE XIII
INDEMNIFICATION

Section 13.1   Indemnification by Seller.   Seller shall indemnify, defend and hold harmless Buyer and its Representatives (collectively, the “Buyer Group”) from and against, and pay or reimburse, as the case may be, the Buyer Group for, any and all Damages, as incurred, suffered by Buyer or any other member of the Buyer Group based upon, arising out of or relating to:

(a)    any falsity, breach or inaccuracy of any representation or warranty made by Seller or Seller Subsidiary herein on the date of this Agreement or on the Closing Date (other than the representations and warranties with respect to Taxes contained in Section 6.5 and environmental matters contained in Section 6.12);

(b)   any breach or violation of any covenant or agreement of Seller or Seller Subsidiary contained herein or in the Transition Agreement or the Intellectual Property Agreement;

(c)    the Retained Liabilities;

(d)   any Liability for and in respect of (i) income Taxes of Seller and Seller Subsidiary arising in connection with the consummation of the transactions contemplated hereby, and (ii) Taxes of Seller and Seller Subsidiary relating to the Business, the Assets (including the Joint Venture) or the Assumed Liabilities for periods (or portions thereof) up to and including the Closing Date (in the case of tax years including the Closing on the Closing Date, Taxes shall be determined on a closing-of-the-books basis through the Closing, except for periodic Taxes (such as real property Taxes) which shall be determined on a daily pro rata basis);

(e)    the Liabilities set forth on Schedule 13.1(e) with respect to the Contracts set forth on Schedule 13.1(e); or

(f)    50% of all product warranty claims under Contracts that constitute Assets to the extent solely based on actions, omissions, or occurrences prior to the Effective Time to the extent such claims exceed the amounts reserved for product warranty claims on the Final Closing Net Assets Statement.

Section 13.2   Indemnification by Buyer.   Buyer shall indemnify, defend and hold harmless Seller, Seller Subsidiary and their respective Representatives (collectively, the “Seller Group”) from and against, and pay or reimburse, as the case may be, the Seller Group for, any and all Damages, as incurred, suffered by Seller or any other member of the Seller Group based upon, arising out of or relating to:

(a)    any falsity, breach or inaccuracy of any representation or warranty made by Buyer herein on the date of this Agreement or on the Closing Date;

(b)   any breach or violation of any covenant or agreement of Buyer contained herein or in the Transition Agreement or the Intellectual Property Agreement;

(c)    the Assumed Liabilities;

(d)   all retainers and commissions pursuant to the terms of the international sales representation agreements set forth on Schedule 8.13 to the extent such retainers and commissions become payable in accordance with the terms of those agreements after the Effective Time (regardless of whether or not such payments relate to new business awarded to the Business after the Effective Time), but only to the extent the payment of such retainers and commissions does not violate applicable Laws;

(e)    all reasonable out-of-pocket costs (including reasonable fees and expenses of counsel) up to an aggregate of Two Hundred Thousand Dollars ($200,000) incurred by Seller or Seller Subsidiary for the purposes of winding down or dissolving Seller Subsidiary; or

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(f)    until Seller is released from all Liabilities related to the Joint Venture Guaranties, all Liabilities of Seller under the Joint Venture Guaranties.

Section 13.3   Procedures for Indemnification.

(a)   If a claim or demand is made against an Indemnitee by any Person who is not a party to this Agreement (and who is not an Affiliate of a party to this Agreement) (a “Third Party Claim”) as to which a party (the “Indemnifying Party”) may be obligated to provide indemnification pursuant to this Agreement, such Indemnitee will notify the Indemnifying Party in writing, and in reasonable detail, of the Third Party Claim reasonably promptly (and, in any event, within thirty (30) days) after becoming aware of such Third Party Claim; provided, however, that failure to give any such notification will not affect the indemnification provided hereunder except to the extent the Indemnifying Party has been actually prejudiced as a result of such failure.

(b)   If a Third Party Claim is made against an Indemnitee and the Indemnifying Party unconditionally and irrevocably acknowledges in writing its obligation to indemnify the Indemnitee therefor, the Indemnifying Party will be entitled to assume the defense thereof (at the expense of the Indemnifying Party) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided that, if such Indemnitee has been advised in writing by its counsel that in the opinion of such counsel there is an actual conflict of interest in the same counsel representing both such parties, such Indemnitees will have the right to employ one (1) separate counsel to represent such Indemnitee and in that event the reasonable fees and expenses of such separate counsel will be paid by such Indemnifying Party. If the Indemnifying Party assumes the defense of any such Third Party Claim, each Indemnitee will have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party; provided that counsel selected by the Indemnifying Party shall control the defense. The Indemnifying Party will be liable for the fees and expenses of counsel employed by the Indemnitee if the Indemnifying Party does not expressly elect to assume the defense thereof (including the acknowledgment by each Indemnifying Party of its indemnification obligation as aforesaid). If the Indemnifying Party assumes the defense of any such Third Party Claim, the Indemnifying Party will promptly supply to the Indemnitee copies of all correspondence and documents relating to or in connection with such Third Party Claim and keep the Indemnitee fully informed of all developments relating to or in connection with such Third Party Claim. If the Indemnifying Party chooses to defend a Third Party Claim, all the Indemnitees will reasonably cooperate with the Indemnifying Party in the defense thereof (such cooperation to be at the expense, including reasonable legal fees and expenses, of the Indemnifying Party).

(c)   No Indemnifying Party will consent to any settlement, compromise or discharge (including the consent to entry of any judgment) of any Third Party Claim without the Indemnitee’s prior written consent; provided that if the Indemnifying Party unconditionally and irrevocably acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee shall agree to any settlement, compromise or discharge of such Third Party Claim that the Indemnifying Party may recommend that unconditionally and irrevocably releases the Indemnitee and its Affiliates (pursuant to a release which is reasonably satisfactory to the Indemnitee) completely from all Liability in connection with such Third Party Claim and which by its terms obligates the Indemnifying Party to pay the full amount of Damages in connection with such Third Party Claim; provided, however, that the Indemnitee may refuse to agree to any such settlement, compromise or discharge (including the consent to entry of any judgment) of any Third Party Claim that (x) provides for injunctive or other nonmonetary relief affecting the Indemnitee or any of its Affiliates or (y) involves the imposition of any fine, payment or other sanction by any Governmental Entity (for the avoidance of doubt, the word “payment” as used in this clause (y) does not include the payment of any Taxes other than any fine or sanction in respect of Taxes). If the Indemnifying

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Party unconditionally and irrevocably acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee will not (unless required by law) admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim (other than a Third Party Claim by a Governmental Entity) without the Indemnifying Party’s prior written consent.

(d)   Any claim on account of Damages which does not involve a Third Party Claim shall be asserted promptly after discovery (and within thirty (30) days) by the Indemnitee to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnitee so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have to such Indemnitee under this Agreement, except to the extent that the Indemnifying Party has been actually prejudiced, as a result of such failure.

Section 13.4   Certain Rights and Limitations.

(a)   As security in part for the performance by Seller of its indemnification obligations under Section 13.1 and its payment obligations under Section 4.1, the Escrow Amount shall be deposited with the Escrow Agent, which amount shall be held and distributed in accordance with the Escrow Agreement. Until all amounts held by the Escrow Agent pursuant to the Escrow Agreement have been distributed in accordance with the terms of the Escrow Agreement or are subject to good faith claims by Buyer or any other member of the Buyer Group under the Escrow Agreement, all claims in respect of indemnification obligations of Seller pursuant to Section 13.1 and payment obligations of Seller under Section 4.1 shall be sought to be collected first from the amounts held in escrow pursuant to the Escrow Agreement (other than claims pursuant to Section 13.1(b) with respect to Seller’s obligations under Section 8.1(e), in respect of which Buyer shall have the right to seek to collect directly from Seller without first seeking to collect from the amounts held in escrow pursuant to the Escrow Agreement). Subject to Section 13.4(d), the Buyer Group will have recourse to Seller in the event amounts held in escrow pursuant to the Escrow Agreement are insufficient to cover claims by Buyer or any other member of the Buyer Group pursuant to Seller’s indemnification obligations under Section 13.1 or Seller’s payment obligations under Section 4.1.

(b)   No loss, Liability, damage or deficiency shall constitute Damages to any party to the extent of (i) any insurance proceeds actually received by such party with respect to such loss, Liability, damage or deficiency (after deducting reasonable costs and expenses incurred in connection with recovery of such proceeds); (ii) any amount recovered by such party from third parties under Contracts providing for indemnification; and (iii) the amount of any net Tax benefit actually realized by such party arising from the recognition of the Damages. With respect to any claim for indemnification under this Article XIII, the Indemnitee shall exercise commercially reasonable efforts to collect insurance proceeds (it being understood that, except to the extent provided in clause (i) of the preceding sentence, the Indemnitee’s obligations under this sentence shall in no way limit the obligations under this Article XIII of the applicable Indemnifying Party).

(c)   No monetary amount shall be payable by Seller or Buyer to any member of the Buyer Group or Seller Group, respectively, with respect to the indemnification of any claims pursuant to Section 13.1(a) or 13.1(f), in the case of indemnification by Seller, or Section 13.2(a), in the case of indemnification by Buyer, until the aggregate amount of Damages actually incurred by the Buyer Group or the Seller Group, as the case may be, with respect to such claims exceeds Four Hundred Thousand Dollars ($400,000) in the aggregate, in which event Seller or Buyer, as the case may be, shall be responsible for the full amount of such Damages that exceed Two Hundred Thousand Dollars ($200,000).

(d)   No monetary amount shall be payable by Seller or Buyer to any member of the Buyer Group or Seller Group, respectively, with respect to the indemnification of any claims pursuant to Section 13.1(a) or 13.1(f), in the case of indemnification by Seller, or Section 13.2(a), in the case of indemnification by Buyer, if and to the extent such payment would exceed any of the limitations set forth in clauses (i), (ii) and (iii) below:

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(i)    the aggregate amount of Damages indemnifiable by Seller pursuant to Section 13.1(a) (other than with respect to Seller’s representations and warranties with respect to Intellectual Property contained in Section 6.6, title contained in Section 6.8 and brokers contained in Section 6.21) and Section 13.1(f) and indemnifiable by Buyer pursuant to Section 13.2(a) (other than with respect to Buyer’s representations and warranties with respect to brokers contained in Section 7.5 and financial resources contained in Section 7.6) shall not exceed Fourteen Million Three Hundred Thousand Dollars ($14,300,000);

(ii)   the aggregate amount of Damages indemnifiable by Seller pursuant to Section 13.1(a) (other than with respect to Seller’s representations and warranties with respect to title contained in Section 6.8) and Section 13.1(f) and indemnifiable by Buyer pursuant to Section 13.2(a) (other than with respect to Buyer’s representations and warranties with respect to financial resources contained in Section 7.6) shall not exceed Thirty-Five Million Seven Hundred Fifty Thousand Dollars ($35,750,000); and

(iii)  the aggregate amount of Damages indemnifiable by Seller pursuant to Section 13.1(a) and Section 13.1(f) and indemnifiable by Buyer pursuant to Section 13.2(a) shall not exceed Seventy-One Million Five Hundred Thousand Dollars ($71,500,000).

(e)  None of the limitations in this Section 13.4 with respect to indemnification of any claims pursuant to Section 13.1(a) or 13.2(a) shall apply to the extent the indemnification obligations thereunder are a result of fraud by the Indemnifying Party.

Section 13.5   Termination of Indemnification Obligations.   The obligations of each party to indemnify, defend and hold harmless Indemnitees (i) pursuant to Sections 13.1(a) and 13.2(a), shall terminate when the applicable representation or warranty expires pursuant to Article XII, (ii) pursuant to Sections 13.1(b) and 13.2(b), shall terminate upon the expiration of all applicable statutes of limitation (giving effect to any extensions thereof) and (iii) pursuant to Sections 13.1(c), 13.1(d), 13.1(e), 13.1(f), 13.2(c), 13.2(d), 13.2(e) and 13.2(f), shall continue without time limitation and shall not terminate at any time; provided, however, that as to clauses (i) and (ii) above, such obligations to indemnify, defend and hold harmless shall not terminate with respect to any individual item as to which the Indemnitee shall have, before the expiration of the applicable period, made a bona fide claim by delivering written notice (stating in reasonable detail the basis of such claim) to the Indemnifying Party.

Section 13.6   Incidental or Consequential Damages.   Notwithstanding anything to the contrary in this Agreement, neither Seller nor Buyer shall have any obligation to indemnify either the Buyer Group or the Seller Group, as the case may be, for incidental, consequential, exemplary, special or punitive damages or lost profits; provided that this Section 13.6 shall not apply to incidental, consequential, exemplary, special or punitive damages or lost profits that are components of judgment awards against a member of the Buyer Group or the Seller Group, as the case may be, in actions by third parties to the extent any such judgment award is subject to indemnification pursuant to Section 13.1 or Section 13.2, respectively.

Section 13.7   Exclusive Remedy.   Except as otherwise provided in Section 15.17 or in any Transaction Document, any claim or cause of action (whether such claim sounds in tort, contract or otherwise and including statutory rights and remedies) based upon, relating to or arising out of this Agreement or the Transaction must be brought by either party in accordance with the provisions and applicable limitations of this Article XIII, which, in the absence of fraud, shall constitute the sole and exclusive remedy of all parties and their Affiliates, successors and assignees for any such claim or cause of action.

Section 13.8   Waiver.   The waiver of any condition based on the accuracy of any representation or warranty pursuant to any Transaction Document, or on the performance of or compliance with any covenant, agreement or obligation pursuant to any Transaction Document, will not affect any right to

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indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, agreements or obligations.

Section 13.9   Effect on Final Purchase Price.   Any indemnity payment made pursuant to this Agreement will be treated as an adjustment to the Purchase Price (and shall be allocated to the Purchase Price of the particular Assets to which it relates) for Tax purposes unless a determination (as defined in Section 1313 of the Code) or similar event under applicable Tax law, rule or regulation with respect to the Indemnitee causes such payment not to constitute an adjustment to the Purchase Price for United States federal income Tax purposes or foreign Tax purposes, as the case may be.

ARTICLE XIV
RESTRICTIVE COVENANT

Section 14.1   Non-compete.   Seller covenants and agrees that, for a period of five years after the Closing Date, none of Seller, Seller Subsidiary or any Affiliate controlled by Seller will, directly or indirectly (on its own behalf or in the service or on behalf of others), in any area of the world, enter into, engage in, provide managerial, supervisory, administrative or consulting services to, represent or have or acquire more than a 2% ownership or beneficial interest in any business or entity engaged, directly or indirectly, in the Business or any derivatives of or improvements to such products or services or any other products or services manufactured, sold or provided by the Business during the five year period ending on the Closing Date; provided, however, that Seller may provide products and services in the ordinary course of business to entities engaged in the Business as long as such products and services provided are not for use in the Business; provided, further, that Seller may acquire control of any business deriving less than 15% of its revenues from such operations so long as Seller shall use commercially reasonable efforts to divest such operations as promptly as practicable and in any event Seller shall have divested such operations not later than one year following such acquisition; provided, further, that if Seller enters into a binding written agreement to divest such operations during such one year period and uses commercially reasonable efforts to close such transaction, then the one year period shall be extended until the earlier of the closing of such transaction or the actual or constructive termination of such agreement. In the event that Seller is acquired by an unaffiliated third party in a transaction that results in the holders of the voting securities of Seller outstanding immediately prior to the consummation of such transaction owning less than 50% of the voting securities of the acquiring or surviving entity in the transaction or any parent thereof outstanding immediately after consummation of such transaction, such acquiring or surviving entity or parent thereof may engage in any activity otherwise prohibited by this Section 14.1.

ARTICLE XV
GENERAL PROVISIONS

Section 15.1   Assignment.   Neither party to this Agreement will convey, assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the other party, except that Buyer may (without obtaining any consent) assign its rights, interests and/or obligations under any Transaction Document, in whole or in part, to any successor to all or any portion of its business or to any Affiliate of Buyer. Any conveyance, assignment or transfer requiring the prior written consent of the other party which is made without such consent will be void ab initio. No assignment of this Agreement will relieve the assigning party of its obligations hereunder.

Section 15.2   Parties in Interest.   This Agreement is binding upon and is for the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not made for the benefit of any Person not a party hereto, and no Person other than the parties hereto or their respective successors and permitted assigns will acquire or have any benefit, right, remedy or claim under or by reason of this Agreement, except that members of the Buyer Group and the Seller Group will be entitled to the rights to indemnification provided to the Buyer Group and the Seller Group, respectively, hereunder.

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Section 15.3   Amendment.   This Agreement may not be amended, modified or supplemented except by a written agreement executed by Buyer and Seller.

Section 15.4   Waiver; Remedies.   No failure or delay on the part of either Buyer or Seller in exercising any right, power or privilege under any Transaction Document will operate as a waiver thereof, nor will any waiver on the part of either Buyer or Seller of any right, power or privilege under any Transaction Document operate as a waiver of any other right, power or privilege under any Transaction Document, nor will any single or partial exercise of any right, power or privilege thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege under any Transaction Document. Except as otherwise provided herein, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or in equity.

Section 15.5   Effect of Investigation.   All representations, warranties, covenants and agreements made by Seller or Seller Subsidiary in this Agreement or in any Transaction Document shall be unaffected by any investigation made by or on behalf of Buyer (whether before, on or after the date hereof or before, on or after the Closing Date) or knowledge obtained (or capable of being obtained) as a result thereof or otherwise.

Section 15.6   Fees and Expenses.   Except as otherwise provided in this Agreement (including transfer taxes pursuant to Section 5.4), each of Seller and Buyer agrees to pay, without right of reimbursement from the other, all costs and expenses incurred by it (and, in the case of Seller, all costs and expenses incurred by Seller Subsidiary) incident to the performance of its obligations hereunder, including the fees and disbursements of counsel, accountants, financial advisors, experts and consultants employed by the respective parties in connection with the Transaction, whether or not the Transaction is consummated; provided that this Section 15.6 shall not limit any Person’s right to recover any Damages for breach of this Agreement or any other Transaction Document.

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Section 15.7   Notices.   All notices, requests, claims, demands and other communications required or permitted to be given under any Transaction Document will be in writing and will be delivered by hand or telecopied, e-mailed or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, when e-mail confirmation is received if delivered by e-mail, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other communications will be addressed as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice in accordance with this Section 15.7:

(a)   If to Buyer:

		Rockwell ▇▇▇▇▇▇▇, Inc. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
		Attention:		▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. Senior Vice President, General Counsel and Secretary
		Telecopy:		(▇▇▇) ▇▇▇-▇▇▇▇
		E-mail:		▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
		with a copy to:
		▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
		Attention:		▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
		Telecopy:		(▇▇▇) ▇▇▇-▇▇▇▇
		E-mail:		▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇

 

(b)   If to Seller:

		▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
		Attention:			▇▇▇▇▇ ▇▇▇▇▇▇▇
		Telecopy:			(▇▇▇) ▇▇▇-▇▇▇▇
		E-mail:			▇▇▇▇▇▇▇▇@▇▇.▇▇▇
		with a copy to:
		Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
		Attention:		▇▇▇▇ ▇. ▇▇▇▇▇▇
		Telecopy:		(▇▇▇) ▇▇▇-▇▇▇▇
		E-mail:		▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

 

Section 15.8   Waiver of Compliance With Bulk Transfer Laws.   Buyer hereby waives compliance by Seller and Seller Subsidiary with the provisions of any bulk transfer laws which may be applicable to the

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transactions contemplated by this Agreement. Seller and Seller Subsidiary shall jointly and severally indemnify, defend and hold harmless the Buyer Group from and against, and pay or reimburse, as the case may be, the Buyer Group for, any and all Damages, as incurred, suffered by any member of the Buyer Group based upon, arising out of or otherwise in any way relating to or in respect of such noncompliance; provided that such indemnification shall be subject to Section 13.3 and 13.6.

Section 15.9   Captions; Currency.   The article and section captions herein and the table of contents hereto are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. Unless otherwise specified, all references herein to numbered articles and sections are to articles and sections of this Agreement and all references herein to schedules and exhibits are to schedules and exhibits to this Agreement. Unless otherwise specified, all references contained in this Agreement, in any exhibit or schedule referred to therein or in any instrument or document delivered pursuant thereto to dollars or “$” shall mean United States Dollars.

Section 15.10   Entire Agreement.   This Agreement, the other Transaction Documents and the Confidentiality Agreement collectively constitute the entire agreement between the parties with respect to the subject matter hereof and this Agreement and the Confidentiality Agreement supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, relating thereto.

Section 15.11   Severability.   If any provision of any Transaction Document or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions thereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.

Section 15.12   Consent to Jurisdiction.   Subject to Section 15.15, each of Seller and Buyer irrevocably submits to the exclusive jurisdiction of (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware and (ii) the United States District Court for the District of Delaware for the purposes of any Action arising out of the Transaction, this Agreement or any other Transaction Document, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof (and agrees not to commence any Action relating thereto except in such courts). Each of Seller and Buyer further agrees that service of any process, summons, notice or document hand delivered or sent by U.S. first class mail to such party’s respective address set forth in Section 15.7 shall be effective service of process for any Action in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Each of Seller and Buyer irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of the Transaction, this Agreement or any other Transaction Document, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof in (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware or (ii) the United States District Court for the District of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in Law or in equity.

Section 15.13   Exhibits and Schedules; Disclosure.

(a)   All exhibits and schedules attached hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Capitalized terms used in any other Transaction Document or in the schedules hereto or thereto but not otherwise defined therein will have the respective meanings assigned to such terms in this Agreement.

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(b)   Seller will have the right to deliver to Buyer at the Closing a supplement to Schedules 6.6(b), 6.9(b), 6.10(a), 6.11(a) and 6.17(f) provided for in Article VI (the “Closing Date Schedule Supplement”) containing any matters occurring after the date hereof (and permitted pursuant to the terms hereof) which, if occurring prior to the date hereof, would have been required to be set forth or described on such schedules. The Closing Date Schedule Supplement for Schedule 6.11(a) will not be considered when determining whether the condition set forth in Section 10.2(a) or any other condition to Closing has been satisfied. The Closing Date Schedule Supplement will, however, for purposes of determining whether any Person is entitled to indemnification pursuant to Section 13.1(a), be deemed to amend such Schedules 6.6(b), 6.9(b), 6.10(a), 6.11(a) and 6.17(f) provided for in Article VI to reflect the matters set forth in the Closing Date Schedule Supplement.

Section 15.14   Governing Law.   This Agreement will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

Section 15.15   Dispute Resolution.

(a)   In the event that any dispute, claim or controversy (collectively, a “Dispute”) arises between Buyer and Seller with respect to or relating to the Transaction, this Agreement or any other Transaction Document, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof (except for any Dispute relating to purchase price adjustments covered by Section 4.1), authorized representatives of Buyer and Seller will meet to attempt a good faith resolution of such Dispute within thirty (30) days after any party notifies the others in writing of a Dispute. If the Dispute is not resolved within thirty (30) days of such notification, any party may make a written demand to the other commencing formal dispute resolution, which demand will specify the nature of the Dispute. Within thirty (30) days of such written demand, or such other time as Buyer and Seller may agree, the parties to the Dispute will attempt in good faith to resolve such Dispute by mediation in accordance with the then existing CPR Model Procedure for Mediation of Business Disputes, promulgated by the CPR Institute for Dispute Resolution, New York City.

(b)   If such mediation is unsuccessful within ninety (90) days after commencement thereof or such other time as Buyer and Seller may agree, such Dispute shall be submitted to binding arbitration, conducted in accordance with the then existing CPR Rules for Non-Administered Arbitration, before three arbitrators. Such arbitration shall be initiated by written notice by either Buyer or Seller to the other parties and each party to the Dispute shall identify its selected arbitrator within fifteen (15) business days following receipt of such notice by the non-initiating party. The arbitrators selected by Buyer and Seller shall, within fifteen (15) business days of their appointment, select a third neutral arbitrator. The arbitration shall be conducted in the City of New York and shall be governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award may be entered by any court having jurisdiction thereof. The arbitrator shall have case management authority and shall resolve the Dispute in a final award within one hundred eighty (180) days from the commencement of the arbitration action, subject to any extension of time thereof allowed by the arbitrators upon good cause shown.

Section 15.16   Counterparts.   This Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

Section 15.17   Specific Performance.   In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved will have the right of specific performance and injunctive relief giving effect to its or their rights under such Transaction Document, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies will be cumulative. The parties agree that any such breach or threatened breach would cause irreparable injury, that the remedies at law for any such breach or

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threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.

Section 15.18   Performance by Seller Subsidiary.   Seller will cause to be performed and hereby guaranties the performance of all actions, agreements and obligations set forth herein to be performed by Seller Subsidiary.

Section 15.19   Interpretation.

(a)   The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Federal, state, local, or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof”, “herein”, and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation” and (iv) the word “or” shall not be exclusive.

(b)   For purposes of this Agreement, “Knowledge” or “aware of” or a similar phrase with respect to Seller shall mean the knowledge of Chief Executive Officer, Chief Financial Officer, Vice President—Business Operations and Vice President—Human Resources of Seller and the individuals set forth on Schedule 15.19(b) if any such Person is actually aware of such fact or other matter or would be aware of such fact or matter after due inquiry; provided, however, that with respect to the individuals set forth on Schedule 15.19(b), each such individual’s Knowledge shall only apply with respect to the representations and warranties contained in the Sections set forth opposite such individual’s name.

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties on the date first hereinabove written.

		ROCKWELL ▇▇▇▇▇▇▇, INC.
		By	/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
			Name:		▇▇▇▇ ▇. ▇▇▇▇▇▇▇
			Title:		Senior Vice President and
					General Manager, Services
		▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER CORPORATION
		By		/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
				Name	▇▇▇▇▇ ▇. ▇▇▇▇▇
				Title:	President and Chief Executive Officer

 

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EXHIBIT A

DEFINITIONS

For purposes of this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):

“Acquisition Proposal” shall have the meaning set forth in Section 8.1(d)(ii).

“Action” means any legal, administrative, governmental or regulatory proceeding or other action, suit, proceeding, claim, arbitration, mediation, alternative dispute resolution procedure, inquiry or investigation by or before any arbitrator, mediator, court or other Governmental Entity.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“AFRL” means the United States Air Force Research Laboratory.

“AFRL Contract” means the Technology Investment Agreement, Government ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇-▇▇-▇-▇▇▇▇, ▇▇/▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇-▇▇-▇▇▇▇▇, dated August 20, 1999, between the U.S. Air Force, Air Force Material Command, Air Force Research Laboratory, Human Effectiveness Directorate, Warfighter Training Research Division and Seller, including Modifications 1-11 thereto.

“Agreement” means this Asset Purchase Agreement, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

“Allocation Schedule” shall have the meaning set forth in Section 4.2.

“Ancillary Agreements” means, collectively, the Transition Agreement, the Intellectual Property Agreement, the Laser Supply Agreement, the Laser Agreement, the Assignment and Assumption Agreement and the Escrow Agreement.

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

“Assignment and Assumption Agreement” means the Assignment and Assumption Agreement dated as of the Closing Date by and between Seller and Buyer in a form to be mutually agreed upon by Seller and Buyer.

“Assumed Liabilities” shall have the meaning set forth in Section 3.1.

“Balance Sheet” shall mean the unaudited consolidated balance sheet of Seller and Seller Subsidiary as of September 30, 2005, included in the financial statements for the nine months ended September 30, 2005, together with the notes thereto.

“Benchmark Amount” shall have the meaning set forth in Section 4.1(c)(i).

“Business” means the business engaged in by Seller and Seller Subsidiary (and their respective predecessors) on and at all times prior to the Closing Date of researching, developing, designing, manufacturing (including by means of procuring from third parties components for), integrating, maintaining, testing, selling, installing, certifying, modifying, repairing, servicing and supporting visual systems (including computers, display systems and visual databases) for commercial and military simulation applications, and activities related thereto.

“Business Employee” shall have the meaning set forth in Section 9.1(a).

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“Business Intellectual Property” means all Intellectual Property that is Related to the Business, excluding the Retained Intellectual Property.

“Business Software” means all computer software (including all enterprise information systems) related to or used in the Business, together with any rights, claims and interests arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any such assets or any component part thereof.

“Buyer” shall have the meaning set forth in the preamble to this Agreement.

“Buyer Group” shall have the meaning set forth in Section 13.1.

“Buyer Welfare Benefit Plans” shall have the meaning set forth in Section 9.3(a).

“Buyer’s Letter” shall have the meaning set forth in Section 4.1(b)(iii).

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended to the date hereof.

“Change in Seller Recommendation” shall have the meaning set forth in Section 8.1(h).

“Claims Made Policies” shall have the meaning set forth in Section 8.9(a).

“Closing” shall have the meaning set forth in Section 5.1.

“Closing Date” shall have the meaning set forth in Section 5.1.

“Closing Date Schedule Supplement” shall have the meaning set forth in Section 15.13(b).

“Closing Net Assets Statement” shall have the meaning set forth in Section 4.1(b)(i).

“Closing Payment” shall have the meaning set forth in Section 4.1(a).

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Confidentiality Agreement” means the Confidentiality Agreement dated as of November 16, 2004 by and between Buyer and Seller.

“Consents” means consents, waivers, approvals, requirements, allowances, novations, authorizations, declarations, filings, registrations and notifications.

“Continued Employees” shall have the meaning set forth in Section 9.1(a).

“Contracts” means, with respect to any Person, all agreements, contracts, obligations, commitments and arrangements (whether written or oral and whether express or implied) (a) to which such Person is a party, (b) under which such Person has any rights, (c) under which such Person has any Liability or (d) by which such Person, or any of the assets or properties owned or used by such Person, is bound, including, in each case, all amendments, modifications and supplements thereto.

“D&T” shall have the meaning set forth in Section 4.1(b)(i).

“Damages” means any and all losses, Liabilities, claims, damages, deficiencies, diminutions in value, fines, payments, Taxes, Liens, costs and expenses whenever or however arising and whether or not resulting from Third Party Claims (the costs and expenses of any and all Actions or other legal matters; all amounts paid in connection with any demands, assessments, judgments, settlements and compromises relating thereto; interest and penalties with respect thereto; and costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and expenses, incurred in investigating, preparing for or defending against any such Actions or other legal matters or in asserting, preserving or enforcing an Indemnitee’s rights hereunder).

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“Debentures” means the 6% Convertible Subordinated Debentures due 2012 of Seller.

“Delivery Date” shall have the meaning set forth in Section 4.1(b)(i).

“Dispute” shall have the meaning set forth in Section 15.15(a).

“Effective Time” shall have the meaning set forth in Section 5.1.

“End Date” shall have the meaning set forth in Section 11.1(b).

“Environmental Laws” means any and all applicable Laws and required Permits issued or promulgated by any Governmental Entity relating to the environment or the protection or preservation of human health or safety, as such human health or safety relates to Hazardous Materials, the preservation or reclamation of natural resources, or the treatment, storage, disposal, management, Release or threatened Release of Hazardous Materials, in each case as in effect on the date hereof.

“Environmental Liabilities” means any and all Damages that are incurred as a result of the presence, Release or threatened Release of Hazardous Materials or a violation of Environmental Laws, including:

(i)    Damages for investigation and/or remediation; and

(ii)   claims by third parties for Damages for personal or bodily injury, or injury to property or natural resources occurring upon or off of any of the real properties used at any time in the Business or any Former Business related to the Business;

provided, however, that any Damages for investigation and/or remediation shall be limited to the extent such investigation or remediation is, or may reasonably be, required pursuant to any Environmental Law to maintain or achieve environmental standards consistent with industrial property use where the applicable Governmental Entity would permit a more lenient standard of response or remediation if the property is restricted to industrial use.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any Person, trade or business which, together with Seller or Seller Subsidiary, is or was treated as a single-employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

“Escrow Agent” means the Person selected by Buyer and Seller to act as escrow agent under the Escrow Agreement.

“Escrow Agreement” means the Escrow Agreement by and among Seller, Buyer and the Escrow Agent, substantially in the form attached hereto as Exhibit B.

“Escrow Amount” shall have the meaning set forth in Section 4.1(a).

“Escrow Fund” shall have the meaning set forth in Section 4.1(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including the rules and regulations promulgated thereunder.

“Excluded Licenses” shall have the meaning set forth in Section 6.6(b).

“Facilities” means all Real Property set forth on Schedule 2.1(a)(i).

“Final Closing Net Assets Statement” shall have the meaning set forth in Section 4.1(b)(ii).

“Financial Statements” means the audited consolidated balance sheets of Seller and its subsidiaries as of December 31, 2003 and 2004 and the related audited consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows of Seller and its subsidiaries for each of the fiscal

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years ended December 31, 2003 and 2004, together with the reports of KPMG LLP thereon, included in Seller’s Annual Report on Form 10-K for the year ended December 31, 2004, and the September 30, 2005 Balance Sheet and the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows of Seller and its subsidiaries for the nine months ended September 30, 2005, including in Seller’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 (collectively, with the footnotes thereto).

“Foreign Governmental Approval” shall have the meaning set forth in Section 8.3.

“Former Business” means any corporation, partnership, entity, division, business unit, business, assets, plant, product line, operations or contract (including any assets and Liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested by Seller or any of its subsidiaries (or any of their predecessors) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated by Seller or any of its subsidiaries (or any of their predecessors).

“GAAP” means United States generally accepted accounting principles as in effect on the date of this Agreement.

“Governmental Entity” means, in any jurisdiction, any (i) federal, state, local, foreign or international government, (ii) court, arbitral or other tribunal, (iii) governmental or quasi-governmental authority of any nature (including any political subdivision, instrumentality, branch, department, official or entity) or (iv) agency, commission, authority or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power.

“Hazardous Materials” means those materials, substances or wastes that are regulated by, or form the basis of liability under, any Environmental Law, including PCBs, pollutants, solid wastes, explosive, radioactive, hazardous or toxic materials, substances, wastes or chemicals, petroleum (including crude oil or any fraction thereof) or petroleum distillates, asbestos or asbestos containing materials, materials listed in 49 C.F.R. Section 172.101 and materials defined as hazardous substances pursuant to Section 101(14) of CERCLA.

“HSR Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended from time to time, including the rules and regulations promulgated thereunder.

“Indemnifying Party” shall have the meaning set forth in Section 13.3(a).

“Indemnitee” means any member of the Buyer Group or the Seller Group who or which may seek indemnification under this Agreement.

“Indenture” means the Indenture dated as of March 1, 1987 between Seller and Security Pacific National Bank, as trustee.

“Insurance Policies” shall have the meaning set forth in Section 6.20(a).

“Intellectual Property” means all (a) inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents (including utility and design patents, industrial designs and utility models), patent applications and patent and invention disclosures, and all other rights of inventorship, worldwide, together with all reissuances, continuations, continuations-in-part, divisions, revisions, supplementary protection certificates, extensions and re-examinations thereof; (b) registered and unregistered trademarks, service marks, trade names, domain names, trade dress, logos and business, corporate and product names and slogans, worldwide, and registrations and applications for registration thereof; (c) copyrights in copyrightable works, and all other rights of authorship, worldwide, and all applications, registrations and renewals in connection therewith; (d) mask works and semiconductor chip rights, worldwide, and all applications, registrations and renewals in connection

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therewith; (e) trade secrets and confidential business and technical information (including confidential ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data, engineering, production and other designs, plans, drawings, engineering notebooks, industrial models, software specifications, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information); (f) computer and electronic data, data processing programs, documentation and software, both source code and object code (including flow charts, diagrams, descriptive texts and programs, computer print-outs, underlying tapes, computer databases and similar items), computer applications and operating programs; (g) rights to ▇▇▇ for and remedies against past, present and future infringements of any or all of the foregoing and rights of priority and protection of interests therein under the Laws of any jurisdiction worldwide; (h) copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including electronic media); and (i) other proprietary, intellectual property and other rights relating to any or all of the foregoing.

“Intellectual Property Agreement” means the Intellectual Property Licensing Agreement dated as of the Closing Date by and between Seller and Buyer, substantially in the form attached hereto as Exhibit C.

“IRS” means the Internal Revenue Service.

“Joint Venture” means Quest Flight Training Limited, a company organized under the laws of England and Wales.

“Joint Venture Guaranties” means Seller’s obligations under the following agreements: (i) the Charge Over Shares & Securities, dated July 20, 2000, between Seller, Quadrant Group plc and Barclays Bank plc; (ii) the Operational Phase Parent Company Guarantee, dated July 20, 2000, by Seller and Quadrant Group plc to the Secretary of State for Defence; (iii) the ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation Operational Guarantee, dated July 20, 2000, from Seller in favour of ▇▇▇▇▇▇▇’▇ Bank plc; and (iv) the Residual Project Guarantee, dated July 20, 2000, from Seller and Quadrant Group plc in favour of ▇▇▇▇▇▇▇’▇ Bank plc.

“Knowledge” shall have the meaning set forth in Section 15.19(b).

“Laser Agreement” means the Laser Projection Systems Agreement dated as of the Closing Date by and between Seller, Buyer and Rockwell ▇▇▇▇▇▇▇ Simulation & Training Solutions, LLC, an indirect wholly-owned subsidiary of Buyer, substantially in the form attached hereto as Exhibit D.

“Laser Supply Agreement” means the Laser Projection System Supply Agreement dated as of the Closing Date by and between Seller and Buyer, substantially in the form attached hereto as Exhibit E.

“Laws” means all laws, statutes, constitutions, treaties, rules, regulations, policies, standards, directives, ordinances, codes, judgments, rulings, orders, writs, decrees, stipulations, injunctions and determinations of all Governmental Entities.

“Leased Premises” shall have the meaning set forth in Section 6.9(b).

“Leases” means all leases, subleases, licenses, and other contractual rights to occupy or use with respect to real property, including, in each case, all amendments, modifications and supplements thereto.

“Liabilities” means any and all claims, debts, liabilities, obligations and commitments of whatever nature, whether known or unknown, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, and whenever or however arising (including those arising out of any Contract or tort, whether based on negligence, strict liability or otherwise) and whether or not the same would be required by GAAP to be reflected as a liability in financial statements or disclosed in the notes thereto.

“Lien” means any charge, claim, equitable interest, lien, encumbrance, option, proxy, pledge, security interest, mortgage, right of first refusal, right of first offer, retention of title agreement, defect of title or

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restriction of any kind or nature, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Material Adverse Effect” means any material adverse change in, or material adverse effect on, (a) the financial condition, results of operations, assets or liabilities of the Business; provided that any change or effect resulting solely from any of the following, alone or in combination, shall not be considered when determining whether a Material Adverse Effect has occurred pursuant to this clause (a): (i) any actions expressly required or expressly contemplated to be taken pursuant to this Agreement; (ii) the loss of employees or customer relationships to the extent that Seller can reasonably demonstrate that such loss was primarily due to the announcement or existence of this Agreement or the transactions contemplated hereby; (iii) any change in economic conditions generally or in the industries in which the Business operates generally (which changes do not disproportionately affect the Business in any material respect); (iv) any acts of war, terrorism or natural catastrophe; (v) any changes in applicable Law or GAAP; and (vi) any change in the market price of Seller’s common stock (provided that the underlying cause or causes of any such change in market price may be considered if not excluded pursuant to clauses (i)-(v) of this definition); or (b) the ability of Seller or Seller Subsidiary to consummate the Transaction.

“Material Contract” shall have the meaning set forth in Section 6.10(a).

“Net Asset Amount” shall have the meaning set forth in Section 4.1(c)(i).

“Net Assets” shall have the meaning set forth in Section 4.1(b)(i).

“Notice of Disagreement” shall have the meaning set forth in Section 4.1(b)(ii).

“Occurrence Basis Policies” shall have the meaning set forth in Section 8.9(a).

“Owned Real Property” shall have the meaning set forth in Section 6.9(a).

“Permits” means all Consents, permits, certificates, variances, exemptions, franchises and other approvals issued, granted, given, required or otherwise made available by any Governmental Entity but excluding patents and applications and registrations for Intellectual Property.

“Permitted Liens” means (a) Liens for Taxes, assessments and other governmental charges, if such Taxes, assessments or charges are not delinquent or are being contested in good faith through appropriate proceedings; (b) statutory landlords’ liens, inchoate workmen’s, repairmen’s or other similar Liens arising or incurred in the ordinary course of business consistent with past practices in respect of obligations which are not overdue, de minimis title defects and non-monetary encumbrances, which statutory landlords’ liens, workmen’s, repairmen’s or other similar Liens, de minimis title defects and non-monetary encumbrances do not, individually or in the aggregate, impair the continued use, occupancy, value or marketability of title of the property to which they relate or the Business, assuming that the property is used on substantially the same basis as such property is currently being used in the Business; (c) any rights of third parties under a Contract included in the Assets, except to the extent any such Contract by its terms creates any lien or security interest in favor of a third party, (d) any existing license to the Business Intellectual Property or the Seller Non-Laser Intellectual Property or any license to the Business Intellectual Property or the Seller Non-Laser Intellectual Property granted in the ordinary course of business prior to the Effective Time in accordance with the terms of this Agreement, except to the extent any such license by its terms creates any lien or security interest in favor of a third party; (e) any Liens in connection with any Seller line of credit, provided that any such Liens shall be released no later than the Effective Time; and (f) the exceptions set forth on Schedule A-1.

“Person” means any individual, firm, partnership, joint venture, trust, corporation, limited liability entity, unincorporated organization, estate or other entity (including a Governmental Entity).

“Plans” shall have the meaning set forth in Section 6.17(b).

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“Proxy Statement” shall have the meaning set forth in Section 8.1(g).

“Purchase Price” shall have the meaning set forth in Section 4.1(a).

“Real Property” shall have the meaning set forth in Section 6.9(b).

“Related to the Business” means related primarily to, used primarily in, arising primarily from, or held primarily for use in, the Business, or otherwise necessary for the operation, as presently conducted, of the Business.

“Release” shall have the meaning set forth in Section 101(22) of CERCLA.

“Representatives” means, with respect to any Person, such Person’s Affiliates, directors, officers, employees, agents, consultants, advisors and other representatives, including legal counsel, accountants and financial advisors.

“Required Seller Vote” means the affirmative vote of the holders of a majority of the outstanding shares of Seller’s capital stock to approve the Transaction as required by the Revised Business Corporation Act of the State of Utah.

“Retained Assets” shall have the meaning set forth in Section 2.1(b).

“Retained Employees” shall have the meaning set forth in Section 9.1(a).

“Retained Intellectual Property” shall have the meaning set forth in Section 2.1(b)(x).

“Retained Liabilities” shall have the meaning set forth in Section 3.2.

“SEC” means the Securities and Exchange Commission.

“Seller” shall have the meaning set forth in the preamble to this Agreement.

“Seller Affiliated Group” shall have the meaning set forth in Section 6.5(a).

“Seller Group” shall have the meaning set forth in Section 13.2.

“Seller Non-Laser Intellectual Property” shall have the meaning set forth in the Intellectual Property Agreement.

“Seller Recommendation” shall have the meaning set forth in Section 8.1(h).

“Seller Retirement Plans” shall have the meaning set forth in Section 9.2(a).

“Seller Savings Plan” shall have the meaning set forth in Section 9.2(b).

“Seller Stockholders Meeting” shall have the meaning set forth in Section 8.1(h).

“Seller Subsidiary” means ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Limited, a company organized under the laws of England and Wales.

“Seller Welfare Benefit Plans” shall have the meaning set forth in Section 9.3(a).

“Seller’s Flexible Spending Plan” shall have the meaning set forth in Section 9.4.

“September 30, 2005 Balance Sheet” means the unaudited consolidated balance sheet of Seller and its subsidiaries as of September 30, 2005, including in Seller’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

“Superior Proposal” shall have the meaning set forth in Section 8.1(d)(iv).

“Tax Returns” shall have the meaning set forth in Section 6.5(a).

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“Taxes” means (a) all taxes, charges, duties, fees, levies or other assessments, including income, excise, property, sales, use, gross receipts, recording, insurance, value added, profits, license, withholding, payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, imposed by any Governmental Entity, and including any interest, penalties and additions attributable thereto; (b) any Liability for the payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor Liability or by operation of Law; and (c) any Liability for the payment of any amounts as a result of being a party to any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clauses (a) and (b).

“Third Party Claim” shall have the meaning set forth in Section 13.3(a).

“Transaction” means the transactions contemplated by this Agreement.

“Transaction Documents” means this Agreement, the Ancillary Agreements and all other instruments, certificates and documents delivered or required to be delivered by Buyer, Seller, any Seller Subsidiary or any Affiliate of any thereof pursuant to this Agreement.

“Transfer Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 1981.

“Transition Agreement” means the Transition Agreement dated as of the Closing Date by and between Seller and Buyer in a form to be mutually agreed upon by Seller and Buyer.

“U.K. Bank Accounts and Lockboxes” shall have the meaning set forth in Section 8.11(a).

“U.K. Business” shall have the meaning set forth in Section 5.5(a).

“UK Employees” shall have the meaning set forth in Section 6.17(f).

“UK Pension Plan” shall have the meaning set forth in Section 9.2(d).

“Unaffiliated Firm” shall have the meaning set forth in Section 4.1(b)(iii).

“VAT” means United Kingdom value added tax.

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988.

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Exhibit D

LASER PROJECTION SYSTEMS AGREEMENT

BETWEEN

ROCKWELL ▇▇▇▇▇▇▇, INC.

ROCKWELL ▇▇▇▇▇▇▇ SIMULATION & TRAINING SOLUTIONS, LLC

AND

▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER CORPORATION

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TABLE OF CONTENTS

 

ii

LASER PROJECTION SYSTEMS AGREEMENT

This Laser Projection Systems Agreement (this “Agreement”) is made and entered into as of the _____ day of _______, 2006, (the “Effective Date”) by and among ROCKWELL ▇▇▇▇▇▇▇, INC., a Delaware corporation (“Parent”), ROCKWELL ▇▇▇▇▇▇▇ SIMULATION & TRAINING SOLUTIONS, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Parent (“Buyer”), and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ COMPUTER CORPORATION, a Utah corporation (“Seller”), and together with Buyer, hereinafter referred to as the “Parties”. Capitalized terms used herein but not defined shall have the meanings given to such terms in the APA (as defined below).

In consideration of the mutual agreements and the obligations of the Parties hereinafter expressed, the receipt and sufficiency of which are acknowledged, Seller and Buyer hereby agree as follows:

ARTICLE 1 - SUBJECT MATTER AND CONTRACT PRICE

1.1          As agreed under the terms of that certain Asset Purchase Agreement, dated as of February 7, 2006 (the “APA”), by and between Seller and Parent, the Parties hereby enter into this Agreement to provide for, among other things, the license by Seller to Buyer of rights to the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System (each as defined below).

1.2          In recognition of the efforts undertaken for, and investments made by, Seller under this Agreement, Parent agrees to (i) pay to Seller, by wire transfer of immediately available funds, the amount of Two Million Dollars ($2,000,000) (the “Initial Payment”) upon the effectiveness of the license with respect to the Fixed-Based Laser Projection System as set forth in Section 8.1, and (ii) deliver to the Escrow Agent, upon execution of this Agreement, Three Million Dollars ($3,000,000) (together with the Initial Payment, the “Contract Price”) to be held by the Escrow Agent in an escrow fund (the “Escrow Fund”) pursuant to the Escrow Agreement (the “Escrow Agreement”), dated as of the date hereof, by and between Seller, Parent and the Escrow Agent, which amount (as may be reduced pursuant to Sections 5.1 and 5.2 or in accordance with the terms of the Escrow Agreement) shall be released to Seller in two installments in accordance with the terms of the Escrow Agreement in respect of the effectiveness of the license with respect to the Motion-Based Laser Projection System as set forth in Section 8.2.

1.3          The Contract Price excludes all taxes, duties or other levies, which may be imposed. All taxes, duties or other levies that are imposed shall be shared equally by Parent and Seller, except for income taxes of Seller, which shall be the sole responsibility of Seller.

ARTICLE 2 - DESCRIPTION OF LASER PROJECTION SYSTEMS

2.1          Seller shall provide a fixed-based laser projection system that meets or surpasses all functional and performance specifications contained in Attachment 1 hereto (the “Fixed-Based Laser Projection System”).

2.1.1         Seller shall perform a demonstration of the prototype Fixed-Based Laser Projection System (the “Fixed-Based Prototype Laser Projection System”).

2.1.2         Seller shall produce a Fixed-Based Laser Projection System that meets manufacturing acceptance testing (the “Fixed-Based First Article Laser Projection System”) in accordance with Section 4.2.

2.2          Seller shall provide a laser projection system that is motion capable that meets or surpasses all functional and performance specifications contained in Attachment 2 hereto (the “Motion-Based Laser Projection System”).

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2.2.1         Seller shall perform a demonstration of the prototype Motion-Based Laser Projection System (the “Motion-Based Prototype Laser Projection System”) in accordance with Section 4.3.

2.2.2         Seller shall produce a Motion-Based Laser Projection System that meets manufacturing acceptance testing (the “Motion-Based First Article Laser Projection System”) in accordance with Section 4.4.

2.3          Seller agrees to provide Buyer with quarterly status reports and verbal question and answer sessions regarding the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System, which shall include product status, project accomplishment, achievement of performance standards, technological challenges and program schedule status.

2.4          Seller agrees to provide Buyer with a program schedule for the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System within a reasonable time after execution of this Agreement.

2.5          Seller shall provide Buyer with a listing of all documentation reasonably necessary for the installation, operation, testing and support of the Fixed-Based Laser Projection System and Motion-Based Laser Projection System.

2.6          Seller shall be solely responsible for all costs associated with the research, development, design, engineering, prototype and first production articles and associated testing required to provide Buyer with laser projection systems that are fully compliant with the specifications contained in Attachments 1 and 2 hereto.

ARTICLE 3 - DELIVERY

3.1          Seller shall use commercially reasonable efforts to complete the Fixed-Based First Article Laser Projection System on or before May 31, 2006.

3.2          Seller shall use commercially reasonable efforts to complete the Motion-Based Prototype Laser Projection System on or before July 1, 2007.

3.3          Seller shall use commercially reasonable efforts to complete the Motion-Based First Article Laser Projection System on or before December 31, 2007.

ARTICLE 4 - QUALITY ASSURANCE, TESTING AND ACCEPTANCE OF WORK

4.1          Seller will provide and maintain a quality control system in accordance with ISO 9001 for the work performed under this Agreement. Upon request by Buyer, Seller shall provide current proof of certification.

4.2          Buyer and Seller will conduct manufacturing acceptance testing of the Fixed-Based First Article Laser Projection System at Seller’s facilities in accordance with a mutually developed plan that will test and evaluate the Fixed-Based First Article Laser Projection System against the specifications contained in Attachment 1 hereto. Upon completion of such testing, Buyer and Seller will make a joint determination of system compliance and acceptance. Neither Buyer nor Seller shall unreasonably withhold, delay or condition its determination of compliance or noncompliance, as the case may be.

4.3          After demonstration of the Motion-Based Prototype Laser Projection System at Seller’s facilities, Buyer and Seller will test and evaluate the Motion-Based Prototype Laser Projection System to ensure compliance with the specifications contained in Attachment 2 hereto and FAA Level D standards, as in effect on the date of this Agreement.

4.4          Buyer and Seller will conduct manufacturing acceptance testing of the Motion-Based First Article Laser Projection System at Seller’s facilities in accordance with a mutually developed plan that

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will test and evaluate the Motion-Based First Article Laser Projection System against the specifications contained in Attachment 2 hereto and FAA Level D standards, as in effect on the date of this Agreement. Upon completion of such testing, Buyer and Seller will make a joint determination of system compliance and acceptance. Neither Buyer nor Seller shall unreasonably withhold, delay or condition its determination of compliance or noncompliance, as the case may be.

4.5          If Seller tenders nonconforming material, Seller will, at its option, replace or correct the material, at no increase in the Contract Price.

4.6          Seller agrees to provide to Buyer, by first production article inspection of the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System, as applicable, and to maintain for five (5) years thereafter, design, engineering and technical documentation and data reasonably necessary to install, operate, test, support and sell the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System, as applicable. In addition, if at any time after manufacturing acceptance testing and acceptance of the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System, as applicable, such documentation or data is updated, revised or supplemented, Seller agrees to provide to Buyer reasonably promptly any such updated, revised or supplemented documentation or data to the extent that it relates to the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System as designed and delivered to Buyer.

ARTICLE 5 - PENALTY FOR LATE DELIVERY

5.1          If Buyer and Seller have not completed manufacturing acceptance testing of the Motion-Based First Article Laser Projection System on or before December 31, 2007, Parent shall be entitled, out of the Escrow Fund, to (i) Forty-One Thousand Six Hundred Sixty-Seven Dollars ($41,667) on each of the first four (4) monthly anniversary dates following December 31, 2007, (ii) Eighty-Three Thousand Three Hundred Thirty-Three Dollars ($83,333) on each of the first four (4) monthly anniversary dates following April 30, 2008, and (iii) One Hundred Twenty-Five Thousand Dollars ($125,000) on each of the first four (4) monthly anniversary dates following August 31, 2008, in each such case if Buyer and Seller have not completed manufacturing acceptance testing of the Motion-Based First Article Laser Projection System on or before such monthly anniversary date, except to the extent that such failure arises from any cause or causes beyond the control of Seller, including acts of critical suppliers beyond the control of Seller, acts of God, fire, storm, flood, earthquake, governmental regulation or direction, acts of the public enemy, war, terrorism, rebellion, insurrection, riot, invasion, strike or lockout, in each case not resulting from the negligence of Seller (each a “Force Majeure Event”), in which event the payment date with respect to each such payment shall be postponed by a number of days equal to the duration of such Force Majeure Event; provided, that, if Buyer and Seller have not completed manufacturing acceptance testing of the Motion-Based First Article Laser Projection System on or before December 31, 2008, Parent shall be entitled, out of the Escrow Fund, to an additional One Million Dollars ($1,000,000) on December 31, 2008, except to the extent that such failure is caused by a Force Majeure Event, in which event the payment date with respect to such payment shall be postponed by a number of days equal to the duration of such Force Majeure Event.

5.2          If the Motion-Based Prototype Laser Projection System has not been demonstrated on or before December 31, 2008, Parent shall be entitled, out of the Escrow Fund, to the amount of One Million Dollars ($1,000,000), except to the extent that such failure is caused by a Force Majeure Event, in which event the payment date with respect to such payment shall be postponed by a number of days equal to the duration of such Force Majeure Event.

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ARTICLE 6 - Modifications and improvements

6.1          Buyer may propose modifications to the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System at any time. Seller shall review any such proposals and negotiate with Buyer in good faith with respect thereto to attempt to reach agreement on reasonable commercial terms, provided that modifications shall be made only upon mutual written agreement between Buyer and Seller.

6.2          Buyer may propose improvements to the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System at any time. Seller shall review any such proposals and negotiate with Buyer in good faith with respect thereto to attempt to reach agreement on reasonable commercial terms, provided that improvements shall be made only upon mutual written agreement between Buyer and Seller.

6.3          After manufacturing acceptance testing and acceptance of the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System, Seller may, at its election, incorporate any enhancements, improvements or new capabilities, designed for, or incorporated into, Seller’s commercial products that were developed by Seller independently of Buyer into the Fixed-Based Laser Projection Systems and the Motion-Based Laser Projection Systems supplied to Buyer, at no additional developmental cost to Buyer. Any other enhancements, improvements, or new capabilities designed for, or incorporated into, Seller’s commercial products that were developed by Seller independently of Buyer will be incorporated into the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System only to the extent that the commercial terms upon which such enhancements, improvements or new capabilities are so incorporated are mutually agreed by Seller and Buyer. Notwithstanding anything herein to the contrary, Seller will have no obligation to incorporate any enhancements, improvements or new capabilities into products which have already been manufactured or delivered. To the extent that Seller incorporates any such enhancements, improvements or new capabilities into the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System pursuant to the first or second sentence of this Section 6.3, Seller will provide Buyer with any updated design, engineering and technical documentation and data, including but not limited to drawings, parts lists, bills of materials, and fabrication instructions, to the extent related to the Fixed-Based Laser Projection System and the Motion-Based Laser Projection System.

6.4          All modifications and improvements to the laser projectors and all Intellectual Property associated therewith shall be owned by Seller, regardless of whether Buyer compensates Seller for creating such modifications or improvements. All such Intellectual Property shall be deemed Laser Intellectual Property for the purposes of this Agreement. Seller shall promptly notify Buyer of all such modifications and improvements in writing, and Seller agrees to meet with Buyer in person at least once annually, and by telephone at least once quarterly, for the purpose of discussing such modifications and improvements.

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ARTICLE 7 -  GENERAL LICENSE

7.1          For purposes of Articles 7 and 8, the following terms shall have the following meanings:

7.1.1         “Catastrophe Event” means (i) a Seller Bankruptcy Event; or (ii) the complete cessation by Seller of its business relating to the design, manufacture and sale of laser projectors (it being understood and agreed that the failure by Seller to deliver any products at all under the Laser Supply Agreement for a period of at least three (3) years after Buyer has submitted and not withdrawn a purchase order for any products under the Laser Supply Agreement following manufacturing acceptance testing of the Motion-Based Laser Projector System shall be deemed to be such a cessation by Seller under this clause (ii), except to the extent that such failure is caused by a Force Majeure Event, in which event such three year period shall be extended by a number of days equal to the duration of such Force Majeure Event).

7.1.2         “Exclusive Laser Fields” means the following fields:  (i) military and commercial simulation and training (and embedded simulation and training); and (ii) aircraft flight decks and cabins.

7.1.3         “Laser Intellectual Property” means all existing or future Seller Intellectual Property covering or relating to laser projectors.

7.1.4         “Laser Technology Escrow” shall have the meaning set forth in Section 7.5.2.

7.1.5         “Non-Exclusive Laser Fields” means the following fields, in each case to the extent not included in the Exclusive Laser Fields:  (i) commercial air traffic control (ATC); (ii) military helmet mounted laser displays; (iii) aircraft test equipment; (iv) military global positioning systems (GPS); and (v) command and control for military intelligence, surveillance and reconnaissance (C2ISR).

7.1.6         “Seller Intellectual Property” means all Intellectual Property that is either owned by Seller or under which Seller has the right to license without the payment of royalties or other fees to any third party. Notwithstanding the foregoing, Seller Intellectual Property shall exclude trademarks, service marks, logos, trade dress, corporate names, and trade names, including the good will appurtenant thereto, whether statutory or common law, and any and all registrations and applications to register therefor.

7.1.7         “Seller Laser Projector Business” means all businesses outside of the Exclusive Laser Fields and the Non-Exclusive Laser Fields.

7.1.8         “Seller Bankruptcy Event” means that Seller has become the subject of a case under Chapter 7 of the U.S. Bankruptcy Code or any similar liquidation, dissolution, or debtor relief statute under state or federal law (but excluding any such statute, including Chapter 11 of the U.S. Bankruptcy Code, providing for reorganization or restructuring of debtors), and such case shall not have been dismissed for ninety (90) days.

7.2        Laser Intellectual Property License.

7.2.1         Effective as of the Effective Time, Seller hereby grants to Buyer, and Buyer hereby accepts, an exclusive (subject to Sections 7.2.4 and 7.4), perpetual, worldwide, non-transferable (except as set forth in Section 11.1), fully-paid, royalty-free right and license, without the right to grant sublicenses (except to (i) Parent and all direct or indirect subsidiaries of Parent (for so long as such subsidiary remains a direct or indirect subsidiary of Parent) and (ii) end-users of software and databases, provided that such sublicenses are granted solely for the use of, and to the extent reasonably necessary for such end-user to use, such software and databases and such sublicenses are subject to Section 7.3.4), under all Laser Intellectual Property to use, sell, offer for sale, import and export laser projectors in the Exclusive Laser Fields.

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7.2.2         Effective as of the Effective Time, Seller hereby grants to Buyer, and Buyer hereby accepts, a non-exclusive, perpetual, worldwide, non-transferable (except as set forth in Section 11.1), fully-paid, royalty-free right and license, without the right to grant sublicenses (except to (i) Parent and all direct or indirect subsidiaries of Parent (for so long as such subsidiary remains a direct or indirect subsidiary of Parent) and (ii) end-users of software and databases, provided that such sublicenses are granted solely for the use of, and to the extent reasonably necessary for such end-user to use, such software and databases and such sublicenses are subject to Section 7.3.4), under all Laser Intellectual Property to use, sell, offer for sale, import and export laser projectors in the Non-Exclusive Laser Fields.

7.2.3         Effective upon the occurrence of a Catastrophe Event, Seller hereby grants to Buyer, and Buyer hereby accepts a non-exclusive, perpetual, worldwide, non-transferable (except as set forth in Section 11.1), fully-paid, royalty-free right and license, without the right to grant sublicenses (except to (i) Parent and all direct or indirect subsidiaries of Parent (for so long as such subsidiary remains a direct or indirect subsidiary of Parent) and (ii) end-users of software and databases, provided that such sublicenses are granted solely for the use of, and to the extent reasonably necessary for such end-user to use, such software and databases and such sublicenses are subject to Section 7.3.4), under all Laser Intellectual Property to make, have made and modify laser projectors in the Exclusive Laser Fields and the Non-Exclusive Laser Fields by third party manufacturers approved by Seller (which approval shall not be unreasonably withheld or delayed).

7.2.4         All exclusive licenses granted under this Agreement are exclusive against all Persons, including the applicable licensor and its Affiliates; provided, however, that all exclusive licenses and all rights granted under this Agreement shall be subject to (i) the third party licenses granted by Seller existing as of the date of this Agreement, and (ii) any restrictions contained in the third party licenses granted to Seller as of the date of this Agreement, each of which are set forth on Schedule 7.2.4 attached hereto and have been made available to Buyer.

7.2.5         Following the date of completion of manufacturing acceptance testing of the Motion-Based First Article Laser Projection System in accordance with Article 2, if (i) Buyer fails to place any orders for laser projectors in the Exclusive Laser Fields for any fifteen (15) month period, (ii) Seller demonstrates in writing with reasonable detail following such fifteen (15) month period that customers desire to buy simulators or other products within the Exclusive Laser Fields using Seller’s laser projectors on terms that are in the aggregate no more favorable to such customers than the terms offered to Buyer (including the configuration of the Fixed-Based Laser Projection System or Motion-Based Laser Projection System, as applicable, volume of purchasing, payment terms, warranty terms and other contractual terms), and (iii) Buyer fails to place any orders for laser projectors in the Exclusive Laser Fields for the three (3) month period following receipt of Seller’s written demonstration pursuant to clause (ii), the exclusive license under Section 7.2.1 shall become nonexclusive, except to the extent that such failure is caused by a Force Majeure Event, in which event such fifteen (15) month period or three (3) month period, as the case may be, shall be extended by a number of days equal to the duration of such Force Majeure Event.

7.2.6         Seller and Buyer agree that the licensed rights granted pursuant to this Agreement (including all licensed know-how and other licensed trade secrets) are “intellectual property” as defined in 11 U.S.C. 101(35A). Seller and Buyer each intend, and Seller and Buyer each agree that they will not make any argument to the contrary in any court of law or equity, that the licenses and related rights and benefits granted to Buyer pursuant to this Agreement, including the release of escrow and Buyer’s right to make and have made upon the occurrence of a Catastrophe Event, shall be entitled to the benefits and protections of Section 365(n) of Title 11 of the U.S.

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Code. For the purposes of Section 365(n), the “embodiments” of the intellectual property licensed under this Agreement include (i) the know-how and other trade secrets of Seller relating to the manufacture of laser projectors, including the drawings and designs associated with the know-how for manufacture of the laser projector (including drawings of the circuit boards and chip design packets) and the methods and technology used to manufacture the laser projector, and (ii) works of authorship used in connection with the marketing and promotion of the laser projector.

7.3          Enforcement/Other Restrictions.

7.3.1         Enforcement By Buyer. Buyer shall have the sole power to institute and prosecute suits for infringement or misappropriation of the Laser Intellectual Property that relates solely to the Exclusive Laser Fields, and if required by law, Seller will join as party plaintiff in such suits; provided, that if Buyer fails to initiate an action to enforce the foregoing Intellectual Property within ninety (90) days of written notice by Seller, Seller, at its own expense, shall have the right to file suit against such infringer, in the name of the Buyer and for Seller’s benefit. All costs and expenses of any such suits instituted by Buyer or Seller shall be borne by the party who instituted such suit against the infringer, and such party shall have the right to collect for its own use all damages, profits and awards of whatever nature recoverable for such infringement. Each party shall, at the requesting party’s expense, reasonably cooperate with the other party in any such suit.

7.3.2         Enforcement by Seller. Except as provided in Section 7.3.1, Seller shall have the sole power to institute and prosecute suits for infringement or misappropriation of the Laser Intellectual Property in all other instances (including, without limitation, the sole power to institute and prosecute suits for infringement or misappropriation of the Laser Intellectual Property that relates (i) to any and all fields outside the Exclusive Laser Fields and/or (ii) to both the Exclusive Laser Fields and a field outside the Exclusive Laser Fields) and if required by law, Buyer will join as party plaintiff in such suits; provided, that if Seller fails to initiate an action to enforce the foregoing Intellectual Property that relates directly to the Exclusive Laser Fields within ninety (90) days of written notice by Buyer, the Buyer, at its own expense and with the consent of Seller (not to be unreasonably withheld), shall have the right to file suit against such infringer, in the name of Seller and for Buyer’s benefit. All costs and expenses of any such suits instituted by Buyer or Seller shall be borne by the party who instituted such suit against the infringer, and such party shall have the right to collect for its own use all damages, profits and awards of whatever nature recoverable for such infringement. Each party shall, at the requesting party’s expense, reasonably cooperate with the other party in any such suit.

7.3.3         Against Licensees, Sublicensees or Transferees. In the event of a breach by a licensee, sublicensee or transferee of either party hereto of the exclusivity and/or field restrictions of the applicable license or sublicense agreement, the party who learns of such breach shall promptly notify the other party in writing, and the licensor, sublicensor or transferor, as the case may be, shall take commercially reasonable actions to stop such breach. If such actions are not successful in obtaining agreement from such third party to promptly cease such use within sixty (60) days of notice of such breach, such licensor, sublicensor or transferor shall, at the aggrieved party’s request, commence appropriate action, which may include commencing suit, to stop such breach within sixty (60) days of such request. The aggrieved party may participate in any such suit, at its own expense, with the applicable licensor, sublicensor or transferor, and such licensor, sublicensor or transferor shall not settle any such suit in a manner that would materially adversely affect the aggrieved party’s exclusive rights without the consent of the aggrieved party. Neither party shall enter into any license or sublicense agreement whose terms conflict with the rights of the parties set forth in this Section 7.3.3.

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7.3.4         As a condition to the licenses granted Buyer hereunder, Buyer agrees (and shall cause its sublicensees to agree) not to decompile, disassemble or otherwise reverse engineer any laser projector or component thereof delivered by Seller, or any software or firmware therein. Notwithstanding anything to the contrary, any license to software granted to Buyer hereunder is for the object code only and no license is granted (or implied) with respect to the source code, unless and until the make and have made license is granted pursuant to Section 7.2.3 and such source code is released pursuant to the escrow agreement as provided in Section 7.5.3, in which case the license in Section 7.2.3 shall include a license to such source code under such license.

7.4          Exclusivity. Except for the licenses granted to Buyer in the Exclusive Laser Fields in this Agreement and laser projectors manufactured by Seller for Buyer pursuant to the Supply Agreement, Seller shall not use, sell, offer for sale, import or export laser projectors in the Exclusive Laser Fields, or license any Person to do so and Seller hereby represents and warrants that it has not licensed any third party to use, sell, offer for sale, import or export laser projectors in the Exclusive Laser Fields. In connection with the foregoing:

7.4.1         Seller shall require that all Persons (other than the U.S. government) who purchase laser projectors, as a stand-alone product, from Seller agree in writing: (i) not to use or resell such laser projectors in the Exclusive Laser Fields; and (ii) to require that all future transferees of such laser projectors agree in writing not to resell laser projectors into the Exclusive Laser Fields and to cause such transferees to so agree in writing.

7.4.2         Seller shall require that all Persons to whom Seller grants a license to make or have made laser projectors agree in writing: (i) not to use or resell laser projectors in the Exclusive Laser Fields; and (ii) to require that all sublicensees and future sublicensees of such license agree in writing not to use or sell laser projectors in the Exclusive Laser Fields and to cause such sublicensees to so agree in writing.

7.4.3         Seller shall not transfer or pledge as collateral any Laser Intellectual Property without obtaining the transferee’s or secured party’s written agreement to the terms and conditions of Sections 7.2, 7.3 and 7.4 of this Agreement. Any transfer or pledge in violation of the foregoing shall be void ab initio.

7.4.4         Buyer shall require that all Persons (other than the U.S. government) who purchase laser projectors that were initially purchased from or manufactured by Seller, as a stand-alone product, from Buyer, Parent or any direct or indirect subsidiaries of Parent agree in writing: (i) not to use or resell such laser projectors in the field of the Seller Laser Projector Business; and (ii) to require that all future transferees of such laser projectors agree in writing not to resell laser projectors in the field of the Seller Laser Projector Business and to cause such transferees to so agree in writing.

7.4.5         Buyer shall require that all Persons to whom Buyer, Parent or any direct or indirect subsidiaries of Parent grants a license to make or have made laser projectors that utilize the Laser Intellectual Property agree in writing: (i) not to use or resell laser projectors in the field of the Seller Laser Projector Business; and (ii) to require that all sublicensees and future sublicensees of such license agree in writing not to use or sell laser projectors in field of the Seller Laser Projector Business and to cause such sublicensees to so agree in writing.

7.5          Documentation and Laser Technology Escrow.

7.5.1         Seller shall grant Buyer reasonable access to all design documentation reasonably necessary to one of ordinary skill in the art for application development, installation, testing, operation, sale, system integration and support of laser projectors.

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7.5.2         At or prior to the Closing, Seller shall place into escrow with a recognized escrow agent mutually acceptable to Seller and Buyer sufficient documentation and data to enable the manufacture of laser projectors by one of ordinary skill in the art on behalf of Buyer in the event of a Catastrophe Event, which escrow shall be updated annually to include documentation and data relating to subsequent improvements to the technology (“Laser Technology Escrow”). The cost of such escrow shall be shared equally between the parties.

7.5.3         The escrow agreement governing the Laser Technology Escrow shall provide that, upon the occurrence of a Catastrophe Event, the Laser Technology Escrow shall be released to Buyer subject to Section 7.2.3 and procedures set forth in such escrow agreement agreed upon by the Parties.

7.6          Laser Projectors Outside the Exclusive Laser Fields and the Non-Exclusive Laser Fields.

7.6.1         In the event that Buyer notifies Seller that Buyer desires to expand its use or sale of laser projectors into additional lines of business outside of the Exclusive Laser Fields and the Non-Exclusive Laser Fields, Seller agrees to negotiate in good faith with Buyer to attempt to reach agreement on the terms and conditions of a license, supply and/or related agreement between Buyer and Seller with respect to any such expansion, subject to (i) any exclusive arrangements Seller has entered into with third parties and (ii) Seller’s good faith intention to enter the relevant line of business (other than the defense electronics and commercial aviation markets).

7.6.2         In the event that Seller initiates an expansion of the use or sale of laser projectors into defense electronics and commercial aviation markets outside of the Exclusive Laser Fields and the Non-Exclusive Laser Fields, Seller shall promptly notify Buyer of any such expansion and, upon Buyer’s requests, negotiate in good faith with Buyer to attempt to reach agreement on the terms and conditions of a license, supply and/or related agreement between Buyer and Seller with respect to any such expansion.

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ARTICLE 8 - FIXED-BASED LASER PROJECTION SYSTEM AND MOTION-BASED LASER PROJECTION SYSTEM LICENSEs

8.1          The Fixed-Based Laser Projection System shall be deemed to be a laser projector for the purpose of the licenses granted to Buyer and others in Article 7, and, upon completion of manufacturing acceptance testing of the Fixed-Based First Article Laser Projection System in accordance with Article 2, such licenses in Article 7 shall become effective as to the Fixed-Based Laser Projection System.

8.2          The Motion-Based Laser Projection System shall be deemed to be a laser projector for the purpose of the licenses granted to Buyer and others in Article 7, and, upon completion of manufacturing acceptance testing of the Motion-Based First Article Laser Projection System in accordance with Article 2, such licenses in Article 7 shall become effective as to the Motion-Based Laser Projection System.

ARTICLE 9 - INDEMNITY

9.1          Seller will indemnify, defend and hold harmless Buyer, its directors, officers, employees, agents, customers and each of the heirs, executors, successors, sublicensees (but only to the extent they are direct or indirect parent, subsidiary or sister companies of Buyer) and permitted assigns of any of the foregoing (collectively, the “Buyer Indemnitees”) from and against all claims, liabilities, demands, damages, or losses (collectively, “Third Party Claims”) asserting that the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System (upon completion thereof) licensed herein infringes, violates or misappropriates any intellectual property rights of any Person insofar as and solely to the extent that such Third Party Claim is based on a claim that the infringement or wrongful use is attributable to Buyer’s application without modification (or combination with other technology) and which use is in material compliance with the terms of this Agreement.

9.2          Should any portion of the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System (upon completion thereof) licensed herein become or, in the Seller’s reasonable opinion, be likely to become the subject of a claim of infringement, violation or misappropriation of Person’s intellectual property right, without limiting any of Buyer’s other remedies, Seller at its option and expense shall either (i) procure for the Buyer the right to continue to use that portion of the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System (upon completion thereof), or (ii) replace or modify that portion of the Fixed-Based Laser Projection System or the Motion-Based Laser Projection System (upon completion thereof) to avoid the infringement or misappropriation, in each case to the extent such action can be effected under commercially reasonable terms.

9.3          Except as provided in Section 9.1, Buyer hereby agrees to indemnify, defend and hold harmless Seller, its affiliates and their respective successors and assigns, and its and their respective directors, officers, agents and employees (collectively, the “Seller Indemnitees”), from and against all Third Party Claims to the extent any such Third Party Claim arises directly from the use by Buyer of the Laser Intellectual Property and which use is not in material compliance with the terms of this Agreement.

9.4          The indemnity provided to any Party herein shall be governed by the procedures for indemnification set forth in Section 13.3 of the APA, which is incorporated herein by reference.

9.5          Seller’s and Buyer’s total liability to incur out-of-pocket costs in the defense of Third Party Claims and to pay damages or awards in any and all Third Party Claims under this Agreement is limited to Five Million Dollars ($5,000,000) in the aggregate, and Buyer and Seller, as the case may be, will advance to Seller or Buyer, as applicable, any amount required to be expended by Seller or Buyer in excess of that limit.

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9.6          Without limiting Buyer’s and Seller’s remedies under the Supply Agreement, Seller and Buyer, as the case may be, shall not be liable to Buyer or Seller, as applicable, for any loss of use, revenue, profit or any special, indirect, incidental or consequential damages arising from any cause whatsoever in connection with this Agreement; provided that this Section 9.6 shall not apply to loss of use, revenue, profit or special, indirect, incidental or consequential damages that are components of judgment awards against a member of the Buyer Indemnitees or the Seller Indemnitees, as the case may be, in actions by third parties to the extent any such judgment award is subject to indemnification pursuant to Section 9.1 or Section 9.3, respectively.

ARTICLE 10 - TERMINATION

10.1   Buyer may at any time, by written notice to Seller, without prejudice to any other rights or remedies provided under this Agreement, terminate this Agreement in any one of the following circumstances:

10.1.1  if Seller has been declared bankrupt, makes an assignment for the benefit of creditors, or is in receivership; or

10.1.2  if Seller materially fails to deliver the systems or perform the services reasonably within the times specified herein or any extensions thereof and Seller has not remedied such failure to perform within a reasonable time thereafter following receipt of written notice thereof from Buyer.

10.2   If this Agreement is terminated pursuant to this Article, Seller shall have no further obligations.

ARTICLE 11 - ASSIGNMENT

11.1   Neither party will convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of the other party, except that (i) Buyer may assign all or a portion of its rights and obligations under this Agreement to a purchaser of all or substantially all of the assets of the business that utilizes such rights, or to Parent or any direct or indirect subsidiary of Parent (for so long as such subsidiary remains a direct or indirect subsidiary of Parent), and (ii) Seller may assign all or a portion of its rights and obligations under this Agreement to a purchaser of all or substantially all of the assets of the Seller Laser Projector Business, provided that, such party agrees in writing to assume all of Buyer’s or Seller’s obligations, as applicable, under this Agreement, it being understood that, in the event of an assignment of a portion of its rights to a purchaser of assets in accordance with clauses (i) and (ii), the assigning party shall not retain the same rights that are assigned to such purchaser or assign the same rights to any other purchaser; provided, however, no assignment of only a portion of Buyer’s rights to a purchaser of assets in accordance with clause (i) may be made to a purchaser that is a competitor of Seller. Any conveyance, assignment or transfer requiring the express written consent of another party to this Agreement which is made without such consent shall be void ab initio. No assignment of this Agreement shall relieve the assigning party of its obligations hereunder, and all rights and obligations of each party hereunder shall survive any change of control of such party.

ARTICLE 12 - NOTICES

12.1   All notices, requests, claims, demands and other communications required or permitted to be given under this Agreement will be in writing and will be delivered by hand or telecopied, e-mailed or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, when e-mail confirmation is received if delivered by e-mail, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other

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communications will be addressed as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice in accordance with this Section 12.1:

 

 

 

 

 

 

 

 

 

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ARTICLE 13 - GOVERNING LAW; CONSENT TO JURISDICTION

13.1   This Agreement will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

13.2   Subject to Section 15.15 of the Asset Purchase Agreement, each of Buyer and Seller irrevocably submits to the exclusive jurisdiction of (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware and (ii) the United States District Court for the District of Delaware for the purposes of any Action arising out of this Agreement, any provision hereof or the breach, performance, enforcement, validity or invalidity hereof (and agrees not to commence any Action relating thereto except in such courts). Each of Buyer and Seller further agrees that service of any process, summons, notice or document hand delivered or sent by U.S. first class mail to such party’s respective address set forth in Section 12.1 shall be effective service of process for any Action in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Each of Buyer and Seller irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of this Agreement, any provision hereof or the breach, performance, enforcement, validity or invalidity hereof in (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware or (ii) the United States District Court for the District of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in Law or in equity.

ARTICLE 14 - INVALID PROVISIONS

14.1   If any of the provisions of this Agreement shall contravene or be invalid, such contravention or invalidity shall not invalidate the whole Agreement, but the Agreement shall be construed as if not containing the particular provision or provisions held to be invalid, and the rights and obligations of the Parties shall be construed and enforced accordingly.

ARTICLE 15 - SOFTWARE LICENSE

15.1   All software provided under this Agreement requires a license agreement between Buyer and Seller as part of this Agreement. Buyer hereby agrees and acknowledges to such license agreement which shall be an attachment to this Agreement.

ARTICLE 16 - INTERPRETATION

16.1   The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Federal, state, local, or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof”, “herein”, and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, (iii) the word

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“including” and words of similar import when used in this Agreement shall mean “including, without limitation” and (iv) the word “or” shall not be exclusive.

ARTICLE 17 - GUARANTY

17.1   Parent hereby guarantees all of Buyer’s obligations hereunder.

ARTICLE 18 - MISCELLANEOUS

18.1   This Agreement, and documents referenced herein, contains the entire agreement between Buyer and Seller.

18.2   This Agreement may not be amended, modified or supplemented except by a written agreement executed by Buyer and Seller.

IN WITNESS WHEREOF, the authorized representatives of the Parties hereto have executed this Agreement on the date first set forth above.

ROCKWELL ▇▇▇▇▇▇▇, INC.		ROCKWELL ▇▇▇▇▇▇▇ SIMULATION & TRAINING SOLUTIONS, LLC
Name / Title		Name / Title
Signature		Signature
Date		Date
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
COMPUTER CORPORATION
Name / Title
Signature
Date

 

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Attachment 1

Fixed-Based Laser Projection System Specifications

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Attachment 2

Motion-Based Laser Projection System Specifications

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