ASSET PURCHASE AGREEMENT

BETWEEN

GE FANUC EMBEDDED SYSTEMS, INC.,

TERAFORCE TECHNOLOGY CORPORATION

AND

DNA COMPUTING SOLUTIONS, INC.

Dated as of August 1, 2005

                         
Article I            DEFINIT
  IONS 1
               
1.1
  Certain Definitions
    1          
1.2
  Terms Defined Elsewhere in this Agreement
    7          
1.3
  Other Definitional and Interpretive Matters
    8          
Article II
  PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
            9  
2.1
  Purchase and Sale of Assets
    9          
2.2
  Excluded Assets.
    10          
2.3
  Assumption of Liabilities
    11          
2.4
  Excluded Liabilities
    11          
2.5
  Cure Amounts
    11          
2.6
  Further Conveyances and Assumptions
    11          
2.7
  Bulk Sales Law
    12          
Article III
  CONSIDERATION
    12          
3.1
  Consideration
    12          
3.2
  Payment of Purchase Price
    12          
Article IV
  CLOSING AND TERMINATION
    12          
4.1
  Closing Date
    12          
4.2
  Deliveries by Seller
    13          
4.3
  Deliveries by Purchaser
    13          
4.4
  Termination of Agreement
    14          
4.5
  Procedure Upon Termination
    15          
4.6
  Effect of Termination
    16          
Article V
  REPRESENTATIONS AND WARRANTIES OF SELLER
    16          
5.1
  Organization and Good Standing
    16          
5.2
  Authorization of Agreement
    16          
5.3
  Board Approval and Recommendation
    17          
5.4
  Conflicts; Consents of Third Parties
    17          
5.5
  Financial Statements; Projections
    18          
5.6
  Inventories
    19          
5.7
  Absence of Certain Developments
    19          
5.8
  Taxes
    20          
5.9
  Title to Purchased Assets
    20          
5.10
  Intellectual Property
    21          
5.11
  Material Contracts
    23          
5.12
  Labor
    23          
5.13
  Litigation
    23          
5.14
  Compliance with Laws; Permits
    24          
5.15
  Related Party Transactions
    24          
5.16
  Customers and Suppliers
    25          
5.17
  Product Warranty; Product Liability
    25          
5.18
  Full Disclosure
    25          
5.19
  Financial Advisors
    25          
5.20
  No Other Representations and Warranties
    26          
Article VI
  REPRESENTATIONS AND WARRANTIES OF PURCHASER
    26          
6.1
  Organization and Good Standing
    26          
6.2
  Authorization of Agreement
    26          
6.3
  Conflicts; Consents of Third Parties
    26          
6.4
  Litigation
    27          
6.5
  Financial Advisors
    27          
6.6
  Financing
    27          
Article VII
  BANKRUPTCY COURT MATTERS
    27          
7.1
  Approval of Break-Up Fee and Expense Reimbursement
    27          
7.2
  Bidding Procedures
    28          
7.3
  Non-Solicitation Period
    30          
7.4
  The Sale Order
    31          
7.5
  Bankruptcy Court Approval
    32          
7.6
  Bankruptcy Court Objections
    33          
Article VIII
  COVENANTS
    33          
8.1
  Access to Information
    33          
8.2
  Conduct of the Business Pending the Closing
    33          
8.3
  Consents
    35          
8.4
  Further Assurances
    35          
8.5
  Non-Competition; Non-Solicitation; Confidentiality
    35          
8.6
  Preservation of Records
    37          
8.7
  Publicity
    37          
8.8
  Use of Name
    38          
8.9
  Financing Statement Releases
    38          
Article IX
  EMPLOYEES AND EMPLOYEE BENEFITS
    38          
9.1
  Employment
    38          
9.2
  Indemnification
    38          
Article X
  CONDITIONS TO CLOSING
    38          
10.1
  Conditions Precedent to Obligations of Purchaser
    38          
10.2
  Conditions Precedent to Obligations of Seller
    40          
10.3
  Conditions Precedent to Obligations of Purchaser and Seller
    40          
10.4
  Frustration of Closing Conditions
    41          
Article XI
  INDEMNIFICATION
    41          
11.1
  Survival of Representations and Warranties
    41          
11.2
  Indemnification
    41          
11.3
  Indemnification Procedures.
    42          
11.4
  Breaches of Representations and Warranties
    44          
11.5
  Limitations on Indemnification
    44          
11.6
  Indemnity Escrow
    44          
11.7
  Tax Treatment of Indemnity Payments
    44          
Article XII
  TAXES
    45          
12.1
  Transfer Taxes
    45          
12.2
  Prorations
    45          
12.3
  Purchase Price Allocation
    45          
12.4
  Cooperation on Tax Matters
    46          
Article XIII
  MISCELLANEOUS
    46          
13.1
  Expenses
    46          
13.2
  Specific Performance
    46          
13.3
  Submission to Jurisdiction; Consent to Service of Process
    47          
13.4
  Waiver of Right to Trial by Jury
    47          
13.5
  Entire Agreement; Amendments and Waivers
    47          
13.6
  Governing Law
    48          
13.7
  Notices
    48          
13.8
  Severability
    49          
13.9
  Binding Effect; Assignment
    49          
13.10
  Non-Recourse
    49          
13.11
  Counterparts
    49          
Schedules
                       
 
                       
1.1(a)
  Equipment
               
1.1(b)
  Inventory
               
1.1(c)
  Products
               
1.1(d)
  Purchased Contracts
               
5.7
  Absence of Certain Developments
               
5.10(a)
  Intellectual Property
               
5.10(b)
  Exceptions to Title to Intellectual Property
               
5.10(g)
  Intellectual Property Licenses
               
5.10(o)
  Software
               
5.11
  Material Contracts
               
5.13
  Litigation
               
5.14(b)
  Permits
               
5.15
  Related Party Transactions
               
5.16(a)
  Customers and Suppliers
               
5.16(b)
  Customers and Suppliers Changes
               
5.17
  Product Warranty
               
5.19
  Seller Financial Advisors
               
10.1(f)
  Key Employees
               
Exhibits
                       
 
                       
A
  Bill of Sale
               
B
  Assumption Agreement
               
C
  Indemnity Escrow Agreement
               

1

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of August 1, 2005 (this “Agreement”), between
GE Fanuc Embedded Systems, Inc., a Delaware corporation (“Purchaser”), TeraForce
Technology Corporation, a Delaware corporation (“TeraForce”), and DNA Computing
Solutions, Inc., a Delaware corporation, a wholly-owned subsidiary of TeraForce
(“DNA” and together with TeraForce, “Seller”).

W I T N E S S E T H:

WHEREAS, Seller intends to commence a chapter 11 case in the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division (the
“Bankruptcy Court”) (such case, the “Chapter 11 Case”) and shall be a
debtor-in-possession under chapter 11 of title 11 of the United States Code, 11
U.S.C. § 101 et seq. (the “Bankruptcy Code”);

WHEREAS, Seller desires to sell, transfer and assign to Purchaser or its
designated Affiliate or Affiliates, and Purchaser desires to (or to cause its
designated Affiliate or Affiliates to) acquire and assume from Seller, pursuant
to Sections 363 and 365 of the Bankruptcy Code, all of the Purchased Assets, all
as more specifically provided herein; and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1; and

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

ARTICLE I

DEFINITIONS

1.1 Certain Definitions.

For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) 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.

“Bidding Procedures Motion” means the motion to be filed with the Bankruptcy
Court seeking approval of the Break-Up Fee and the Expense Reimbursement and the
establishment of bidding procedures as contemplated pursuant to Article VII
hereof.

“Bidding Procedures Order” means the order, in form and substance reasonably
acceptable to Purchaser, entered by the Bankruptcy Court with respect to the
Bidding Procedures Motion and more fully described in Section 7.2 hereof.

“Business Day” means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.

“Code” mean the Internal Revenue Code of 1986, as amended.

“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement, whether written
or oral.

“Documents” means all files, documents, instruments, papers, books, reports,
records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers,
journals, title policies, customer lists, regulatory filings, operating data and
plans, technical documentation (design specifications, functional requirements,
operating instructions, logic manuals, flow charts, etc), user documentation
(installation guides, user manuals, training materials, release notes, working
papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials related to the Seller’s business and
the Purchased Assets in each case whether or not in electronic form.

“Employee” means all individuals, as of the date hereof, who are employed by
Seller in connection with its business, together with individuals who are hired
in respect of the Seller’s business after the date hereof.

“Equipment” means the equipment of Seller set forth on Schedule 1.1(b).

“Excluded Contracts” means the Contracts of Seller other than those set forth on
Schedule 1.1(d).

“GAAP” means generally accepted accounting principles in the United States as of
the date hereof.

“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state, or
local, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private) (including the Bankruptcy Court).

“Hardware” means any and all computer and computer-related hardware, including,
but not limited to, computers, file servers, facsimile servers, scanners, color
printers, laser printers and networks.

“Indemnity Escrow Agent” means Wilmington Trust Company in its capacity as
escrow agent under the Indemnity Escrow Agreement.

“Indemnity Escrow Agreement” means the Indemnity Escrow Agreement to be dated as
of the Closing Date by and among Seller, Purchaser and the Indemnity Escrow
Agent substantially in the form of Exhibit C hereto.

“Indemnity Escrow Amount” means the sum of $300,000.

“Indemnity Escrow Fund” means the Indemnity Escrow Amount together with all
interest or income actually earned thereon pursuant to the Indemnity Escrow
Agreement.

“Intellectual Property” means all intellectual and industrial property rights,
whether protected, created or arising under the laws of the United States or any
other jurisdiction, including: (i) all patents and applications therefor,
inventions and invention disclosures, including continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents issuing
thereon (collectively, “Patents”), (ii) all trademarks, service marks, trade
names, service names, industrial designs, brand names, trade dress rights,
logos, Internet domain names, identifying symbols, logos, emblems, signs or
insignia, and corporate names and general intangibles of a like nature, together
with the goodwill associated with any of the foregoing, and all applications,
registrations and renewals thereof (collectively, “Marks”), (iii) copyrights
(including copyrights in computer software programs) and registrations and
applications therefor, works of authorship and mask work rights (collectively,
“Copyrights”), (iv) discoveries, concepts, ideas, research and development,
know-how, formulae, inventions, compositions, manufacturing and production
processes and techniques, technical data, procedures, designs, drawings,
specifications, databases, and other proprietary and confidential information,
including customer lists, supplier lists, pricing and cost information, and
business and marketing plans and proposals (collectively, “Trade Secrets”).

“Intellectual Property Licenses” means (i) any grant to a third Person of any
right to use any of the Purchased Intellectual Property, and (ii) any grant to
Seller of a right to use a third Person’s Intellectual Property.

“Inventory” means the categories of inventory of Seller set forth on Schedule
1.1(b).

“IRS” means the Internal Revenue Service.

“Knowledge of Seller” means the actual knowledge, after due inquiry, of the
officers of Seller.

“Law” means any foreign, federal, state or local law (including common law),
statute, code, ordinance, rule, regulation or other requirement (including the
Bankruptcy Code).

“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings by or before
a Governmental Body.

“Liability” means any debt, loss, damage, adverse claim, liability or obligation
(whether direct or indirect, known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due, and whether in contract, tort, strict liability or otherwise), and
including all costs and expenses relating thereto.

“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.

“Material Adverse Effect” means (i) a material adverse effect on the historical
or near-term business, assets, properties, results of operations, condition
(financial or otherwise) or prospects of Seller or its business, (ii) a material
adverse effect on the value of the Purchased Assets or (iii) a material adverse
effect on the ability of Seller to consummate the transactions contemplated by
this Agreement or perform their obligations under this Agreement or the Seller
Documents, excluding any such effect to the extent resulting from or arising in
connection with (a) general economic or market changes or changes that generally
affect businesses of the same type as the Seller’s business, but only if, in
each case, the Purchased Assets are not disproportionately affected; (b) the
filing of the Chapter 11 Case; or (c) the public announcement of the
transactions contemplated hereunder.

“Modification” means, with respect to any item, any modification, translation,
conversion, compilation, upgrade or other derivative version of, or change or
addition to, such item. “Modified” and “Modify” shall have corollary meanings.

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award.

“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of the Seller’s business through the date hereof
consistent with past practice.

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates.

“Person” means any individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.

“Products” means any and all products developed, manufactured, marketed or sold
by Seller, whether work in progress or in final form, including the products set
forth on Schedule 1.1(c).

“Purchased Contracts” means the Contracts set forth on Schedule 1.1(d).
Purchaser shall have the right, by written notice delivered to Seller at any
time during the period from and after the date hereof and until one (1) day
prior to the Auction Date to delete any Contract from Schedule 1.1(d) (it being
understood that any such Contract deleted by Purchaser from such schedule may
subsequently be rejected by Seller in the Chapter 11 Case). Purchaser shall also
have the right by written notice delivered to Seller at any time during the
period from and after the date hereof and until one (1) day prior to the Auction
Date to add any Contract to Schedule 1.1(d); provided that such Contract has not
been previously rejected in the Chapter 11 Case. Schedule 1.1(d) also sets forth
the estimated amounts (as of the date hereof) of all amounts which Seller
expects will be payable pursuant to Section 365(b) of the Bankruptcy Code on
account of the assumption and assignment of any Purchased Contract.

“Purchased Intellectual Property” means the Intellectual Property used in, held
for use in or intended to be used in DNA’s business as presently conducted and
as currently proposed to be conducted.

“Purchased Technology” means the Technology used in, held for use in or intended
to be used in DNA’s business as presently conducted and as currently proposed to
be conducted.

“Restructuring Transaction” means (a) a recapitalization transaction involving,
in whole or in part, Seller and its existing security holders or creditors,
(b) any merger, consolidation, share exchange, business combination or other
similar transaction with Seller, (c) any tender offer or exchange offer for 10%
or more of the outstanding shares of Seller’s common stock or any class of
Seller’s debt securities or the filing of a registration statement under the
Securities Act of 1933, as amended, in connection therewith, or (d) the
acquisition of beneficial ownership or a right to acquire beneficial ownership
of, or the formation of any “group” (as defined under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) which beneficially owns or has the
right to acquire beneficial ownership of 10% or more of the then outstanding
shares of any class of Seller’s common stock or any class of Seller’s debt
securities or (e) a transaction or series of transactions, including by way of a
plan of reorganization, in connection with a liquidation or reorganization or
other continuation of Seller’s business relating to some or all of the Purchased
Assets.

“Sale Motion” means the motion to be filed with the Bankruptcy Court by Seller
seeking (a) approval of the terms and provisions of this Agreement,
(b) authorization for (i) the sale of the Purchased Assets pursuant to
Section 363 of the Bankruptcy Code and (ii) the assumption and assignment of the
Purchased Assets that are executory contracts pursuant to Section 365 of the
Bankruptcy Code and (c) any other provisions acceptable to Purchaser.

“Sale Order” means the order of the Bankruptcy Court, in form and substance
reasonably acceptable to Purchaser, granting the relief requested in the Sale
Motion and authorizing the sale of the Purchased Assets pursuant to Section 363
of the Bankruptcy Code and the assumption and assignment of the Purchased Assets
that are executory contracts pursuant to Section 365 of the Bankruptcy Code,
free and clear of all Liens and as more fully described in Section 7.4.

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code, object code or other form, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons, and (iv) all documentation including user manuals and other
training documentation related to any of the foregoing.

“Subsidiary” means any Person of which a majority of the outstanding voting
securities or other voting equity interests are owned, directly or indirectly,
by either Seller.

“Tax” or “Taxes” means (i) any and all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i), and (iii) any
liability in respect of any items described in clauses (i) and/or (ii) payable
by reason of contract, assumption, transferee liability, operation of law,
Treasury Regulation section 1.1502-6(a) (or any predecessor or successor thereof
or any analogous or similar provision under law) or otherwise.

“Taxing Authority” means the U.S. Internal Revenue Service and any other
Governmental Body responsible for the administration of any Tax.

“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any attachments thereto, and any amendment
thereof) including, but not limited to, any information return, claim for
refund, amended return or declaration of estimated Tax, and including, where
permitted or required, combined, consolidated or unitary returns for any group
of entities that includes the Company, or any of its Subsidiaries.

“Technology” means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, Software (whether in source code, object
code or human readable form) research and development, technical data, programs,
subroutines, tools, materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice), apparatus,
creations, improvements, works of authorship and other similar materials, and
all recordings, graphs, drawings, reports, analyses, and other writings, and
other tangible embodiments of the foregoing, in any form whether or not
specifically listed herein, and all related technology.

“Transitional Services Agreement” means an agreement dated as of the Closing
Date between Purchaser and Seller, on terms and conditions reasonably
satisfactory to Purchaser and Seller, pursuant to which Seller shall provide to
Purchaser such transitional services as mutually agreed to by Purchaser and
Seller.

“Vista” means Vista Controls, Inc.

“Vista Agreements” means the following Contracts, dated as of November, 2003,
between DNA and Vista: (i) Technology License and Marketing Agreement,
(ii) Distribution Agreement and (iii) Technology Transfer and Support Agreement.

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

1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have meanings set forth in the sections indicated:

          Term   Section
Acquisition Financing
    6.6  
Alternative Transaction
    7.2  
Asset Acquisition Statement
    12.2  
Assumed Liabilities
    2.3  
Auction
    7.2 (c)
Bankruptcy Code
  Recitals

Bankruptcy Court
  Recitals

Bid Deadline
  7.2(a)(ii)
Break-Up Fee
    7.1  
Chapter 11 Case
  Recitals

Closing
    4.1  
Closing Date
    4.1  
Confidential Information
    8.5 (c)
Copyrights
  1.1 (in Purchased Intellectual
 
  Property definition)

Cure Amounts
    2.5  
DNA
  Preamble

Excluded Assets
    2.2  
Excluded Liabilities
    2.4  
Expense Reimbursement
    7.1  
Expenses
    11.2 (a)(v)
Financial Statement
    5.5 (a)
Financial Statement Date
    5.5 (a)
Indemnification Claim
    11.3 (a)
Losses
    11.2 (a)(i)
Marks
  1.1 (in Purchased Intellectual
 
  Property definition)

Material Contract
    5.10 (e)
Non-Solicitation Period
    7.3 (a)
Patents
  1.1 (in Purchased Intellectual
 
  Property definition)

Purchased Assets
    2.1  
Purchase Price
    3.1  
Purchaser
  Preamble

Purchaser Documents
    6.2  
Purchaser Indemnified Parties
    11.2 (a)
Restricted Business
    8.5 (a)
Revised Statements
    12.2  
Seller
  Preamble

Seller Documents
    5.2  
Seller Indemnified Parties
    11.2 (b)
Seller Marks
    8.8  
Seller Representatives
    7.3 (a)
Starting Auction Bid
    7.2 (c)
Survival Period
    11.1  
TeraForce
  Preamble

Trade Secrets
  1.1 (in Purchased Intellectual
 
  Property definition)

Transferred Employees
    9.1 (a)
Unresolved Claims
    11.6  

1.3 Other Definitional and Interpretive Matters

(a) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

(b) The parties hereto have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing Purchaser shall (or shall cause its
designated Affiliate or Affiliates to) purchase, acquire and accept from Seller,
and Seller shall sell, transfer, assign, convey and deliver to Purchaser (or its
designated Affiliate or Affiliates) all of Seller’s right, title and interest
in, to and under the Purchased Assets, free and clear of all Liens, claims (as
defined in Section 101(5) of the Bankruptcy Code) and interests. “Purchased
Assets” means each of the following assets:

(a) all Purchased Intellectual Property and Purchased Technology;

(b) all Inventory;

(c) all Equipment;

(d) all rights of Seller under the Purchased Contracts;

(e) all Documents that are used in, held for use in or intended to be used in,
or that arise primarily out of, the Purchased Assets, including Documents
relating to Products, services, marketing, advertising, promotional materials,
Purchased Intellectual Property, personnel files for Transferred Employees and
all files, customer files and documents (including credit information), supplier
lists, records, literature and correspondence, but excluding personnel files for
Employees of Seller who are not Transferred Employees;

(f) all Permits used by Seller in connection with the Purchased Assets to the
extent assignable;

(g) all rights of Seller under non-disclosure or confidentiality, non-compete,
or non-solicitation agreements with employees and agents of Seller or with third
parties to the extent relating to the Purchased Assets (or any portion thereof);

(h) all rights of Seller under or pursuant to all warranties, representations
and guarantees made by suppliers, manufacturers and contractors to the extent
relating to Products sold, or services provided, to Seller or to the extent
affecting any Purchased Assets; and

(i) all rights, claims or causes of action of against third parties relating to
any of the Purchased Assets.

2.2 Excluded Assets. Nothing herein contained shall be deemed to transfer,
assign or convey the Excluded Assets to Purchaser, and Seller shall retain all
right, title and interest to, in and under the Excluded Assets. “Excluded
Assets” shall mean all assets, properties, interests and rights of Seller other
than the Purchased Assets and those assets, properties, interests and rights
primarily related to the Purchased Assets, including each of the following
assets:

(a) all cash and accounts receivable of Seller;

(b) all deposits (including customer deposits and security deposits for rent,
electricity, telephone or otherwise) and prepaid charges and expenses of Seller;

(c) the Excluded Contracts; and

(d) all real estate and leasehold interests of Seller; and

(e) (i) all amounts recoverable or recovered by Seller in connection with any
Legal Proceedings commenced prior to the Closing Date, or after the Closing Date
to the extent not related to the Purchased Assets and (ii) all rights, claims or
causes of action of Seller against third parties relating to Excluded Assets.

2.3 Assumption of Liabilities. On the terms and subject to the conditions set
forth in this Agreement, at the Closing Purchaser shall (or shall cause its
designated Affiliate or Affiliates to) assume, effective as of the Closing, only
the following liabilities of Seller (collectively, the “Assumed Liabilities”):

(a) all Liabilities of Seller under the Purchased Contracts that arise out of or
relate to the period on and after the Closing Date; and

(b) all Liabilities relating to amounts required to be paid by Purchaser
hereunder.

2.4 Excluded Liabilities. Notwithstanding anything contained in this Agreement
to the contrary, Purchaser does not assume or agree to pay, satisfy, discharge
or perform, and shall not be deemed by virtue of the execution and delivery of
this Agreement or any document delivered at the Closing pursuant to this
Agreement, or as a result of the consummation of the transactions contemplated
by this Agreement, to have assumed, or to have agreed to pay, satisfy, discharge
or perform, any liability, obligation or indebtedness of Seller, arising in
connection with or relating to any period prior to the Closing Date, whether
primary or secondary, direct or indirect, known or unknown, contingent or
absolute, determined or indeterminable, other than the Assumed Liabilities.
Seller shall retain and pay, satisfy, discharge and perform in accordance with
the terms thereof, all liabilities and obligations other than the Assumed
Liabilities (all such liabilities and obligations retained by Seller being
referred to herein as the “Excluded Liabilities”).

2.5 Cure Amounts.

(a) At Closing and pursuant to Section 365 of the Bankruptcy Code, Seller shall
assume and assign to Purchaser the Purchased Contracts. The cure amounts, as
determined by the Bankruptcy Court, if any (the “Cure Amounts”), necessary to
cure all defaults, if any, and to pay all actual or pecuniary losses that have
resulted from such defaults under the Purchased Contracts, shall be paid by
Seller, on or before Closing, and not by Purchaser and Purchaser shall have no
liability therefor.

(b) Purchaser and Seller agree that they shall each use commercially reasonable
efforts to establish the adequate assurance of future performance by Purchaser,
by taking the following actions: furnishing affidavits or other documents or
information for filing with the Bankruptcy Court or testimony, as reasonably
requested by Seller.

2.6 Further Conveyances and Assumptions.

(a) From time to time following the Closing, Seller shall, or shall cause its
Subsidiaries to, make available to Purchaser such non-confidential data in
personnel records of Transferred Employees as is reasonably necessary for
Purchaser to transition such employees into Purchaser’s records.

(b) From time to time following the Closing, Seller and Purchaser shall, and
shall cause their respective Subsidiaries to, execute, acknowledge and deliver
all such further conveyances, notices, assumptions, releases and acquaintances
and such other instruments, and shall take such further actions, as may be
necessary or appropriate to assure fully to Purchaser and its respective
successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Purchaser
under this Agreement and the Seller Documents and to assure fully to Seller and
its Subsidiaries and their successors and assigns, the assumption of the
liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the Seller Documents, and to otherwise make effective the
transactions contemplated hereby and thereby.

2.7 Bulk Sales Law. Purchaser hereby waives compliance by Seller with the
requirements and provisions of any “bulk-transfer” Laws of any jurisdiction that
may otherwise be applicable with respect to the sale of any or all of the
Purchased Assets to Purchaser. Pursuant to Section 363(f) of the Bankruptcy
Code, the transfer of the Purchased Assets shall be free and clear of any
security interests in the Purchased Assets, including any Liens or claims
arising out of the bulk transfer laws, and the parties shall take such steps as
may be necessary or appropriate to so provide in the Sale Order.

ARTICLE III

CONSIDERATION

3.1 Consideration. The aggregate consideration for the Purchased Assets shall be
an amount in cash equal to $2,895,000 (the “Purchase Price”).

3.2 Payment of Purchase Price.

(a) On the Closing Date, Purchaser shall pay the Purchase Price (less the
Indemnity Escrow Deposit) to Seller, which shall be paid by wire transfer of
immediately available funds into an account designated by Seller.

(b) On the Closing Date, Purchaser shall deliver to the Indemnity Escrow Agent
under the Indemnity Escrow Agreement, by wire transfer of immediately available
funds, the amount of $300,000, representing the sum of the amounts of Indemnity
Escrow Deposit.

ARTICLE IV

CLOSING AND TERMINATION

4.1 Closing Date. Subject to the satisfaction of the conditions set forth in
Sections 10.1 and 10.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities provided for in Article II
hereof (the “Closing”) shall take place at the offices of Weil, Gotshal & Manges
LLP located at 200 Crescent Court, Suite 300, Dallas, Texas 75201 (or at such
other place as the parties may designate in writing) at 10:00 a.m. (Dallas time)
on a date to be specified by the parties, which date shall be no later than the
second Business Day after satisfaction or waiver of the conditions set forth in
Article X (other than conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions), unless
another time or date, or both, are agreed to in writing by the parties hereto.
The date on which the Closing shall be held is referred to in this Agreement as
the “Closing Date.” Unless otherwise agreed by the parties in writing, the
Closing shall be deemed effective and all right, title and interest of Seller to
be acquired by Purchaser hereunder shall be considered to have passed to
Purchaser as of 12:01 a.m. (Dallas time) on the Closing Date.

4.2 Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser:

(a) a duly executed bill of sale in the form of Exhibit A hereto;

(b) duly executed assumption agreement in the form of Exhibit B hereto and duly
executed assignments of the registrations and applications for registration
included in the Purchased Intellectual Property, in a form suitable for
recording in the U.S. Patent and Trademark office and applicable foreign
counterpart offices, and general assignments of all other Purchased Intellectual
Property;

(c) copies of all consents, waivers and approvals referred to in
Section 10.1(e);

(d) duly executed affidavit of non-foreign status for Seller that complies with
Section 1445 of the Code;

(e) a duly executed Transitional Services Agreement;

(f) the officer’s certificate required to be delivered pursuant to
Sections 10.1(a) and 10.1(b);

(g) a duly executed Indemnity Escrow Agreement; and

(h) such other good and sufficient instruments of transfers as Purchaser may
reasonably request.

4.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Seller:

(a) the Purchase Price (less the Indemnity Escrow Amount), including evidence of
the wire transfer referred to in Section 3.2 hereof;

(b) a duly executed assignment and assumption agreement in the form attached
hereto as Exhibit B hereto;

(c) a duly executed Transitional Services Agreement;

(d) the officer’s certificate required to be delivered pursuant to
Sections 10.2(a) and 10.2(b);

(e) a duly executed Indemnity Escrow Agreement; and

(f) such other documents, instruments and certificates as Seller may reasonably
request.

4.4 Termination of Agreement. This Agreement may be terminated prior to the
Closing as follows:

(a) by mutual written consent of Seller and Purchaser;

(b) by Purchaser, if any of the conditions to the obligations of Purchaser set
forth in Sections 10.1 and 10.3 shall have become incapable of fulfillment other
than as a result of a breach by Purchaser of any covenant or agreement contained
in this Agreement, and such condition is not waived by Purchaser;

(c) by Seller, if any condition to the obligations of Seller set forth in
Sections 10.2 and 10.3 shall have become incapable of fulfillment other than as
a result of a breach by Seller of any covenant or agreement contained in this
Agreement, and such condition is not waived by Seller;

(d) by Purchaser, if there shall be a breach by Seller of any representation or
warranty, or any covenant or agreement contained in this Agreement which would
result in a failure of a condition set forth in Section 10.1 or 10.3 and which
breach cannot be cured or has not been cured by 10 Business Days after the
giving of written notice by Purchaser to Seller of such breach;

(e) by Seller, if there shall be a breach by Purchaser of any representation or
warranty, or any covenant or agreement contained in this Agreement which would
result in a failure of a condition set forth in Section 10.2 or 10.3 and which
breach cannot be cured or has not been cured by 10 Business Days after the
giving of written notice by Seller to Purchaser of such breach;

(f) by Seller or Purchaser if there shall be in effect a final nonappealable
Order of a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence) that the parties reasonably agree is advisable to pursue; or

(g) by Purchaser, if there is a Material Adverse Effect;

(h) by Purchaser, if Seller has not commenced the Chapter 11 Case within two
(2) Business Days after the date hereof;

(i) by Purchaser, if the Seller has not filed with the Bankruptcy Court the
Bidding Procedures Motion within one (1) Business Day after the date of
commencement of the Chapter 11 Case;

(j) by Purchaser, if the Bidding Procedures Order has not been entered by the
Bankruptcy Court within thirty (30) days after the date of commencement of the
Chapter 11 Case;

(k) by Purchaser, if the Sale Order has not been entered by the Bankruptcy Court
within seventy-five (75) days after the date of commencement of the Chapter 11
Case;

(l) by Seller or Purchaser, if the Bankruptcy Court approves a Restructuring
Transaction or an Alternative Transaction or the sale of all or substantially
all of the assets of Seller or any of the Purchased Assets to a Person (or group
of Persons) other than Purchaser or an Affiliate of Purchaser, provided that no
termination under this Section 4.4(l) shall be effective until the Break-Up Fee
and the Expense Reimbursement set forth in Section 7.1 hereof shall have been
paid to Purchaser;

(m) by Purchaser, if (i) the Bankruptcy Court enters an order appointing a
trustee, examiner with expanded powers or responsible officer in the Chapter 11
Case, (ii) the Chapter 11 Case is converted to a case under chapter 7 of the
Bankruptcy Code or (iii) the Chapter 11 Case is dismissed;

(n) by Purchaser, if the Bidding Procedures Order (including the Break-Up Fee,
Expense Reimbursement or any of the provisions set forth in Section 7.2 hereof)
or the Sale Order is modified in any respect without the consent of Purchaser;

(o) by Purchaser, if any secured creditor of Seller obtains relief from the stay
to foreclose on any of the Purchased Assets, which foreclosure could cause a
Material Adverse Effect; or

(p) by Purchaser, if Purchaser shall have sent written notice to Seller at least
five (5) days prior to the date of the Auction that any of the conditions set
forth in Section 10.1(f), 10.1(g) or 10.1(h) has not been satisfied.

Notwithstanding the foregoing, if the Closing shall not have occurred by the
close of business on one hundred eighty (180) days after the date hereof, this
Agreement shall automatically terminate.

4.5 Procedure Upon Termination. This Agreement shall in no event terminate with
respect to Seller unless and until any and all amounts payable to Purchaser
pursuant to Section 7.1 in connection with such proposed termination shall have
been paid in full to Purchaser. In the event of termination and abandonment by
Purchaser or Seller, or both, pursuant to Section 4.4 hereof, written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Assets hereunder shall be
abandoned, without further action by Purchaser or Seller. If this Agreement is
terminated as provided herein each party shall redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same.

4.6 Effect of Termination. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of its
duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Purchaser or
Seller; provided, however, that the obligations of the parties set forth in
Article XIII and Sections 4.5, 4.6, 7.1, 7.2(j) and 7.2(k) hereof shall survive
any such termination and shall be enforceable hereunder; provided, further,
however, that nothing in this Section 4.6 shall relieve Purchaser or Seller of
any liability for a breach of this Agreement prior to the effective date of such
termination.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Each Seller hereby, jointly and severally, represents and warrants to Purchaser
that:

5.1 Organization and Good Standing.

Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now conducted. Seller is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not have a
Material Adverse Effect. Seller has delivered to Purchaser true, complete and
correct copies of its certificate of incorporation and by-laws or comparable
organizational documents as in effect on the date hereof.

5.2 Authorization of Agreement. Subject to obtaining Bankruptcy Court approval
pursuant to the Sale Order, Seller has all requisite power, authority and legal
capacity to execute and deliver this Agreement and Seller has all requisite
power, authority and legal capacity to execute and deliver each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by Seller in connection with the consummation of the transactions
contemplated by this Agreement (the “Seller Documents”), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Subject to obtaining Bankruptcy Court approval
pursuant to the Sale Order, the execution and delivery of this Agreement and the
Seller Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all requisite corporate action on the
part of Seller. This Agreement has been, and each of the Seller Documents will
be at or prior to the Closing, duly and validly executed and delivered by Seller
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) following the approval of this Agreement and the
transactions contemplated hereby by the Bankruptcy Court pursuant to the Sale
Order, this Agreement, constitutes, and each of the Seller Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

5.3 Board Approval and Recommendation. The Board of Directors of Seller has (i)
determined that this Agreement and the transactions contemplated hereby,
including the purchase of the Purchased Assets by Purchaser, are advisable, fair
to and in the best interests of those Persons to whom the directors owe
fiduciary duties under applicable law, (ii) determined that an immediate sale of
the Purchased Assets pursuant to Section 363 of the Bankruptcy Code is necessary
and urgent as the value of the Purchased Assets, and, therefore, the value
ultimately available to the creditors and equityholders of Seller, is rapidly
deteriorating, and (iii) approved this Agreement and the transactions
contemplated hereby.

5.4 Conflicts; Consents of Third Parties.

(a) Except as a result of the Chapter 11 Case, none of the execution and
delivery by Seller of this Agreement or by Seller of the Seller Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by Seller with any of the provisions hereof or thereof will conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of Seller to make any payment under, or to the increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Liens upon any of the properties or
assets of Seller under any provision of (i) the certificate of incorporation and
by-laws or comparable organizational documents of Seller; (ii) subject to entry
of the Sale Order, any Purchased Contract or Permit to which Seller is a party
or by which any of the properties or assets of Seller are bound; (iii) subject
to entry of the Sale Order, any Order of any court, Governmental Body or
arbitrator applicable to Seller or any of the properties or assets of Seller as
of the date hereof; or (iv) subject to entry of the Sale Order, any applicable
Law.

(b) Other than in connection with the commencement of the Chapter 11 Case, entry
of the Bidding Procedures Order and entry of the Sale Order, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of
Seller (i) in connection with the execution and delivery of this Agreement or
the Seller Documents, the compliance by Seller with any of the provisions hereof
or thereof, the consummation of the transactions contemplated hereby or the
taking by Seller of any other action contemplated hereby, or (ii) the continuing
validity and effectiveness immediately following the Closing of any Contract or
Permit of Seller.

5.5 Financial Statements; Projections.

(a) Seller has delivered to Purchaser copies of the financial statements of
Seller as at May 31, 2005 (the “Financial Statement Date”) reflecting the sales
of the Products and the value of the Inventory (such financial statement,
including the related notes and schedules thereto, are referred to herein as the
“Financial Statement”). The Financial Statement is complete and correct in all
material respects, has been prepared in accordance with GAAP consistently
applied without modification of the accounting principles used in the
preparation thereof throughout the periods presented and presents fairly in all
material respects the sales of the Products and the value of the Inventory as at
the dates and for the periods indicated.

(b) Seller makes and keeps books, records and accounts which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of its
assets. Seller maintains systems of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the actual levels at reasonable intervals and appropriate action is taken with
respect to any differences.

(c) The financial projections and business plan provided by Seller to Purchaser
prior to the date hereof were reasonably prepared on a basis reflecting the
management’s best estimates, assumptions and judgments, at the time provided to
Purchaser, as to the future financial performance of Seller’s business, assuming
reasonable access to capital and support of its business.

(d) Seller’s principal executive officer and its principal financial officer
have disclosed, based on their most recent evaluation, to Seller’s auditors and
the audit committee of the Board of Directors of Seller (i) all significant
deficiencies in the design or operation of internal controls which could
adversely affect Seller’s ability to record, process, summarize and report
financial data and have identified for Seller’s auditors any material weaknesses
in internal controls and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in Seller’s internal
controls.

(e) Seller has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information
relating to Seller is made known to Seller’s principal executive officer and its
principal financial officer.

5.6 Inventories. With the exception of the Inventory reflected in the Financial
Statement as being obsolete, excess, damaged or otherwise unusable Inventory,
the Inventory of Seller is in good and marketable condition, and is saleable in
the Ordinary Course of Business. The Inventory of Seller set forth in the
Financial Statement was properly stated therein in accordance with GAAP
consistently applied. Adequate reserves have been reflected in the Financial
Statement for obsolete, excess, damaged or otherwise unusable Inventory, which
reserves were calculated in a manner consistent with past practice and in
accordance with GAAP consistently applied. The Inventory of Seller constitutes
sufficient quantities for the normal operation of Seller’s business in
accordance with past practice.

5.7 Absence of Certain Developments. Except as expressly contemplated by this
Agreement or as set forth on Schedule 5.7, since the Financial Statement Date
(i) Seller has conducted its business only in the Ordinary Course of Business
and (ii) there has not been any event, change, occurrence or circumstance that
has had or could reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, since the Financial Statement
Date:

(i) there has not been any damage, destruction or loss, whether or not covered
by insurance, with respect to the Purchased Assets having a replacement cost of
more than $10,000 for any single loss or $100,000 for all such losses;

(ii) there has not been any change by Seller in accounting or Tax reporting
principles, methods or policies;

(iii) Seller has not mortgaged, pledged or subjected to any Lien any of its
assets, or acquired any assets or sold, assigned, transferred, conveyed, leased
or otherwise disposed of any assets of Seller, except for assets acquired or
sold, assigned, transferred, conveyed, leased or otherwise disposed of in the
Ordinary Course of Business;

(iv) Seller has not granted any license or sublicense of any rights under or
with respect to any Purchased Intellectual Property; and

(v) Seller has not agreed, committed, arranged or entered into any understanding
to do anything set forth in this Section 5.7.

5.8 Taxes.

(a) With respect to the Purchased Assets, (i) all material Tax Returns required
to be filed by or on behalf of Seller or any affiliated group of which Seller is
or was a member have been duly and timely filed with the appropriate Taxing
Authority in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings), and all such Tax Returns are true, complete and correct in all
material respects; and (ii) all material Taxes payable by or on behalf of Seller
or any affiliated group of which Seller is or was a member have been fully and
timely paid.

(b) Seller has timely paid or caused to be paid all Taxes due with respect to
the Purchased Assets, the non-payment of which would result in a Lien on any
Purchased Asset or would result in Purchaser becoming liable or responsible
therefor.

(c) All deficiencies asserted or assessments made as a result of any
examinations by any Taxing Authority of the Tax Returns related to the Purchased
Assets have been fully paid, and, to the Knowledge of Seller, there are no other
audits or investigations by any Taxing Authority in progress, nor has Seller
received any written notice from any Taxing Authority that it intends to conduct
such an audit or investigation related to the Purchased Assets.

(d) There is no Purchased Contract covering any Person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by Purchaser, Seller or any of their respective Affiliates by reason
of Section 280G of the Code.

(e) Seller is not a foreign person within the meaning of Section 1445 of the
Code.

(f) No power of attorney with respect to any Tax matter is currently in force
with respect to the Purchased Assets that would, in any manner, bind, obligate,
or restrict Purchaser.

(g) Seller has not executed or entered into any agreement with, or obtained any
consents or clearances from, any Taxing Authority, or have been subject to any
ruling guidance specific to Seller, that would be binding on Purchaser for any
taxable period (or portion thereof) ending on or after the Closing Date.

5.9 Title to Purchased Assets . Seller owns and has good title to each of the
Purchased Assets, and at the Closing, Seller shall convey each of the Purchased
Assets free and clear of all Liens.

5.10 Intellectual Property

(a) Schedule 5.10(a) sets forth an accurate and complete list of all Patents,
registered Marks, material unregistered Marks, pending applications for
registrations of any Marks and unregistered Marks, registered Copyrights, and
pending applications for registration of Copyrights, owned or filed by Seller
and included in the Purchased Intellectual Property. Schedule 5.10(a) lists the
jurisdictions in which each such item of Purchased Intellectual Property has
been issued or registered or in which any such application for such issuance and
registration has been filed.

(b) Except as disclosed in Schedule 5.10(b), Seller is the sole and exclusive
owner of all right, title and interest in and to all of the Intellectual
Property required to be set forth on Schedule 5.10(a), and each of the other
Copyrights in any works of authorship prepared by or for Seller that resulted
from or arose out of any work performed by or on behalf of Seller or by any
employee, officer, consultant or contractor of any of them.

(c) To the Knowledge of Seller, Seller is the sole and exclusive owner of, or
has valid and continuing rights to use, sell and license, as the case may be,
all other of the Purchased Intellectual Property and Purchased Technology, free
and clear of all Liens or obligations to others (except for those specified
licenses included in Schedule 5.10(g)).

(d) All Intellectual Property required to be set forth on Schedule 5.10(a) is in
full force and effect and has not lapsed, expired or been abandoned, and is not
the subject of any opposition or cancellation proceeding filed with the United
States Patent and Trademark Office or any other intellectual property registry.

(e) The Purchased Intellectual Property, the manufacturing, licensing,
marketing, importation, offer for sale, sale or use of the Products or Purchased
Technology, and the present and currently proposed business practices and
methods of Seller do not constitute an infringement, unauthorized use,
misappropriation or other violation of any Intellectual Property of any Person
(including pursuant to any non-disclosure agreements or obligations to which
Seller or any of their present or former employees is a party). The Purchased
Intellectual Property includes all of the Intellectual Property necessary and
sufficient to enable Seller to conduct its business in the manner in which such
business is currently being conducted and, as currently proposed to be
conducted.

(f) Except with respect to licenses of commercial off-the-shelf Software, and
except pursuant to the Intellectual Property Licenses listed in
Schedule 5.10(g), Seller is not required, obligated, or under any liability
whatsoever, to make any payments by way of royalties, fees or otherwise to any
owner, licensor of, or other claimant to any Purchased Intellectual Property, or
other third party, with respect to the use thereof or in connection with the
conduct of Seller’s business as currently conducted or proposed to be conducted.

(g) Schedule 5.10(g) sets forth a complete and accurate list of all Contracts to
which Seller is a party (i) granting any Intellectual Property Licenses,
(ii) containing a covenant not to compete or otherwise limiting its ability to
(A) exploit fully any of the Purchased Intellectual Property or (B) conduct
Seller’s business in any market or geographical area or with any Person or
(iii) containing an agreement to indemnify any other Person against any claim of
infringement, unauthorized use, misappropriation or violation of Intellectual
Property.

(h) Each of the Intellectual Property Licenses is in full force and effect and
is the legal, valid and binding obligation of Seller, enforceable against them
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). Seller is not in default under any Intellectual Property License, nor,
to the Knowledge of Seller, is any other party to an Intellectual Property
License in default thereunder, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder. No
party to any of the Intellectual Property Licenses has exercised any termination
rights with respect thereto.

(i) No Trade Secret or any other non-public, proprietary information material to
Seller’s business as presently conducted has been authorized to be disclosed or,
to the Knowledge of Seller, has been actually disclosed by Seller to any
employee or any third party other than pursuant to a non-disclosure agreement
restricting the disclosure and use of such Trade Secret or information. Seller
has taken adequate security measures to protect the secrecy, confidentiality and
value of all the Trade Secrets of Seller and any other confidential information,
including invention disclosures, not covered by any patents owned or published
patent applications filed by Seller, which measures are reasonable in the
industry in which Seller operates. Each employee, consultant and independent
contractor of Seller, has entered into a written non-disclosure and invention
assignment agreement with Seller in a form provided to Purchaser.

(j) Seller is not and has not been the subject of any pending or, to the
Knowledge of Seller, threatened Legal Proceedings which involve a claim of
infringement, unauthorized use, misappropriation or other violation by any
Person against Seller or challenging the ownership, use, validity or
enforceability of, any Purchased Intellectual Property. Seller has not received
written (including by electronic mail) notice of any such threatened claim or
challenge and, to the Knowledge of Seller, there are no facts or circumstances
that would form the basis for any such claim or challenge. The Purchased
Intellectual Property and all of Seller’s rights in and to Purchased
Intellectual Property are valid and enforceable.

(k) To the Knowledge of Seller, no Person (including Employees and former
employees of Seller) is infringing, violating, misusing or misappropriating any
material Purchased Intellectual Property, and neither Seller nor any of its
Subsidiaries has made any such claim against any Person (including Employees and
former employees of Seller).

(l) There are no Orders to which Seller is a party or by which Seller is bound
which restrict the rights to use any of the Purchased Intellectual Property or
Purchased Technology.

(m) The consummation of the transactions contemplated hereby will not result in
the loss or impairment of Purchaser’s right to own or use any of the Purchased
Intellectual Property or Purchased Technology.

(n) No present or former employee has any right, title, or interest, directly or
indirectly, in whole or in part, in any Purchased Intellectual Property or
Purchased Technology. To the Knowledge of Seller, no employee, consultant or
independent contractor of Seller is, as a result of or in the course of such
employee’s, consultant’s or independent contractor’s engagement by Seller, in
default or breach of any material term of any employment agreement,
non-disclosure agreement, assignment of invention agreement or similar
agreement.

(o) Schedule 5.10(o) sets forth a complete and accurate list of (i) all Software
that is owned exclusively by Seller and is material to the operation of Seller’s
business and (ii) all Software that is used by Seller in its business that is
not exclusively owned by Seller, excluding Software available on reasonable
terms through commercial distributors or in consumer retail stores for a license
fee of no more than $10,000.

5.11 Material Contracts. Except as set forth in Schedule 5.11, each Purchased
Contract is in full force and effect, constitutes a valid and binding obligation
of Seller and, to the Knowledge of Seller, the other parties thereto, and is
legally enforceable against Seller and, to the Knowledge of Seller, the other
parties thereto, in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
similar laws from time to time in effect which affect the enforcement of
creditors’ rights generally. Except as disclosed in Schedule 5.11, Seller is not
in material breach or default under any Purchased Contract and, to the Knowledge
of Seller, no other party to any Purchased Contract is in material breach or
default in any material respect thereunder. To the Knowledge of Seller, no party
to any of the Purchased Contracts has exercised any termination rights with
respect thereto. Seller has delivered to Purchaser true, correct and complete
copies of all of the Purchased Contracts, together with all amendments,
modifications or supplements thereto.

5.12 Labor. Seller is not a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of Seller.

5.13 Litigation. Except as set forth in Schedule 5.13 and the Chapter 11 Case,
there is no suit, action, proceeding, investigation (to the Knowledge of
Seller), claim or order pending or, to the Knowledge of Seller, threatened
against Seller (or to the Knowledge of Seller, pending or threatened, against
any of the officers, directors or key employees of Seller with respect to their
business activities on behalf of Seller), or to which Seller is otherwise a
party, which, if adversely determined, would have a Material Adverse Effect,
before any Governmental Body; nor to the Knowledge of Seller is there any
reasonable basis for any such action, proceeding, or investigation. Other than
the Chapter 11 Case, Seller is not subject to any Order of any Governmental Body
except to the extent the same could not reasonably be expected to have a
Material Adverse Effect and Seller is not engaged in any legal action to recover
monies due it or for damages sustained by it.

5.14 Compliance with Laws; Permits.

(a) Seller is in compliance in all material respects with all Laws of any
Governmental Body applicable to its operations or assets or its business. Seller
has not received any written or other notice of or been charged with the
violation of any Laws. To the Knowledge of Seller, Seller is not under
investigation with respect to the violation of any Laws and there are no facts
or circumstances which could form the basis for any such violation.

(b) Schedule 5.14(b) contains a list of all Permits which are required for the
operation of Seller’s business as presently conducted and as presently intended
to be conducted. Seller currently has all Permits which are required for the
operation of its business as presently conducted. Seller is not in default or
violation, and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation, in any material respect of any
term, condition or provision of any Permit to which it is a party, to which the
Seller’s business is subject or by which its properties or assets are bound and,
to the Knowledge of Seller, there are no facts or circumstances which could form
the basis for any such default or violation.

5.15 Related Party Transactions.

(a) Except as set forth on Schedule 5.15, none of Seller, any Subsidiary of
Seller or any of their respective officers or employees (i) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of Seller,
(B) engaged in a business related to the business of Seller, or (C) a
participant in any transaction to which Seller is a party or (ii) is a party to
any Contract with Seller.

(b) Each Purchased Contract, agreement, or arrangement between Seller on the one
hand, and any Affiliate of Seller or any officer, director or employee of Seller
on the other hand, is on commercially reasonable terms no more favorable to the
Affiliate, director, officer or employee of Seller than what any third party
negotiating on an arms-length basis would expect.

5.16 Customers and Suppliers.

(a) Schedule 5.16(a) sets forth a list of the ten (10) largest customers and the
ten (10) largest suppliers of Seller, as measured by the dollar amount of
purchases therefrom or thereby, during each of the fiscal years ended
December 31, 2004, showing the approximate total sales by Seller to each such
customer and the approximate total purchases by Seller from each such supplier,
during such period.

(b) Except as set forth on Schedule 5.16(b), since December 31, 2004, no
customer or supplier listed on Schedule 5.16(a) has terminated its relationship
with Seller or materially reduced or changed the pricing or other terms of its
business with Seller and, to the Knowledge of Seller, no customer or supplier
listed on Schedule 5.16(a) has notified Seller that it intends to terminate or
materially reduce or change the pricing or other terms of its business with
Seller.

5.17 Product Warranty; Product Liability.

(a) Except as set forth on Schedule 5.17, each product manufactured, sold or
delivered by Seller in conducting the Seller’s business has been in conformity
with all product specifications and all express and implied warranties. Seller
does not have any liability for replacement or repair of any such products or
other damages in connection therewith or any other customer or product
obligations. Seller has not sold any products or delivered any services that
included a warranty for a period of longer than one (1) year.

(b) Seller has not committed any act or failed to commit any act, which would
result in, and there has been no occurrence which would give rise to or form the
basis of, any product liability or liability for breach of warranty (whether
covered by insurance or not) on the part of Seller with respect to products
designed, manufactured, assembled, repaired, maintained, delivered or installed
or services rendered prior to the Closing.

5.18 Full Disclosure. This Agreement and the Seller Documents and their
respective schedules and exhibits delivered by or on behalf of Seller hereunder
and thereunder are true, correct and complete in all material respects. No
representation or warranty of Seller contained in this Agreement or any of the
Seller Documents and no written statement made by or on behalf of Seller to
Purchaser or any of its Affiliates pursuant to this Agreement or any of the
Seller Documents contains an untrue statement of a material fact or, to Seller’s
knowledge, omits to state a material fact necessary to make the statements
contained herein or therein not misleading.

5.19 Financial Advisors. Except as set forth on Schedule 5.19, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Seller in connection with the transactions contemplated by this Agreement and no
Person is entitled to any fee or commission or like payment in respect thereof.

5.20 No Other Representations and Warranties. Purchaser acknowledges that except
as expressly provided in this Agreement, Seller makes no representation or
warranty of any kind whatsoever or by operation of law, by statute or otherwise.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller that:

6.1 Organization and Good Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

6.2 Authorization of Agreement. Purchaser has full corporate power and authority
to execute and deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (the “Purchaser Documents”), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

6.3 Conflicts; Consents of Third Parties.

(a) Except as set forth on Schedule 6.3 hereto, neither of the execution and
delivery by Purchaser of this Agreement and of the Purchaser Documents, nor the
compliance by Purchaser with any of the provisions hereof or thereof will
(i) conflict with, or result in the breach of, any provision of the certificate
of incorporation or by-laws of Purchaser, (ii) conflict with, violate, result in
the breach of, or constitute a default under any note, bond, mortgage,
indenture, license, agreement or other obligation to which Purchaser is a party
or by which Purchaser or its properties or assets are bound or (iii) violate any
statute, rule, regulation or Order by which Purchaser is bound, except, in the
case of clauses (ii) and (iii), for such violations, breaches or defaults as
would not, individually or in the aggregate, have a material adverse effect on
the ability of Purchaser to consummate the transactions contemplated by this
Agreement.

(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or Purchaser Documents or the compliance by Purchaser
with any of the provisions hereof or thereof.

6.4 Litigation. There are no Legal Proceedings pending or, to the knowledge of
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.

6.5 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.

6.6 Financing. Purchaser at the Closing will have, sufficient funds, including
its committed financing (the “Acquisition Financing”), available to pay the
Purchase Price and any expenses incurred by Purchaser in connection with the
transactions contemplated by this Agreement.

ARTICLE VII

BANKRUPTCY COURT MATTERS

7.1 Approval of Break-Up Fee and Expense Reimbursement.

(a) Seller acknowledges and agrees that Purchaser has expended considerable time
and expense in connection with this Agreement and the negotiation thereof and
the identification and quantification of assets of Seller. In consideration
therefor, Seller shall file with and seek the approval of the Bankruptcy Court
of the Bidding Procedures Motion, including the Break-Up Fee and Expense
Reimbursement, and the entry by the Bankruptcy Court of the Bidding Procedures
Order approving the payment of the break-up fee in an amount equal to Seventy
Five Thousand Dollars ($75,000) (the “Break-Up Fee”) and the expense
reimbursement in an amount not to exceed Seventy Five Thousand Dollars ($75,000)
(the “Expense Reimbursement”) for Purchaser’s reasonable out-of-pocket
documented expenses incurred in connection with the transactions contemplated
hereby and the financing thereof and deeming the Break-Up Fee and the Expense
Reimbursement as administrative priority expenses under Sections 503(b) and
507(a)(1) of the Bankruptcy Code.

(b) Seller shall pay to Purchaser the Expense Reimbursement on the first (1st)
Business Day after the earlier occurrence of any of the following events:

(i) Seller voluntarily withdraws the Sale Motion other than in connection with
Seller’s termination of this Agreement in accordance with Section 4.4(e) hereof;

(ii) the Bankruptcy Court approves an Alternative Transaction or Restructuring
Transaction, whether or not within the bidding procedures set forth in the
Bidding Procedures Order;

(iii) to the extent that Seller is no longer under the jurisdiction of the
Bankruptcy Court, Seller consummates an Alternative Transaction or Restructuring
Transaction prior to a date eighteen (18) months following the date hereof; or

(iv) Purchaser terminates this Agreement in accordance with the provisions of
Section 4.4(d), 4.4(g), 4.4(h), 4.4(i), 4.4(k), 4.4(m), 4.4(n), or 4.4(o)
hereof.

(c) In addition to Seller’s payment of the Expense Reimbursement to Purchaser
pursuant to Section 7.1(b), Seller shall pay to Purchaser the Break-Up Fee on
the first (1st) Business Day after the earlier occurrence of any of the
following events:

(i) Seller consummates an Alternative Transaction or Restructuring Transaction
in the Chapter 11 Case, whether or not within the bidding procedures set forth
in the Bidding Procedures Order; or

(ii) to the extent that Seller is no longer under the jurisdiction of the
Bankruptcy Court, Seller consummates an Alternative Transaction or Restructuring
Transaction prior to a date eighteen (18) months following the date hereof.

7.2 Bidding Procedures. This Agreement is subject to approval by the Bankruptcy
Court and the consideration by Seller of higher or better competing bids (each
an “Alternative Transaction”). Prior to seeking approval of the sale of the
Purchased Assets, Seller shall seek the Bankruptcy Court’s approval of the
Bidding Procedures Order, which shall include the following procedures and
overbid protections for the submission and consideration of qualified bids,
along with such other bidding procedures as agreed to by Seller and Purchaser:

(a) In order for any Alternative Transaction to be a qualified bid (each a
“Qualified Bid”), it must be:

(i) in writing;

(ii) received by Purchaser and Seller at their respective addresses set forth in
Section 13.7 no later than the deadline for submitting an Alternative
Transaction established by the Bidding Procedures Order (the “Bid Deadline”);

(iii) a firm, unconditional bid to purchase the Purchased Assets, not subject to
any contingencies as to the validity, effectiveness and/or binding nature of the
offer, including, without limitation, further due diligence review or financing;

(iv) a firm bid of at least $200,000 over the Purchase Price;

(v) accompanied by sufficient information to demonstrate that the competing
bidder has the financial wherewithal and ability to timely consummate the
acquisition of the Purchased Assets on terms and conditions substantially the
same as this Agreement, including evidence of adequate financing and a financial
guaranty, if appropriate;

(vi) accompanied by a signed contract substantially in the form of this
Agreement, and marked to show any changes made to this Agreement; and

(vii) accompanied by a good faith cash deposit in an amount equal to the
$150,000 to be deposited with Seller on or before the Bid Deadline;

(b) Seller shall promptly inform Purchaser of all Qualified Bids and any
information received related to the terms and conditions of such Qualified Bids;

(c) Purchaser shall have the opportunity to increase its offer to a level at
least $50,000 in excess of any Qualified Bid to be eligible to become the
starting bid at the auction (the “Auction”) contemplated by the Bidding
Procedures Order (“Starting Auction Bid”); and, in connection therewith,
Purchaser shall be entitled to credit the Breakup Fee and Expense Reimbursement
against the purchase price reflected in such Qualified Bid, provided that
Purchaser delivers a statement to Seller that the actual amount of its expenses
that Purchaser reasonably expects to incur in connection with the transaction
contemplated hereby are equal to or greater than the amount of Expense
Reimbursement that Purchaser seeks to have credited against the purchase price
reflected in such bid of Purchaser;

(d) Seller shall evaluate all Qualified Bids received and shall determine which
Qualified Bid reflects the highest or best offer as the Starting Auction Bid for
the Purchased Assets. Seller shall announce its determination of the Starting
Auction Bid at the commencement of the Auction;

(e) the first incremental competitive bid at the Auction shall be at least
$100,000 over the Starting Auction Bid, with any subsequent increases of bids to
be made in increments equal to as least $100,000;

(f) no bids shall be considered by Purchaser unless a party submitted a
Qualified Bid and participates in the Auction;

(g) all of the Purchased Assets shall be sold in a single lot;

(h) if Seller desires to select a bid from an entity other than Purchaser that
Purchaser believes is not the highest or best bid, the Bankruptcy Court shall
determine which is the successful bidder;

(i) when determining the highest or best bid, Seller shall include the Break-Up
Fee and the Expense Reimbursement in Purchaser’s last bid, which Break-Up Fee
and Expense Reimbursement would otherwise be payable to Purchaser;

(j) the payment of the Break-Up Fee and the Expense Reimbursement to Purchaser
in accordance with Section 7.1;

(k) if any overbid from an entity other than Purchaser is accepted but fails to
be consummated, Seller shall be obligated to consummate the transaction with
Purchaser, at Purchaser’s option, on the terms of this Agreement, except for the
purchase price, which shall equal the purchase price of the next highest bid
that was submitted to Seller during the Auction;

(l) In the event that Seller determines in good faith that it has not received a
Qualified Bid by the Bid Deadline that is a higher or better bid than the one
represented by this Agreement, Seller shall seek approval of this Agreement at
the Approval Hearing without conducting an Auction and without further motion;
and

(m) such other terms as the Bankruptcy Court deems necessary and are reasonably
acceptable to Purchaser.

7.3 Non-Solicitation Period.

(a) From the time of Seller’s and Purchaser’s execution and delivery of this
Agreement until the Bankruptcy Court’s entry of the Bidding Procedures Order
(the “Non-Solicitation Period”), Seller shall not, nor shall it authorize or
permit any Subsidiary of Seller to, nor shall it authorize or permit any
officer, director, manager or employee of, or any investment banker, attorney or
other advisor, agent or representative of, Seller or any of its Subsidiaries
(collectively, “Seller Representatives”) to solicit or otherwise proactively
encourage any entity with respect to the submission of an Alternative
Transaction or negotiate the terms of an Alternative Transaction; provided,
however, that during the Non-Solicitation Period so long as Seller is not
otherwise in breach of this Agreement, nothing in this Agreement shall prohibit
Seller or Seller Representatives from entering into confidentiality agreements
with any entity or furnishing to any entity any information relating to the
Purchased Assets with respect to any proposal or expression of interest that
constitutes, or which may lead to, a Qualified Bid; and provided, further,
however, that Seller shall not execute any Alternative Transaction prior to the
Bankruptcy Court’s entry of the Bidding Procedures Order. In the event Seller
receives an Alternative Transaction during the Non-Solicitation Period, Seller
shall as promptly as practicable (and in any event within twenty-four (24) hours
after receipt) advise Purchaser in writing of the details of such Alternative
Transaction and the identity of the entity submitting the Alternative
Transaction and, to the extent known by the Seller, the principals who are
backing such entity.

(b) Following entry of the Bidding Procedures Order until the Bid Deadline,
Seller and Seller Representatives shall not be subject to any restrictions with
respect to the solicitation or encouragement of any entity concerning the
potential or actual submission of a Qualified Bid; provided, however, that
within twenty four (24) hours after Seller’s receipt of any offer for an
Alternative Transaction, Seller must deliver to Purchaser by facsimile
transmission or send by courier service for delivery to Purchaser by the morning
of the next business day true and complete copies of any such Alternative
Transaction.

7.4 The Sale Order. Seller shall use its commercially reasonable efforts to
cause the Bankruptcy Court to enter a Sale Order which contains, among other
provisions requested by Purchaser, the following provisions (it being understood
that certain of such provisions may be contained in either the findings of fact
or conclusions of law to be made by the Bankruptcy Court as part of the Sale
Order):

(a) the sale of the Purchased Assets by a Seller to Purchaser (A) are or will be
legal, valid and effective transfers of the Purchased Assets; (B) vest or will
vest Purchaser with all right, title and interest of such Seller to the
Purchased Assets free and clear of all Liens and claims pursuant to Section
363(f) of the Bankruptcy Code (other than Liens created by Purchaser); and (C)
constitute transfers for reasonably equivalent value and fair consideration
under the Bankruptcy Code and the laws of the states in which Seller is
incorporated and any other applicable non-bankruptcy laws;

(b) all amounts to be paid to Purchaser pursuant to this Agreement constitute
administrative expenses under Sections 503(b) and 507(a)(1) of the Bankruptcy
Code and are immediately payable if and when the obligations of Seller arise
under this Agreement, without any further order of the Bankruptcy Court;

(c) all Persons are enjoined from taking any actions against Purchaser or any
Affiliates of Purchaser (as they existed immediately prior to the Closing) to
recover any claim which such Person has solely against a Seller or its
Affiliates;

(d) pursuant to Section 1146(c) of the Bankruptcy Code, the transactions
contemplated by this Agreement shall be exempt from stamp, sales, use, transfer
and certain other taxes, the so-called “bulk sales” laws shall be waived in all
necessary jurisdictions, and the transactions contemplated herein shall be
deemed to be under or in contemplation of a plan to be confirmed under
Section 1129 of the Code;

(e) obligations of Seller relating to Taxes, whether arising under law, by this
Agreement, or otherwise, shall be fulfilled by Seller;

(f) the provisions of the Sale Order are non-severable and mutually dependent;

(g) provide that Purchaser will not have any successor or transferee liability
for liabilities of Seller (whether under federal or state law or otherwise) as a
result of the sale of the Purchased Assets;

(h) Purchaser has acted in good faith within the meaning of Section 363(m) of
the Bankruptcy Code, the transactions contemplated by this Agreement are
undertaken by Purchaser and Seller at arm’s length, without collusion and in
good faith within the meaning of Section 363(m) of the Bankruptcy Code, and such
parties are entitled to the protections of Section 363(m) of the Bankruptcy
Code;

(i) all Purchased Contracts shall be assumed by Seller and assigned to Purchaser
pursuant to Section 365 of the Bankruptcy Code and, as required by this
Agreement, Seller shall be obligated to pay all Cure Amounts in respect thereof;

(j) the Bankruptcy Court retains exclusive jurisdiction to interpret and enforce
the provisions of this Agreement, the Bidding Procedures Order and the Sale
Order in all respects; provided, however, that in the event the Bankruptcy Court
abstains from exercising or declines to exercise jurisdiction with respect to
any matter provided for in this clause or is without jurisdiction, such
abstention, refusal or lack of jurisdiction shall have no effect upon and shall
not control, prohibit or limit the exercise of jurisdiction of any other court
having competent jurisdiction with respect to any such matter; and

(k) such other provisions as Purchaser may agree to.

7.5 Bankruptcy Court Approval.

(a) As promptly as practicable after the date of this Agreement, but in no event
later than the date the Bidding Procedures Motion is filed, Seller shall file,
in a form reasonably satisfactory to Purchaser, the Sale Motion. At least
15 days prior to the hearing approving the Sales Order, Seller shall serve a
copy of the Sale Motion (along with a copy at the proposed Sale Order and the
Bidding Procedures Order) on each jurisdiction where the Purchased Assets are
subject to Tax.

(b) Seller shall use its commercially reasonable efforts to obtain entry of the
Sale Order no later than seventy-five (75) days after the date of commencement
of the Chapter 11 Case.

(c) Seller shall cooperate with Purchaser and its representatives in connection
with the Sale Order, the Bidding Procedures Order and the bankruptcy proceedings
in connection therewith. Such cooperation shall include, but not be limited to,
consulting with Purchaser at Purchaser’s reasonable request concerning the
status of such proceedings and providing Purchaser with copies of requested
pleadings, notices, proposed orders and other documents relating to such
proceedings as soon as reasonably practicable prior to any submission thereof to
the Bankruptcy Court. Seller further covenants and agrees that the terms of any
plan it submits to the Bankruptcy Court for confirmation shall not conflict
with, supersede, abrogate, nullify or restrict the terms of this Agreement, or
in any way prevent or interfere with the consummation or performance of the
transactions contemplated by this Agreement, including, without limitation, any
transaction contemplated by or approved pursuant to the Sale Order or the
Bidding Procedures Order.

7.6 Bankruptcy Court Objections. In furtherance and not in limitation of the
covenants of the parties contained in this Article VII, each of the parties
hereto shall use its commercially reasonable efforts to resolve objections, if
any, as may be asserted or raised by the Bankruptcy Court, any party in interest
to the Chapter 11 Case, a Governmental Body or other Person with respect to the
transactions contemplated by this Agreement.

ARTICLE VIII

COVENANTS

8.1 Access to Information. Seller agrees that, prior to the Closing Date,
Purchaser shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of Seller and
such examination of the books, records and financial condition of Seller as it
reasonably requests and to make extracts and copies of such books and records.
Any such investigation and examination shall be conducted during regular
business hours and under reasonable circumstances, and Seller shall cooperate
fully therein. No investigation by Purchaser prior to or after the date of this
Agreement shall diminish or obviate any of the representations, warranties,
covenants or agreements of Seller contained in this Agreement or the Seller
Documents. In order that Purchaser may have full opportunity to make such
physical, business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of Seller, Seller shall use
commercially reasonable efforts to cause the officers, employees, consultants,
agents, accountants, attorneys and other representatives of Seller to cooperate
fully with such representatives in connection with such review and examination.
Seller shall promptly deliver to Purchaser such copies of all pleadings,
motions, notices, statements, schedules, applications, reports and other papers
filed by Seller in the Chapter 11 Case. Seller shall promptly provide to
Purchaser all documents and materials relating to the proposed sale of the
Purchased Assets, Purchased Contracts or any portion thereof, including, without
limitation, with respect to competing bids, and otherwise cooperate with
Purchaser, to the extent reasonably necessary in connection with Purchaser’s
preparation for or participation in any part of the Chapter 11 Case in which
Purchaser’s participation is necessary, required or reasonably appropriate.
Seller shall promptly deliver to Purchaser all pleadings, motions, notices,
statements, schedules, applications, reports and other papers filed in any other
judicial or administrative proceeding as Purchaser may reasonably request. In
addition, Seller shall consult with Purchaser with respect to any written or
oral communication concerning, in whole or in part, the transactions
contemplated by this Agreement.

8.2 Conduct of the Business Pending the Closing.

(a) Except as otherwise expressly contemplated by this Agreement (including the
prosecution of the Chapter 11 Case) or with the prior written consent of
Purchaser, Seller shall:

(i) conduct its business only in the Ordinary Course of Business;

(ii) use its commercially reasonable efforts to (A) preserve its present
business operations, organization (including management and the sales force) and
goodwill of Seller and (B) preserve the present relationships with Persons
having business dealings with Seller (including customers and suppliers);

(iii) maintain (A) all of the assets and properties of Seller in their current
condition, ordinary wear and tear excepted and (B) insurance upon all of the
assets and properties of Seller in such amounts and of such kinds comparable to
that in effect on the date of this Agreement;

(iv) (A) maintain the books, accounts and records of Seller in the Ordinary
Course of Business, (B) continue to collect accounts receivable and pay accounts
payable utilizing normal procedures and without discounting or accelerating
payment of such accounts, and (C) comply with all contractual and other
obligations applicable to the operation of Seller;

(v) comply in all material respects with applicable Laws; and

(vi) not take any action which would adversely affect the ability of the parties
to consummate the transactions contemplated by this Agreement.

(b) Except as otherwise expressly contemplated by this Agreement or with the
prior written consent of Purchaser, Seller shall not:

(i) make or rescind any election relating to Taxes, settle or compromise any
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes, or except as may be required by applicable Law
or GAAP, make any material change to any of its methods of accounting or methods
of reporting income or deductions for Tax or accounting practice or policy from
those employed in the preparation of its most recent Tax Returns;

(ii) subject to any Lien or otherwise encumber or permit, allow or suffer to be
encumbered, any of the properties or assets (whether tangible or intangible) of
Seller;

(iii) sell, assign, license, transfer, convey, lease or otherwise dispose of any
of the Purchased Assets (except for fair consideration in the Ordinary Course of
Business) of Seller;

(iv) enter into or agree to enter into any merger or consolidation with, any
corporation or other entity, and not engage in any new business or invest in,
make a loan, advance or capital contribution to, or otherwise acquire the
securities of any other Person;

(v) enter into, modify or terminate any labor or collective bargaining agreement
or, through negotiation or otherwise, make any commitment or incur any liability
to any labor organization;

(vi) introduce any material change with respect to the operation of the Seller’s
business, including any material change in the types, nature, composition or
quality of products or services, or, other than in the Ordinary Course of
Business, make any change in product specifications or prices or terms of
distributions of such products;

(vii) enter into any transaction or to enter into, modify or renew any Contract
which by reason of its size or otherwise is not in the Ordinary Course of
Business;

(viii) enter into any Contract, understanding or commitment that restrains,
restricts, limits or impedes the ability of the Seller’s business, or the
ability of Purchaser, to compete with or conduct any business or line of
business in any geographic area;

(ix) terminate, amend, restate, supplement or waive any rights under any
(A) Purchased Contract or (B) Permit; or

(x) agree to do anything prohibited by this Section 8.2 or anything which would
make any of the representations and warranties of Seller in this Agreement
untrue or incorrect in any material respect.

8.3 Consents. Seller shall use its commercially reasonable efforts, and
Purchaser shall cooperate with Seller, to obtain at the earliest practicable
date all consents and approvals required to consummate the transactions
contemplated by this Agreement, including, without limitation, the consents and
approvals referred to in Section 5.4(b) hereof.

8.4 Further Assurances. Each of Seller and Purchaser shall use its commercially
reasonable efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.

8.5 Non-Competition; Non-Solicitation; Confidentiality.

(a) For a period from the date hereof until the third (3rd) anniversary of the
Closing Date, Seller shall not and shall cause its Subsidiaries not to directly
or indirectly, own, manage, operate, control or participate in the ownership,
management, operation or control of any business, whether in corporate,
proprietorship or partnership form or otherwise, engaged in Seller’s business as
of the date hereof and during the preceding twelve (12) months, including the
production and sale of PowerPC and FPGA based single board computer products (a
“Restricted Business”); provided, however, that the restrictions contained in
this Section 8.5(a) shall not restrict the acquisition by Seller, directly or
indirectly, of less than 2% of the outstanding capital stock of any publicly
traded company engaged in a Restricted Business. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of the foregoing
will be inadequate and that Purchaser, in addition to any other relief available
to it, shall be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damage or posting any bond whatsoever.

(b) For a period from the date hereof to the third (3rd) anniversary of the
Closing Date, Seller shall not and shall cause its Subsidiaries not to:
(i) cause, solicit, induce or encourage any employees of Seller who are or
become employees of Purchaser or its Affiliates to leave such employment or
hire, employ or otherwise engage any such individual; or (ii) cause, induce or
encourage any material actual or prospective client, customer, supplier, or
licensor of Seller’s business (including any existing or former customer of
Seller and any Person that becomes a client or customer of Seller’s business
after the Closing) or any other Person who has a material business relationship
with Seller’s business, to terminate or modify any such actual or prospective
relationship.

(c) From and after the date hereof, Seller shall not and shall cause its
Subsidiaries and their respective officers, and directors not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person other than
authorized officers, directors and employees of Purchaser or use or otherwise
exploit for its own benefit or for the benefit of anyone other than Purchaser,
any Confidential Information (as defined below). Seller and its officers,
directors and Subsidiaries shall not have any obligation to keep confidential
any Confidential Information if and to the extent disclosure thereof is
specifically required by law; provided, however, that in the event disclosure is
required by applicable Law, Seller shall, to the extent reasonably possible,
provide Purchaser with prompt notice of such requirement prior to making any
disclosure so that Purchaser may seek an appropriate protective order. For
purposes of this Section 8.5(c), “Confidential Information” shall mean any
confidential information with respect to Seller’s business, including, methods
of operation, customers, customer lists, Products, prices, fees, costs,
Technology, inventions, Trade Secrets, know-how, Software, marketing methods,
plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters. “Confidential Information” does not include,
and there shall be no obligation hereunder with respect to, information that
(i) is generally available to the public on the date of this Agreement or
(ii) becomes generally available to the public other than as a result of a
disclosure not otherwise permissible thereunder. This Section 8.5 shall not in
any way limit the disclosure of information (x) by Seller in connection with the
and prosecution of the Chapter 11 Case or (y) regarding Seller to other bidders
or potential bidders to the extent specifically permitted by this Agreement.

(d) The covenants and undertakings contained in this Section 8.5 relate to
matters which are of a special, unique and extraordinary character and a
violation of any of the terms of this Section 8.5 will cause irreparable injury
to the parties, the amount of which will be impossible to estimate or determine
and which cannot be adequately compensated. Therefore, Purchaser will be
entitled to an injunction, restraining order or other equitable relief from any
court of competent jurisdiction in the event of any breach of this Section 8.5.
The rights and remedies provided by this Section 8.5 are cumulative and in
addition to any other rights and remedies which Purchaser may have hereunder or
at law or in equity. In the event that Purchaser were to seek damages for any
breach of this Section 8.5, the portion of the Purchase Price which is allocated
by the parties to the foregoing covenant shall not be considered a measure of or
limit on such damages.

(e) The parties hereto agree that, if any court of competent jurisdiction in a
final nonappealable judgment determines that a specified time period, a
specified geographical area, a specified business limitation or any other
relevant feature of this Section 8.5 is unreasonable, arbitrary or against
public policy, then a lesser time period, geographical area, business limitation
or other relevant feature which is determined to be reasonable, not arbitrary
and not against public policy may be enforced against the applicable party.

8.6 Preservation of Records. Seller and Purchaser agree that each of them shall
preserve and keep the records held by it, Seller’s Subsidiaries or Purchaser’s
Affiliates relating to Seller’s business for a period of seven (7) years from
the Closing Date and shall make such records and personnel available to the
other as may be reasonably required by such party in connection with, among
other things, any insurance claims by, legal proceedings against or governmental
investigations of Seller or Purchaser or any of their Affiliates or in order to
enable Seller or Purchaser to comply with their respective obligations under
this Agreement and each other agreement, document or instrument contemplated
hereby or thereby. In the event Seller or Purchaser wishes to destroy such
records before or after that time, such party shall first give ninety (90) days
prior written notice to the other and such other party shall have the right at
its option and expense, upon prior written notice given to such party within
such ninety (90) day period, to take possession of the records within one
hundred and eighty (180) days after the date of such notice.

8.7 Publicity. Neither Seller nor Purchaser shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of Purchaser or Seller, disclosure is otherwise required by applicable
Law or by the Bankruptcy Court with respect to filings to be made with the
Bankruptcy Court in connection with this Agreement or by the applicable rules of
any stock exchange on which Purchaser or Seller lists securities, provided that
the party intending to make such release shall use its commercially reasonable
efforts consistent with such applicable Law or Bankruptcy Court requirement to
consult with the other party with respect to the text thereof.

8.8 Use of Name. Seller hereby agrees that upon the consummation of the
transactions contemplated hereby, Purchaser shall have the sole right to the use
of the name “DNA Computing Solutions” or similar names or any service marks,
trademarks, trade names, identifying symbols, logos, emblems or signs containing
or comprising the foregoing, including any name or mark confusingly similar
thereto (collectively, the “Seller Marks”) and Seller shall not, and shall not
permit any Subsidiary to, use such name or any variation or simulation thereof.
In furtherance thereof, as promptly as practicable but in no event later than
thirty (30) days following the Closing Date, Seller shall remove, strike over or
otherwise obliterate all Seller Marks from all materials owned by Seller and
used or displayed publicly including, without limitation, any sales and
marketing materials, displays, signs, promotional materials and other materials.

8.9 Financing Statement Releases. On or prior to the Closing, Seller shall have
filed valid releases of any and all financing statements filed with respect to
any Purchased Asset.

ARTICLE IX

EMPLOYEES AND EMPLOYEE BENEFITS

9.1 Employment.

(a) Except as otherwise provided herein, at any time immediately prior to or
after the Closing, Purchaser shall be permitted to offer employment to any
employees of Seller. Such individuals who accept such offer are referred to
herein as the “Transferred Employees.” Subject to applicable Laws, Purchaser
shall have the right to dismiss any or all Transferred Employees at any time,
with or without cause, and to change the terms and conditions of their
employment (including compensation and employee benefits provided to them).

(b) To the extent permitted by applicable Law, from time to time following the
Closing, Seller shall make available to Purchaser such non-confidential data in
personnel records of Transferred Employees as is reasonably necessary for
Purchaser to transition such employees into Purchaser’s records.

9.2 Indemnification. Seller shall indemnify and hold Purchaser and its
Affiliates harmless with respect to any Transferred Employee from (i) any
employment-related liability with respect to employment on or prior to the date
any such Transferred Employee was hired by Purchaser and (ii) any liability
under WARN.

ARTICLE X

CONDITIONS TO CLOSING

10.1 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):

(a) the representations and warranties of Seller set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date) and
Purchaser shall have received a certificate signed by an authorized officer of
Seller (in form and substance reasonably satisfactory to Purchaser), dated the
Closing Date, to such effect;

(b) Seller shall have performed and complied in all respects with all
obligations and agreements required in this Agreement to be performed or
complied with by it prior to the Closing Date, and Purchaser shall have received
a certificate signed by an authorized officer of Seller (in form and substance
reasonably satisfactory to Purchaser), dated the Closing Date, to such effect
and copies of such corporate resolutions and other documents evidencing the
performance thereof as Purchaser may reasonably request;

(c) there shall not have been or occurred any event, change, occurrence or
circumstance that has had or which could reasonably be expected to have a
Material Adverse Effect since the Financial Statement Date;

(d) no Legal Proceedings (including, without limitation, any proceeding over
which the Bankruptcy Court has jurisdiction under 28 U.S.C. § 157(b) and (c))
shall have been instituted or threatened or claim or demand made against Seller
or Purchaser seeking to restrain or prohibit or to obtain substantial damages
with respect to the consummation of the transactions contemplated hereby, and
there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby;

(e) Seller shall have obtained all consents, waivers and approvals referred to
in Section 5.4(b) hereof in a form satisfactory to Purchaser;

(f) Purchaser shall have entered into employment contracts or arrangement with
the Employees identified on Schedule 10.1(f) on terms and conditions
satisfactory to Purchaser in its sole discretion, which condition shall be
deemed satisfied if Purchaser does not provide written notice to Seller on or
prior to the day immediately prior to the date of the Auction that such
condition has not been satisfied;

(g) Purchaser shall have entered into a real property lease for a facility
satisfactory to Purchaser for Purchaser’s operation of its business with respect
to the Purchased Assets on terms and conditions satisfactory to Purchaser in its
sole discretion, which condition shall be deemed satisfied if Purchaser does not
provide written notice to Seller on or prior to the day immediately prior to the
date of the Auction that such condition has not been satisfied;

(h) Purchaser shall be satisfied, in its sole discretion, with its due diligence
of Purchaser’s customers and suppliers, which condition shall be deemed
satisfied if Purchaser does not provide written notice to Seller on or prior to
the day immediately prior to the date of the Auction that such condition has not
been satisfied; and

(i) Seller shall have rejected in the Chapter 11 Case the Vista Agreements.

10.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller in whole or in part to
the extent permitted by applicable law):

(a) The representations and warranties of Purchaser set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date); and

(b) Purchaser shall have performed and complied in all respects with all
obligations and agreements required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date.

10.3 Conditions Precedent to Obligations of Purchaser and Seller. The respective
obligations of Purchaser and Seller to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived by
Purchaser and Seller in whole or in part to the extent permitted by applicable
Law):

(a) no Legal Proceedings shall have been instituted or threatened or claim or
demand made against Seller or Purchaser seeking to restrain or prohibit or to
obtain substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;

(b) the Bankruptcy Court shall have entered the Bidding Procedures Order; and

(c) the Bankruptcy Court shall have entered the Sale Order and any stay period
applicable to the Sale Order shall have expired or shall have been waived by the
Bankruptcy Court.

10.4 Frustration of Closing Conditions. Neither Seller nor Purchaser may rely on
the failure of any condition set forth in Section 10.1, 10.2, 10.3, or, as the
case may be, if such failure was caused by such party’s failure to comply with
any provision of this Agreement.

ARTICLE XI

INDEMNIFICATION

11.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in Articles V and VI of this Agreement shall
survive the Closing through and including the first (1st) anniversary of the
Closing Date (the “Survival Period”); provided, however, that any obligations to
indemnify and hold harmless shall not terminate with respect to any Losses as to
which the Person to be indemnified shall have given notice (stating in
reasonable detail the basis of the claim for indemnification) to the
indemnifying party in accordance with Section 13.3(a) before the termination of
the Survival Period.

11.2 Indemnification.

(a) Subject to Section 11.4 hereof, Seller hereby agrees to indemnify and hold
Purchaser and its directors, officers, employees, Affiliates, stockholders,
agents, attorneys, representatives, successors and assigns (collectively, the
“Purchaser Indemnified Parties”) harmless from and against:

(i) any and all losses, liabilities, obligations, damages, costs and expenses
(collectively, “Losses”) based upon, attributable to or resulting from the
failure of any representation or warranty of Seller set forth in this Agreement
or in any Seller Document, to be true and correct in all respects at the date
hereof and at the Closing Date;

(ii) any and all Losses based upon, attributable to or resulting from the breach
of any covenant or other agreement on the part of Seller under this Agreement or
any Seller Document;

(iii) any and all Losses arising out of, based upon or relating to any Excluded
Asset or any Excluded Liability; and

(iv) any and all Losses imposed under or pursuant to environmental Laws,
including any loss of any tangible personal property of Seller, liabilities,
obligations, fines, penalties, damages, costs and expenses imposed under or
pursuant to environmental Laws arising from or related to any condition, act or
omission, by Seller or any predecessor thereof or related to the operations of
Seller or any predecessor thereof at any property currently or formerly owned,
operated or leased by Seller, whether known or unknown, to the extent existing
on or prior to the Closing Date, including, but not limited to any environmental
costs and Liabilities; and

(v) any and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including attorneys’ and
other professionals’ fees and disbursements (collectively, “Expenses”) incident
to any and all Losses with respect to which indemnification is provided
hereunder.

(b) Subject to Section 11.4, Purchaser hereby agrees to indemnify and hold
Seller and its Affiliates, stockholders, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Seller Indemnified
Parties”) harmless from and against:

(i) any and all Losses based upon, attributable to or resulting from the failure
of any representation or warranty of Purchaser set forth in this Agreement or
any Purchaser Document, to be true and correct at the date hereof and at the
Closing Date;

(ii) any and all Losses based upon, attributable to or resulting from the breach
of any covenant or other agreement on the part of Purchaser under this Agreement
or any Purchaser Document;

(iii) any and all Losses arising out of, based upon or relating to any Assumed
Liability;

(iv) any and all Losses arising in connection with the conduct and operation of
Purchaser’s business on and after the Closing Date; and

(v) any and all Expenses incident to any and all Losses with respect to which
indemnification is provided hereunder.

11.3 Indemnification Procedures.

(a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any Person in respect of which payment may
be sought under Section 11.2 hereof (regardless of the limitations set forth in
Section 11.4) “Indemnification Claim”), the indemnified party shall reasonably
and promptly cause written notice of the assertion of any Indemnification Claim
of which it has knowledge which is covered by this indemnity to be forwarded to
the indemnifying party. The indemnifying party shall have the right, at its sole
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Indemnification Claim which relates to any Losses
indemnified against hereunder; provided that the indemnifying party shall have
acknowledged in writing to the indemnified party its unqualified obligation to
indemnify the indemnified party as provided hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Indemnification Claim which relates to any Losses indemnified against hereunder,
it shall within ten (10) days (or sooner, if the nature of the Indemnification
Claim so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Indemnification Claim which relates to any Losses indemnified
against hereunder, fails to notify the indemnified party of its election as
herein provided or contests its obligation to indemnify the indemnified party
for such Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Indemnification Claim. If the
indemnified party defends any Indemnification Claim, then the indemnifying party
shall reimburse the indemnified party for the Expenses of defending such
Indemnification Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Indemnification Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Indemnification Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party a conflict or potential conflict exists between the indemnified party and
the indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required to pay
for more than one such counsel for all indemnified parties in connection with
any Indemnification Claim. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any such
Indemnification Claim. Notwithstanding anything in this Section 11.3 to the
contrary, neither the indemnifying party nor the indemnified party shall,
without the written consent of the other party, settle or compromise any
Indemnification Claim or permit a default or consent to entry of any judgment
unless the claimant and such party provide to such other party an unqualified
release from all liability in respect of the Indemnification Claim.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the indemnifying party notifies
the indemnified party in writing of the indemnifying party’s willingness to
accept the settlement offer and, subject to the applicable limitations of
Section 11.4, pay the amount called for by such offer, and the indemnified party
declines to accept such offer, the indemnified party may continue to contest
such Indemnification Claim, free of any participation by the indemnifying party,
and the amount of any ultimate liability with respect to such Indemnification
Claim that the indemnifying party has an obligation to pay hereunder shall be
limited to the lesser of (A) the amount of the settlement offer that the
indemnified party declined to accept plus the Losses of the indemnified party
relating to such Indemnification Claim through the date of its rejection of the
settlement offer or (B) the aggregate Losses of the indemnified party with
respect to such Indemnification Claim. If the indemnifying party makes any
payment on any Indemnification Claim, the indemnifying party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
indemnified party to any insurance benefits or other claims of the indemnified
party with respect to such Indemnification Claim.

(b) After any final judgment or award shall have been rendered by a Governmental
Body of competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the indemnified party
and the indemnifying party shall have arrived at a mutually binding agreement
with respect to an Indemnification Claim hereunder, the indemnified party shall
forward to the indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect to such matter and
the indemnifying party shall be required to pay all of the sums so due and owing
to the indemnified party by wire transfer of immediately available funds within
ten (10) Business Days after the date of such notice.

(c) The failure of the indemnified party to give reasonably prompt notice of any
Indemnification Claim shall not release, waive or otherwise affect the
indemnifying party’s obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.

11.4 Breaches of Representations and Warranties. For purposes of calculating
Losses hereunder, any materiality or material adverse effect qualifications in
the representations, warranties, covenants and agreements shall be ignored.

11.5 Limitations on Indemnification . Neither Seller nor Purchaser shall be
required to indemnify any Person hereunder for an aggregate amount of Losses and
Expenses above the amount of the Indemnity Escrow Fund. The Indemnity Escrow
Fund shall be the sole source of payment of any of Seller’s indemnification
obligations hereunder.

11.6 Indemnity Escrow. On the Closing Date, Purchaser shall pay from the
Purchase Price to the Indemnity Escrow Agent, in immediately available funds, to
the account designated by the Indemnity Escrow Agent, the Indemnity Escrow
Amount, in accordance with the terms of this Agreement and the Indemnity Escrow
Agreement. Any payment Seller is obligated to make to any Purchaser Indemnified
Parties pursuant to this Article XI shall be paid first from the Indemnity
Escrow Fund. Following the first (1st) anniversary of the Closing Date, the
Indemnity Escrow Agent shall release the Indemnity Escrow Fund (to the extent
not utilized to pay Purchaser for any indemnification claim) to Seller, except
that the Indemnity Escrow Agent shall retain an amount equal to the amount of
claims for indemnification under this Article XI asserted prior to such first
(1st) anniversary but not yet resolved (“Unresolved Claims”). The Indemnity
Escrow Amount retained for Unresolved Claims shall be released by the Indemnity
Escrow Agent (to the extent not utilized to pay Purchaser for any such claims
resolved in favor of Purchaser) upon their resolution in accordance with this
Article XI.

11.7 Tax Treatment of Indemnity Payments. Seller and Purchaser agree to treat
any indemnity payment made pursuant to this Article XI as an adjustment to the
Purchase Price for all Tax purposes. If, notwithstanding the treatment required
by the preceding sentence, any indemnification payment is determined to be
taxable to the party receiving such payment by any Taxing Authority, the paying
party shall also indemnify the party receiving such payment for any Taxes
incurred by reason of the receipt of such payment and any Expenses incurred by
the party receiving such payment in connection with such Taxes (or any asserted
deficiency, claim, demand, action, suit, proceeding, judgment or assessment,
including the defense or settlement thereof, relating to such Taxes).

ARTICLE XII

TAXES

12.1 Transfer Taxes. Seller shall (i) be responsible for (and shall indemnify
and hold harmless Purchaser against) any and all Liabilities for any sales, use,
stamp, documentary, filing, recording, transfer, real estate transfer, stock
transfer, gross receipts, registration, duty, securities transactions or similar
fees or taxes or governmental charges (together with any interest or penalty,
addition to tax or additional amount imposed) as levied by any Taxing Authority
in connection with the transactions contemplated by this Agreement
(collectively, “Transfer Taxes”), regardless of the Person liable for such
Transfer Taxes under applicable Law and (ii) timely file or caused to be filed
all necessary documents (including all Tax Returns) with respect to Transfer
Taxes. Notwithstanding the foregoing, the Seller shall use its commercially
reasonable efforts to cause the Sale Order to contain a provision that Seller’s
sale, transfer, assignment and conveyance of the Purchased Assets to Purchaser
hereunder shall be entitled to the protections afforded under Section 1146(c) of
the Bankruptcy Code. The parties will reasonably cooperate to minimize any such
taxes, including with respect to delivery location.

12.2 Prorations. Seller shall bear all property and ad valorem tax liability
with respect to the Purchased Assets if the lien or assessment date arises prior
to the Closing Date irrespective of the reporting and payment dates of such
taxes. All other real property taxes, personal property taxes, or ad valorem
obligations and similar recurring taxes and fees on the Purchased Assets for
taxable periods beginning before, and ending after, the Closing Date, shall be
prorated between Purchaser and Seller as of 12:01 a.m. eastern standard time on
the Closing Date. With respect to Taxes described in this Section 12.2, Seller
shall timely file all Tax Returns due before the Closing Date with respect to
such Taxes and Purchaser shall prepare and timely file all Tax Returns due after
the Closing Date with respect to such Taxes. If one party remits to the
appropriate Taxing Authority payment for Taxes, which are subject to proration
under this Section 12.2 and such payment includes the other party’s share of
such Taxes, such other party shall promptly reimburse the remitting party for
its share of such Taxes.

12.3 Purchase Price Allocation. Not later than sixty (60) days after the Closing
Date, Purchaser shall prepare and deliver to Seller copies of Form 8594 and any
required exhibits thereto (the “Asset Acquisition Statement”) allocating the
purchase price among the Purchased Assets. Purchaser shall prepare and deliver
to Seller from time to time revised copies of the Asset Acquisition Statement
(the “Revised Statements”) so as to report any matters on the Asset Acquisition
Statement that need updating (including purchase price adjustments, if any). The
purchase price for the Purchased Assets shall be allocated in accordance with
the Asset Acquisition Statement or, if applicable, the last Revised Statements,
provided by Purchaser to Seller, and all income Tax Returns and reports filed by
Purchaser and Seller shall be prepared consistently with such allocation.

12.4 Cooperation on Tax Matters.

(a) Purchaser and Seller shall furnish or cause to be furnished to each other,
as promptly as practicable, such information and assistance relating to the
Purchased Assets as is reasonably necessary for the preparation and filing of
any Tax Return, claim for refund or other required or optional filings relating
to Tax matters, for the preparation for any Tax audit, for the preparation for
any Tax protest, for the prosecution or defense of any suit or other proceeding
relating to Tax matters.

(b) Purchaser shall retain possession of all accounting, business, financial and
Tax records and information relating to the Purchased Assets that are in
existence on the Closing Date and transferred to Purchaser hereunder for a
period of at least three (3) years from the Closing Date. Purchaser shall give
Seller notice and an opportunity to retain any such records in the event that
Purchaser determines to destroy or dispose of them after such period. In
addition, from and after the Closing Date, Purchaser shall provide access to
Seller (after reasonably detailed prior notice and during normal business
hours), to the books, records, documents and other information relating to the
Purchased Assets as is reasonably necessary for Seller to properly prepare for,
file, prove, answer, prosecute and/or defend any Tax Return, claim, filing, tax
audit, tax protest, suit, proceeding or answer.

ARTICLE XIII

MISCELLANEOUS

13.1 Expenses. Except for the Expense Reimbursement and as otherwise provided in
this Agreement, each of Seller and Purchaser shall bear its own expenses
incurred in connection with the negotiation and execution of this Agreement and
each other agreement, document and instrument contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby.

13.2 Specific Performance. Each of Seller and Purchaser acknowledges and agrees
that the breach of this Agreement would cause irreparable damage to Purchaser or
Seller, as the case may be, and that Purchaser or Seller, as the case may be,
will not have an adequate remedy at law. Therefore, the obligations of Seller
under this Agreement, including, without limitation, Seller’s obligation to sell
the Purchased Assets to Purchaser and Purchaser’s obligation to purchase the
Purchased Assets from Seller, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.

13.3 Submission to Jurisdiction; Consent to Service of Process.

(a) The parties hereto hereby irrevocably submit to the exclusive jurisdiction
of the Bankruptcy Court over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party hereby
irrevocably agrees that all claims in respect of such dispute or any suit,
action proceeding related thereto may be heard and determined in the Bankruptcy
Court; provided, however, that in the event the Bankruptcy Court abstains from
exercising or declines to exercise jurisdiction with respect to any matter
provided for in this sentence or is without jurisdiction, such abstention,
refusal or lack of jurisdiction shall have no effect upon and shall not control,
prohibit or limit the exercise of jurisdiction of any other court having
competent jurisdiction with respect to any such matter. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by the mailing of a
copy thereof in accordance with the provisions of Section 13.7.

13.4 Waiver of Right to Trial by Jury. Each party to this Agreement waives any
right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.

13.5 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto) represent the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof. This
Agreement can be amended, supplemented or changed, and any provision hereof can
be waived, only by written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.

13.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State.

13.7 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (i) when delivered personally by hand (with
written confirmation of receipt), (ii) when sent by facsimile (with written
confirmation of transmission) or (iii) one business day following the day sent
by overnight courier (with written confirmation of receipt), in each case at the
following addresses and facsimile numbers (or to such other address or facsimile
number as a party may have specified by notice given to the other party pursuant
to this provision):

If to Seller, to:

TeraForce Technology Corporation

1240 E. Campbell Road

Richardson, TX 75081

Facsimile: (469) 330-4972

Attention: Chief Executive Officer

With a copy to:

Munsch Hardt Kopf & Harr, P.C.

1445 Ross Avenue, Suite 4000

Dallas, TX 75202

Facsimile: 214-855-7584

Attention: Joseph J. Wielebinski

If to Purchaser, to:

GE Fanuc Embedded Systems, Inc.

P.O. Box 8106

Charlottesville, VA 22906

Facsimile: (434) 978-6435

Attention: President and Chief Executive Officer

With a copy to:

GE Fanuc Embedded Systems, Inc.

P.O. Box 8106

Charlottesville, VA 22906

Facsimile: (434) 978-5997

Attention: Vice President & General Counsel

and

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: (212) 310-8007
Attention: Gary T. Holtzer

13.8 Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

13.9 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement
except as provided below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by either Seller or Purchaser (by operation of
law or otherwise) without the prior written consent of the other parties hereto
and any attempted assignment without the required consents shall be void;
provided, however, that Purchaser may assign this Agreement and any or all
rights or obligations hereunder (including, without limitation, Purchaser’s
rights to purchase the Purchased Assets and Purchaser’s rights to seek
indemnification hereunder) to any Affiliate of Purchaser. Upon any such
permitted assignment, the references in this Agreement to Purchaser shall also
apply to any such assignee unless the context otherwise requires.

13.10 Non-Recourse. No past, present or future director, officer, employee,
incorporator, member, partner, equityholder, Affiliate, agent, attorney or
representative of Purchaser or its Affiliates shall have any liability for any
obligations or liabilities of Purchaser under this Agreement or the Purchaser
Documents of or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby and thereby.

13.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

GE FANUC EMBEDDED SYSTEMS, INC.

By: /s/ Jeff Garwood
Name: Jeff Garwood
Title: President and Chairman

TERAFORCE TECHNOLOGY CORPORATION

By: /s/ Robert P. Capps
Name: Robert P. Capps
Title: Executive Vice President

DNA COMPUTING SOLUTIONS, INC.

By: /s/ Robert P. Capps
Name: Robert P. Capps
Title: Executive Vice President

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