Exhibit 10.2

 

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (the “Agreement”) is made effective as of
January 25, 2006 (the “Effective Date”), by and among SV Probe Pte. Ltd, a
corporation organized under the laws of Singapore (“SV Singapore”), SV Probe,
Inc., a California corporation (“SV US”, and together with SV Singapore and its
subsidiaries collectively referred to as “Purchaser”), Kulicke and Soffa
Industries, Inc., a Pennsylvania corporation (“K&S”), K&S Interconnect, Inc., a
Delaware corporation (“Interconnect”), Kulicke and Soffa (Suzhou), Ltd., a
corporation organized under the laws of the Peoples Republic of China (“Chinese
Sub”), Kulicke and Soffa (Japan) Ltd., a corporation organized under the laws of
Japan (“Japanese Sub”), Kulicke & Soffa (S.E.A.) Ptd Ltd., a corporation
organized under the laws of Singapore (“Singaporean Sub”), and Kulicke & Soffa
Test Taiwan Co. Ltd., a corporation organized under the laws of Taiwan
(“Taiwanese Sub”). Chinese Sub, Japanese Sub, Singaporean Sub and Taiwanese Sub,
together with Probe Technology S.A.S. France, a corporation organized under the
laws of France (“French Sub”), are collectively referred to herein as the
“Subsidiaries.” Interconnect and the Subsidiaries are referred to herein
collectively as the “Seller Group.”

 

RECITALS

 

A. Seller Group is engaged in the manufacture and sale of wafer test solutions
(the “Business”) and certain other lines of business. Seller Group desires to
sell substantially all of the assets, and assign certain of the liabilities,
that relate to the Business to Purchaser, and Purchaser desires to purchase such
assets and assume such liabilities, subject to the terms and conditions of this
Agreement.

 

B. K&S indirectly or directly owns all or substantially all of the issued and
outstanding capital stock or other equity interests of each member of Seller
Group. Ellipsiz Ltd., a corporation organized under the laws of Singapore (“SV
Parent”), indirectly or directly owns a majority of the issued and outstanding
shares of the capital stock of Purchaser.

 

C. At the time of, and in connection with, the first closing of the sale of
assets to Purchaser, the parties desire to enter into a transition services
agreement and certain other agreements to facilitate the transition of the
Business to Purchaser following the Initial Closing, as described more fully
herein.

 

Therefore, based on the foregoing premises and for other good and valuable
consideration, the parties do hereby agree as follows:

 

AGREEMENT

 

1. Sale of Assets.

 

(a) Upon the terms and conditions set forth in this Agreement, at the Initial
Closing or the China Closing, as applicable, Seller Group shall, and K&S shall
cause Seller Group to, sell, convey, assign, transfer and deliver to Purchaser,
and Purchaser shall purchase, acquire and accept from Seller Group, the assets
that are described below and used exclusively in the Business (the “Assets”),
free and clear of any Claims other than Permitted Claims:

 

(i) any and all furniture, fixtures, improvements, equipment (including office
equipment), machinery, parts, computer hardware, tools, vehicles and all other
tangible personal property that is used or held for use exclusively in the
Business listed on Schedule 1(a)(i);

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(ii) any and all rights of Seller Group in and to (collectively, the
“Proprietary Rights”):

 

(1) the Trademarks listed in Schedule 5(j)(i)(1), the Patents and Patent
applications listed in Schedule 5(j)(i)(2) and the Copyrights and applications
for Copyright registration listed in Schedule 5(j)(i)(3);

 

(2) the product names listed on Schedule 1(a)(ii)(2); and

 

(3) any and all inventions, formulae, processes, schematic drawings, secret
processes, product plans, logos, trade names, unregistered trademarks,
unregistered patents, unregistered copyrights, trade secrets, know-how,
technical information, software (including all source code and object code and
without limitation software developed by Seller Group and software acquired or
leased from any other person or entity in which Seller Group has any right,
title or interest), databases, supplier lists, customer lists, domain names,
internet addresses, and any and all other intellectual property, in each case
that relate exclusively to the Business;

 

(iii) any and all claims and rights (and benefits arising therefrom) of Seller
Group with or against all persons, including all express or implied warranties
from any supplier of Seller Group, with respect to the Assets, in each case to
the extent such transfer is permitted by law and only to the extent any such
claim or right is exclusively related to an Asset or Assumed Liability;

 

(iv) any and all Transferred Receivables relating to the Business set forth on
the Closing Receivables Schedule;

 

(v) any and all Inventory relating to the Business set forth on the Closing
Inventory Schedule;

 

(vi) any and all contracts, agreements and purchase and sales orders that relate
exclusively to the Business, to the extent they are transferable and are
designated on Schedule 5(l) (under a subheading to such effect or otherwise) as
Contracts to be assigned and assumed, and any other contracts, agreements and
purchase and sales orders that relate exclusively to the Business that are
entered into after the date hereof that Purchaser agrees in writing to assume to
the extent transferable (collectively, the “Assumed Contracts”);

 

(vii) any and all permits, licenses, certificates, approvals and other similar
authorizations of any Federal, state, local, municipal or other domestic or
foreign governmental entities that are used exclusively in the Business and
listed on Schedule 1(a)(vii), to the extent transferable;

 

(viii) any and all goodwill of the Business;

 

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(ix) any and all copies of payroll records for any Transferred Employees that
consent to the transfer of their payroll records, and copies of all sales
invoices, accounts receivable and accounts payable records, warranties on all
supplies and equipment, manuals related to the Assets, drawings, files, papers,
and other records of Seller Group, in each case that relate exclusively to the
Business or the Assets (collectively, “Books and Records”). For the avoidance of
doubt, Books and Records shall exclude any and all income tax returns of Seller
Group and its affiliates;

 

(x) subject to proration as described in Section 3(e) hereof, any and all
Prepaids relating exclusively to the Business; and

 

(xi) any and all other assets, if any, listed on Schedule 1(a)(xi).

 

2. Excluded Assets. Any and all assets of Seller Group, including assets used in
the Business, that are not expressly listed above in Section 1(a) are excluded
from the Assets and shall not be assigned to Purchaser under this Agreement. For
the sake of clarity, and notwithstanding any provision of this Agreement to the
contrary, the Assets shall not include the following (the “Excluded Assets”):

 

(a) any and all cash, cash equivalents and accounts receivable of Seller Group,
other than Transferred Receivables;

 

(b) any and all rights of Seller Group in and under this Agreement;

 

(c) any and all assets specifically excluded from the definition of Assets under
clauses (i) through (xi) of Section 1(a) of this Agreement.

 

(d) any and all interests in real property and any leasehold improvements
thereto, and all related rights;

 

(e) any and all equity interests of or in any member of Seller Group, whether in
the form of stock, membership interests, partnership interests or otherwise;

 

(f) any and all of the minute books, stock record books or tax records of any
member of Seller Group; and

 

(g) any and all of the assets identified on Schedule 2(g).

 

3. Purchase Price.

 

(a) Consideration. Subject to and upon the terms and conditions of this
Agreement, in consideration of and payment in full for the transfer of Assets,
Purchaser shall deliver to Seller Group the aggregate cash consideration set
forth in Section 3(a)(i) below, as may be adjusted pursuant to Section 3(d)
hereof, and shall assume those certain liabilities, obligations and agreements
specifically described in Section 3(b) below.

 

(i) Purchase Price. The aggregate cash consideration (the “Purchase Price”),
subject to adjustment under Section 3(d) hereof, shall be Ten Million United
States Dollars (US$10,000,000). At the Initial Closing, Purchaser shall pay the
Purchase Price, as and

 

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if adjusted pursuant to Section 3(d) hereof, by wire transfer of immediately
available funds in the full amount of the Purchase Price to an account
designated by Interconnect on behalf of each member of Seller Group.
Interconnect shall provide wire transfer instructions in writing to Purchaser at
least two business days prior to the Initial Closing.

 

(b) Assumption of Certain Obligations. At the Initial Closing, Purchaser shall
assume and agree to perform and discharge and indemnify Seller Group against the
following (collectively, the “Assumed Liabilities”):

 

(i) all trade accounts and other accounts payable that were incurred in the
ordinary course of operation of the Business and are identified in the Closing
Payables Schedule; and

 

(ii) all obligations of Seller Group under the Assumed Contracts; provided,
however, that Purchaser is not agreeing to, and will not, assume, pay, perform,
discharge or indemnify Seller Group against or with respect to any debt,
liability or obligation (1) which is the result of a violation by Seller Group
of any Contract on or prior to the Initial Closing, or (2) which arises out of
any Contract which is not assigned to Purchaser (except where Purchaser is
solely responsible for failure of assignment) or which is not designated on
Schedule 5(l) hereto as a Contract to be assumed by Purchaser, or (3) which
arises out of any lease for any period prior to the Initial Closing.

 

Except as specifically set forth in this Section 3(b), and notwithstanding that
liabilities of Seller Group are set forth in the Schedules hereto or otherwise
disclosed in connection with this Agreement (including, without limitation, the
representations and warranties of Seller Group), Purchaser is not agreeing to,
and shall not, assume, pay, perform or discharge any debts, liabilities, taxes,
commitments or obligations of Seller Group of any kind whatsoever, known or
unknown, contingent or fixed (including costs and expenses incurred in defending
any claims therefor), including without limitation any indebtedness of Seller
Group to K&S or any officer, director, employee, agent or affiliate of Seller
Group.

 

(c) Allocation of Purchase Price. The Purchase Price shall be allocated by the
parties among the Assets as set forth on Exhibit B attached hereto. Seller Group
and Purchaser shall cooperate on the timely filing of Internal Revenue Form
8594, which will be prepared in conformity with such purchase price allocation
and principles.

 

(d) Net Working Capital Adjustment.

 

(i) Deliverables at Signing. Attached hereto as Schedule 3(d) are (collectively,
the “January 23, 2006 Working Capital Schedules”):

 

(1) a listing of all accounts payable of the Business (“Payables”) as of
January 23, 2006 and the carrying value of such accounts payable on the Books
and Records as of such date (the “January 23, 2006 Payables Schedule”);

 

(2) a listing of certain accounts receivable of the Business (“Transferred
Receivables”) as of January 23, 2006 and the carrying value of such accounts
receivable on the Books and Records as of such date (the “January 23, 2006
Receivables Schedule”), the aggregate carrying value of which is $6,000,000; and

 

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(3) a listing of all of the inventory of the Business included in the Assets
(“Inventory”) and the carrying value of such inventory on the Books and Records
as of such date (the “January 23, 2006 Inventory Schedule”).

 

(ii) January 23, 2006 Net Working Capital Value. Based on the January 23, 2006
Working Capital Schedules, the Net Working Capital Value as of January 23, 2006
is $9,300,000 (“January 23, 2006 Net Working Capital Value”).

 

For purposes of this Agreement, “Net Working Capital Value” as of a specified
date shall mean the carrying value of Transferred Receivables, plus the net
carrying value of Inventory, plus the carrying value of the portion of the
Prepaids prorated to Seller Group pursuant to Section 3(e) hereof, minus the
carrying value of Payables, in each case on the Books and Records as of such
date.

 

(iii) Deliverables at Closing. At the Initial Closing, Seller Group will deliver
to Purchaser:

 

(1) schedules listing each of the following and their respective carrying value
on the Books and Records, dated as of the business day immediately preceding the
Initial Closing Date (collectively, the “Closing Working Capital Schedules”):
(A) the Transferred Receivables (the “Closing Receivables Schedule”),
(B) Inventory (the “Closing Inventory Schedule”), and (C) Accounts Payable (the
“Closing Payables Schedule”); and

 

(2) a statement (the “Closing Net Working Capital Statement”) showing its
calculation of Net Working Capital Value as of the Initial Closing Date
(“Closing Net Working Capital”).

 

(iv) Purchaser’s Audit of Schedules. For thirty (30) calendar days following the
Initial Closing, Seller Group shall cooperate with Purchaser in connection with
any audit of such Closing Working Capital Schedules conducted by Purchaser (in
its sole discretion and at its own expense) and shall respond to Purchaser’s
reasonable requests for information in connection with such audit. In addition,
prior to the Initial Closing, Purchaser may (in its sole discretion and at its
own expense) retain an audit firm to conduct an audit of the January 23, 2006
Working Capital Schedules and Seller Group shall cooperate with any reasonable
requests for information and documents in connection with such audit.

 

(v) Dispute Resolution.

 

(1) If Purchaser desires to dispute any of the Closing Working Capital Schedules
or the calculation of the Closing Net Working Capital, Purchaser shall notify
Seller Group within thirty (30) calendar days after the Initial Closing. If
Purchaser does not so dispute any such item within such 30 day period, then the
Closing Net Working Capital Statement shall be deemed final and conclusive (and
shall in such case be deemed the “Final Closing Net Working Capital Statement”).

 

(2) In the event of a dispute as contemplated under the preceding paragraph,
Purchaser and Seller Group shall first use their diligent good faith efforts to
resolve such dispute between themselves. If the parties are unable to resolve
the dispute within ten (10) calendar days after delivery of the dispute notice,
then any remaining items in dispute

 

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shall be submitted to an agreed upon nationally recognized accounting firm,
whose resolution of such items shall be final and conclusive. The Closing Net
Working Capital Statement, as modified in accordance with such a resolution of
disputed items, shall be deemed final and conclusive (and shall in such case be
deemed the “Final Closing Net Working Capital Statement”).

 

(vi) Adjustments to Purchase Price. Based on the Closing Net Working Capital
Value set forth in the Final Closing Net Working Capital Statement, the Purchase
Price will be increased or decreased dollar for dollar as follows (as so
adjusted, the “Closing-Adjusted Purchase Price”):

 

(1) if the Closing Net Working Capital Value is more than the January 23, 2006
Net Working Capital Value, the Purchase Price will be increased by the amount
that the Initial Closing Net Working Capital exceeds the January 23, 2006 Net
Working Capital Value;

 

(2) if the Closing Net Working Capital Value is less than the January 23, 2006
Net Working Capital Value, the Purchase Price will be decreased by the amount
that the Closing Net Working Capital is less than the January 23, 2006 Net
Working Capital Value;

 

(3) if the Closing Net Working Capital Value is equal to the January 23, 2006
Net Working Capital Value, the Purchase Price will not be adjusted.

 

(vii) Payment of Any Adjusted Amount. Purchaser or Seller Group, as applicable,
shall within ten (10) business days following determination of the Final Closing
Net Working Capital Statement, wire transfer funds in the amount of the
difference between the Purchase Price and the Closing-Adjusted Purchase Price.

 

(e) Credits and Prorations. Seller Group and Purchaser shall prorate all
Prepaids, including any payments due or advanced under any lease as of the
Initial Closing Date. With respect to any amounts that have not yet been billed
or otherwise determined, Seller Group and Purchaser shall prorate such amounts
based on the most recent ascertainable bill, based on when such Prepaids and
other assessments are due and payable. Prepaids that are prorated to Seller
Group shall be included in the calculation of Net Working Capital Value for
purposes of Section 3(d) hereof, to the extent that such Prepaids are
transferred to Purchaser. “Prepaids” as used in this Agreement shall mean,
subject to proration as described in this paragraph, all prepaid expenses,
security deposits, advances made by Seller Group and all other prepaid items,
credits and discounts for or toward the purchase of goods, services and
Inventory relating to the Business, which have not as of the Initial Closing
Date been received in full by the Business.

 

4. Closings.

 

(a) Initial Closing. Subject to the satisfaction or waiver of all conditions of
the Initial Closing set forth in this Agreement, the consummation of the
purchase and sale of the Assets (other than the Assets that relate to the
operation of the Business in China (the “China Assets”)) (the “Initial Closing”)
shall take place on February 28, 2006 at 10:00 a.m. (Pacific Time) at the
offices of Hopkins & Carley, A Professional Corporation, 70 S. First Street, 2nd
Floor, San Jose, California 95113 or at such other time and place as Seller
Group and Purchaser

 

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may agree in writing; provided, however, that if any of the conditions to the
Initial Closing has not been satisfied or waived by such date (other than a
condition related to an action contemplated to occur at the Initial Closing),
the Initial Closing shall occur on such later date as the parties shall agree
upon but in no event later than three business days after satisfaction or waiver
of all of the closing conditions (such date of the Initial Closing, the “Initial
Closing Date”). At the Initial Closing, Seller Group and Purchaser shall deliver
the documents and take the actions referred to in Section 12 hereof.

 

(b) China Closing. The consummation of the purchase and sale of the China Assets
(the “China Closing”) shall take place on the date that is the six month
anniversary of the Initial Closing at 10:00 a.m. (Pacific Time) at the offices
of Hopkins & Carley, A Professional Corporation, 70 S. First Street, 2nd Floor,
San Jose, California 95113 or at such other time and place as Seller Group and
Purchaser may agree in writing (such date of the China Closing, the “China
Closing Date”). At the China Closing, Seller Group shall assign all of its
right, title and interest in and to the China Assets. Purchaser and Seller Group
agree to execute and/or cause to be delivered to each other party hereto such
instruments and other documents, and will take such other actions, as such other
party may reasonably request (prior to, at or after the China Closing) for the
purpose of carrying out or evidencing the transfer of the China Assets as
contemplated hereunder.

 

5. Representations and Warranties of Seller Group. Except as set forth on any of
the Schedules to this Section 5 (which, together with the Schedules to
Section 7, are collectively referred to as the “Disclosure Schedule”), it being
agreed that an item included on a particular section of the Disclosure Schedule
referenced in any section or subsection of Section 5 or Section 7 shall be
deemed to relate to each other section or subsection of Section 5 or Section 7
to the extent such relationship is reasonably apparent from the face of such
disclosure), the members of Seller Group hereby jointly and severally represent
and warrant to Purchaser:

 

(a) Organization and Authority.

 

(i) Interconnect (A) is a company duly organized, validly existing and in good
standing under the laws of the State of Delaware and (B) is duly qualified to
conduct business under the laws of each jurisdiction listed in Schedule 5(a)(i),
which includes all jurisdictions in which the Business makes such qualification
necessary, except where the failure to be so qualified and in good standing
would not reasonably be expected to have a Material Adverse Effect. Interconnect
has all corporate power and authority it needs to carry on its operations with
respect to the Business as currently conducted and to own, lease or operate the
Assets owned, leased or operated by it. Except for the other members of Seller
Group, Interconnect has no direct or indirect equity ownership in any
corporation, limited liability company, partnership or other business entity
that is involved in the Business.

 

As used in this Agreement, “Material Adverse Effect” means (i) any violation or
other matter that would have a material adverse effect on the ability of Seller
Group to perform its obligations under this Agreement or on the ability of
Seller Group to consummate the transactions contemplated hereby, (ii) any
violation or other matter that either individually or in the aggregate with all
other circumstances, changes or effects, has a material adverse effect on the
Assets or the financial condition or results of operations of the Business or
(iii) any violation or other matter that either individually or in the aggregate
with all other circumstances, changes

 

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or effects, has a material adverse effect on the Business but excluding, in each
case under (i) through (iii): (v) effects or changes that are generally
applicable to the industries and markets in which the Business operates,
(w) changes in the United States or world financial markets or general economic
conditions, (x) changes in generally accepted accounting principles (“GAAP”) or
in any interpretation thereof, (y) any actions or failures to act by Purchaser
or its affiliates, or (z) effects directly or primarily arising out of the
execution or delivery of this Agreement, the consummation of the transactions
contemplated hereby or the public announcement (or other disclosure to third
parties) of this Agreement or the transaction contemplated hereby.

 

(ii) Each member of Seller Group has the entity power to own its property and
assets and to carry on its businesses as now being conducted. Each member of
Seller Group has full entity power and authority to enter into this Agreement
and any agreements contemplated hereby to which it is a party and to carry out
the transactions contemplated by this Agreement and any such agreements
contemplated hereby.

 

(b) Authorization and No Conflicts. The execution, delivery and performance of
this Agreement, the transactions contemplated hereby and all other documents and
agreements of Seller Group delivered or to be delivered pursuant hereto or
thereto: (i) have been duly authorized by all necessary corporate action on the
part of each member of Seller Group, (ii) will not result in any conflict with,
or breach or violation of, or default under, (A) the articles of incorporation
or bylaws (or equivalent instruments) of any member of Seller Group or (B) any
judgment, order, decree, mortgage, agreement, deed of trust, indenture or other
instrument to which such member of Seller Group is a party or by which it is
bound, or any foreign, federal, state or local statute or regulation applicable
to such member of Seller Group, and (iii) will not result in the creation of any
lien on any of the Assets, except in the case of clauses (ii) and (iii), as
would not reasonably be expected to have a Material Adverse Effect. This
Agreement has been duly executed and delivered on behalf of each member of
Seller Group and constitutes the legal, valid and binding obligation of each
member of Seller Group enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting creditors’ rights and remedies generally.

 

(c) Consents. To Seller Group’s knowledge, except as set forth on Schedule 5(c)
attached hereto, no consent or approval of any person, regulatory authority,
governmental organization or third party, and no approval, order, license,
permit, franchise, declaration or filing of any nature, is required as a result
of or in connection with Seller Group’s execution, delivery and performance of
its obligations under this Agreement.

 

(d) Financial Information. Attached hereto as Schedule 5(d) is a pro forma
statement of profit and loss of the Business for the periods indicated therein
(the “Financial Statements”). The Financial Statements fairly present in all
material respects the pro forma results of operations of the Business as of the
date or for the period stated thereon, except that such Financial Statements are
subject to normal year-end adjustments.

 

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(e) Absence of Changes or Events. Except as disclosed on Schedule 5(e) attached
hereto, since December 31, 2005, Seller Group has conducted its business only in
the ordinary course consistent with past practice and, other than events or
changes that would not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect, there has not been:

 

(i) any material adverse change in the financial condition, results of
operations, assets, liabilities, or cash flow of the Business, or, to the
knowledge of Seller Group, any occurrence, circumstance, or combination thereof
which reasonably could be expected to result in any such material adverse
change;

 

(ii) any transaction relating to the Business or the Assets (other than the
transactions contemplated herein) involving not less than $50,000 which was
entered into or carried out by Seller Group other than in the ordinary and usual
course of business;

 

(iii) any material change made by Seller Group in its method of operating the
Business or its accounting practices relating thereto;

 

(iv) any mortgage, pledge, lien, security interest, hypothecation, charge, or
other encumbrance imposed or agreed to be imposed on or with respect to the
Business or any of the Assets;

 

(v) any sale, lease, or disposition of, or any agreement to sell, lease, or
dispose of any of the Assets, other than sales, leases, or dispositions in the
usual and ordinary course of business and consistent with prior practice or with
respect to which Purchaser has been consulted and has consented in writing;

 

(vi) any material modification, waiver, change, amendment, release, rescission,
accord and satisfaction, or termination of, or with respect to, any material
term, condition, or provision of any contract, agreement, license, or other
instrument to which Seller Group is a party and which is material to the
Business or the Assets, other than any satisfaction by performance in accordance
with the terms thereof in the usual and ordinary course of business and
consistent with prior practice;

 

(vii) any work stoppage, slow-down, picket, strike or lock-out involving
employees of Seller Group working in the Business nor, to the knowledge of
Seller Group, a filing of any petition or charge of unfair labor practices
regarding Seller Group and involving the Business with the National Labor
Relations Board or any other governmental agency;

 

(viii) any increase in or modification of the compensation or benefits payable
or to become payable by Seller Group to any Transferred Employee;

 

(ix) any payments, transfer, assignments by Seller Group of any rights, property
or assets used exclusively in the Business that would otherwise be included in
the Assets to be transferred hereunder to any shareholder, including any
repayment of all or any portion of any indebtedness owed by Seller Group to any
shareholders or any officer, director, consultant of or to Seller Group, other
than in the ordinary course of business or in connection with the transactions
contemplated hereby;

 

(x) any express waivers of any material rights relating to the Business by
Seller Group;

 

(xi) any dispositions or abandonment of any of Seller Group’s trademarks,
tradenames, patents, copyrights, or other Proprietary Rights or application
therefore

 

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that would otherwise be included in the Assets to be transferred hereunder, in
each case to the extent that such Proprietary Rights are necessary to the
conduct of the Business; or

 

(xii) to the knowledge of Seller Group, any action taken by any member of Seller
Group as of the date hereof in respect of a customer in connection with the
operation of the Business that could reasonably be expected to cause such
customer to terminate its purchase of products or services of the Business.

 

(f) Taxes. K&S is not a “foreign person” as defined in Section 1445(f)(3) of the
Code and no tax is required to be withheld pursuant to Section 1445 of the Code
as a result of the purchase contemplated by this Agreement. Seller Group has
withheld and paid all taxes and other amounts required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party. The transactions
contemplated herein are not subject to any tax withholding requirements under
the Code. Seller Group has duly filed all foreign, federal, state, county and
municipal tax returns, reports and declarations which were required to be filed
by them and has paid all taxes which have become due pursuant thereto and all
other taxes, assessments and other governmental charges imposed by law upon
Seller Group or any of its properties, assets, income, receipts, payrolls,
sales, transactions, capital, net worth or franchises. To Seller Group’s
knowledge, there are no pending tax examinations affecting the Business or
Assets nor are there any claims for taxes pending or any basis therefor.
Notwithstanding anything to the contrary, no representation or warranty is made
with respect to the tax treatment of the Business or Assets after the Initial
Closing Date.

 

(g) Assets. Except as set forth in Schedule 5(g), the Assets (including, for
purposes of this Section 5(g) only, the Sublease Facilities, to the extent the
Sublease Facilities are used for the Business) constitute all of the material
assets (tangible and intangible) necessary for the conduct of the Business as
currently conducted. The tangible personal property relating to the Business
included in the Assets are in the aggregate in operating condition and are
suitable for the purposes for which they are presently used.

 

(h) Accounts Receivable; Inventory. The Transferred Receivables arose in the
ordinary course of business and are not and, to Seller Group’s knowledge, will
not be subject to any claim of offset, recoupment, setoff, or counter-claim, and
Seller Group has no knowledge of any specific facts or circumstances (whether
asserted or unasserted) that would give rise to any such claim. No amount of
Transferred Receivables are or will be contingent upon the performance by Seller
Group of any obligation or contract. Schedule 5(h) contains an aging report of
the Transferred Receivables as of January 23, 2006. The Inventory is of a
quality usable and saleable in the ordinary course of the conduct of the
Business as heretofore conducted and is not obsolete, as determined consistent
with Seller Group’s normal accounting policies.

 

(i) Title to Property. Except as set forth Schedule 5(i) attached hereto:

 

(i) Seller Group has all rights, title and interest in, all of the Assets (other
than the China Assets), free and clear of all claims, liens, charges,
encumbrances, security interests, licenses, rights of others or options of any
kind whatsoever (“Claims”), except for the following (“Permitted Claims”):
(i) Claims for taxes, assessments or other governmental charges or levies that
are not yet due or payable or for current taxes, assessments or other
governmental

 

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charges or levies that may thereafter be paid without penalty or that are being
contested in good faith by appropriate proceedings, (ii) statutory Claims of
landlords and Claims of carriers, warehousemen, mechanics, materialmen,
repairmen and other Claims arising in the ordinary course of business,
(iii) Claims incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance or other types of
social security, (iv) Claims included in the Assumed Liabilities, and (v) Claims
on goods in transit incurred pursuant to documentary letters of credit, in each
case arising in the ordinary course, and (vi) other Claims or imperfections of
title to or on property that are not material in amount or do not materially
detract from the value of or materially impair the existing use of the property
affected by such Claim or imperfection.

 

(ii) Seller Group owns or has a valid leasehold interest in all of the China
Assets.

 

(j) Patents, Trademarks, Tradenames, Service Marks and Copyrights.

 

(i) Schedule 5(j)(i)(1) sets forth an accurate and complete list of all
registered Trademarks owned by Seller Group and used or held for use exclusively
in connection with the Business (collectively “Business Registered Marks”),
Schedule 5(j)(i)(2) sets forth an accurate and complete list of all Patents and
Patent applications owned by Seller Group and used or held for use exclusively
in connection with the Business (collectively the “Business Patents”), and
Schedule 5(j)(i)(3) sets forth an accurate and complete list of all registered
Copyrights owned by Seller Group and used or held for use exclusively in
connection with the Business, and all pending applications for registration of
Copyrights filed anywhere in the world that are owned (in whole or in part) by
Seller Group and used or held for use exclusively in connection with the
Business (collectively the “Business Copyrights” and, together with the Business
Registered Marks and the Business Patents, the “Business Registered IP”).

 

(ii) The Proprietary Rights include the Business Registered IP and trade names,
trade secrets, information, proprietary rights and processes necessary for the
operation of the Business as now conducted. Unless otherwise noted in Schedule
5(j)(ii), Seller Group is the sole owner of all right, title and interest in and
to or otherwise has the right to transfer all the Proprietary Rights for use in
the Business for making Business Products free and clear of all liens,
encumbrances, claims, rights of use and restrictions whatsoever. Except as set
forth in Schedule 5(j)(ii), there are no outstanding options, licenses, or
agreements of any kind relating to the Proprietary Rights.

 

(iii) To Seller Group’s knowledge, neither the Proprietary Rights nor any other
processes, methods, or operations employed by Seller Group in the Business as
now conducted conflicts with or infringes upon any valid and enforceable
proprietary rights or intellectual property of any other person, firm,
corporation, or other entity. There is not pending or, to Seller Group’s
knowledge, threatened any claim or litigation contesting the right of Seller
Group to engage in or employ any such processes, methods, operations, or the
Proprietary Rights in the Business as now conducted. To Seller Group’s
knowledge, no employee of Seller Group is in violation of any term of any
employment contract, proprietary information or inventions agreement, or any
other contract or agreement relating to the relationship of any such employee
with Seller Group or any previous employer. To Seller Group’s knowledge, none of
the employees of Seller Group is obligated under any contract (including
licenses, covenants, or

 

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commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency which would conflict with
their obligation to use their best efforts to promote the interests of the
Business or which would conflict with the Business as conducted.

 

(k) Insurance. Schedule 5(k) attached hereto contains a description (including,
without limitation, the name of the carrier, the coverage limits and premium
amounts) of each of the policies of insurance with respect to the Business, each
of which policies is in full force and effect, including without limitation
Seller Group’s workers’ compensation policy. Seller Group has not been refused
any insurance by an insurance carrier during the past three years nor has any
insurance policy been cancelled with respect to Seller Group or the Assets.
There is no claim by Seller Group pending under any of such policies. Except as
otherwise set forth in Schedule 5(k), all premiums due and payable under all
such policies have been paid, and Seller Group is otherwise in full compliance
with the material terms of such policies.

 

(l) Contracts and Commitments.

 

(i) Schedule 5(l) attached hereto (1) contains a list of each contract,
commitment, agreement, lease, license, undertaking and other arrangement to
which Seller Group is a party, or by which it is bound, affecting or relating to
Seller Group, the Business, the Assets or consummation of the transactions
contemplated hereby (the “Contracts”) which is Material to the Business and
(2) identifies (by subheading or otherwise) those Contracts agreed by the
parties to be assumed by Purchaser at the Initial Closing or the China Closing.

 

(ii) A Contract shall be considered “Material” for purposes of this Section 5(l)
if such Contract (or the matters covered thereby) (1) is or was incurred outside
the ordinary course of business, (2) is or was incurred in the ordinary course
of business and involves in excess of $10,000.00 with respect to sale of goods
or services or other items, including leases, sales representative agreements
and distribution agreements, or (3) is any other Contract that does not
otherwise meet the standards of Section 5(l)(ii)(1) and (2) hereof, but which
Contract Seller Group and Purchaser are, by including such Contract on said
Schedule 5(l) and designating the same thereon as an Assumed Contract, hereby
agreeing that Purchaser shall assume at the Initial Closing (to the extent
provided in Section 3(b) hereto).

 

(iii) Schedule 5(l) also contains a list of all employment agreements,
consulting agreements, executive compensation plans, bonus plans or agreements,
sales commission plans or agreements, collective bargaining agreements and
retirement plans, affecting any Transferred Employees (each of which shall also
be deemed “Material” for purposes of this Section 5(l)).

 

(iv) Seller Group has delivered to Purchaser a true and correct copy of each of
the written agreements which is required by clause (i) or clause (ii) of this
Section 5(l) to be listed on Schedule 5(l). Except as set forth on Schedule
5(l), each of the agreements that is required to be listed on Schedule 5(l) and
is designated (under a subheading to such effect or otherwise) as a Contract to
be assigned is in full force and effect and has not been amended, modified or
assigned, and all payments and other amounts required to be paid by Seller Group
under each of such agreements, which have become due, have been paid; there
exists no default under any of such agreements by Seller Group nor, to Seller
Group’s knowledge, by any other

 

12

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party thereto, and no event, occurrence, condition or act which, with the giving
of notice, the lapse of time or the happening of any further condition would
become a default under any of such agreements by Seller Group or, to Seller
Group’s knowledge, by any other party thereto; no waiver or indulgence has been
granted by Seller Group to the other party under any of such agreements; and all
of the agreements listed on Schedule 5(l) and designated by subheading to such
effect or otherwise) as Contracts to be assigned, except as otherwise indicated
thereon, are assignable to Purchaser by Seller Group without the consent of any
party and the assignment thereof will not affect the validity or enforceability
thereof or cause any material change in the substantive terms thereof.

 

(m) Litigation.

 

(i) Except as disclosed in Schedule 5(m) attached hereto, there is no legal
action, decree, judgment, order, settlement agreement, arbitration or other
proceeding, suit or governmental investigation pending or, to the knowledge of
Seller Group, threatened against Seller Group in respect of the Business or any
of the Assets, nor were there any legal actions, decrees, judgments, orders,
settlement agreements, arbitrations or other proceedings, suits or governmental
investigations in respect of the Seller Group that affect the Business pending
at any time during the period commencing with January 1, 2005 and ending on the
date of this Agreement, which matters were dismissed, settled or otherwise
terminated or finally resolved in any manner during such period.

 

(ii) Except as disclosed in said Schedule 5(m), Seller Group has not been
charged with nor, to Seller Group’s knowledge, is Seller Group in violation of,
or in default with respect to, any judgment, order, decree, law, rule or
regulation of, or any return or report required to be filed with, any applicable
foreign, federal, state, municipal or governmental department, commission,
board, bureau, agency or instrumentality with respect to Seller Group which
affects the Business or the Assets.

 

(n) Compliance with Laws.

 

(i) Seller Group has complied in all material respects with all laws,
regulations and orders which may materially affect the Business or the Assets or
the transactions contemplated hereby or which may reasonably be expected to
subject Purchaser to material liability. Seller Group has obtained all
governmental permits or licenses, if any, required by the Business, the lack of
which would reasonably be expected to have a Material Adverse Effect.

 

(ii) Except as described on Schedule 5(n) attached hereto and except as would
not reasonably be expected to have a Material Adverse Effect, Seller Group has
conducted and currently conducts its business in material compliance with all
applicable foreign, federal, state and local requirements with respect to air
and water quality, with respect to generation, transportation, handling,
treatment, storage and disposal of waste (including hazardous waste, if any),
with respect to environmental laws and with respect to health and safety laws.
Except as described on Schedule 5(n) and except as would not reasonably be
expected to have a Material Adverse Effect, Seller Group has complied in all
material respects with all notice, recordkeeping and reporting requirements
imposed by any regulatory authority and any informational requests or demands
arising under any applicable foreign, federal, state, local or other
environmental or health and safety laws. Except as described on Schedule 5(n)
and except as would not

 

13

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reasonably be expected to have a Material Adverse Effect, there are no
outstanding or, to Seller Group’s knowledge, threatened claims, suits or
proceedings or judgments against or involving Seller Group arising under any
applicable foreign, federal, state, local or other environmental, nuisance,
health and safety laws, regulations, order or requirements relating to Seller
Group or the Assets. Except as described on Schedule 5(n) and except as would
not reasonably be expected to have a Material Adverse Effect, Seller Group is
not subject to any notice of any outstanding or, to Seller Group’s knowledge,
threatened non-compliance order or notice of violation issued by any regulatory
authority administering environmental or health and safety laws in connection
with operation of the Business or by any predecessor in interest, which
violation or non-compliance has not been resolved to the satisfaction of the
regulatory authority. Except as described on Schedule 5(n), Seller Group is not
subject to any judgment, consent order, consent decree or other restriction,
specification or requirement issued by any such regulatory authority.

 

(iii) Except as described on Schedule 5(n), to Seller Group’s knowledge, there
has not been any release or disposal of any “hazardous waste” or “hazardous
substance” (as such terms are defined under applicable foreign, federal, state,
local or other laws and regulations) by Seller Group in violation of any law or
regulation upon any real property owned, leased or operated by Seller Group and
used in the Business. Except as described on Schedule 5(n), to Seller Group’s
knowledge, there has been no “release” or “threatened release” of any “hazardous
substance” (as such terms are defined under applicable foreign, federal, state,
local or other laws and regulations) by Seller Group or K&S from or on any site
used in the Business at which there has been any disposal of any “solid waste”
or “hazardous waste” (as such terms are defined under applicable foreign,
federal, state, local or other laws and regulations) for which Seller Group may
be liable. Except as described on Schedule 5(n), Seller Group has not directly
or indirectly, disposed of “hazardous” or “solid wastes” (as such terms are
defined under applicable foreign, federal, state, local or other laws and
regulations) off-site in violation of law. Except as described on Schedule 5(n),
Seller Group has not received any notice or otherwise has no knowledge of any
enforcement order or notice of violation issued by any regulatory authority to
the owners, operators or users of the facilities leased by Seller Group with
respect thereto, or to the owners, operators or users of any other off-site
facilities in which order or notice Seller Group or K&S has been named as a
potentially responsible party.

 

(o) Employees.

 

(i) No work stoppage, slow-down, picket, strike or lock-out is presently
occurring with respect to the Business, nor, to the knowledge of Seller Group,
is any such work stoppage, slow-down, picket, strike or lock-out threatened. To
Seller Group’s knowledge, (i) there are no organizational efforts presently
being made or threatened by or on behalf of any labor union with respect to any
employees of Seller Group that work in the Business, and (ii) no union or other
labor organization has attempted to organize any of current or former employees
of Seller Group that work in the Business. No member of Seller Group is a party
to any collective bargaining agreements or other labor union contracts other
than those, if any, set forth on Schedule 5(l) attached hereto.

 

(ii) Except as set forth on Schedule 5(o) attached hereto, no Transferred
Employee is subject to any contracts, written or unwritten, that specify a
particular

 

14

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employment or service term with Seller Group, or limit Seller Group’s right to
terminate the employment or service relationship of such Transferred Employee.

 

(iii) Schedule 5(o) sets forth a full and complete list of all Transferred
Employees as of January 23, 2006, which Schedule 5(o) sets forth each
Transferred Employee’s name, job title, and rate of compensation. Only those
individuals listed on Schedule 5(o) for whom a number is included in the column
labeled “Job Offer” shall be deemed “Transferred Employees.” Except as expressly
contemplated in this Agreement or as set forth on Schedule 5(o) attached hereto,
as of the date of this Agreement Seller Group has no knowledge of any intent by
any of its of Transferred Employees to terminate it relationship with Seller
Group, whether before, at or after the Initial Closing, nor does Seller Group
have a present intention to terminate the employment of any of the foregoing.

 

(iv) Seller Group has not failed to comply with all applicable foreign, federal,
state, and local laws, rules, and regulations relating to employment of
employees working in the Business, and all applicable laws, rules, and
regulations applicable to employees working in the Business governing payment of
minimum wages and overtime rates, and the withholding and payment of taxes from
compensation of such employees, except in each case where such failure would not
reasonably be expected to have a Material Adverse Effect. There are no unfair
labor practice charges, charges of discrimination, wrongful termination or other
similar complaints pending against Seller Group or its management involving
employees now or previously employed by Seller Group in the Business.

 

(p) Employee Benefit Plan and Related Matters. Except as set forth in Schedule
5(p) attached hereto, no member of Seller Group is a party to any pension,
profit sharing, savings, retirement, or other deferred compensation plan, or any
bonus (whether payable in cash or stock) or incentive program, or any group
health plan (whether insured or self-funded), or any disability or group life
insurance plan or other employee welfare benefit plan. Seller Group is not a
party to, does not contribute to and has no liability under, any “multiemployer
plan” as defined in Section 3(37) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”). If any such plans exist, Seller Group has
furnished to Purchaser or its counsel complete and accurate copies of such
plans.

 

(q) Brokers’ and Finders’ Fees. Except as set forth on Schedule 5(q) attached
hereto, neither Seller Group nor K&S is obligated to pay any fees or expenses of
any broker, finder or investment banker in connection with the origin,
negotiation, or execution of this Agreement or in connection with any
transactions contemplated hereby or thereby.

 

(r) Interested Party Transactions. No officer, director, employee or affiliate
of K&S has any interest in any Assets, and, to the knowledge of Seller Group, no
such person has any business relationship with K&S pertaining to the Assets,
except as an officer, director or employee of Seller Group. Except as set forth
on Schedule 5(r) attached hereto, neither K&S nor Seller Group is a party to any
material business transaction relating to the Business with any entity in which,
to the knowledge of Seller Group, any of their respective officers, directors or
employees, or members of any of their immediate families, has, directly or
indirectly, individually or collectively, any material financial interest that
has not been entered into on an arms length basis.

 

15

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(s) Product and Service Warranties. Schedule 5(s) attached hereto sets forth a
true, accurate and complete description of all of Seller Group’s standard
warranty policies relating to Seller Group’s products or services.

 

(t) Disclaimer of Other Representations and Warranties. EXCEPT AS EXPRESSLY SET
FORTH IN THIS SECTION 5 NEITHER K&S NOR ANY MEMBER OF THE SELLER GROUP MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
TO THE BUSINESS, THE ASSETS, THE ASSUMED LIABILITIES, THE SELLER GROUP, OR ANY
OF ITS OTHER ASSETS, LIABILITIES OR OPERATIONS, INCLUDING WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

(u) Customers. Schedule 5(u) attached hereto sets forth a list of the ten
customers of Seller Group who accounted for the most sales of Seller Group
during Seller Group’s last two full fiscal years and during the interim period
ended September 30, 2005 in respect of each of the Interface, Vertical and
Cantilever divisions of the Business. Seller Group has furnished Purchaser with
complete and accurate copies or descriptions of all current agreements with such
customers to the extent relating to the Business. Seller Group has not received
notice as of the date of this Agreement from any such customer of its intention
to terminate its purchase of products and services in respect of the Business
from Seller Group.

 

(v) Accounts Payable. Attached hereto as Schedule 5(v) is a true, correct and
complete list of all accounts payable and trade payables of Seller Group (the
“Accounts Payable”) as of January 23, 2006 together with an aging thereof by
vendor, supplier or other payee. Seller Group is not in material breach of the
payment terms related to any Accounts Payable. Each and all of the Accounts
Payable and each and all of such subsequent payables, expenses or liabilities
arose from bona fide purchases or transactions in the ordinary course of the
business of Seller Group.

 

(w) Leases. Seller Group is currently leasing real property relating to the
Business at the locations identified on Schedule 5(w) attached hereto (the
“Facilities”). To the knowledge of Seller Group, all of the improvements,
additions, and alterations made to the Facilities by or on behalf of Seller
Group or its predecessors-in-interest were properly consented to by each
respective landlord under each of the Leases. Rent and all other charges due
under any lease for the Facilities have been timely paid and, to the knowledge
of Seller Group, none of Seller Group are in material default thereunder.

 

6. Representations and Warranties of Purchaser. Each Purchaser entity jointly
and severally represents and warrants to K&S and Seller Group as follows:

 

(a) Each of SV Singapore and SV US is a corporation duly organized, validly
existing and in good standing under the laws of the state or country of its
formation and has full power and authority to enter into this Agreement and any
related agreements and to carry out the transactions contemplated by this
Agreement and any related agreements. SV Parent is a corporation duly organized
under the laws of Singapore, validly existing and in good standing. SV Parent
beneficially owns and indirectly controls the voting and disposition of a
majority of

 

16

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the issued and outstanding shares of the capital stock of SV US, SV Singapore
and each of the other entities that collectively comprise Purchaser.

 

(b) Authorization and No Conflicts. The execution, delivery and performance of
this Agreement, the transactions contemplated hereby and thereby, and all other
documents and agreements of Purchaser delivered or to be delivered pursuant
hereto and thereto: (i) have been duly authorized by all necessary corporate
action on the part of Purchaser, and (ii) will not result in any conflict with,
or breach or violation of, or default under, (A) the Articles of Incorporation
or Bylaws or equivalent documents of Purchaser, or (B) any judgment, order,
decree, mortgage, agreement, deed of trust, indenture or other instrument to
which Purchaser is a party or by which it is bound, or any statute or regulation
applicable to Purchaser. Without limiting the foregoing, with respect to
Purchaser’s execution and performance of this Agreement, (x) the approval of the
Board of Directors of SV Parent has been obtained or is not required and
(y) approval of this Agreement by SV Parent’s stockholders is not required under
applicable law. This Agreement has been duly executed and delivered on behalf of
Purchaser and constitutes the legal, valid and binding obligations of Purchaser
enforceable in accordance with its terms, except as such enforceability may be
limited by the application of laws relating to bankruptcy, insolvency,
reorganization or affecting creditors’ rights generally and except to the extent
that injunctive or other equitable relief is within the discretion of the court.

 

(c) Consents. To the knowledge of Purchaser, no consent or approval of any
person, regulatory authority, governmental organization or third party, and no
approval, order, license, permit, franchise, declaration or filing of any
nature, is required as a result of or in connection with Purchaser’s execution,
delivery and performance of its obligations under this Agreement.

 

(d) Litigation. There is no legal proceeding pending or, to Purchaser’s
knowledge, threatened, against Purchaser that questions or challenges the
validity of this Agreement or the ability of Purchaser to consummate any of the
transactions contemplated hereby.

 

(e) Brokers’ Fees. Purchaser is not obligated to pay any fees or commissions to
any broker, finder or agent with respect to the contemplated transactions.

 

(f) Adequacy of Funds. Purchaser has adequate financial resources to satisfy its
monetary and other obligations under this Agreement, including the obligation to
pay the Purchase Price at the Initial Closing. To the extent that Purchaser does
not have sufficient funds to pay the Purchase Price at the Initial Closing, SV
Parent has agreed to transfer the necessary funds to Purchaser by letter dated
January 24, 2006 from SV Parent to K&S.

 

(g) Limited Representations. Except as set forth in Sections 5 and 7, neither
K&S nor any Seller Group member makes any express or implied representation or
warranty with respect to the Business, the Assets or otherwise or with respect
to any other written or oral information provided by K&S, a Seller Group member,
or any of their respective affiliates or representatives, including as to
merchantability or fitness for any particular purpose. Purchaser acknowledges
that it has had the opportunity to (i) review material regarding Seller Group
and the Business made available by Seller Group and otherwise requested by
Purchaser and (ii) perform such due diligence examination of the Business as
Purchaser has deemed appropriate.

 

17

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However, neither K & S nor any member of Seller Group shall have any liability
to Purchaser in respect to its reliance on any such material or any
representations or warranties or statements made for or on behalf of K&S or
Seller Group, except as specifically set forth in this Agreement in respect to
the representations and warranties in Sections 5 and 7 hereof.

 

7. Representations and Warranties of K&S. K&S represents and warrants to
Purchaser as follows:

 

(a) Organization and Authority. K&S is a corporation duly organized, validly
existing and in good standing under the laws of the State of Pennsylvania and
has full power and authority to enter into this Agreement and to carry out the
transactions contemplated by this Agreement.

 

(b) Authorization and No Conflicts. The execution, delivery and performance of
this Agreement, the transactions contemplated hereby, and the issuance of the
Shares: (i) have been duly authorized by all necessary corporate action on the
part of K&S, and (ii) will not result in any conflict with, or breach or
violation of, or default under, (A) the Articles of Incorporation or Bylaws of
K&S, (B) any judgment, order, decree by which K&S is bound or (C) any agreement
to which K&S is a party or by which it is bound, except in the case of clauses
(B) and (C), as would not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. This Agreement has been duly
executed and delivered on behalf of K&S and constitutes the legal, valid and
binding obligations of K&S enforceable in accordance with its terms, except as
such enforceability may be limited by the application of laws relating to
bankruptcy, insolvency, reorganization or affecting creditors’ rights generally
and except to the extent that injunctive or other equitable relief is within the
discretion of the court.

 

(c) Consents. No consent or approval of any person, regulatory authority,
governmental organization or third party, and no approval, order, license,
permit, franchise, declaration or filing of any nature, is required as a result
of or in connection with K&S’ execution, delivery and performance of its
obligations under this Agreement.

 

(d) Litigation. There is no legal proceeding pending or, to Purchaser’s
knowledge, threatened, against K&S that questions or challenges the validity of
this Agreement or the ability of K&S to consummate any of the transactions
contemplated hereby.

 

(e) Brokers’ Fees. Except as disclosed in Schedule 5(q), K&S is not obligated to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated hereby.

 

8. Covenants of Seller Group.

 

(a) Title to Property. At the Initial Closing, Seller Group shall, and K&S shall
cause Seller Group to, transfer to Purchaser all of its rights, title and
interests in the Assets (other than the China Assets), free and clear of any
Claims other than Permitted Claims.

 

(b) Further Assurances. From time to time, at Purchaser’s request, whether on or
after the Initial Closing Date and without further consideration, Seller Group
shall execute and deliver or cause to be executed and delivered such further
instruments of conveyance and

 

18

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transfer and take such other action as Purchaser reasonably may require more
effectively to convey and transfer to Purchaser title to and possession of the
Assets.

 

(c) Consents. At or prior to the Initial Closing, Seller Group shall use
commercially reasonable efforts to deliver to Purchaser any required written
consents from third parties to the assignment by Seller Group to Purchaser of
those Assumed Contracts that are so designated (under a subheading to such
effect) on Schedule 5(l) hereto as Contracts to be assigned and that relate only
to the Business.

 

(d) Accounts Receivable. Purchaser shall use commercially reasonable efforts to
collect the Transferred Receivables in accordance with their payment terms. If
despite its commercially reasonable efforts, which shall not include the
obligation to commence litigation, Purchaser has not collected the carrying
value of the Transferred Receivables by the six month anniversary of the Initial
Closing and Purchaser notifies K&S within 30 days after such six month
anniversary that it desires K&S to acquire the unpaid Transferred Receivables,
Purchaser shall assign to K&S and K&S shall purchase from Purchaser such unpaid
Transferred Receivables for an amount equal to their carrying value. Such
assignment and purchase shall occur within 30 days after the earlier of receipt
by K&S of such notice or completion by K&S of an audit of the Transferred
Receivables confirming the amount of unpaid Transferred Receivables, which K&S
may conduct, and Purchaser agrees to cooperate in such audit, within the 30 day
period after receipt by K&S of such notice. Notwithstanding anything in this
Agreement to the contrary, K&S may collect any accounts receivable assigned to
it.

 

9. Covenants by Purchaser.

 

(a) Warranty Services. From and after the Initial Closing, Purchaser shall
provide such services on behalf of Seller Group as may be necessary to cover any
warranty of Seller Group identified on Schedule 5(s) attached hereto for any
services provided or goods sold by Seller Group prior to the Initial Closing
(but Purchaser shall not be responsible for any breach of any such warranties by
Seller Group prior to the Initial Closing). Seller Group agrees to compensate
Purchaser for its direct costs for providing such services on Seller Group’s
behalf to the extent the direct costs of providing such services exceed $50,000
in aggregate. Seller Group shall have the right to conduct periodic audits of
Purchaser’s records following the Initial Closing, and Purchaser shall cooperate
with Seller Group’s reasonable requests in connection with any such audit.

 

(b) Assumed Obligations. Purchaser agrees to pay all debts, and perform all
obligations, assumed by Purchaser pursuant to Section 3(b) of this Agreement.

 

(c) Applicable Sales Taxes. Seller Group and Purchaser shall each pay one-half
of all sales taxes that arise as a result of the transactions consummated
pursuant to this Agreement.

 

(d) Retention of Records. Purchaser agrees to (a) retain, for the benefit of
Seller Group, for a period of five (5) years commencing with the Initial Closing
Date, copies of all of Seller Group’s files, records, software, books of account
and other records, including all Contracts, that Seller Group delivers to Seller
Group pursuant to the transactions contemplated by this Agreement (collectively,
the “Retained Records”), or (b) to the extent Purchaser wishes

 

19

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to destroy all or any portion of the Retained Records, Purchaser will provide
Seller Group with (i) 60 days prior written notice of its intent to destroy the
Retained Records and (ii) the option, exercisable within the 60-day notice
period, to take possession of the Retained Records for Seller Group’s sole
benefit. To the extent Purchaser retains possession of the Retained Records, at
Seller Group’s expense, Purchaser will deliver copies of any of the Retained
Records to Seller Group in the event Seller Group requests copies for purposes
of responding to any litigation, pre-litigation, or administrative request or
demand.

 

10. Conditions To Purchaser’s Obligations. Purchaser’s obligations to purchase
the Assets and to deliver to Seller Group the consideration therefor shall be
subject to the satisfaction of each of the following conditions (any one or more
of which may be waived by Purchaser in its sole and absolute discretion):

 

(a) Adverse Proceedings. No order of any court or administrative agency shall be
in effect which restrains or prohibits the transactions contemplated hereby, and
no suit, action, investigation, inquiry or other legal or administrative
proceeding shall have been instituted and shall remain pending on the Initial
Closing Date, or shall be threatened on the Initial Closing Date, which
challenges the validity or legality of the transactions contemplated hereby.

 

(b) Performance of Conditions and Accuracy of Representations. Seller Group
shall have duly performed or complied in all material respects with its
covenants and obligations under this Agreement to be performed prior to or at
the Initial Closing, and, except as otherwise provided or contemplated hereby
and except for representations made as of a specific date, all of its warranties
and representations shall be true and correct in all material respects on the
Initial Closing Date as if made on and as of the Initial Closing Date.

 

(c) Tender of Documents. At the Initial Closing, Seller Group and K&S shall have
tendered to Purchaser all of the documents listed in Section 12(a) below.

 

11. Conditions to Seller Group’s Obligations. Seller Group’s obligations to sell
the Assets to Purchaser shall be subject to the satisfaction of each of the
following conditions (any one or more of which may be waived by Seller Group in
its sole and absolute discretion):

 

(a) Adverse Proceedings. No order of any court or administrative agency shall be
in effect which restrains or prohibits the transactions contemplated hereby, and
no suit, action, investigation, inquiry or other legal or administrative
proceeding shall have been instituted and shall remain pending on the Initial
Closing Date, or shall be threatened on the Initial Closing Date, which
challenges the validity or legality of the transactions contemplated hereby.

 

(b) Performance of Conditions and Accuracy of Representations. Purchaser shall
have duly performed or complied in all material respects with its covenants and
obligations under this Agreement to be performed prior to the Initial Closing,
and, except as otherwise provided or contemplated hereby and except for
representations made as of a specific date, all of its representations and
warranties shall be true and correct in all material respects on the Initial
Closing Date as if made on and as of the Initial Closing Date.

 

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(c) Tender of Documents. At the Initial Closing, Purchaser shall have tendered
to Seller Group all of the documents listed in Section 12(b) below.

 

12. Documents Delivered and Actions Taken at the Initial Closing.

 

(a) By Seller Group. At the Initial Closing, Seller Group shall duly execute
deliver or cause to be delivered to Purchaser:

 

(i) an agreement between Seller Group and Purchaser that shall constitute both a
bill of sale and an instrument of assumption of liabilities, in substantially
the form attached hereto as Exhibit A (other than the China Assets) (the “Bill
of Sale and Assumption Agreement”), and other appropriate documents of transfer
and such other endorsements, assignments, checks, deeds, documents or
instruments executed by Seller Group as Purchaser may reasonably request to
transfer and convey to Purchaser title to the Assets free and clear of any and
all Claims other than Permitted Claims;

 

(ii) all of the Books and Records (other than as relate to the China Assets);

 

(iii) copies of consents to the assignment of those Assumed Contracts (other
than as relate to the China Assets) for which consent to assignment is required
under Section 8(c) hereof;

 

(iv) copies of the resolutions of the Board of Directors and shareholders of
Seller Group, certified by the Secretary or Assistant Secretary of Seller Group
as being correct and complete and then in full force and effect without
amendment or modification thereof, authorizing the execution and delivery of
this Agreement, the Bill of Sale and the agreements, assignments and instruments
called for under this Agreement and the consummation of the transactions
contemplated hereby;

 

(v) a certificate of Seller Group, signed by a senior officer of Interconnect,
certifying that, except as otherwise provided or contemplated hereby, the
representations and warranties of Seller Group made herein were true and correct
in all material respects as of the date of this Agreement and are true and
correct in all material respects as of the Initial Closing Date, except for
representations made as of a specific date, and that Seller Group has performed
and complied with in all material respects all covenants and agreements required
to be performed or complied with by Seller Group on or prior to the Initial
Closing Date;

 

(vi) sublease agreements in respect of a portion of each of Seller Group’s
facilities located in Gilbert, Taiwan and France (the “Sublease Facilities”),
each in a form mutually acceptable to Purchaser and Seller Group prior to the
Initial Closing (the “Subleases”), duly executed by Seller Group;

 

(vii) the Transition Services Agreement in substantially the form attached
hereto as Exhibit C (the “Transition Services Agreement”), duly executed by
Seller Group;

 

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(viii) a Shared Technology Agreement in a form mutually acceptable to Purchaser
and Seller Group prior to the Initial Closing (the “Shared Technology
Agreement”), duly executed by Seller Group;

 

(ix) a certificate, dated as of a recent date, of the Secretary of State of the
States of Arizona, California, Delaware, Texas, and the appropriate state
officer of each of the other states listed in Schedule 5(a)(i) attached hereto
as to the good standing of Seller Group in the States of Arizona, California,
Delaware, Texas, and each such other jurisdiction where Seller Group is
qualified to do business;

 

(x) a certificate, dated as of a recent date, of the Secretary of State of the
State of Pennsylvania as to the good standing of K&S in Pennsylvania;

 

(xi) a manufacturing services agreement in a form mutually acceptable to K&S and
Purchaser prior to the Initial Closing (the “Manufacturing Services Agreement”),
duly executed by Seller Group;

 

(xii) the Closing Working Capital Schedules.

 

(b) By Purchaser. At the Initial Closing, Purchaser shall duly execute and
deliver to Seller Group:

 

(i) the Purchase Price payable pursuant to Section 3(a)(i) hereof;

 

(ii) the Bill of Sale and Assumption Agreement, and such other assumption
agreements related to the obligations and liabilities agreed to be assumed by
Purchaser as Seller Group may reasonably request, executed by Purchaser;

 

(iii) copies of the resolutions of the Board of Directors of Purchaser,
certified by the Secretary or Assistant Secretary of Purchaser as being correct
and complete and then in full force and effect without amendment or
modification, authorizing the execution and delivery of this Agreement and the
agreements and instruments called for hereunder, and the consummation of the
transactions contemplated hereby;

 

(iv) a certificate of Purchaser, signed by a senior officer of Purchaser,
certifying that the representations and warranties of Purchaser made herein were
true and correct in all material respects as of the date of this Agreement and,
except if some other date is specifically set forth herein, are true and correct
in all material respects as of the Initial Closing Date, and that Purchaser has
performed and complied with in all material respects all covenants and
agreements required to be performed or complied with by it on or prior to the
Initial Closing Date;

 

(v) the Subleases, duly executed by Purchaser;

 

(vi) the Transition Services Agreement, duly executed by Purchaser;

 

(vii) the Manufacturing Services Agreement, duly executed by Purchaser; and

 

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(viii) the Shared Technology Agreement, duly executed by Purchaser.

 

(c) The parties agree to cooperate and negotiate in good faith in order to agree
upon the forms of any agreements which are contemplated to be agreed upon by
them under this Section 12 or elsewhere under this Agreement prior to the
Initial Closing.

 

13. Certain Other Agreements.

 

(a) Offers of Employment.

 

(i) Purchaser shall offer, and Seller Group hereby consents to Purchaser
offering, employment to employees, consultants, salespersons or other personnel
of Seller Group listed on Schedule 13(a)(i) hereto (collectively, the
“Transferred Employees”). Seller Group has not, and shall not, make any promise,
representation or undertaking on behalf of Purchaser to any of its employees;
provided, however, that to the extent that Purchaser desires to add or remove
any employees from the list set forth on Schedule 13(a)(i) after the date
hereof, Seller Group and Purchaser shall negotiate in good faith with respect to
such requested changes. With respect to each Transferred Employee, Seller Group
shall pay in a manner consistent with applicable law all vacation and sick days
that the Transferred Employee had accrued while an employee of Seller Group
through the date of Closing.

 

(ii) If, at any time within twelve months of the Initial Closing Date, Purchaser
or any of its affiliates makes an offer of employment to, and it is accepted by,
any employee of Seller Group as the date of this Agreement who is not a
Transferred Employee, Purchaser shall promptly reimburse Seller Group for any
and all retention bonus, severance and termination payments that Seller Group
made to such employee as a result of the action taken in contemplation of this
Agreement (other than payments in respect of accrued vacation and sick days).
For the avoidance of doubt, this Section 13(b)(ii) shall not limit or modify the
restrictions and covenants set forth in Section 13(c) hereof or remedies
available to K&S or Seller Group in connection with a breach thereof.

 

(iii) Purchaser and Seller shall each pay one-half of the retention bonus that
is paid to the manufacturing employees of Chinese Sub to induce them to continue
providing services during the term of the Manufacturing Services Agreement, in
an amount not to exceed $50,000 by either party or $100,000 together.

 

(b) Nonsolicitation. Unless otherwise agreed to in writing by Seller Group, for
a period commencing on the date hereof and ending on August 1, 2006, SV Parent
and Purchaser shall not, and shall not permit their affiliates to, call upon any
person who was, as of December 31, 2005, an employee of K&S, Seller Group, or
any of their respective affiliates, other than Transferred Employees, for the
purpose or with the intent of soliciting such individual to the employ of SV
Parent, Purchaser or any of their affiliates and shall not employ any such
person, regardless of any changes in the individual’s employment status since
December 31, 2005.

 

(c) Noncompetition.

 

(i) For a period of three years after the Initial Closing, K&S and Seller Group
shall not, and shall cause their respective subsidiaries not to, engage,
directly or indirectly,

 

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including as an owner, member, manager, partner, shareholder, advisor or
consultant, in any business that competes anywhere in the world with the
Business as conducted on the Initial Closing Date (“Restricted Wafer Business”).
The foregoing shall not limit or otherwise restrict (x) any acquisition by K&S
or its subsidiaries of any Person even if such Person is engaged in the
Restricted Wafer Business so long as the revenue of the Restricted Wafer
Business does not constitute more than 10% of the revenues of such Person, or if
the Restricted Wafer Business does constitute more than 10% of such revenues,
K&S disposes of such Restricted Wafer Business within 9 months of the
acquisition, or (y) the sale of a controlling interest in K&S or any of its
assets to any Person engaged in the Restricted Wafer Business.

 

(ii) For a period of three years after the Initial Closing, Purchaser shall not,
and Purchaser shall cause its subsidiaries not to, engage, directly or
indirectly, including as an owner, member, manager, partner, shareholder,
advisor or consultant, in the design, manufacture, servicing or marketing of
capital equipment or packaging materials used to assemble semiconductor devices
(“Restricted K&S Business”). The foregoing shall not limit or otherwise restrict
(x) any acquisition by Purchaser or its subsidiaries of any Person even if such
Person is engaged in the Restricted K&S Business so long as the revenue of the
Restricted K&S Business does not constitute more than 10% of the revenues of
such Person, or if the Restricted K&S Business does constitute more than 10% of
such revenues, Purchaser disposes of such Restricted K&S Business within 9
months of the acquisition, or (y) the sale of a controlling interest in
Purchaser or any of its assets to any Person engaged in the Restricted K&S
Business.

 

(d) If any provision contained in Section 13(b) or (c) shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of such
paragraph (b) or (c) of this Section 13 and such paragraph shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
therein. It is the intention of the parties that if any of the restrictions or
covenants contained therein is held to cover a geographic area or to be for a
length of time that is not permitted by applicable law, or in any way construed
to be too broad or to any extent invalid, such provision shall not be construed
to be null, void and of no effect, but to the extent such provision would be
valid or enforceable under applicable law, a court of competent jurisdiction
shall construe and interpret or reform paragraph (b) and/or (c), as applicable,
of this Section 13 to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Seller Group and Purchaser acknowledge that the other could be irreparably
harmed by any breach of Section 13(b) and/or (c) and that there would be no
adequate remedy at law or in damages to compensate Purchaser or Seller Group, as
applicable, for any such breach. Seller Group and Purchaser shall be entitled to
seek injunctive relief requiring specific performance by the other party in
respect of Section 13(b) and (c).

 

(e) Post-Closing Collection of Accounts Receivable.

 

(1) If any member of Seller Group receives any payment in respect of any
accounts receivable included in the Assets after the Initial Closing it shall
promptly remit such funds to Purchaser.

 

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(2) If Purchaser or any of its affiliates receives any payment in respect of any
account receivable of Seller Group not included in the Assets after the Initial
Closing, Purchaser shall promptly remit such funds to K&S.

 

(3) In furtherance of the foregoing, if any party receives a payment from a
third party that, pursuant to the terms hereof, should have been paid to another
party hereto, the party who receives the payment agrees to hold in trust and
promptly remit such payment to the party entitled thereto. If either party
receives a payment from a customer that cannot be identified to a specific
invoice or obligation, the recipient shall, if reasonable under the
circumstances, inquire of the customer as to the intended application thereof
and, lacking a response, the payment shall be applied to the oldest outstanding
undisputed invoice relating to the payor.

 

(f) Certain Payroll Tax Matters. Seller Group and Purchaser shall use the
“alternate” procedure for predecessors and successors, provided in Section 5 of
Revenue Procedure 2004-53, 2004-2 C.B. 320, with respect to filing and
furnishing Internal Revenue Service Forms W-2, W-3 and 941 for the calendar year
of the Initial Closing in respect of Transferred Employees in the United States
who accept offers of employment. In accordance with such procedure:

 

(1) Seller Group and Purchaser shall report on a “predecessor-successor” basis
as set forth therein solely for the purpose of tax reporting under this
Section 13(f);

 

(2) Seller Group shall be relieved from furnishing Forms W-2 to such Transferred
Employees for the period from January 1 of such calendar year to the day of the
Initial Closing; and

 

(3) Purchaser shall assume the obligations of Seller Group to furnish such forms
to such employees for the full such calendar year and Seller Group shall provide
to Purchaser all requisite information relating to such obligation for the
period up to the Initial Closing Date.

 

For clarification, any reference to predecessors and successors in this
Section 13(f) is solely for the tax reporting obligations set forth in this
Section and has no legal effect otherwise.

 

(g) Investigation by Purchaser. All of Seller Group’s and K&S’ representations,
warranties, covenants and agreements contained herein shall remain effective in
accordance with their terms to the extent provided in Section 14 hereof
notwithstanding any investigation at any time made by or on behalf of Purchaser
or of any information or facts discovered by or on behalf of Purchaser in
connection with such investigation.

 

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14. Survival and Indemnification.

 

(a) Survival. The representations and warranties of Seller Group in Sections
5(a)(i)(A), 5(a)(ii), 5(b)(i), 5(b)(ii)(A) and the first sentence of
Section 5(i), of K&S in Section 7(b)(i) and of Purchaser in Section 6(b)(i)
shall survive indefinitely following the Initial Closing, and the
representations and warranties of Seller Group in the last sentence of
Section 5(g) and the last sentence of Section 5(h) shall survive for 30 calendar
days following the Initial Closing and no claim in respect of a breach of any
such representations and warranties may be made after the date that is 30
calendar days following the Initial Closing. All other representations and
warranties hereunder of the parties to this Agreement shall not survive the
Initial Closing and no claim in respect of a breach of any such representations
and warranties may be made following the Initial Closing.

 

(b) Indemnification.

 

(i) Seller Group and K&S shall jointly and severally indemnify, defend and hold
harmless Purchaser against all losses, liabilities, costs and expenses
(including reasonable attorneys’ fees and court costs) (collectively, “Losses”)
resulting or arising from:

 

(1) any breach of any representation or warranty in (A) Section 5(a)(i)(A),
5(a)(ii), 5(b)(i), Section 5(b)(ii)(A) or and Section 7(b)(i) or (B) the last
sentence in Section 5(g), the last sentence in Section 5(h) or the first
sentence of Section 5(i);

 

(2) the failure of Seller Group or K&S to perform or comply with any covenant or
obligation of Seller Group or K&S hereunder; and

 

(3) any and all claims brought against Purchaser by any third person, entity or
governmental authority, including without limitation claims for unpaid taxes,
interest and/or penalties, product liability claims, claims for infringement of
Proprietary Rights, litigation, environmental claims or claims of failure to
comply with applicable laws, statutes, regulations or orders, to the extent such
claims relate to the conduct by Seller Group of the Business prior to the
Initial Closing, except to the extent such Losses are Assumed Liabilities and
except that Seller Group and K&S shall have no obligation to indemnify, defend
or hold harmless Purchaser in respect to any claim relating to AVT. “AVT”
(Advanced Vertical Test) refers to Seller Group’s programs and proposed products
for improved technology for wafer testing. Such programs include the AVT Memory
Program, the AVT Area Array Program, and any other programs and technology
related to such improvements in wafer testing.

 

(ii) Each Purchaser entity shall jointly and severally indemnify, defend and
hold harmless Seller Group and K&S against all Losses resulting or arising from:

 

(1) any breach of any representation or warranty in Section 6(b)(i);

 

(2) the failure of Purchaser to perform or comply with any covenant or
obligation of Purchaser hereunder;

 

(3) any and all claims brought by any third person, entity or governmental
authority, including without limitation claims for unpaid taxes, interest and/or

 

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penalties, product liability claims, claims for infringement of Proprietary
Rights, litigation, environmental claims or claims for failure to comply with
applicable laws, statutes, regulations or orders, to the extent such claims
relate to the conduct by Purchaser and its affiliates of the Business after the
Initial Closing; and

 

(4) any and all claims brought by any third person, entity or governmental
authority relating to AVT.

 

(iii) Notwithstanding anything to the contrary contained herein, the foregoing
indemnities of Seller Group and K&S, on the one hand, and of Purchaser, on the
other hand, shall not apply unless the party seeking indemnification (the
“Indemnitee”) shall, with reasonable promptness after learning of information
which will lead to a claim for indemnification hereunder, notify the other
party(ies) (the “Indemnitor”) of the basis for such claim and provide Indemnitor
with copies of any claims or other documents received and shall otherwise make
available to the Indemnitor all relevant information material to the defense of
any claim against the Indemnitee which shall serve as the basis for a claim by
the Indemnitee pursuant to the terms hereof. The Indemnitor shall have the right
to control the defense of such claim, unless the Indemnitor fails within a
reasonable time after notice to take action to defend the same. The Indemnitee
shall have the election to join in the defense of any such claim at its own
cost, but such claims shall be subject to the control of the Indemnitor, and the
Indemnitee shall not settle or compromise the same unless it shall first obtain
the written consent of the Indemnitor.

 

(iv) The amount of any and all Losses for which indemnification is provided
pursuant to this Section 14 shall be (1) reduced by any actual, incremental tax
benefit recognized by the Indemnitee in the taxable year in which such
indemnification is payable, or in an earlier taxable year, by reason of the
circumstances or events giving rise to such Losses and (2) increased by any
actual, incremental tax cost or reduction in such tax benefit by reason of the
accrual of the right to, or the receipt of, the indemnification payment, in any
such taxable year or, in the case of any such tax costs or reductions in tax
benefits projected for future taxable years, the present value of such projected
costs or reductions (net of any additional tax benefits projected for such
taxable years), using the applicable Federal short-term rate in effect as of the
date on which such indemnification is payable and assuming the Indemnitee’s
effective, incremental tax rate applicable in computing such costs, reductions
or benefits in such future taxable years equals the effective, incremental tax
rate actually applicable in respect of the tax benefit under clause (1) of this
paragraph, and shall be net of any amounts of any insurance proceeds,
indemnification payments, contribution payments or reimbursements actually
received by the Indemnitee with respect to such Losses or any of the
circumstances giving rise thereto.

 

(v) Limitation on Liability.

 

(1) Notwithstanding the foregoing, neither Seller Group nor K&S shall be
required to indemnify Purchaser for breach of any representation or warranty as
provided under Section 14(b)(i)(1)(B) (x) unless written notice thereof has been
given by Purchaser to Seller Group within the applicable survival period for the
representation or warranty alleged to have been breached and (y) until the
aggregate dollar amount of Losses resulting or arising from any and all such
breaches exceeds Two Hundred Thousand United States Dollars (US$200,000), at
which point Seller Group and K&S shall jointly and severally indemnify

 

27

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Purchaser for all Losses in excess of Two Hundred Thousand United States Dollars
(US$200,000), except that in no event will Seller Group or K&S, jointly or
severally, have aggregate liability under Section 14(b)(i)(1)(B) in excess of
One Million United States Dollars (US$1,000,000).

 

(2) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL ANY PARTY OR ANY OF ITS AFFILIATES BE LIABLE FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION
WITH ANY CLAIMS, LOSSES, DAMAGES, OR INJURIES ARISING OUT OF THE CONDUCT OF SUCH
PARTY PURSUANT TO THIS AGREEMENT.

 

(vi) Exclusive Remedy; Mitigation. Except for the remedy of specific
performance, which any party may seek to utilize in the case of a breach by
another party of its obligations hereunder, each of K&S, each member of Seller
Group and each Purchaser entity acknowledge and agree that, following the
Initial Closing, the indemnification provisions of Sections 14 (b) (i) and
(ii) shall be the sole and exclusive remedies of the parties hereto for any
breach of the representations or warranties in this Agreement that survive the
Initial Closing and for any failure to perform or comply with any covenants or
agreements contained herein. In furtherance of, and subject to, the foregoing,
each party hereto hereby waives from and after the Initial Closing, any and all
rights, claims and causes of action it may have against the Indemnitor arising
under or based upon any applicable law or otherwise, except for the remedies
specifically provided in this Agreement. In addition, each of the parties hereto
shall (x) take such commercially reasonable actions as may be available to
mitigate any Losses for which such party would otherwise be entitled to
indemnification hereunder, and (y) not intentionally take any action that it is
not legally required to take if such action would result in Losses for which it
will seek indemnification hereunder.

 

15. Termination; Remedies.

 

(a) Termination of Agreement. This Agreement may be terminated at any time prior
to the Initial Closing:

 

(i) By mutual written consent of both Purchaser and K&S.

 

(ii) By Purchaser, without prejudice to any other rights or remedies Purchaser
may have, by Purchaser giving written notice to K&S of Purchaser’s election to
terminate this Agreement, at any time prior to the Initial Closing, if:

 

(1) K&S or Seller Group shall have breached any material representation,
warranty or covenant contained in, or contemplated by, this Agreement in any
material respect, provided that Purchaser has notified Seller Group of the
breach, and the breach is not cured in all material respects within 30 days of
such notice;

 

(2) the Initial Closing shall not have occurred by March 28, 2006, unless the
failure of the Initial Closing to occur is the result of the failure on the part
of Purchaser or SV Parent to perform any of their obligations or satisfy any
conditions that are within their control hereunder;

 

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(iii) By Seller Group, without prejudice to any other rights or remedies Seller
Group may have, by Seller Group giving written notice to Purchaser of Seller
Group’s election to terminate this Agreement, at any time prior to the Initial
Closing, if:

 

(1) Purchaser shall have breached any material representation, warranty or
covenant contained in, or contemplated by, this Agreement in any material
respect, provided that that Seller Group has notified Purchaser of the breach,
and the breach is not cured in all material respects within 30 days of such
notice; or

 

(2) the Initial Closing shall not have occurred by March 28, 2006 unless the
failure of the Initial Closing to occur is the result of the failure on the part
of K&S or Seller Group to perform any of their obligations or satisfy any
conditions that are within their control hereunder.

 

(b) Breakup Fee.

 

(i) K&S and Seller Group shall pay to Purchaser Three Hundred Thousand United
States Dollars (US$300,000) (the “Breakup Fee”) in cash within thirty (30) days
of March 28, 2006 if (A) the Board of Directors, or applicable management, of
any of Seller Group or K&S have not approved and authorized the consummation of
the transactions contemplated by this Agreement, or (B) approval and/or
authorization by the shareholders or owners of any of Seller Group is required
in order to consummate of the transactions completed by this Agreement and not
obtained, and, in each case, the Initial Closing does not occur on or before
March 28, 2006.

 

(ii) Purchaser shall pay to K&S a Break-up Fee in the amount of Three Hundred
Thousand United States Dollars (US$300,000) in cash within thirty (30) days of
March 28, 2006 if (A) if approval and/or authorization by the shareholders or
owners of Purchaser or SV Parent is required in order to consummate of the
transactions contemplated by this Agreement and not obtained or (B) sufficient
funds to pay the Purchase Price are not obtained by Purchaser, and, in each
case, the Initial Closing does not occur on or before March 28, 2006.

 

(c) Effect of Termination. Sections 15 and 17 hereof shall survive the
termination of this Agreement.

 

16. Possession of Assets. Title to the Assets to be transferred at the Initial
Closing or China Closing, as applicable, and possession of the Sublease
Facilities shall be given to Purchaser at the Initial Closing on the Initial
Closing Date. All risk of loss with respect to the Assets and the Sublease
Facilities shall be borne by Seller Group until the Initial Closing or China
Closing, as applicable. If on the Initial Closing Date the tangible property to
be transferred hereunder or the Sublease Facilities shall have suffered loss or
damage on account of fire, earthquake, flood, accident, condemnation, act of
war, civil commotion, or any other cause or event beyond the reasonable power
and control of Seller Group (whether or not similar to the foregoing), unless
such losses and damages would not reasonably be expected to have a Material
Adverse Effect, Purchaser shall have the right, at its election, to either
(a) complete the acquisition and collect or be transferred all insurance
proceeds or benefits received by or to which Seller Group would otherwise be
entitled on account of such loss or damage to any of the

 

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Assets or the Sublease Facilities or (ii) to terminate this Agreement, which
shall be in lieu of any other right or remedy Purchaser may have whatsoever.

 

17. Miscellaneous.

 

(a) Brokerage Fees. Each of the parties to this Agreement shall be exclusively
liable for any brokerage fees or commissions due to any broker, finder or
investment banker engaged by it.

 

(b) Waivers. Any party may waive any default by any other party or the failure
to fulfill any of the conditions to its obligations. Any waiver must be in
writing.

 

(c) Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been duly given and received only if made
in the following ways: (i) on the day of delivery if delivered personally,
(ii) three (3) days after the date of mailing if mailed by certified first class
mail, postage prepaid, (iii) the next business day following deposit, specifying
next day delivery, with a nationally recognized overnight air courier service
which guarantees next day delivery, or (iv) when sent by telephonic facsimile
(with a copy simultaneously sent by certified mail return receipt requested,
with confirmation thereof), to the other party at the following address (or to
such person or persons or such other address or addresses as a party may specify
by notice pursuant to this provision):

 

(i) If to Purchaser, to:

 

SV Probe, Inc.

4251 Burton Drive

Santa Clara, CA 95054

Facsimile: (408) 492-1424

Attention: Kevin M. Kurtz, President

 

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

 

Hopkins & Carley

The Letitia Building

70 S. First Street

San Jose, California 95113

Attention: Mark A. Heyl, Esq.

Facsimile No.: (408) 998-4790

 

(ii) If to Seller Group, to:

 

K&S Interconnect, Inc.

c/o Kulicke and Soffa Industries, Inc.

2101 Blair Mill Road

Willow Grove, PA 19090

Facsimile: (215) 784-7575

Attention: General Counsel

 

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

 

Drinker Biddle & Reath LLP

One Logan Square

18th and Cherry Streets

Philadelphia, PA 19103-6996

Facsimile: (215) 988-2757

Attention: F. Douglas Raymond, III

 

(d) Amendments. At any time prior to the Initial Closing Date, this Agreement
may be amended, supplemented or modified by a writing duly authorized and
executed by each Purchaser entity, each of the entities that together comprise
Seller Group and K&S.

 

(e) Expenses; Taxes. Subject to the indemnification provided herein, each of the
parties shall bear its own expenses in connection with this Agreement and the
transactions to effectuate this Agreement, including, without limitation,
attorneys’ and accountants’ fees. If the Initial Closing or China Closing, as
applicable, occurs, then any and all real and/or personal property taxes imposed
by any state or local taxing authority on any of the Assets for or with respect
to a tax period straddling the period before and after the Initial Closing or
China Closing, as applicable, shall be prorated between Purchaser and Seller
Group based on the number of days during any such applicable period that the
relevant Assets were owned by Seller Group and by Purchaser, respectively, and
the parties shall cooperate with one another after the Initial Closing or China
Closing, as applicable, to file any and all returns or the like required by the
applicable taxing authority to be filed and to pay its portion of the taxes so
due. Any other applicable transfer taxes or other taxes or charges arising from
or out of the transactions contemplated by this Agreement shall be borne
one-half by Seller Group and one-half by Purchaser, except that Seller Group
shall pay the custom duties tax on the transfer to Purchaser of the tangible
personal property of the Chinese Sub included in the Assets.

 

(f) Entire Agreement. This Agreement, together with the schedules and exhibits
attached hereto, contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and thereof.

 

(g) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California applicable to agreements
made and to be performed in the State of California (and Federal law, to the
extent applicable).

 

(h) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

(i) Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, including counterparts transmitted by facsimile or electronic
transmission, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

 

(j) Parties in Interests. Nothing contained in this Agreement, express or
implied, is intended to confer upon any person or entity, other than the parties
hereto and their

 

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permitted assignees, any rights or remedies under or by reason of this
Agreement. Prior to the Initial Closing, no assignment of this Agreement or any
rights hereunder by any party shall be given any effect without the prior
written consent of the other party. Subject to the preceding sentences, this
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns (including any successors or assigns
in connection with any dissolution and winding up of such party).

 

(k) Dispute Resolution. Any and all disputes, claims or controversies arising
out of or relating to this Agreement that are not resolved by mutual agreement
of the parties hereto will be submitted to final and binding arbitration before
JAMS/ENDISPUTE, or its successor. Any party may commence the arbitration process
called for in this Agreement by filing a written demand for arbitration with
JAMS/ENDISPUTE, with a copy to the other party or parties, as applicable. The
arbitration will be conducted in accordance with the provisions of this
Agreement and JAMS/ENDISPUTE’s Comprehensive Arbitration Rules and Procedures
(“Arbitration Rules”) in effect at the time of filing of the demand for
arbitration, and California Code of Civil Procedure Section 1282, et. seq. (the
“Code of Civil Procedure”), as amended. Specifically, Section 1283.05 of the
Code of Civil Procedure shall govern the rights of discovery. To the extent
there exists an inconsistency between this Agreement, the Arbitration Rules and
the Code of Civil Procedure, the Agreement, the Code of Civil Procedure and then
the Arbitration Rules will apply on such order. The parties herein will
cooperate with JAMS/ENDISPUTE and with one another in selecting an arbitrator
from JAMS/ENDISPUTE’s panel of neutrals, and in scheduling the arbitration
proceedings. The parties herein covenant that they shall participate in the
arbitration in good faith, and that they shall initially share equally in its
costs, unless otherwise required by law; provided, however, the prevailing party
is entitled to reimbursement of all attorneys’ fees, expenses, and costs of
arbitration. Notwithstanding anything to the contrary provided in the
Arbitration Rules, the arbitrator will issue written findings of fact and
conclusions of law in accordance with California law. All findings of fact will
be final and non-appealable, except as provided by the Arbitration Rules.
Findings of law will be appealable to a court of competent jurisdiction, as
limited by this Agreement. The provisions of this Section may be enforced by any
court of competent jurisdiction, as limited by this Agreement, and the
prevailing party or parties in such arbitration will be entitled to an award of
all costs, fees, expenses, including attorneys’ fees, to be paid by the
non-prevailing party or parties. Notwithstanding the foregoing, a party may seek
injunctive relief in a court of competent jurisdiction, as limited by this
Agreement, without seeking arbitration. Any arbitration hereunder shall take
place in Chicago, Illinois.

 

(l) Attorneys’ Fees. If any party hereto brings an arbitration action pertaining
to or arising out of this Agreement, the prevailing party shall be entitled to
recover from the losing party all reasonable costs and expenses of the
arbitration, including reasonable attorneys’ and arbitrator fees and costs, in
such amounts as may be determined in the discretion of the arbitrator having
jurisdiction of such action.

 

(m) Knowledge of Seller Group. For purposes hereof, the phrase “to Seller
Group’s knowledge” or any variation thereof shall mean the actual knowledge,
upon reasonable inquiry, of: Charles Salmons, Maurice E. Carson and David J.
Anderson.

 

(n) Exclusive Dealing. From the date hereof and through and until the Initial
Closing or a termination of this Agreement pursuant to Section 15, neither
Seller Group nor any

 

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of its directors, officers, employees, representatives or agents, will, directly
or indirectly, solicit or initiate any discussions or negotiations with, or
participate in any negotiations with or provide any information to or otherwise
cooperate in any other way with, any corporation, partnership, person or other
entity or group (other than Purchaser) concerning any sale of the Assets or any
sale of the Business or any similar transaction involving control thereof.

 

(o) Confidentiality and Publicity. All information acquired by any party or its
respective agents or representatives of the business of the other party hereto
shall be held in the strictest confidence (except if such information is in the
public domain or readily obtainable from independent sources or required by law
to be disclosed) and if the transactions contemplated hereby are not
consummated, no party shall use or disclose any such information to any third
parties (except to the extent publicly available or readily obtainable from
independent sources or required by law to be disclosed). The timing and text of
announcements or statements pertaining to the subject matter of this Agreement
or the transactions contemplated herein will be mutually agreed to by Seller
Group and Purchaser, except that any party hereto may make any l disclosure it
is legally required to make under applicable securities laws without approval of
the other party.

 

(p) No Electronic Writings. No electronic record or electronic signature (other
than facsimile) shall be deemed to be a writing so as to satisfy any requirement
under this Agreement that any agreement, waiver, amendment, notice or other
instrument delivered by a party to this Agreement under or pursuant hereto be in
writing.

 

(q) Interpretation.

 

(i) In the negotiation of this Agreement, each party has received advice from
its own attorney. This Agreement is not to be construed for or against any party
based on which party drafted any of the provisions of this Agreement.

 

(ii) The captions, titles and headings, and table of contents, included in this
Agreement are for convenience only, and do not affect this Agreement’s
construction or interpretation.

 

(iii) This Agreement does not, and is not intended to, confer any rights or
remedies in favor of any person other than the parties signing this Agreement,
except as may be specifically set forth in other provisions of this Agreement.

 

(iv) The words “including,” “includes,” or “include” are to be read as listing
non-exclusive examples of the matters referred to, whether or not words such as
“without limitation” or “but not limited to” are used in each instance.

 

(v) (A) Unless the context clearly implies otherwise, an affirmative covenant
of, or a condition requiring action to be taken by, Seller Group hereunder,
shall be deemed to have been complied with, performed or satisfied, as
applicable, if the applicable action is taken by any member of Seller Group.

 

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(B) Unless the context clearly implies otherwise, a statement regarding the
status (financial or otherwise) of Seller Group hereunder shall be deemed to
refer to all of members of Seller Group, taken together on a consolidated basis.

 

(vi) Any reference in this Agreement to wire transfers or other payments
requires payment in dollars of the United States of America unless some other
currency is expressly stated in that reference.

 

(r) Designation of Agent for Service of Process. Each Purchaser entity other
than SV US does hereby appoint SV US as its agent for service of process in
connection with any claims brought by Seller Group or K&S in respect of this
Agreement or any other agreement contemplated hereby. Each Seller Group entity
other than Interconnect does hereby appoint Interconnect as its agent for
service of process in connection with any claims brought by Purchaser in respect
of this Agreement or any other agreement contemplated hereby.

 

(s) Further Assurance. Each party hereto will execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
will take such other actions, as such other party may reasonably request (prior
to, at or after the Initial Closing and prior to, at or after the China Closing)
for the purpose of carrying out or evidencing any of the transactions
contemplated by this Agreement or any other agreements or documents related
hereto.

 

(t) French Sub. To the extent that this Agreement provides for action to be
taken by or on behalf of French Sub, K&S and Interconnect shall cause French Sub
to take such action.

 

(u) Assignment. This agreement may not be assigned by any party hereto prior to
the Initial Closing without the written consent of each of the other parties
hereto.

 

(v) Defined Terms. Attached hereto as Exhibit D is an index to the defined terms
in this Agreement.

 

[Signature Page Follows]

 

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The parties hereto have executed this Agreement as of the Effective Date.

 

PURCHASER: SV Probe, Inc. a California corporation

By:

  /s/    KEVIN M. KURTZ             Kevin M. Kurtz     President and Chief
Executive Officer SV Probe Pte. Ltd. a Singapore corporation

By:

  /s/    KEVIN M. KURTZ             Kevin M. Kurtz     President and Chief
Executive Officer K&S: Kulicke and Soffa Industries, Inc. a Pennsylvania
corporation

By:

  /s/    MAURICE E. CARSON         Name:   Maurice E. Carson Title:   Vice
President and Chief Financial Officer

--------------------------------------------------------------------------------

SELLER GROUP: K&S Interconnect, Inc. a Delaware corporation

By:

  /s/    MAURICE E. CARSON        

Name:

  Maurice E. Carson

Title:

  Vice President, Treasurer Kulicke and Soffa (Suzhou), Ltd. a corporation
organized under the laws of the People’s Republic of China

By:

  /s/    MAURICE E. CARSON        

Name:

  Maurice E. Carson

Title:

  Director Kulicke and Soffa (Japan) Ltd. a corporation organized under the laws
of Japan

By:

  /s/    MAURICE E. CARSON        

Name:

  Maurice E. Carson

Title:

  Director Kulicke & Soffa (S.E.A.) Pte Ltd. a corporation organized under the
laws of Singapore

By:

  /s/    MAURICE E. CARSON        

Name:

  Maurice E. Carson

Title:

  Director

--------------------------------------------------------------------------------

Kulicke & Soffa Test Taiwan Co. Ltd. a corporation organized under the laws of
Taiwan

By:

  /s/    MAURICE E. CARSON        

Name:

  Maurice E. Carson

Title:

  Director, Supervisor