Exhibit 10.1
EXECUTION FINAL
ASSET PURCHASE AGREEMENT
BETWEEN
SPARTON MEDICAL SYSTEMS COLORADO, LLC
AND
DELPHI MEDICAL SYSTEMS, LLC
July 9, 2010

 

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TABLE OF CONTENTS

         
1. CONVEYANCE OF THE ACQUIRED ASSETS:
    9  
 
       
1.1 Acquired Assets Transaction
    9  
1.2 Certain Excluded Assets
    9  
A. Third Party Assets
    9  
B. Insurance
    10  
C. Records
    10  
D. Claims
    10  
E. Tax Refunds
    10  
F. Personnel Records
    10  
G. Privileged Information and Materials
    10  
H. Inventory
    10  
I. Cash
    10  
J. Excluded Contracts/Lease
    10  
K. Receivables
    10  
L. Certain Licenses
    10  
M. Deposits
    11  
1.3 Post-Closing Asset Deliveries
    11  
1.4 No Assumption of Retained Liabilities by Purchaser
    11  
1.5 Assumed Liabilities
    12  
1.6 Non-Assignability
    12  
 
       
2. NONDISCLOSURE AGREEMENT; confidentiality:
    13  
 
       
3. PURCHASE PRICE:
    14  
 
       
3.1 Purchase Price for Acquired Assets
    14  
3.2 Holdback
    16  
3.3 Purchase Price Allocation
    16  
 
       
4. EMPLOYEE MATTERS:
    17  
 
       
4.1 Salaried Employees
    17  
4.2 Hourly Employees
    18  
4.3 Transferred Employees
    18  
A. Assumed Employee Accrual
    18  
B. Employee Benefit Plans
    19  
C. Severance
    19  
D. COBRA
    19  
E. WARN Act
    19  
F. Cooperation
    19  
 
       
5. [INTENTIONALLY OMITTED.]
    19  
 
       
6. REPRESENTATIONS AND WARRANTIES
    20  

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6.1 Warranties of Seller
    20  
A. Corporate Organization
    20  
B. Corporate Authority
    20  
C. No Conflict
    20  
D. No Joint Ventures
    20  
E. Title to Acquired Assets
    20  
F. Litigation
    21  
G. Compliance with Laws
    21  
H. Sufficiency of Assets
    21  
I. Financial Statements
    21  
J. [Intentionally Omitted.]
    21  
K. Absence of Certain Changes
    21  
L. Leased Real Property
    22  
M. Inventory
    22  
N. Intellectual Property
    22  
O. Employment and Labor Matters
    23  
P. Employee Benefits
    23  
Q. Contracts
    24  
R. Brokers
    25  
S. Licenses, Approvals, Other Authorizations
    25  
T. Environmental Matters
    25  
U. Taxes
    26  
V. Insurance
    27  
W. Product Warranty
    27  
X. Customers and Suppliers
    27  
Y. [Intentionally Omitted.]
    27  
Z. Accuracy of Information; Full Disclosure
    27  
AA. Certain Transactions
    28  
BB. Regulatory Compliance
    28  
CC. Survival
    29  
DD. Absence of Other Representations or Warranties
    29  
6.2 Warranties of Purchaser
    29  
A. Corporate Organization
    29  
B. Corporate Authority
    29  
C. No Conflicts
    29  
D. Consents and Approvals
    30  
E. Litigation
    30  
F. Brokers
    30  
G. Solvency
    30  
H. Availability of Funds
    30  
I. Compliance with Laws
    30  
J. Anti-Money Laundering
    30  
6.3 Fair Disclosure
    31  
6.4 Purchaser Acknowledgement
    31  
 
       
7. CONDITIONS TO CLOSING
    31  
 
       
7.1 Conditions to Obligations of Seller and Purchaser
    31  
A. No Law, Judgments, Etc
    31  
B. Excess Inventory
    31  
7.2 Conditions to Obligations of Purchaser
    31  

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A. Accuracy of Warranties
    32  
B. Performance of Covenants
    32  
C. Third Party Consents
    32  
D. UCC, Tax Lien and Judgment Search Results
    32  
E. Phase 1
    32  
F. New Road 18 Lease
    32  
G. No Material Adverse Effect
    32  
7.3 Conditions to Obligations of Seller
    32  
A. Accuracy of Warranties
    32  
B. Performance of Covenants
    33  
C. Payment of Purchase Price
    33  
D. Road 18 Lease Termination
    33  
E. No Material Adverse Effect
    33  
F. Delivery of Purchaser’s Certificate
    33  
 
       
8. CLOSING:
    33  
 
       
8.1 Closing Date
    33  
8.2 Ancillary Agreements
    33  
8.3 Miller Road Sublease
    33  
8.4 Seller’s Deliveries
    33  
8.5 Purchaser’s Deliveries
    34  
 
       
9. CERTAIN ADDITIONAL COVENANTS
    34  
 
       
9.1 Continued Operations
    34  
9.2 Registrations, Filings and Consents; Further Actions
    35  
9.3 Further Assurances
    35  
9.4 Indemnification
    37  
A. LIMITATIONS OF LIABILITY
    37  
B. Seller’s Agreement to Indemnify
    37  
C. Purchaser’s Agreement to Indemnify
    38  
D. Limitations on Agreements to Indemnify
    38  
E. Third Party Indemnification
    39  
F. Not Exclusive Indemnifications
    40  
9.5 Exclusivity
    40  
9.6 Connectivity
    40  
9.7 Sunrise Agreement
    41  
9.8 Storage
    41  
9.9 FDA Regulatory Compliance
    41  
9.10 Warranty Claims
    41  
9.11 Software and Electronic Records
    42  
 
       
10. TAX MATTERS
    43  
 
       
10.1 Seller Responsibilities
    43  
10.2 Purchaser Responsibilities
    43  
10.3 Mutual Assistance
    43  
 
       
11. TERMINATION
    43  

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12. MISCELLANEOUS
    44  
 
       
12.1 Notices
    44  
12.2 Bulk Sales Laws
    45  
12.3 Assignment
    45  
12.4 Entire Agreement
    45  
12.5 Waiver
    45  
12.6 Severability
    45  
12.7 Amendment
    46  
12.8 Expenses
    46  
12.9 Third Parties
    46  
12.10 Headings
    46  
12.11 Counterparts
    46  
12.12 Governing Law
    46  
12.13 Public Announcements
    46  
12.14 Venue and Retention of Jurisdiction
    46  
12.15 Risk of Loss
    46  
12.16 No Right of Setoff
    46  
12.17 Enforcement of Agreement
    47  
12.18 Dispute Resolution
    47  
12.19 Dollar Amounts
    47  
12.20 Jury Trial Waiver
    47  

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ASSET PURCHASE AGREEMENT
     SPARTON MEDICAL SYSTEMS COLORADO, LLC, a Colorado limited liability company
(“Sparton” or “Purchaser”), and DELPHI MEDICAL SYSTEMS, LLC, a Delaware limited
liability company (“Delphi” or “Seller”), have entered into this Asset Purchase
Agreement on July 9, 2010.
RECITAL:
     WHEREAS, the Seller desires to sell to Purchaser all of its right, title
and interest in and to the Acquired Assets (as defined below), and Purchaser
desires to make such purchase subject to the terms and conditions set forth in
this Agreement.
     NOW, THEREFORE, in consideration of the premises, mutual promises,
representations, warranties and covenants contained in this Agreement and other
good and valuable consideration, and intending to be legally bound hereby, the
Parties agree:
DEFINITIONS:
     The following terms, as used in this Agreement, have the following meanings
whether used in the singular or plural (other terms are defined in Sections or
Schedules to which they pertain):
     “Acquired Assets” mean all of Seller’s right, title and interest in and to
the assets owned by or leased or licensed to the Seller and primarily used or
held for use by Seller in connection with the operation of the Business (other
than the Excluded Assets), including the following:
     A. Equipment and Personal Property;
     B. Inventory;
     C. Contracts;
     D. Licenses;
     E. Owned Intellectual Property;
     F. Information Technology Assets;
     G. Books and Records; and
     H. The right to use the bailed Third Party Assets, but only to the extent
of Seller’s rights to use such bailed Third Party Assets.
     “Action” shall mean any action, suit, arbitration, inquiry, hearing,
proceeding or investigation by or before any court of competent jurisdiction,
governmental or other regulatory or administrative agency or commission or
arbitral panel.
     “Additional Salaried Employees” has the meaning set forth in Section 4.1.C.

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     “Agreement” means this Asset Purchase Agreement, including all Schedules
and Exhibits.
     “Allocation” has the meaning set forth in Section 3.3.A.
     “Ancillary Agreements” mean the Bill of Sale, the Assignment and Assumption
Agreement, the Transition Services Agreement, the Non-Competition Agreement, the
Escrow Agreement and the Miller Road Sublease.
     “Affiliate” (and, with a correlative meaning, “Affiliated”) shall mean,
with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such first Person. As used in this definition, “control”
(including, with correlative meanings, “controlled by” and “under common control
with”) shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
     “Assumed Employee Accrual” has the meaning set forth in Section 4.3.A.
     “Assumed Liabilities” has the meaning set forth in Section 1.5.
     “Back-Up” has the meaning set forth in Section 9.11.
     “Base Inventory Value” has the meaning set forth in Section 3.1.B.
     “Baseline Report” has the meaning set forth in Section 3.1.D.
     “Books and Records” shall mean all of Seller’s books and records (or copies
of relevant portions thereof) primarily relating to the Acquired Assets, the
Assumed Liabilities or the operations of the Business as of the Closing Date,
other than Tax Returns and related work papers for taxable periods ending on or
prior to the Closing Date.
     “Business” means the Seller’s contract manufacturing business conducted at
the Facility, pursuant to which Seller manufactures various products pursuant to
the Customer Contracts.
     “Business Day” means any day other than a Saturday, a Sunday or a day on
which banks in Detroit, Michigan are authorized or obligated by law or executive
order to close.
     “Closing” has the meaning set forth in Section 8.1.
     “Closing Date” means the date of Closing.
     “Confidential Information” has the meaning set forth in Section 2.2.
     “Consent” means any consent, approval, authorization, waiver, permit,
agreement, license, certificate, exemption, order, registration, declaration,
filing or notice of, with or to any Person, in each case required to permit the
consummation of any of the transactions contemplated by this Agreement.
     “Contracts” shall mean all existing contracts, leases, subleases, licenses,
sublicenses and similar binding agreements, commitments and arrangements of
Seller primarily related to

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the Business, whether written or oral, and all rights thereunder, including,
without limitation, the contracts set forth on Schedule 6.1.Q(i) hereto, the
Supplier Contracts and the Customer Contracts, and all contracts, leases,
subleases, licenses, sublicenses and similar binding agreements, commitments and
arrangements of Seller primarily related to the Business, whether written or
oral, and all rights thereunder, arising from the conduct of the Business that
are entered into between the date of this Agreement and the Closing Date.
     “Customer Contracts” mean those purchase orders and supply agreements
primarily related to the Business pursuant to which Seller provides goods or
services necessary for the manufacture or assembly of goods to its customers,
which are listed on Schedule B and are outstanding on the Closing Date.
     “Data Maintenance Period” has the meaning set forth in Section 9.11.B.
     “Defending Party” has the meaning set forth in Section 12.18.
     “Demanding Party” has the meaning set forth in Section 12.18.
     “Disclosure Schedule(s)” has the meaning set forth in Section 9.3.C.
     “Divested Products Data” has the meaning set forth in Section 9.11.C.
     “Employee Benefit Plans” means savings, profit sharing, retirement,
incentive, health, dental, death, accident, disability, executive or deferred
compensation, hospitalization, severance, vacation, sick leave, fringe or
welfare benefits, any employment or consulting contracts, “employee benefit
plans” (as defined in Section 3(3) of ERISA), employee manuals and written
statements of policies, practices or understandings relating to employment.
     “Environmental, Health and Safety Laws” shall mean all applicable statutes,
laws, ordinances, rules, regulations, codes, injunctions, judgments, orders and
decrees thereunder: (a) of the United States of America; (b) of any state or
local governmental subdivision within the United States of America; and (c) of
any foreign nations (and all agencies, departments, courts or any other
subdivision of any of the foregoing, that has jurisdiction) concerning pollution
or protection of the environment, public health and safety or employee health
and safety, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, petroleum or petroleum-based
materials or wastes, or chemical, industrial, Hazardous Substances or toxic
substances or wastes into ambient air, surface water, ground water or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants or
chemical, industrial, Hazardous Substances or toxic materials or wastes. Without
limiting the generality of the foregoing, such Environmental, Health and Safety
Laws include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976 and the Occupational Safety and Health Act of 1970, each as amended.
     “Equipment” means all machinery and equipment owned by Seller and used
primarily in the Business, including, without limitation, as set forth on
Schedule A, and all attachments and accessories to such items, together with the
Tooling.
     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

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     “Escrow Account” has the meaning set forth in Section 3.2.
     “Escrow Agreement” has the meaning set forth in Section 3.2.
     “Escrow Period” has the meaning set forth in Section 3.2.
     “Excess Inventory” shall mean any Inventory set forth on the Baseline
Report that is remaining on hand and for which no binding customer purchase
order exists (or relates to the Inventory) immediately prior to the expiration
of the Excess Inventory Review Period, calculated as set forth on
Schedule 3.1.D.
     “Excess Inventory Objection Notice” has the meaning set forth in
Section 3.1.D(iii).
     “Excess Inventory Review Period” shall mean the eighteen (18) month period
following the Closing.
     “Excluded Assets” means assets not included in the Acquired Assets,
including as set forth in Section 1.2.
     “Excluded Business” means all business of the Seller other than the
Business, including, without limitation, Seller’s design, development,
manufacture, assembly, testing, distribution and sale of portable oxygen
concentrator products, infusion devices and remote monitoring systems.
     “Facility” means Seller’s manufacturing facilities located at 4300 Godding
Hollow, Frederick, Colorado 80504 and 7755 Miller Drive, Frederick, Colorado
80504, where Seller conducts the Business, which facilities Seller leases
pursuant to the Leases.
     “FDA” means the Federal Food and Drug Administration.
     “Final Excess Inventory Value” has the meaning set forth in Section 3.1.D.
     “Final Inventory Value” has the meaning set forth in Section 3.1.B.
     “Financial Statements” has the meaning set forth in Section 6.1.I.
     “Food and Drug Laws” means the Federal Food, Drug and Cosmetic Act of 1938,
as amended, and all similar state, local and foreign laws or ordinances.
     “Governmental Entity” means any United States federal, state or local,
tribunal, legislative, executive, governmental, quasi-governmental or regulatory
authority, self-regulatory authority, agency, department, commission,
instrumentality or body having governmental authority with respect to the
transactions contemplated hereby, under applicable law.
     “Hazardous Substances” shall mean any substances, compounds, mixtures,
wastes or materials that are defined to be, that are regulated as or that are
listed under any of the Environmental, Health and Safety Laws. Without limiting
the generality of the foregoing, Hazardous Substances includes: (a) petroleum or
petroleum products; (b) polychlorinated biphenyls; (c) asbestos containing
materials; and (d) urea formaldehyde.
     “Holdback” means an amount equal to twenty-five percent (25%) of the
Purchase Price.

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     “Indemnification Claim” has the meaning set forth in Section 9.4.E.
     “Information Technology Assets” means those information technology assets
owned by Seller, used primarily in the Business and set forth on Schedule A-1.
     “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended.
     “Intellectual Property” shall mean all of the following, in any
jurisdiction throughout the world, to the extent owned by Seller and used or
held for use by Seller primarily or exclusively in or for the operation of the
Business: (a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof; (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations and combinations
thereof, and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith; (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith; (d) all mask works and all applications, registrations and renewals
in connection therewith; (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and proposals); (f) all
computer software (including source code, executable code, data, databases and
related documentation); (g) all other proprietary rights; (h) all goodwill
associated with any of the foregoing; (i) all remedies against infringement of
any of the foregoing; and (j) all rights to protection of interests in any of
the foregoing.
     “Inventory” means all raw materials, work-in-process, finished products,
stores, stock, supplies, packaging and spare parts owned by Seller, used
primarily in the Business and existing as of the Closing Date, whether on hand
or in transit.
     “Knowledge” with respect to the Seller means the actual knowledge of the
individuals listed on Schedule 6.1 after reasonable investigation and reasonable
inquiry of the appropriate employees or other individuals having responsibility
for such matters. “Knowledge” with respect to Purchaser means the actual
knowledge of the individuals listed on Schedule 6.2 after reasonable
investigation and reasonable inquiry of the appropriate employees or other
individuals having responsibility for such matters.
     “Laws” means laws, ordinances, codes, standards, administrative rulings or
regulations of any applicable federal, state, local or foreign governmental
authority.
     “Lease(s)” means the lease(s) pursuant to which Seller leases the building
located at 4300 Godding Hollow, Frederick, Colorado 80504 (the “Road 18 Lease”),
and the lease for the building located at 7755 Miller Drive, Frederick, Colorado
80504 (the “Miller Road Lease”).
     “Leased Real Property” shall have the meaning set forth in Section 6.1.L
hereof.
     “Letter of Intent” shall have the meaning set forth in Section 9.5.

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     “Licenses” shall mean those licenses, permits, authorizations, approvals,
franchises, orders, registrations, certificates, variances and similar rights
issued by any Governmental Entity that are primarily related to the Business.
     “Liabilities” means any liability or obligation of whatever kind or nature
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any Tax liability.
     “Lien” means any lien (including tax liens and any statutory or common law
liens, possessory or otherwise), charge, pledge, security interest, conditional
sale agreement or other title retention agreement, lease, mortgage, security
interest, option or other encumbrance (including the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code of any
jurisdiction) and any monetary amounts which are secured by any Lien.
     “Manufactured”, as used in Sections 1.4.B and 1.4.C below, shall mean fully
assembled with all required testing completed.
     “Material Adverse Effect” or a “Material Adverse Change” means any change,
development, effect or event that has or could reasonably be expected to have a
material adverse effect on the business, assets, conditions (financial or
otherwise), operating results or operations of the Business or the Acquired
Assets, taken as a whole, or to the ability of Seller to consummate timely the
transactions contemplated hereby, except any change or event resulting from,
relating to or arising out of: (i) any act or omission of Seller (excluding any
act contemplated herein) taken with the prior written consent of the Purchaser;
(ii) national or international political or social conditions, including the
engagement by the United States in hostilities whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon such country, or any of its territories, possessions or
diplomatic or consular offices or upon any military installation, equipment or
personnel of any such countries; (iii) changes in generally accepted accounting
principles in the United States; (iv) any existing event, occurrence or
circumstances listed in any Schedule provided under Article 6 of this Agreement
or the Supplement or with respect to which the Purchaser has Knowledge; (v) any
adverse change in or effect on the Acquired Assets that is cured or for which an
offer to cure has been made by Seller to Purchaser’s reasonable satisfaction,
before the earlier of: (a) the Closing Date; and (b) the date on which this
Agreement is terminated pursuant to Article 11; or (vi) any act of God or other
force majeure type event.
     “Material Contracts” has the meaning set forth in Section 6.1.Q.
     “Miller Road Sublease” has the meaning set forth in Section 8.3.
     “Most Recent Financial Statements” has the meaning set forth in
Section 6.1.I.
     “Most Recent Fiscal Month End” has the meaning set forth in Section 6.1.I.
     “Most Recent Fiscal Year End” has the meaning set forth in Section 6.1.I.
     “New Road 18 Lease” has the meaning set forth in Section 7.2.F.

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     “Non-Competition Agreement” shall mean the Non-Competition Agreement of
Seller and its Affiliates relating to previous and existing customers of the
Business as described in such agreement, in substantially the form attached
hereto as Exhibit 8.4.D, to be executed and delivered at the Closing.
     “Nondisclosure Agreement” means the nondisclosure and confidentiality
letter agreement dated October 29, 2009 executed by Sparton Corporation and
Seller.
     “Notice” has the meaning set forth in Section 12.18.
     “Objection Notice” has the meaning set forth in Section 3.1.C(i).
     “OFAC” has the meaning set forth in Section 6.2.J.
     “Ordinary Course of Business” means the usual, regular and ordinary course
of business consistent with past custom and practice of Seller.
     “Organizational Documents” means: (i) the articles of incorporation and the
bylaws of a corporation; (ii) the partnership agreement and any statement of
partnership of a general partnership; (iii) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (iv) the
articles or certificate of organization and the operating agreement or other
document intended to govern the structure and/or internal affairs of a limited
liability company; (v) any charter, agreement, indenture or similar document
adopted or filed in connection with the creation, formation or organization of a
Person; and (vi) any amendment to the foregoing.
     “Owned Intellectual Property” means Intellectual Property that, as of the
Closing Date, is: (i) owned by Seller; and (ii) used primarily in the Business.
     “Party” or “Parties” means Purchaser and Seller.
     “Permitted Lien” means: (i) purchase money security interests arising in
the Ordinary Course of Business listed on Schedule 6.1.E; (ii) security
interests relating to vendor tooling arising in the Ordinary Course of Business;
(iii) any Lien that may be created by or on behalf of Purchaser; and (iv) in
relation to Leased Real Property: (a) Liens relating to any current real estate
or ad valorem taxes or assessments not yet delinquent or being contested in good
faith by appropriate proceedings; (b) mechanic’s, materialmen’s, laborer’s and
carrier’s liens and other similar liens arising by operation of Law in the
Ordinary Course of Business for obligations which are not delinquent and which
will be paid or discharged in the Ordinary Course of Business that would not,
individually or in the aggregate, materially impair the use or occupancy of the
Facility; and (c) matters which an ALTA survey would disclose.
     “Person” means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or other entity or organization.
     “Personal Property” shall mean all of the tangible personal property of
Seller, other than Inventory used or held for use by Seller primarily in
connection with the Business, whether or not reflected in the Financial
Statements, including, without limitation, all machinery, furniture, fixtures,
equipment, computer hardware, tools, dies and repair and replacement parts,
except to the extent disposed of in the Ordinary Course of Business prior to the
Closing Date, and such additional items as are acquired by Seller for use
primarily in connection with the Business in

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the Ordinary Course of Business prior to the Closing Date; provided, however,
that the Personal Property does not include Intellectual Property or Technical
Documentation.
     “Purchase Price” has the meaning set forth in Section 3.1.A.
     “Purchaser” means Sparton Medical Systems Colorado, LLC, a Colorado limited
liability company.
     “Purchaser Damages” has the meaning set forth in Section 9.4.B.
     “Purchaser MAE Certificate” has the meaning set forth in Section 8.5.D.
     “Restoration” has the meaning set forth in Section 9.11.
     “Retained Liabilities” means Seller’s Liabilities other than the Assumed
Liabilities.
     “Sale” means the sale, transfer and assignment of the Acquired Assets from
Seller to Purchaser in accordance with this Agreement.
     “SDN List” has the meaning set forth in Section 6.2.J.
     “Seller” means Delphi Medical Systems, LLC, a Delaware limited liability
company.
     “Seller Damages” has the meaning set forth in Section 9.4.C.
     “Sunrise Agreement” means that certain Development and Supply Agreement
dated January 28, 2004 between Seller (as assignee of Delphi Medical Systems
Corporation) and Sunrise Medical, Inc., as amended.
     “Sunrise Data” has the meaning set forth in Section 9.11.B.
     “Supplement” has the meaning set forth in Section 9.3.C.
     “Supplier Contracts” mean all Seller purchase orders and supply agreements
for goods or services primarily related to the operation of the Business, and
product warranty or service agreements related to such purchase orders and
supply agreements, which are listed on Schedule C and are outstanding on the
Closing Date.
     “Tax(es)” means any tax or similar governmental charge, impost or levy
whatsoever (including, without limitation, income, franchise, transfer taxes,
use, gross receipts, goods and services value added, employment, excise, ad
valorem, property, withholding, payroll, social contribution, customs duty,
minimum or windfall profit taxes or transfer fees), together with any related
penalties, fines, additions to tax or interest, imposed by the United States or
any state, county, local or foreign government or subdivision or agency thereof.
     “Tax Returns” mean any return, declaration, report, claim for refund or
information return or statement, or any other similar filings related to Taxes,
including any schedule or attachment thereto.
     “Technical Documentation” means all documented technical information owned
by the Seller that is currently in the files of the Business or is used
primarily in the Business.

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     “Third Party Assets” has the meaning set forth in Section 1.2.A.
     “Tooling” means all tooling, gauges, dies, fixtures, test and assembly
fixtures, patterns, casting patterns, cavities, molds, prototype tooling,
engineering product testing tooling and fixtures and similar items owned by
Seller and used primarily in connection with the Business, wherever located.
     “Transition Services Agreement” means the Transition Services Agreement
between the Parties, substantially in the form of Exhibit 8.4.C, to be executed
and delivered at Closing. The Transition Services Agreement shall provide, in
part, that Sparton shall provide up to two hundred (200) hours access after the
Closing, on the terms set forth in the Transition Services Agreement, to the
Agile support system.
     “Transferred Employees” means the Transferred Salaried Employees, the
Additional Salaried Employees and the Transferred Hourly Employees.
     “Transferred Hourly Employees” means the hourly employees who are employed
by Sellers in connection with the Business, immediately prior to Closing and
identified on Schedule 4.2.A.
     “Transferred Salaried Employees” means the salaried employees who are
employed by Sellers in connection with the Business, immediately prior to
Closing and identified on Schedule 4.1.A.
     “USA Patriot Act” has the meaning set forth in Section 6.2.J.
     “Warranty Dispute” has the meaning set forth in Section 9.10.B.
     “Warranty Invoice” has the meaning set forth in Section 9.10.B.
1. CONVEYANCE OF THE ACQUIRED ASSETS:
     1.1 Acquired Assets Transaction. Upon the terms and subject to the
conditions set forth in this Agreement at Closing (unless otherwise expressly
provided in this Agreement or the Ancillary Agreements) Seller will sell,
transfer, assign, convey and deliver to Purchaser, and Purchaser will purchase,
accept and acquire from Seller, the Acquired Assets, free and clear of all Liens
other than the Permitted Liens. Purchaser will take ownership of the Acquired
Assets wherever the same are located.
     1.2 Certain Excluded Assets. Notwithstanding anything to the contrary in
this Agreement or in any Ancillary Agreements, the following properties and
assets of Seller will not be included in the Acquired Assets:
     A. Third Party Assets. Any machinery, Equipment, Inventory, Tooling,
dunnage or containers owned by any third party, and the other items owned by any
third party, including the items listed on Schedule 1.2.A, and including third
party bailed assets (“Third Party Assets”); provided, that, to the extent the
Seller has any rights pertaining to such bailed Third Party Assets, those rights
will be transferred as part of the Acquired Assets.

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     B. Insurance. Insurance coverage and insurance policies relating to the
Acquired Assets or the Business or their development, manufacture or sale,
including any and all claims and rights thereunder and the proceeds thereof and
all prepaid insurance premiums.
     C. Records. Any Books and Records that Seller is required by Law to retain,
all Tax Returns of Seller for time periods prior to Closing, related work
papers, and all “Delphi” marked sales and promotional materials and brochures;
provided, however, that Seller shall provide reasonable access to Purchaser to
such retained Books and Records and other materials in connection with Seller’s
operation of the Business after the Closing for a period of eighteen
(18) months.
     D. Claims. All claims, defenses, causes of action or claims of any kind
relating to either the Excluded Assets or Retained Liabilities, but only to the
extent not relating to the Business.
     E. Tax Refunds. All refunds, credits, prepayments or deferrals of or
against any Taxes that are not Assumed Liabilities.
     F. Personnel Records. All work histories, personnel and medical records of
employees and former employees of Seller who are not Transferred Employees for
whom a record exists at the time of Closing; provided, however, so far as
legally permissible under applicable data protection, medical confidentiality or
similar Laws, the Purchaser will be provided the originals of all personnel and
medical records of any employee hired by the Purchaser in compliance with
applicable Laws. If any employee objects to provision of personnel or medical
records to Purchaser, the records will not be provided, except to the extent the
Parties mutually determine that provision of the records to such Purchaser over
the objections by the employee is permitted by applicable Law.
     G. Privileged Information and Materials. Information and materials
protected by the attorney-client privilege (or its equivalent in jurisdictions
outside of the United States).
     H. Inventory. All Inventory which will have been transferred or disposed of
by Seller prior to Closing in the Ordinary Course of Business.
     I. Cash. All cash, certificates of deposit, marketable securities,
short-term investments and other cash equivalents of Seller.
     J. Excluded Contracts/Lease. The Road 18 Lease, the Miller Road Lease and
the Sunrise Agreement.
     K. Receivables. All accounts receivable of Seller relating to the period
prior to Closing.
     L. Certain Licenses. Any and all Licenses and utilities that are
non-transferable or that are shared with other businesses of Seller or its
Affiliates and identified on Schedule 1.2.L.

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     M. Deposits. All deposits and prepayments related to the Leases or to
utilities for the Facility.
     1.3 Post-Closing Asset Deliveries. Subject to Section 1.2 above, should
Seller or Purchaser, in its reasonable discretion, determine after the Closing
that any Acquired Assets (including Books and Records) are still in the
possession of Seller, Seller will promptly deliver them to Purchaser at no cost
to Purchaser. Should Seller or Purchaser, in its reasonable discretion,
determine after the Closing that books, records or other materials not included
in the Acquired Assets or otherwise constituting Excluded Assets were delivered
to Purchaser, Purchaser will promptly return them to Seller at no cost to
Seller.
     1.4 No Assumption of Retained Liabilities by Purchaser. Purchaser will not
assume or have any responsibility for the Retained Liabilities. Seller shall
retain and pay and perform when due all of the Retained Liabilities. The
Retained Liabilities shall include the following, other than to the extent
relating to a breach, action or inaction by Purchaser after Closing or any
Assumed Liabilities:
     A. All accounts payable of Seller relating to goods or services delivered
during the pre-Closing period;
     B. All Liabilities of Seller in respect of returns, recalls and warranty
claims for products Manufactured or sold by Seller prior to the Closing Date;
     C. All product liability and similar claims for injury to person (including
death) or property (real or personal) in connection with any products
Manufactured or sold by Seller prior to the Closing Date;
     D. All Liabilities for claims arising out of or relating to Seller’s
employment relationship with any employees of Seller or with contractors of
Seller prior to the Closing, whether or not hired by Purchaser, including,
without limitation, any unemployment compensation claims, worker’s compensation
claims, commissions and claims for race, age, sex and other forms of
discrimination and harassment to the extent arising out of or relating to
actions or events occurring prior to the Closing;
     E. Other than as specifically set forth in Section 4.3.A, all Liabilities
of Seller or any of its Affiliates: (i) under any pension, profit sharing,
savings, retirement, health, medical, life, disability, dental, deferred
compensation, stock option, commission, bonus, incentive, severance pay, group
insurance or other similar Employee Benefit Plans or arrangements, or under any
policies, handbooks, or custom or practice, collective bargaining agreement or
any employment or contractor or sales representative agreements, whether express
or implied, applicable to any of Seller’s employees at any time prior to the
Closing, and any assessments, fines, penalties or monetary damages arising out
of the operation of such plans prior to the Closing Date; and (ii) for any other
compensation or benefits, payable or in the future to be payable to any past or
present employee or independent contractor of Seller relating to the period
prior to the Closing Date;
     F. All other Liabilities with respect to or arising out of Seller’s
employment of any of Seller’s employees or their termination by Seller whether
prior to or after the Closing Date;

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     G. All Liabilities arising out of any wrongful or unlawful violation or
infringement by Seller or any of its Affiliates of any Intellectual Property of
any person or entity prior to the Closing Date, including with respect to
products manufactured or sold by Seller prior to the Closing Date;
     H. All Liabilities arising out of claims alleging damage to the environment
or similar claims against Seller related to the use, occupation, ownership or
operation by Seller of the Leased Real Property prior to the Closing Date,
including any Liabilities under any Environmental, Health and Safety Laws;
     I. All Liabilities of Seller arising out of any Action arising out of or
relating to matters or events occurring prior to the Closing Date;
     J. All Liabilities of Seller in respect of the borrowing of money or
issuance of any note, bond, indenture, loan, credit agreement or other evidence
of indebtedness, whether or not disclosed in this Agreement or otherwise;
     K. All Liabilities of Seller arising out of, under or in connection with
any of the Excluded Assets;
     L. Except as expressly provided in Section 1.5, all other Liabilities of
Seller arising out of or relating to matters or events occurring prior to the
Closing Date; and
     M. All Liabilities related to the Excluded Business.
     1.5 Assumed Liabilities. Purchaser will assume and have responsibility for
the Assumed Liabilities. For purposes of this Agreement, the term “Assumed
Liabilities” means, other than to the extent relating to a breach, action or
inaction by Seller prior to Closing or any Retained Liabilities: (i) liabilities
specifically assumed by Purchaser under this Agreement or the Ancillary
Agreements; (ii) obligations arising post-Closing relating to Purchaser’s
ownership or use of the Acquired Assets; (iii) obligations arising post-Closing
under the Contracts and Employee Benefit Plans assigned to Purchaser pursuant to
this Agreement; (iv) liabilities arising out of the post-Closing conduct of the
Business; and (v) liabilities arising post-Closing with respect to any
Transferred Employee or the Employee Benefit Plans.
     1.6 Non-Assignability. To the extent that any Contract or License included
in the Acquired Assets is not capable of being assigned to Purchaser at Closing,
without the Consent of the other party thereto, or if such assignment or
attempted assignment would constitute a breach thereof, this Agreement shall not
constitute an assignment thereof, or an attempted assignment, unless any such
Consent is obtained. At Purchaser’s request, Seller will use commercially
reasonable efforts, which will not include the incurrence of any liability to
the other party to the Contract, to obtain such party’s Consent to the
assignment. Purchaser will cooperate with Seller in its efforts to obtain the
Consents. Seller will have no liability to Purchaser in the event that any
Consent to assignment of any Contract is not obtained.
     A. In the event: (i) a Contract or License prohibits the assignment by
Seller of its rights and obligations thereunder; or (ii) Seller has not obtained
the necessary Consents to assignment from all parties prior to the Closing Date,
during the eighteen (18) month period commencing with Closing, Seller shall
cooperate with Purchaser at no cost to Seller in any reasonable and lawful
arrangements designed to provide for Purchaser the benefits under such Contracts
or Licenses accruing after the Closing,

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including the enforcement for the benefit and at the expense of Purchaser of any
rights comparable to the rights previously enjoyed by Seller in connection with
such Contracts or Licenses.
     B. To the extent that Purchaser is provided the benefits under a Contract
or License as set forth in Section 1.6.A, Purchaser will perform, on behalf of
Seller, the obligations of Seller (including payment obligations) under or in
connection with such Contracts and Licenses. If Purchaser fails to perform to
the extent required under this Section 1.6.B, Seller, after providing fifteen
(15) days prior written notice or such other notice period as is reasonable
under the circumstances, which notice period will not be less than any cure
period provided in the underlying Contract or License, without waiving any
rights or remedies that it may have under this Agreement or applicable Laws, may
suspend its performance under Section 1.6.A with respect to the Contract or
License that is the subject of such failure to perform unless and until such
situation is remedied; or Seller may perform in a reasonable manner at
Purchaser’s sole cost and expense, in which case Purchaser will reimburse
Seller’s reasonable costs of such performance without mark-up, immediately upon
receipt of an invoice.
     C. Seller will have no liability to Purchaser arising out of the provision
of the benefits of any Contract or License under this Section 1.6 other than for
gross negligence or willful misconduct and will have no Liability for actions
taken under this Section 1.6 in connection with the request or direction of
Purchaser. Purchaser will reimburse Seller and will hold Seller harmless from
and against all Liabilities incurred or asserted as a result of Seller’s
post-Closing direct or indirect performance, requested by Purchaser under this
Section 1.6, under management or ownership of any non-assignable Contract or
License, other than arising in connection with Seller’s gross negligence or
willful misconduct.
2. NONDISCLOSURE AGREEMENT; CONFIDENTIALITY:
     2.1 Effective as of the Closing, each of Purchaser and Sparton Corporation
will be deemed to be released of its obligations arising under the Nondisclosure
Agreement with respect only to Evaluation Material related to the Acquired
Assets; provided, however, from and after the Closing, Paragraph 7 of the
Nondisclosure Agreement shall remain in full force and effect with respect to
any persons not hired by Purchaser pursuant to the terms of this Agreement.
     2.2 From and after the Closing, Seller shall, and shall cause its
Affiliates to, hold in strict confidence and not use to the detriment of
Purchaser, any non-public, confidential or proprietary information with respect
to this Agreement, the Business and the Acquired Assets (the “Confidential
Information”). Confidential Information does not include information that:
(i) is or has become generally available to the public other than as a result of
improper disclosure by Seller or Seller’s Affiliates; or (ii) Seller or any of
Seller’s Affiliates is required by Law to disclose, provided that Seller shall
endeavor to give Purchaser such notice as may be reasonable under the
circumstances so that Purchaser may attempt to obtain a protective order.

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3. PURCHASE PRICE:
     3.1 Purchase Price for Acquired Assets:
     A. Subject to the terms and conditions of this Agreement, the aggregate
purchase price for the Acquired Assets will be $8,000,000 (the “Purchase
Price”). The Purchase Price, reduced by the amount of the Assumed Employee
Accrual as provided under Section 4.3.A below, and reduced by the Holdback, will
be paid by Purchaser on the Closing Date as set forth herein.
     B. The Purchase Price shall be adjusted downward dollar-for-dollar by the
amount by which the total value of all Inventory acquired by Purchaser
hereunder, as calculated in accordance with Schedule 3.1.C (the “Final Inventory
Value”), is less than Ten Million Dollars ($10,000,000) (the “Base Inventory
Value”) and the Purchase Price shall be adjusted upward Fifty Cents ($.50) for
each dollar by the amount by which the Final Inventory Value is greater than the
Base Inventory Value.
     C. As promptly as practicable following the Closing Date, Purchaser shall
prepare a calculation of the Final Inventory Value as of the Closing Date, based
on a physical count of Inventory that was conducted by Seller from June 18, 2010
to June 24, 2010. The Final Inventory Value shall be determined in accordance
with generally accepted accounting principles, valued on a first in, first out
basis and consistent with the valuation principles and practices identified in
Schedule 3.1.C. The Final Inventory Value will reflect reserves for excess and
obsolete Inventory that are consistent with the reserves for excess and obsolete
Inventory determined in accordance with the valuation principles and practices
identified in Schedule 3.1.C. Purchaser shall deliver the Final Inventory Value
to Seller promptly upon completion of such calculation.
     (i) Within thirty (30) days after receiving the Final Inventory Value from
Purchaser, Seller shall deliver to Purchaser a detailed statement describing
Seller’s objections, if any, to the Final Inventory Value, or stating that
Seller has no objections to the Final Inventory Value. If Seller has no
objections to the Final Inventory Value, the Final Inventory Value shall become
final and binding upon the parties. If Seller delivers to Purchaser within such
thirty (30) day period a statement of Seller’s objections to the Final Inventory
Value (the “Objection Notice”), the Parties will endeavor to reconcile any
differences and agree upon an adjusted Final Inventory Value. If the Parties are
unable to agree upon an adjusted Final Inventory Value within thirty (30) days
following Purchaser’s receipt of Seller’s Objection Notice, at the request of
either Party the outstanding matters shall be submitted for resolution to Plante
Moran or, if either Party is utilizing the services of Plante Moran, such other
accounting firm as the Parties mutually agree. Each of the Parties shall bear
one-half (1/2) of the fees and expenses of the accounting firm. Such accounting
firm’s scope of review shall be limited to only those items of disagreement
specified in Seller’s Objection Notice and any items described by Purchaser in
response to Seller’s Objection Notice. Such accounting firm shall make a final
determination of the issues in dispute and prepare an adjusted Final Inventory
Value as promptly as practicable, but in no event more than forty-five (45) days
after engagement, and both Parties agree to cooperate fully with such accounting
firm. The adjusted Final Inventory Value prepared by such accounting firm shall
be final and binding upon the Parties.

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     (ii) If the Final Inventory Value as determined above is less than the Base
Inventory Value, Purchaser shall, at Seller’s option, deduct the shortfall
amount from the Holdback or Seller shall pay such shortfall amount in
immediately available funds, in each case within five (5) days following final
determination of the Final Inventory Value. If the Final Inventory Value as
determined above is greater than the Base Inventory Value, Purchaser shall pay
Seller fifty percent (50%) of the difference in immediately available funds
within five (5) days following determination of the Final Inventory Value.
    D. Within thirty (30) days after the expiration of the Excess Inventory
Review Period, Purchaser shall deliver a calculation of the Excess Inventory in
accordance with Schedule 3.1.D (the “Final Excess Inventory Value”), together
with a representation that such Final Excess Inventory Value is true and
correct. The baseline for the determination of the amount of Excess Inventory
shall be calculated in accordance with the valuation principles and practices
set forth on Schedule 3.1.C and shall be the amount of Inventory on hand as of
July 31, 2010, less the amount of Inventory necessary to fulfill the most
current customer forecasts as provided by each customer of the Business, as
agreed upon by the Parties (the “Baseline Report”).
     (i) During the Excess Inventory Review Period, Purchaser shall use best
efforts to enforce the terms and conditions of any Contract with customers
relating to Inventory, including terms and conditions relating to Inventory
repurchase, stagnant Inventory and the current term of the Contract. Further,
during the Excess Inventory Review Period, Purchaser shall not enter into any
amendment to any Contract or revise or compromise the terms of any Contract
relating to Inventory, including terms and conditions relating to Inventory
repurchase, stagnant Inventory or acceleration of termination of a Contract, to
the detriment of Seller.
     (ii) During the Excess Inventory Review Period, Purchaser shall provide to
Seller a quarterly report by part number in a format consistent with the
Baseline Report, indicating the beginning Inventory balance, actual usage,
quarterly Inventory balance and rolling twelve (12) month forecast. Purchaser
shall provide Seller or its designee with reasonable access to review the Excess
Inventory from Closing until expiration of the Excess Inventory Review Period,
with prior written notice and during normal business hours or as otherwise
agreed by the Parties, to review the books, records and Inventory relating to
the Baseline Report, at Seller’s cost. Seller’s review and activities at the
Facility shall not unreasonably interfere with any ongoing production at the
Facility.
     (iii) Within thirty (30) days after receiving the Final Excess Inventory
Value from Purchaser, Seller shall deliver to Purchaser a detailed statement
describing Seller’s objections, if any, to the Final Excess Inventory Value, or
stating that Seller has no objections to the Final Excess Inventory Value. If
Seller has no objections to the Final Excess Inventory Value, the Final Excess
Inventory Value shall become final and binding upon the Parties. If Seller
delivers to Purchaser within such thirty (30) day period a statement of Seller’s
objections to the Final Excess Inventory Value (the “Excess Inventory Objection
Notice”), the Parties will endeavor to reconcile any differences and agree upon
an adjusted Final Excess Inventory Value. If the Parties are unable to agree
upon an adjusted Final Excess Inventory Value within thirty (30) days

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following Purchaser’s receipt of Seller’s Excess Inventory Objection Notice, at
the request of either Party the outstanding matters shall be submitted for
resolution in accordance with the provisions of Section 3.1.C(i).
     (iv) If the Final Excess Inventory Value as determined above is zero,
Purchaser shall pay Seller, in immediately available funds, the amount of One
Hundred Thousand Dollars ($100,000) within five (5) days following final
determination of the Final Excess Inventory Value. If the Final Excess Inventory
Value as determined above is more than zero but is less than One Hundred
Thousand Dollars ($100,000), Purchaser shall pay Seller, in immediately
available funds, the difference between the Final Excess Inventory Value and One
Hundred Thousand Dollars ($100,000) within five (5) days following final
determination of the Final Excess Inventory Value. If the Final Excess Inventory
Value as determined above is greater than One Hundred Thousand Dollars
($100,000), Seller shall pay Purchaser (or, at Seller’s option, Purchaser may
deduct from the Holdback) the amount of the Final Excess Inventory Value, up to
a maximum of Two Million Dollars ($2,000,000) within five (5) days following
determination of the Final Excess Inventory Value. Further, if, during the six
(6) month period following expiration of the Excess Inventory Review Period,
Purchaser receives a payment from any customer related to Excess Inventory
included in the Final Excess Inventory Value for which Seller has paid
Purchaser, then Purchaser shall remit such payment to Seller.
     (v) Purchaser will not scrap or otherwise dispose of any Excess Inventory
included in the Final Excess Inventory Value for which Seller has paid
Purchaser, other than sale to the applicable customer without Seller’s prior
written consent. Seller shall have the option, at any time during the six
(6) month period following expiration of the Excess Inventory Review Period, to
take ownership and possession of any Excess Inventory included in the Final
Excess Inventory Value for which Seller has paid Purchaser. Purchaser shall
permit Seller to store any such Excess Inventory owned by Seller at the Facility
for a reasonable period of time and will provide Seller with reasonable access
to the Facility to remove any such Excess Inventory.
     3.2 Holdback. Subject to the terms and conditions herein, at the Closing,
Purchaser shall deposit the Holdback in an interest bearing account (the “Escrow
Account”) pursuant to an Escrow Agreement substantially in the form of
Exhibit 3.2 hereto (the “Escrow Agreement”), for a period of eighteen
(18) months after the Closing Date (the “Escrow Period”); provided, however, for
purposes of Section 3.1.D, the Escrow Period shall continue for an additional
thirty (30) day period. The Holdback shall be distributed in accordance with the
terms of the Escrow Agreement.
     3.3 Purchase Price Allocation:
     A. Within sixty (60) days after the final determination of the Purchase
Price pursuant to Sections 3.1.B and 3.1.C above, the Parties agree to allocate
the aggregate of the Purchase Price and the Assumed Liabilities (and all other
capitalized costs) among the Acquired Assets and the other agreements provided
for herein for all purposes (including financial accounting and tax purposes)
(the “Allocation”).

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     B. Purchaser and Seller will each report the federal, state and local
income Tax consequences of the Sale in a manner consistent with the Allocation,
including, if applicable, the preparation and filing of Forms 8594 under
Section 1060 of the Internal Revenue Code (or any successor form or successor
provision of any future Tax law) with their respective federal income Tax
returns for the taxable year that includes the Closing Date, and none of the
Parties will take any position inconsistent with the Allocation unless required
under applicable law. Seller will provide Purchaser and Purchaser will provide
Seller with a copy of any information required to be furnished to the Secretary
of Treasury under Internal Revenue Code Section 1060.
     C. To the extent that Seller makes any payments relating to the Business
prior to, on or following the Closing Date with respect to any Acquired Assets
as to which title passed to Purchaser on such Closing Date, and as to items in
Section 3.3.D below relating to periods following such Closing Date for which
the Purchaser will receive benefit, the Purchaser shall reimburse Seller on a
per diem basis within thirty (30) days of receipt of evidence of payment
reasonably satisfactory to Purchaser. If Seller receives any payment from a
customer post-Closing relating to a period after the Closing, Seller shall
immediately remit payment to Purchaser.
     D. To the extent Purchaser makes any payment relating to the Business
following the Closing Date with respect to any Acquired Assets as to which title
passed to Purchaser on such Closing Date, and as to items listed below relating
to periods on or prior to such Closing Date for which Seller received a benefit,
Seller shall, at Seller’s option, reimburse Purchaser or permit Purchaser to
deduct from the Holdback on a per diem basis within thirty (30) days of receipt
of evidence of payment reasonably satisfactory to Seller, in each case for the
following: personal and other ad valorem taxes, including certain personal
property taxes, in accordance with local customs; and payments, charges and
local taxes due pursuant to any permit, commitment or other binding arrangements
to which Seller is a party or is obligated and which is being assumed by
Purchaser pursuant to this Agreement. If Purchaser receives any payment from a
customer post-Closing relating to a period prior to the Closing, Purchaser shall
immediately remit payment to Seller.
     E. All payments by Purchaser to Seller, or by Seller to Purchaser, as the
case may be, under this Agreement shall be accomplished, at the option of the
recipient, by a certified or cashier’s check or wire transfer to the account
specified by the recipient.
4. EMPLOYEE MATTERS:
     4.1 Salaried Employees:
     A. Effective as of the Closing, Purchaser will offer employment to all
current salaried employees, which employees are listed on Schedule 4.1.A (the
“Transferred Salaried Employees”), with such new employment to commence (if
accepted, whether by reporting to work or otherwise) with effect from the
Closing. Seller will cooperate in encouraging any such employees to accept
employment with Purchaser and will allow Purchaser reasonable access to such
employees.
     B. For all Transferred Salaried Employees, Purchaser’s offer of employment
will be on the same terms, at the same level of compensation and with the same
benefits

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in place immediately prior to the Closing; provided, however, that after
December 31, 2010 the benefits will be provided under Purchaser’s Employee
Benefit Plans.
     C. Effective as of Closing, Purchaser will offer employment to the salaried
employees of Seller’s Affiliate, Delphi Corporation, listed on the attached
Schedule 4.1.C (the “Additional Salaried Employees”), with such new employment
to commence (if accepted, whether by reporting to work or otherwise) with effect
from the Closing. Seller will cooperate in encouraging such employees to accept
employment with Purchaser and will allow Purchaser reasonable access to such
employees. For the Additional Salaried Employees, Purchaser’s offer of
employment will be on the same terms and at the same level of compensation in
place immediately prior to the Closing and with benefits that are substantially
similar in the aggregate to those in place immediately prior to the Closing,
which benefits will be provided under the Employee Benefit Plans of Purchaser’s
Affiliate, Sparton Corporation.
     D. For all Transferred Salaried Employees and the Additional Salaried
Employees, Purchaser will maintain the requisite level of compensation and
benefits for a minimum of twelve (12) months following the Closing Date;
provided, however, that with respect to Transferred Salaried Employees, after
December 31, 2010, benefits will be provided under Purchaser’s Employee Benefit
Plans, which provide substantially similar benefits to Seller’s Employee Benefit
Plans. To the extent that Purchaser separates any Transferred Salaried Employee
or Additional Salaried Employee during the twelve (12) month period following
the Closing Date under circumstances that would render the Transferred Salaried
Employee or Additional Salaried Employee eligible for severance benefits had
such separation occurred at Seller, Purchaser will provide such separated
Transferred Salaried Employees or Additional Salaried Employees the severance
benefits provided for under the terms of Purchaser’s severance plan applicable
at Closing, a summary of which Purchaser has delivered to Seller, taking into
account the Transferred Salaried Employee’s or the Additional Salaried
Employee’s combined Seller and Purchaser service.
     4.2 Hourly Employees:
     A. Effective as of the Closing, Purchaser will offer employment to all
current hourly employees, which employees are listed on Schedule 4.2.A (the
“Transferred Hourly Employees” and together with the Transferred Salaried
Employees and the Additional Salaried Employees, the “Transferred Employees”)
with such new employment to commence (if accepted, whether by reporting to work
or otherwise) with effect from the Closing. Seller will cooperate in encouraging
any such employees to accept employment with Purchaser and will allow Purchaser
reasonable access to such employees.
     B. For all Transferred Hourly Employees, Purchaser’s offer of employment
will be on the same terms, at the same level of compensation and with the same
benefits in place immediately prior to Closing; provided, however, that after
December 31, 2010 the benefits will be provided under Purchaser’s Employee
Benefit Plans.
     4.3 Transferred Employees:
     A. Assumed Employee Accrual. Purchaser will be responsible for the amount
of all accrued and unutilized vacation pay and any profit sharing or incentive

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compensation of Transferred Employees due for the calendar year in which the
Closing occurs and the Purchase Price will be reduced on a pro-rata basis using
the number of days worked by the Transferred Employees for Seller (the “Assumed
Employee Accrual”).
     B. Employee Benefit Plans. Seller currently maintains the Employee Benefit
Plans listed on Schedule 4.3.B. Purchaser agrees, effective as of the Closing
Date, to assume sponsorship of the Employee Benefit Plans listed on
Schedule 4.3.B, including all obligations of the sponsor to contribute to and
administer such Employee Benefit Plans, and shall, immediately following the
Closing Date, amend each of the Employee Benefit Plans listed on Schedule 4.3.B
to remove all references to Seller as the plan sponsor, and identify Purchaser
as the plan sponsor. Notwithstanding the preceding sentence, Seller shall retain
all Liabilities with respect to such plans for the period prior to the Closing
Date and Purchaser shall assume all Liabilities with respect to such plans for
the period after the Closing Date. The Parties agree to perform all acts
necessary or required to consummate the assumption by Purchaser of the Employee
Benefit Plans on Schedule 4.3.B, including, but not limited to, the making of
all required filings with the Internal Revenue Service and the Department of
Labor, if any, and the receipt of all necessary notices and approvals from
Governmental Entities, if any. The Parties shall provide each other with such
records and information as may be necessary or appropriate to carry out their
obligations under this section or for the purposes of administration of such
Employee Benefit Plans and shall cooperate in the filing of all documents
required for the Purchaser to assume sponsorship of the Employee Benefit Plans
listed on Schedule 4.3.B, if any. The Parties agree that if the insurers
insuring the transferred Employee Benefit Plans do not agree to the assignment
of the insurance contracts insuring such plans or require a material increase in
pricing in order to agree to the assignment, Purchaser shall obtain
substantially similar insurance coverage as provided under Seller’s Employee
Benefit Plans.
     C. Severance. Other than as stated in this Agreement, Purchaser will assume
all obligations and liabilities relating to any claims for severance,
termination (actual or constructive), redundancy or other payments or benefits
by Transferred Employees arising from the transactions contemplated under this
Agreement.
     D. COBRA. Purchaser will assume all obligations relating to compliance with
the continuation health care coverage requirements of IRC Section 4980B and
Sections 601 through 608 of ERISA regarding qualifying events in regard to
Transferred Employees that accept Purchaser’s offer of employment and any M&A
qualified beneficiaries pursuant to 29 C.F.R §54.4980B-9, arising from the
transactions contemplated under this Agreement.
     E. WARN Act. Purchaser will assume all obligations and liabilities relating
to WARN Act or other similar notice Laws, if any, by Transferred Employees
arising from the transactions contemplated under this Agreement or Purchaser’s
actions.
     F. Cooperation. Seller and Purchaser will provide each other with such
records and information as may be reasonably necessary, appropriate and
permitted under applicable Law to carry out their obligations under this
Section 4.3.
5. [INTENTIONALLY OMITTED.]

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6. REPRESENTATIONS AND WARRANTIES:
     6.1 Warranties of Seller. Seller hereby represents and warrants to
Purchaser that the following representations and warranties are true and correct
as of the date hereof and will, unless specifically applicable as of the date
hereof, be true and correct as of the Closing (as though made then and as though
the Closing Date was substituted for the date of this Agreement throughout this
Section 6.1):
     A. Corporate Organization. Seller is a limited liability company, duly
organized and validly existing under the Laws of the State of Delaware, is duly
qualified as a foreign limited liability company in Colorado and such other
jurisdictions as its conduct of the Business requires, and has the corporate
power and authority to carry on the Business as it is currently being conducted.
     B. Corporate Authority. Seller has the requisite limited liability company
power and authority to perform its obligations under this Agreement and each
Ancillary Agreement, to execute and perform in accordance with this Agreement,
and, assuming due authorization, execution and delivery by Purchaser, this
Agreement shall constitute a valid and binding obligation of Seller enforceable
against Seller in accordance with its terms. The execution and delivery of this
Agreement and the Ancillary Agreements, the performance of Seller’s obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
proceedings on the part of Seller.
     C. No Conflict. Except as set forth on Schedule 6.1.C, the execution,
delivery and performance by Seller of this Agreement and the Ancillary
Agreements, the consummation of the transactions contemplated hereby and thereby
by Seller and the compliance with the terms of this Agreement and the Ancillary
Agreements by Seller do not: (a) conflict with, result in a breach of any
provision of, constitute a default under, result in the modification or
cancellation of or give rise to any right of termination or acceleration in
respect of any Contract to which Seller is a party and that primarily relates to
the Business or the Acquired Assets; (b) result in the creation of any Lien
upon, or any person obtaining the right to acquire any of the Acquired Assets;
(c) violate or conflict with any Law to which Seller or any of the Acquired
Assets is subject; (d) require Seller to obtain any authorization, consent,
order, permit or approval of, or to deliver any notice to, or filing,
registration or qualification with, any Governmental Entity; or (e) conflict
with or result in any breach of any of the provisions of Seller’s Organizational
Documents; in each case except as would not have a Material Adverse Effect.
     D. No Joint Ventures. There are no corporations, partnerships, joint
ventures, limited liability companies or other entities in which Seller,
directly or indirectly, has an interest and through which any part of the
Business is conducted.
     E. Title to Acquired Assets. Seller warrants that, as of the date of
delivery of the Acquired Assets, Seller will have good, valid and marketable
right, title and interest to the Acquired Assets and the Acquired Assets will be
sold, assigned, transferred or delivered, as the case may be, free and clear of
any Lien other than the Permitted Liens.

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     F. Litigation. Schedule 6.1.F sets forth a true and complete description of
all pending Actions against Seller or any of its Affiliates involving the
Business, existing at any time during the nine (9) month period immediately
preceding the date of this Agreement of which Seller has Knowledge. Except as
disclosed on Schedule 6.1.F hereto, there is no Action (including, without
limitation, any workers compensation claims) pending or, to Seller’s Knowledge,
threatened against Seller with respect to the Business or any of the Acquired
Assets. Except as disclosed on Schedule 6.1.F hereto, there are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency, or by arbitration) against Seller
that are reasonably likely to interfere with the conduct of the Business as
presently conducted or prevent or materially delay the transactions contemplated
in this Agreement.
     G. Compliance with Laws. Except as set forth on Schedule 6.1.G, to Seller’s
Knowledge, Seller has, with respect to the Business and the Acquired Assets,
complied with all applicable Laws, except where noncompliance would not have a
Material Adverse Effect, and, to Seller’s Knowledge, no Action has been filed or
commenced against Seller alleging any failure so to comply, except where the
failure to comply would not have a Material Adverse Effect. The representations
and warranties relating to Environmental Matters, including Environmental Health
and Safety Laws and related Licenses, are exclusively set forth in
Section 6.1.T.
     H. Sufficiency of Assets. The Acquired Assets, together with the Excluded
Assets, comprise all of the assets, rights and properties used or held for use
by Seller primarily in connection with the Business. The Acquired Assets,
together with the Excluded Assets, are all of the assets, rights and properties
necessary to operate the Business at the Facility in all material respects as
the Business is presently conducted by Seller.
     I. Financial Statements. Schedule 6.1.I hereto contains true and complete
copies of the following internally prepared and unaudited pro forma financial
statements (collectively, the “Financial Statements”): (a) the balance sheets
and related statements of income of the Business for the fiscal year ended
December 31, 2009 (the “Most Recent Fiscal Year End”); and (b) the balance sheet
and related statements of income of the Business (the “Most Recent Financial
Statements”) as of and for the four (4) month period ended April 30, 2010 (the
“Most Recent Fiscal Month End”). All Financial Statements are in accordance with
the books and records of Seller, and such books and records of Seller are true
and complete in all material respects. Each of the balance sheets included in
the Financial Statements fairly presents in all material respects the financial
position of the Business as of its date, and each of the related statements of
income included within the Financial Statements fairly presents in all material
respects the results of operations of the Business for the respective periods
then ended.
     J. [Intentionally Omitted.]
     K. Absence of Certain Changes. Except as disclosed on Schedule 6.1.K
hereto, or as set forth in the management presentation presented to Purchaser on
April 20, 2010, or as otherwise contemplated or expressly permitted by this
Agreement, since the Most Recent Fiscal Year End: (i) there has not been any
Material Adverse

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Change with respect to the Business; and (ii) Seller has conducted the Business
only in the Ordinary Course of Business.
     L. Leased Real Property. Schedule 6.1.L hereto sets forth the address of
each parcel of real property leased by Seller in connection with the Business
(the “Leased Real Property”) and a true and complete list of all Leases for each
such Leased Real Property (including the date and name of the parties to such
Lease document). Seller does not own any real property used in connection with
the Business. Seller has delivered to Purchaser a true and complete copy of the
Road 18 Lease. With respect to the Road 18 Lease: (a) such Lease is legal,
valid, binding, enforceable and in full force and effect; (b) the transactions
contemplated by this Agreement require the consent of the other party to such
Lease; (c) Seller’s possession and quiet enjoyment of the Leased Real Property
under such Lease has not been disturbed and there are, as of the date hereof, no
disputes with respect to such Lease; (d) none of Seller or, to Seller’s
Knowledge, any other party to the Lease is in breach or default under such
Lease, and, to Seller’s Knowledge, no event has occurred or circumstance exists
that, with the delivery of notice, the passage of time or both, would constitute
such a breach or default, or permit the termination, modification or
acceleration of rent under such Lease; (e) Seller has not subleased, licensed or
otherwise granted any Person the right to use or occupy such Leased Real
Property or any portion thereof; and (f) Seller has not collaterally assigned or
granted any other Lien in such Lease or any interest therein, which assignment
or Lien will not be released at Closing.
     M. Inventory. The Inventory, whether or not reflected in the Financial
Statements, consists of a quality and quantity usable and, with respect to
finished goods, saleable, in the Ordinary Course of Business and, to Seller’s
Knowledge, none of the Inventories is damaged. Except as set forth on
Schedule 6.1.M, the Inventory has been purchased or acquired by Seller in the
Ordinary Course of Business and is valued according to generally accepted
accounting principles, on a first in, first out basis and consistent with the
valuation principles and practices listed in Schedule 3.1.C.
     N. Intellectual Property:
     (i) Except as disclosed in Schedule 6.1.N (and for the subject matter
addressed in Section 6.1.N(ii)), Seller owns or possesses, or has the right to
use pursuant to a valid and enforceable written license, sublicense, agreement
or permission, all Intellectual Property necessary for the operation of the
Business as presently conducted and as presently proposed to be conducted,
including, without limitation, all Intellectual Property used in any service,
product, technology or process: (x) currently being used, manufactured,
published or marketed by Seller; or (y) currently under development for possible
future manufacturing, publication, marketing or other use by Seller. To Seller’s
Knowledge, except as set forth on Schedule 6.1.N, each item of Intellectual
Property owned or used by Seller in connection with the Business immediately
prior to the Closing will be owned or available for use by Purchaser on
identical terms and conditions immediately subsequent to the Closing. Seller has
taken all action reasonably necessary to maintain and protect each item of
Intellectual Property that is included within the Acquired Assets.
     (ii) Seller has not knowingly interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property

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rights of third parties. Within the period of five (5) years prior to the
Closing, Seller has received no charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation or violation,
including any claim that Seller must license or refrain from using any
Intellectual Property rights of any third party. To Seller’s Knowledge, no third
party has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of Seller used in connection
with the Business.
     (iii) Schedule 6.1.N hereto identifies each United States and foreign
patent or registration and each United States and foreign pending patent
application or application for registration that is included in the Acquired
Assets, and identifies each license, sublicense, agreement or other permission
that Seller has granted to any third party with respect to any Intellectual
Property used in connection with the Business (together with any exceptions).
Seller has delivered to Purchaser true and complete copies of all such patents,
registrations, applications, licenses, sublicenses, agreements and permissions
(as amended to date) and all other written documentation evidencing ownership
and prosecution (if applicable) of each such item.
     (iv) Schedule 6.1.N hereto identifies each item of intellectual property
(other than items of intellectual property provided pursuant to Customer
Contracts) that any third party owns and that Seller uses in connection with the
Business pursuant to license, sublicense, agreement or permission. Seller has
delivered to Purchaser true and complete copies of all such licenses,
sublicenses, agreements and permissions (as amended to date).
     O. Employment and Labor Matters. Seller is not a party to or subject to any
collective bargaining agreement or other agreement with a labor union in
connection with the Business. No representation petition respecting the
employees of Seller has been filed with the National Labor Relations Board and,
to the Knowledge of Seller, there is no current effort to organize the employees
of Seller into any collective bargaining unit or any solicitation of them to
join any labor organization. Except as set forth on Schedule 6.1.O, to Seller’s
Knowledge, Seller is in compliance with all applicable Laws respecting
employment and employment practices, occupational safety and health standards,
terms and conditions of employment and wages and hours, except where
noncompliance would not have a Material Adverse Effect.
     P. Employee Benefits:
     (i) Schedule 4.3.B hereto lists all Employee Benefit Plans that are
sponsored by Seller and in which any employees of Seller in connection with the
Business, other than the Additional Salaried Employees, participate.
     (ii) As to Employee Benefit Plans sponsored by Seller that are intended to
be tax-qualified “employee pension benefit plans” as defined in Section 3(2) of
ERISA, such plans sponsored by Seller are tax qualified under Section 401(a) of
the Code, are not currently under examination by, nor are any matters pending
before, the Internal Revenue Service, the Employee Benefits Security
Administration or any quasi-government agency, are not subject to any claim,
suit or arbitration (other than routine claims for benefits), are not subject to
the minimum funding standards of Code Section 412, are in compliance with and

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have been administered in accordance with their terms and in compliance with all
applicable requirements of law, including, but not limited to, the Code and
ERISA, and there have been no prohibited transactions as defined in Code Section
4975 or ERISA Section 406 with respect to such plans that could subject Seller
or its Affiliates to a tax or penalty under Code Section 4975 or ERISA
Section 502(i).
     (iii) Seller has not incurred any Liability under Title IV of ERISA that
has or could, after the Closing Date, become a Lien upon any of the Acquired
Assets pursuant to ERISA Section 4068.
     (iv) Seller is not and has never been required to contribute to any
“multiemployer plan”, as such term is defined in Section 4001(a)(3) of ERISA, in
which employees of Seller in connection with the Business participate.
     (v) Except as set forth in Schedule 4.3.B, no Employee Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees for periods extending beyond their retirement or
other termination of service, other than: (x) coverage mandated by applicable
law; or (y) death benefits under any pension plan.
     (vi) For the purposes of Schedule 4.3.B, Seller shall include all trades or
businesses under common control with Seller as provided in the regulations under
Code Section 414(c).
     Q. Contracts:
     (i) Schedule 6.1.Q(i) hereto lists, as of the dates set forth therein, the
following Contracts to which Seller is a party and that primarily relate to the
Business, other than Employee Benefit Plans (collectively, the “Material
Contracts”):
     (a) Any Contract for the lease of personal property to or from any Person
providing for lease payments in excess of $50,000 per annum;
     (b) Any Contract for the purchase or sale of raw materials, commodities,
supplies, products or other personal property, or for the furnishing or receipt
of services, the performance of which will extend over a period of more than one
(1) year, provide for discounts or allowances or involve consideration in excess
of $50,000;
     (c) Any Contract concerning a partnership or joint venture;
     (d) Any Contract under which Seller has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $50,000 or under which it has imposed a Lien on any of
the Acquired Assets;
     (e) Any Contract concerning non-competition;

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     (f) Any Contract with an Affiliate;
     (g) Any Contract for the employment or other engagement of any individual
on a full-time, part-time, consulting or other basis providing annual
compensation in excess of $50,000;
     (h) Any sales representative or agency Contract, brokers Contract or dealer
Contract, or other Contract relating to the sale or distribution of products or
services of the Business by other Persons;
     (i) Any Contract under which Seller has advanced or loaned any Person
amounts in the aggregate exceeding $50,000; or
     (j) Any other Contract not otherwise included above, the performance of
which involves consideration in excess of $50,000 per annum or $300,000 in the
aggregate prior to expiration of such Contract.
     (ii) Seller has delivered to Purchaser a true and complete copy of each
written Material Contract and a summary of each oral Material Contract assumed
or deemed assumed by Purchaser (all as amended to date) listed on
Schedule 6.1.Q(i). Seller acknowledges and agrees that inclusion of a Material
Contract in the data room made available to Purchaser for purposes of its due
diligence activities is sufficient to constitute delivery under this
Section 6.1.Q(ii). With respect to each such Material Contract, except as set
forth on Schedule 6.1.Q(ii): (a) the Material Contract is legal, valid, binding
and enforceable on Seller and, to Seller’s Knowledge, on each other party
thereto, and is in full force and effect; (b) Seller is not and, to Seller’s
Knowledge, no other party to a Material Contract is in material breach or
default, or has alleged a material breach or default, in each case that has not
been cured or otherwise resolved, and to Seller’s Knowledge no event has
occurred that with notice or lapse of time would constitute a material breach or
default, or permit termination, modification or acceleration, under the Material
Contract, except as set forth on Schedule 6.1.Q(ii); and (c) Seller has not, and
to Seller’s Knowledge no other party has, repudiated any provision of the
Material Contract.
     R. Brokers. Seller has employed no finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby for which Purchaser
would be liable.
     S. Licenses, Approvals, Other Authorizations. Except as set forth on
Schedule 6.1.S, Seller possesses or has been granted all Licenses necessary for
the conduct of the Business as presently conducted, except where the failure to
have such Licenses would not have a Material Adverse Effect. Except as noted on
Schedule 6.1.S hereto, all such Licenses are in full force and effect. Except as
noted on Schedule 6.1.S hereto, no proceeding is pending or, to Seller’s
Knowledge, threatened seeking the revocation or limitation of any License.
     T. Environmental Matters. Except as set forth in Schedule 6.1.T hereto:
     (i) The Business has been conducted by Seller, and the condition of the
Acquired Assets and the Leased Real Property is, in compliance with all

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Environmental, Health and Safety Laws, except where the failure to comply would
not have a Material Adverse Effect;
     (ii) Without limiting the generality of the foregoing, Seller has obtained,
currently possesses and is and has been in material compliance with, all terms
and conditions of all permits, licenses and other authorizations that are
required pursuant to Environmental, Health and Safety Laws for the occupation of
the Leased Real Property, the ownership and use of the Acquired Assets and
otherwise for the conduct of the Business, all of which permits, licenses and
authorizations are listed on Schedule 6.1.T;
     (iii) Seller has not received any written notice, report or other
information suggesting that the operation of the Business or condition of the
Acquired Assets or the Leased Real Property is in actual or alleged violation of
any of the Environmental, Health and Safety Laws or that it has any Liabilities
or potential Liabilities in connection with the Business (including any
investigatory, remedial or corrective obligations) relating to its Leased Real
Property;
     (iv) To Seller’s Knowledge, none of the following exists at, on, in or
under any portion of the Leased Real Property: (a) underground storage tanks;
(b) asbestos-containing material in any form or condition; (c) polychlorinated
biphenyls; or (d) landfills or surface impoundments; and
     (v) To Seller’s Knowledge, and except as may be contained in the Lease(s),
Seller has not, in connection with the Business, either expressly or by
operation of law, assumed or undertaken any Liability, including, without
limitation, any obligation for corrective or remedial action of any other Person
relating to Environmental, Health and Safety Laws.
     U. Taxes:
     (i) None of the Acquired Assets is or at the Closing Date will be
encumbered by any Liens arising out of any unpaid Taxes (except for Taxes that
are not yet due and payable) and there are no grounds for the assertion or
assessment of any Liens against any of the Acquired Assets in respect of any
Taxes (other than Liens for Taxes, if payment thereof is not yet due).
     (ii) To Seller’s Knowledge, no issue has been raised by any taxing
authority in connection with an audit or examination of any Tax Return in
connection with the Business, that if raised with regard to any other Tax Return
not so audited or examined, would reasonably be expected to result in a proposed
deficiency with respect to the period covered by such other Tax Return. No
taxing authority in a jurisdiction where Seller does not file Tax Returns has
made a claim, assertion or threat that Seller is or may be subject to taxation
in such jurisdiction in connection with the Business.
     (iii) All Taxes that Seller has been required to collect or withhold for in
connection with the Business, including, but not limited to, any employee,
independent contractor, creditor, stockholder or other party, have been duly
withheld or collected and, to the extent required, have been paid to the proper
taxing authority. Seller has not received any reports or other written
assertions

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by agents of any taxing authority of any deficiencies or other Liabilities for
Taxes in connection with the Business with respect to taxable periods for which
the limitations period has not run. Seller has not waived any statute of
limitations in respect of Taxes in connection with the Business or agreed to any
extension of time with respect to a Tax assessment or deficiency in connection
with the Business.
     (iv) Seller is not a “foreign person” within the meaning of Code Section
1445(f)(3).
     V. Insurance. Schedule 6.1.V contains a complete and correct list, in all
material respects, of all material policies of insurance covering the Acquired
Assets (other than the Excluded Assets), indicating for each policy the carrier,
risks insured, the amount of coverage, deductible, expiration date and any
material pending claims under such policies.
     W. Product Warranty. The representations and warranties of Seller under
this Section 6.1.W are subject to the limitation stated under Seller’s
indemnification obligations under Section 9.4.B(ii) below. Seller does not
design any products for its customers in connection with the Business.
Schedule 6.1.W hereto: (i) lists each Material Contract with a customer pursuant
to which Seller delivers an express warranty on the products sold by Seller in
connection with the Business; and (ii) sets forth Seller’s standard terms and
conditions of sale (containing applicable guaranty, warranty and indemnity
provisions). No product manufactured, sold or delivered by Seller in connection
with the Business is subject to any guaranty, express warranty or other
indemnity beyond that which is contained in the applicable customer contract or
the standard terms and conditions of sale set forth in Schedule 6.1.W hereto. To
Seller’s Knowledge, Seller is not a party to any Action against Seller arising
out of any injury to individuals or property as a result of the ownership,
possession or use of any product manufactured, sold or delivered by Seller in
connection with the Business.
     X. Customers and Suppliers. Schedule 6.1.X hereto lists the current
customers of the Business and sets forth opposite the name of each such customer
the approximate dollar amount and approximate percentage of net sales of the
Business attributable to such customer during the most recent fiscal year.
Schedule 6.1.X hereto lists the ten (10) largest suppliers to the Business
(based upon dollar amount of purchases by Seller) and sets forth opposite the
name of each such supplier the approximate dollar amount of purchases
attributable to such supplier during the most recent fiscal year. No supplier of
the Business has indicated in writing to Seller that it will stop, or materially
decrease the rate of, supplying materials, products or services to the Business
and no customer of the Business has indicated in writing to Seller that it will
stop, or materially decrease the rate of, purchasing materials, products or
services from the Business.
     Y. [Intentionally Omitted.]
     Z. Accuracy of Information; Full Disclosure. No representation or warranty
of Seller contained in this Agreement contains any untrue statement of a
material fact or, to Seller’s Knowledge, omits to state a material fact required
to be stated therein or necessary to make the statements made, in the context in
which made,

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not false or misleading, which, in each case, has or could reasonably be
expected to have, a Material Adverse Effect.
     AA. Certain Transactions. All purchases and sales or other transactions, if
any, between Seller, on the one hand, and any officer, director or employee
thereof or Affiliate thereof, on the other hand, since Seller’s purchase of the
Business have been made on the basis of prevailing market rates and terms such
that, from the perspective of Seller, all such transactions have been made on
terms no less favorable than those which, to Seller’s Knowledge, would have been
available from unrelated third parties. Except as set forth on Schedule 6.1.AA,
neither any officer, director nor employee of Seller, nor any spouse, child or
other relative of any of such persons, owns, or has any interest, directly or
indirectly, in any of the real or personal property owned by or leased to Seller
primarily related to the Business or any Intellectual Property owned or licensed
by Seller and primarily related to the Business.
     BB. Regulatory Compliance:
     (i) Since Seller’s purchase of the Business, Seller has not received any
adverse written notice from the FDA or any other Governmental Entity:
(a) regarding its manufacturing operations, the Business or the Acquired Assets;
(b) alleging any violation of any Law by Seller which, in the case of either
clause (a) or (b), individually or in the aggregate has had or would have a
Material Adverse Effect.
     (ii) Except as described in Schedule 6.1.BB, no License of Seller has been
denied, placed on hold, withdrawn, suspended or discontinued by Seller as a
result of any action by the FDA or any other similar Governmental Entity, or in
the United States or outside the United States (whether voluntarily or
otherwise), in each case since Seller’s purchase of the Business. No proceedings
in the United States or outside of the United States of which Seller has
Knowledge (whether completed or pending) seeking the withdrawal, suspension or
seizure of any License of Seller are pending against Seller, nor have any such
proceedings been pending at any prior time, in each case which has had or would
have a Material Adverse Effect on Seller or the Acquired Assets.
     (iii) Except for instances that have not had and would not have a Material
Adverse Effect: (a) to the Knowledge of Seller, since Seller’s purchase of the
Business, no officer, employee or agent of Seller has made an untrue statement
of a material fact or fraudulent statement to the FDA or any other Governmental
Entity, failed to disclose a material fact required to be disclosed to the FDA
or any other Governmental Entity or committed an act, made a statement or failed
to make a statement that, at the time such disclosure was made, could reasonably
be expected to provide a basis for the FDA or any other Governmental Entity to
invoke with respect to Seller its policy respecting “Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg.
46191 (September 10, 1991) or any similar policy; and (b) neither has, to the
Knowledge of Seller, any officer, employee or agent of Seller, been convicted of
any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C.
Section 335a(a) or any similar Law or permitted by 21 U.S.C. Section 335a(b) or
any similar Law.

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     (iv) Seller has not received any written notice since its purchase of the
Business that the FDA or any other Governmental Entity has commenced, or overtly
threatened to initiate, any action to enjoin production or clinical evaluation
of any product included within the Acquired Assets.
     (v) The representations and warranties relating to Environmental Matters,
including Environmental Health and Safety Laws and Environmental Licenses, are
exclusively set forth in Section 6.1.T.
     CC. Survival. Each of the foregoing representations and warranties will
survive the Closing Date for a period of eighteen (18) months following Closing
Date; provided, however, the representations and warranties in Sections 6.1 A,
B, C and E shall survive the Closing indefinitely.
     DD. Absence of Other Representations or Warranties. Except for the
warranties expressly set forth in this Agreement and the Ancillary Agreements,
Seller makes no representations or warranties, express or implied, with respect
to the Acquired Assets or the Business. For the avoidance of doubt, no warranty
or representation is given on the contents of the documents provided in due
diligence, on any other documents or other information not contained in this
Agreement or the Ancillary Agreements, all of which were produced only for
information purposes.
     6.2 Warranties of Purchaser. Purchaser hereby represents and warrants to
Seller that the following representations and warranties are true and correct as
of the date hereof and will be true and correct as of the Closing (as though
made then and as though the Closing Date was substituted for the date of this
Agreement throughout this Section 6.2):
     A. Corporate Organization. Purchaser is a limited liability company, duly
organized, validly existing and in good standing under the Laws of the State of
Colorado, is duly qualified as a foreign limited liability company in such
jurisdictions as the conduct of its business requires, and has the power and
authority to carry on its business as it is now being conducted.
     B. Corporate Authority. Purchaser has the requisite limited liability
company authority to perform its obligations under this Agreement and each
Ancillary Agreement, to execute and perform in accordance with this Agreement,
and, assuming due authorization, execution and delivery by Seller, this
Agreement constitutes a valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms. The execution and delivery of
this Agreement and the Ancillary Agreements, the performance of Purchaser’s
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary proceedings on the part of Purchaser.
     C. No Conflicts. The execution, delivery and performance by Purchaser of
this Agreement and the Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby, and the compliance with the terms
of this Agreement and the Ancillary Agreements by Purchaser do not violate,
conflict with or result in a breach of Purchaser’s Organizational Documents, or
of any other agreement to which Purchaser is a party of by which it is bound,
except as would not, individually or in the aggregate, have a material adverse
effect on Purchaser’s ability to consummate the transactions contemplated by
this Agreement.

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     D. Consents and Approvals. Other than as set forth on Schedule 6.2.D, no
consent, approval or authorization of any non-governmental third party and no
consent, approval, authorization or declaration of or filing or registration
with any foreign, federal, state or local governmental or regulatory authority
is required to be made or obtained by Purchaser in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
     E. Litigation. There is no litigation, equitable or legal, administrative,
arbitrative or other proceedings pending, or to the Knowledge of Purchaser,
threatened against or affecting Purchaser which could reasonably be expected to
result in the issuance of an order restraining, enjoining or otherwise
prohibiting Purchaser from consummating the transactions contemplated by this
Agreement.
     F. Brokers. Purchaser has employed no finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby for which Seller would
be liable.
     G. Solvency. Upon the consummation of the transactions contemplated by this
Agreement: (i) Purchaser will not be insolvent; (ii) Purchaser will not be left
with unreasonably small capital; (iii) Purchaser will not have incurred debts
beyond its ability to pay such debts as they mature; and (iv) the capital of
Purchaser will not be impaired.
     H. Availability of Funds. Purchaser has or will have available, at or prior
to Closing, sufficient cash in immediately available funds to pay the Purchase
Price and all costs, fees and expenses necessary to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
     I. Compliance with Laws. To Purchaser’s Knowledge, Purchaser is in
compliance with all Laws applicable to it, except with respect to those
violations that could not reasonably be expected to result in the issuance of an
order outstanding restraining, enjoining or otherwise prohibiting Purchaser from
consummating the transactions contemplated by this Agreement.
     J. Anti-Money Laundering. To Purchaser’s Knowledge, Purchaser is in
compliance with: (i) all applicable provisions of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-57) (“USA Patriot Act”), as amended, and
all regulations issued pursuant to it; (ii) Executive Order No. 13224 on
Terrorist Financing, Effective September 24, 2001, and relating to Blocking
Property and Prohibited Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism; (iii) the International Emergency Economic Power
Act (50 U.S.C. 1701 et seq.), and any applicable implementing regulations;
(iv) the Trading with the Enemies Act (50 U.S.C. 50 et seq.), and any applicable
implementing regulations; and (v) all applicable legal requirements relating to
anti-money laundering, anti-terrorism and economic sanctions in the
jurisdictions in which Purchaser operates or does business. Neither the
Purchaser nor any of its directors, officers or Affiliates is identified on the
United States Treasury Department Office of Foreign Asset Control’s (“OFAC”)
list of “Specially Designated Nationals and Blocked Persons” (the “SDN List”) or
otherwise the target of an economic sanctions program administered by OFAC, and
Purchaser is not affiliated in any way with, or providing financial or material
support to, any such persons or entities. Purchaser agrees that should it, or
any of its directors, officers or Affiliates be named at

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any time in the future on the SDN List, or any other similar list maintained by
the U.S. Government, Purchaser shall inform the Seller in writing immediately.
     6.3 Fair Disclosure. Any matter fairly disclosed in any Schedule to this
Agreement will be deemed an exception for all other representations and
warranties contained in this Agreement whether or not such other representations
or warranties contain a reference to such other Schedule, but only to the extent
the relevance of such matter to such other representation and warranty is
reasonably apparent.
     6.4 Purchaser Acknowledgement:
     A. Purchaser agrees that, other than as specifically represented or
warranted by Seller under Section 6.1 of this Agreement, which shall be deemed
to control in the event of a conflict between Section 6.1 and this Section 6.4:
(i) Seller neither represents nor warrants that any of the Acquired Assets will
operate satisfactorily or that any of the Acquired Assets comply with any
applicable Laws; (ii) Purchaser accepts the entire risk and responsibility of
taking any necessary action (including performing inspections and undertaking
physical modifications) to make the Acquired Assets operate safely and
satisfactorily after Closing in Purchaser’s plant, and comply with any
applicable Laws; (iii) Seller shall have no liability or responsibility for the
condition, yield and/or operation of the Acquired Assets after transfer to
Purchaser; and (iv) Purchaser is purchasing the Acquired Assets based solely
upon its own inspection, evaluation, review and analysis, and Purchaser assumes
the entire risk associated with such inspection, evaluation, review and analysis
being incomplete or inaccurate.
     B. Purchaser acknowledges and agrees that, if the Closing occurs
notwithstanding the existence of a breach of any of Seller’s representations and
warranties of which Purchaser has Knowledge on or prior to such Closing,
Purchaser is prohibited from bringing a claim against Seller, including an
indemnification claim, related to any such breach.
7. CONDITIONS TO CLOSING:
     7.1 Conditions to Obligations of Seller and Purchaser. The respective
obligations of each Party to effect the transactions contemplated by this
Agreement will be subject to the satisfaction or waiver at or prior to the
Closing Date (or such earlier time as is indicated below) of the following
conditions precedent:
     A. No Law, Judgments, Etc. No provisions of any applicable Law and no
judgment, injunction (preliminary or permanent), order or decree that prohibits,
makes illegal or enjoins the consummation of the transactions contemplated by
this Agreement will be in effect.
     B. Excess Inventory. Prior to the Closing, the Parties shall have agreed
upon the Baseline Report.
     7.2 Conditions to Obligations of Purchaser. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement will be subject to
the fulfillment at or prior to the Closing of the following conditions (any one
or more of which may be waived in whole or in part by Purchaser):

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     A. Accuracy of Warranties. Disregarding the Supplement for purposes of this
Section 7.2.A, the representations and warranties of Seller contained in this
Agreement will be true and correct in all material respects and as of the
Closing Date as if made on such date (except for representations and warranties
that speak as of a specific date or time, which will be true and correct only as
of such date or time), except where such representation and warranties are
qualified by the terms “material”, which shall be true and correct in all
respects as of the Closing Date (except for representations and warranties that
speak as of a specific date or time, which will be true and correct only as of
such date or time).
     B. Performance of Covenants. Each of the Ancillary Agreements to which
Seller is a party will have been executed and delivered by Seller to Purchaser,
and all other agreements and transactions contemplated hereby or in this
Agreement or any Ancillary Agreement to be performed by Seller on or before the
Closing will have been performed in all material respects.
     C. Third Party Consents. The parties shall have received consents to
transfer the Material Contracts and Licenses listed on Schedule 7.2.C, which
shall be in full force and effect as of the Closing Date.
     D. UCC, Tax Lien and Judgment Search Results. Seller shall have delivered
to Purchaser a report, in standard form and substance and otherwise in form and
substance reasonably satisfactory to Purchaser, as to the results of an
examination of financing statements filed under the Uniform Commercial Code, and
tax lien and judgment records, in each office in each such jurisdiction in which
Seller is qualified to do business.
     E. Phase 1. Purchaser shall have obtained a Phase 1 environmental site
assessment of the Leased Real Property, in a form substantially conforming with
ASTM 1527 and reasonably acceptable to Purchaser, and any further investigations
to resolve any Recognized Environmental Conditions disclosed in the Phase 1
environmental site assessment.
     F. New Road 18 Lease. Concurrently with the Closing, the landlord under the
facility subject to the Road 18 Lease shall have entered into a new lease with
Purchaser (the “New Road 18 Lease”), reasonably acceptable to Purchaser, to
lease the portion of the Facility subject to the Road 18 Lease to Purchaser
after the Closing.
     G. No Material Adverse Effect. Since the date of this Agreement, no
Material Adverse Effect shall have occurred and be continuing at Closing.
     7.3 Conditions to Obligations of Seller. Except as otherwise permitted by
this Agreement, the obligation of Seller to consummate the transactions
contemplated by this Agreement will be subject to the fulfillment at or prior to
the Closing of the following conditions (any one or more of which may be waived
in whole or in part by Seller):
     A. Accuracy of Warranties. The representations and warranties of Purchaser
contained in this Agreement will be true and correct in all material respects at
and as of the Closing Date if made on such date (except for representations and
warranties that speak as of a specific date or time, which will be true and
correct only as of such date or time), except where such representations and
warranties are qualified by

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the terms “material”, which shall be true and correct in all respects at and as
of the Closing Date (except for representations and warranties that speak as of
a specific date or time, which will be true and correct only as of such date or
time).
     B. Performance of Covenants. Each of the Ancillary Agreements to which
Purchaser is a party will have been executed and delivered by Purchaser to
Seller, and all other agreements and transactions contemplated hereby or in any
Ancillary Agreement to be performed by Purchaser on or before the Closing will
have been performed in all material respects.
     C. Payment of Purchase Price. Purchaser shall have paid the Purchase Price
called for by Section 3.1, including by funding the Holdback.
     D. Road 18 Lease Termination. The landlord under the portion of the
Facility subject to the Road 18 Lease shall have executed and delivered to
Seller a document reasonably acceptable to Seller terminating the Road 18 Lease
effective at Closing and releasing Seller from all claims in connection with
such termination.
     E. No Material Adverse Effect. Since the date of this Agreement, no
Material Adverse Effect shall have occurred and be continuing at Closing.
     F. Delivery of Purchaser’s Certificate. Purchaser shall have delivered the
Purchaser MAE Certificate.
8. CLOSING:
     8.1 Closing Date. Subject to the satisfaction of the conditions set forth
in this Agreement, the closing (the “Closing”) of the transactions contemplated
hereby will take place at the offices of Seller on August 6, 2010 or the first
day thereafter that the conditions set forth in Article 7 have been satisfied or
waived (other than conditions which by their nature can be satisfied only at the
Closing), or on such other date or at such other time as the Parties may agree,
but in no event later than August 15, 2010. The Closing shall be deemed
effective as of 12:01 a.m. on the Closing Date.
     8.2 Ancillary Agreements. At the Closing, the Parties will execute and
deliver each of the Ancillary Agreements.
     8.3 Miller Road Sublease. At the Closing, the Parties will execute and
deliver a sublease for the Miller Road facility (the “Miller Road Sublease”),
with a term beginning on the Closing Date and ending on June 30, 2011 and
providing for termination on thirty (30) days notice, and containing such other
reasonable and customary terms and conditions as are applicable for a facility
sublease and reasonably acceptable to both Seller and Purchaser.
     8.4 Seller’s Deliveries. At the Closing, Seller will deliver to Purchaser
the following, in proper form for recording where appropriate:
     A. Duly executed Assignment and Assumption Agreement, substantially in the
form set forth in Exhibit 8.4.A, for the Licenses and the Contracts.
     B. Duly executed Bill of Sale, substantially in the form set forth in
Exhibit 8.4.B, for the Acquired Assets.

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     C. Duly executed Transition Services Agreement, substantially in the form
set forth in Exhibit 8.4.C.
     D. Duly executed Non-Competition Agreement, substantially in the form set
forth in Exhibit 8.4.D.
     E. An officer’s certificate, dated as of the Closing Date, executed on
behalf of Seller, certifying that the conditions specified in Article 7 have
been fulfilled.
     F. A certificate, dated as of the Closing Date, executed on behalf of
Seller by a Secretary or an Assistant Secretary, certifying: (i) a true and
correct copy of Seller’s Organizational Documents; (ii) a true and correct copy
of the resolutions of the appropriate Seller management group authorizing the
execution, delivery and performance of this Agreement and any Ancillary
Agreement to which Seller is a party and the consummation of the transactions
contemplated hereby and thereby; and (iii) a true and correct copy of a good
standing certificate, dated as of a recent date, from any state in which Seller
is qualified to do business.
     8.5 Purchaser’s Deliveries. At the Closing, Purchaser will deliver to
Seller, in proper form for recording where appropriate:
     A. The Purchase Price as set forth in Section 3.1, including the funding of
the Holdback.
     B. An officer’s certificate, dated as of the Closing Date, executed on
behalf of Purchaser, certifying that the conditions specified in Article 7 have
been fulfilled.
     C. A certificate, dated as of the Closing Date, executed on behalf of the
Purchaser by its Secretary or an Assistant Secretary, certifying: (i) a true and
correct copy of Purchaser’s Organizational Documents; and (ii) a true and
correct copy of the resolutions of the Purchaser’s board authorizing the
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby.
     D. If true, a certificate dated as of the Closing Date, executed on behalf
of Purchaser, certifying that, to Purchaser’s Knowledge, no Material Adverse
Effect shall have occurred as of the date of Closing (the “Purchaser MAE
Certificate”).
9. CERTAIN ADDITIONAL COVENANTS:
     9.1 Continued Operations. Except: (i) as otherwise provided in this
Agreement; (ii) for any changes that may be required under applicable Laws; or
(iii) as disclosed on Schedule 9.1, until the Closing, Seller will continue to
operate the Business in the Ordinary Course of Business and use commercially
reasonable efforts to maintain and preserve its relationships with customers,
suppliers, employees and others having business relationships with the Business.
Except as required by this Agreement, or as disclosed on Schedule 9.1, from and
after the date of this Agreement and until Closing Seller, with respect to the
Business, will refrain from doing any of the following without the consent of
Purchaser (which consent will not be unreasonably withheld or delayed):

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     A. Sell or otherwise dispose of Acquired Assets having a value exceeding
$10,000, excluding sales of Inventory and sales of receivables to financial
institutions or credit collection agencies, in each case in the Ordinary Course
of Business;
     B. Incur, assume or guarantee any debt obligation that would become an
Assumed Liability;
     C. Incur any Lien on any Acquired Assets, in each case, other than
Permitted Liens;
     D. Increase the cash compensation of the Transferred Employees or enter
into, adopt, terminate, modify or amend any Employee Benefit Plan outside the
Ordinary Course of Business;
     E. Make any material change in the accounting methods or practices followed
by the Business (other than such changes that are: (i) required by Law;
(ii) made in conformance with GAAP; or (iii) required in connection with the
preparation of the Financial Statements);
     F. Initiate, terminate or make any material amendment to a Material
Contract outside the Ordinary Course of Business;
     G. Fail to maintain insurance in a manner consistent with Seller’s past
practice;
     H. Make any capital investment exceeding $10,000;
     I. Delay, accelerate or postpone payment or receipt of accounts payable
and/or accounts receivable outside the Ordinary Course of Business;
     J. Enter into any loan or Contract with an Affiliate; or
     K. Agree or commit to do any of the foregoing.
     9.2 Registrations, Filings and Consents; Further Actions. Upon the terms
and subject to the conditions of this Agreement, each of the Parties will use
commercially reasonable efforts to take, or cause to be taken, all appropriate
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement and the Ancillary Agreements as
promptly as practicable including, without limitation, using their reasonable
best efforts to cause the satisfaction of all conditions to Closing.
     9.3 Further Assurances:
     A. If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instructions and documents) as any other Party reasonably may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under this Agreement).

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     B. Purchaser will, from time to time, at the cost of and reasonable request
of Seller, cooperate fully with Seller in providing Seller and its Affiliates
(as appropriate) (to the extent possible through Transferred Employees) with
technical assistance and information in respect to any claims brought against
Seller and its Affiliates involving the conduct of the Business prior to
Closing, including consultation and/or the appearance(s) of such persons on a
reasonable basis as expert or fact witnesses in trials or administrative
proceedings. Seller will reimburse Purchaser and its Affiliates for reasonable,
actual direct out-of-pocket costs (travel, employee time, hotels, etc.) of
providing such services. In particular, Purchaser, for itself and on behalf of
its Affiliates, agrees to: (i) retain all documents required to be maintained by
Law; (ii) make available their documents and records in connection with any
pursuit, contest or defense, including documents that may be considered to be
“confidential” or subject to trade secret protection (except that: (a) no
documents or records protected by the attorney client privilege in favor of
Purchaser and its Affiliates must be made available if making these documents or
records available would cause the loss of this privilege (in any case, however,
Purchaser must notify Seller of the existence of such privileged documents); and
(b) Seller and its Affiliates will agree to keep confidential documents and
records that are confidential or are subject to trade secret protection);
(iii) promptly respond to discovery requests in connection with such claim,
understanding and acknowledging that the requirements of discovery in connection
with litigation require timely responses to interrogatories, requests to produce
and depositions and also understanding and acknowledging that any delays in
connection with responses to discovery may result in sanctions; (iv) make
available, as may be reasonably necessary and upon reasonable advance notice and
for reasonable periods so as not to interfere unreasonably with Purchaser’s
business (in its reasonable discretion), engineers, technicians or other
knowledgeable individuals to assist Seller and its Affiliates in connection with
such claim, including investigation into claims and occurrences described in
this section and preparing for and giving factual and expert testimony at
depositions, court proceedings, inquiries, hearings and trial; and (v) make
available facilities and exemplar parts for the sole and limited use of
assisting Seller and its Affiliates in the contest or defense.
     C. Between the date hereof and the Closing, Seller will give prompt notice
in writing to Purchaser of: (i) any information that, to Seller’s Knowledge,
indicates that any representation or warranty of Seller contained herein was not
true and correct in all material respects as of the date hereof or will not be
true and correct in all material respects as of the Closing Date; (ii) the
occurrence of any event that will, to Seller’s Knowledge, result, or is
reasonably likely to result, in a Material Adverse Effect or in the failure to
satisfy a condition to Closing specified in this Agreement; and (iii) any notice
or other written communication received by Seller from any third Person alleging
that the consent of such third Person is required in connection with the
transactions contemplated by this Agreement. Further, no later than seven
(7) Business Days prior to the Closing Date, Seller may deliver to Purchaser a
supplement (the “Supplement”) to any Schedule provided under Article 6 of this
Agreement (each a “Disclosure Schedule” and collectively, the “Disclosure
Schedules”) solely with respect to any such events, facts or conditions
occurring or arising after the date of this Agreement, and not resulting from
Seller’s failure to comply with the terms of this Agreement, or breach as of the
date hereof of any representation or warranty made herein.
     D. Between the date hereof and the Closing, Purchaser will give prompt
notice in writing to Seller of: (i) any information that, to Purchaser’s
Knowledge, indicates that any representation or warranty of Purchaser contained
herein was not true and

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correct in all material respects as of the date hereof or will not be true and
correct in all material respects as of the Closing Date; (ii) the occurrence of
any event that will, to Purchaser’s Knowledge, result, or is reasonably likely
to result, in the failure to satisfy a condition to Closing specified in this
Agreement; and (iii) any notice or other written communication received by
Purchaser from any third Person alleging that the consent of such third Person
is required in connection with the transactions contemplated by this Agreement.
     E. Between the date of this Agreement and the Closing Date, Seller shall,
during ordinary business hours: (i) give to Purchaser and its authorized
representatives reasonable access to all Books and Records, plants, offices and
other facilities and properties of Seller primarily related to the Business;
(ii) permit Purchaser to make such inspections thereof as Purchaser may
reasonably request; and (iii) cause Seller’s officers, employees and advisors to
use commercially reasonable efforts to furnish Purchaser with such financial and
operating data and other information with respect to the Business and the
Acquired Assets as Purchaser may from time to time reasonably request. Any such
inspection or investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Business, the Excluded
Businesses or the businesses of Seller’s Affiliates.
     9.4 Indemnification:
     A. LIMITATIONS OF LIABILITY. SUBJECT TO SECTION 9.4.E, NEITHER PARTY
UNDERTAKES ANY LIABILITY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY,
INDIRECT OR PUNITIVE DAMAGES. SELLER WILL NOT BE LIABLE FOR ANY, AND PURCHASER
ASSUMES LIABILITY FOR ALL, PERSONAL INJURY AND PROPERTY DAMAGE CONNECTED WITH
PURCHASER’S INVESTIGATION AND EXAMINATION OF THE ACQUIRED ASSETS, THE HANDLING,
TRANSPORTATION, POSSESSION, PROCESSING, FURTHER MANUFACTURE OR OTHER USE OR
RESALE OF ANY OF THE ACQUIRED ASSETS AFTER THE CLOSING DATE, WHETHER SUCH
ACQUIRED ASSETS ARE USED OR RESOLD ALONE OR IN COMBINATION WITH OTHER ASSETS OR
MATERIALS; AND PURCHASER ACKNOWLEDGES THAT THE ACQUIRED ASSETS ARE BEING SOLD IN
THEIR PRESENT STATE AND CONDITION, “AS IS, WHERE IS”, SUBJECT TO THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 6.1, WITH ALL FAULTS, AND
PURCHASER IS PURCHASING AND ACQUIRING SUCH ACQUIRED ASSETS ON THAT BASIS
PURSUANT TO PURCHASER’S OWN INVESTIGATION AND EXAMINATION AFTER HAVING BEEN
PROVIDED WITH AN ADEQUATE OPPORTUNITY AND ACCESS TO SUCH ACQUIRED ASSETS TO
COMPLETE SUCH INVESTIGATION.
     B. Seller’s Agreement to Indemnify. If the Closing occurs and Purchaser
makes a written claim for indemnification against Seller in accordance with the
procedures set forth in this Section 9.4, then, from and after the Closing,
Seller agrees to indemnify and hold harmless Purchaser and its Affiliates, each
of their respective shareholders, directors, officers, employees and agents, and
each of the heirs, executors, successors and assigns from and against all
liabilities, claims, assessments, losses, judgments, settlements, damages, costs
and expenses (including, without limitation, reasonable professional fees and
expenses) (collectively, the “Purchaser Damages”) incurred by Purchaser as a
result of or arising out of: (i) the Retained Liabilities and Excluded Assets;
(ii) a breach of any representation or covenant of Seller

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contained in this Agreement; or (iii) a breach of any covenant to be performed
by Seller under this Agreement.
     C. Purchaser’s Agreement to Indemnify. If the Closing occurs and Seller
makes a written claim for indemnification against Purchaser in accordance with
the procedures set forth in this Section 9.4, then, from and after the Closing,
Purchaser shall indemnify and hold harmless Seller and its Affiliates, each of
their respective members, shareholders, directors, officers, employees and
agents, and each of their heirs, executors, successors and assigns from and
against all liabilities, claims, assessments, losses, judgments, settlements,
damages, costs and expenses (including, without limitation, reasonable
professional fees and expenses) (collectively, the “Seller Damages”) incurred by
Seller as a result of or arising out of: (i) the Assumed Liabilities; (ii) a
breach of any representation or warranty of Purchaser contained in this
Agreement; (iii) a breach of any covenant to be performed by Purchaser under
this Agreement; (iv) the operation of the Business or the use, operation or
ownership of any of the Acquired Assets after the Closing (other than with
respect to any Retained Liabilities); or (v) any warranty, product liability or
other claims related to or arising from Purchaser’s operation of the Business
after the Closing Date (other than with respect to any Retained Liabilities).
     D. Limitations on Agreements to Indemnify. The obligations of the Parties
to indemnify the other pursuant to this Section 9.4 are subject to the following
limitations:
     (i) SUBJECT TO SECTION 9.4.E, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR SPECIAL OR EXEMPLARY DAMAGES, OR FOR LOST PROFITS OR
BUSINESS INTERRUPTION LOSSES IN CONNECTION WITH THIS AGREEMENT OR ANY ACTIONS OR
OMISSION OF EITHER PARTY UNDER THIS AGREEMENT, EVEN IF ADVISED OF THE LIKELIHOOD
OF SUCH LOSSES.
     (ii) Each Party agrees that, from and after the Closing, the
indemnification provided in this Section 9.4 is the exclusive remedy for a
breach by the other Party of any representation, warranty, agreement or covenant
contained in this Agreement, and that there shall be no other remedy for any
breach by a Party in respect of any claim for monetary damages arising out of or
under this Agreement.
     (iii) In calculating amounts payable to an indemnified party, the amount of
any indemnified Purchaser Damages or Seller Damages, as the case may be, shall
be determined without duplication of any other damages for which a claim has
been made or could be made under any other representation, warranty or covenant
included herein.
     (iv) Any written notice delivered by an indemnified party to an
indemnifying party seeking indemnification pursuant to this Agreement shall set
forth, with as much specificity as is reasonably practicable, the basis of the
claim, the sections of this Agreement which form the basis for the claim, and,
to the extent reasonably practicable, a reasonable estimate of the amount of the
Purchaser Damages or Seller Damages, as the case may be, that have been or may
be sustained by such indemnified party.

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     (v) Notwithstanding any other provision of this Agreement, in no event
shall an indemnified party be entitled to indemnification pursuant to this
Agreement to the extent any Purchaser Damages or Seller Damages, as the case may
be, were attributable to the indemnified party’s own gross negligence or willful
misconduct.
     (vi) No indemnifying party shall be liable to an indemnified party until
the amount of all indemnifiable damages of such indemnified party in the
aggregate exceeds $25,000, after which point, other than as limited below, the
indemnifying party will be obligated to the indemnified party for all damages.
     (vii) Notwithstanding anything to the contrary contained herein, except
with respect to fraud, intentional misrepresentations and the representations
and warranties contained in Sections 6.1 A, B, C and E, in no event will Seller
be obligated to indemnify Purchaser for Purchaser Damages (or any indemnifiable
damages) that, in the aggregate, exceed fifty percent (50%) of the Purchase
Price. For the avoidance of doubt, except as set forth herein, Seller’s
obligations to indemnify Purchaser for Purchaser Damages are capped at fifty
percent (50%) of the Purchase Price.
     (viii) The obligation of any Party to indemnify the other pursuant to the
terms of this Section 9.4 shall apply only to the extent the Party seeking
indemnification notifies the other Party of such damages in writing on or before
the later of: (a) eighteen (18) months after the Closing Date; or (b) sixty
(60) days after the applicable Party first learns about the claim for which
indemnification is sought under this Section 9.4.
     (ix) To the extent an indemnifying party makes any indemnification payment
pursuant this Section 9.4 for which the indemnified party has a right to recover
against a third party (including an insurance company but specifically excluding
situations that are self insured, including through any captive insurance
company), the indemnifying party shall be subrogated to the right of the
indemnified party to seek and obtain recovery from such third party.
     (x) No party shall be liable to an indemnified party for consequential,
punitive or special damages, unless such damages are included in third party
indemnification claims pursuant to Section 9.4.E below and the indemnified party
is liable to a third party claimant for such damages.
     E. Third Party Indemnification. The obligations of any indemnifying party
to indemnify any indemnified party under Section 9.4 with respect to Purchaser
Damages or Seller Damages, as the case may be, resulting from the assertion of
liability by third parties (including Governmental Entities) (an
“Indemnification Claim”), shall be subject to the following terms and
conditions, and the limitations of the first sentence of Section 9.4.A and
Section 9.4.D(i) shall not apply to any such Indemnification Claims:
     (i) Any party against whom any Indemnification Claim is asserted shall give
the party required to provide indemnity hereunder written notice of any such
Indemnification Claim promptly after learning of such Indemnification Claim
(with such notice satisfying the requirements of Section 12.1), and to the
extent such matter involves a third party claim, the indemnifying party may, at
its option,

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undertake the defense thereof by representatives of its own choosing and shall
provide written notice of any such undertaking to the indemnified party;
provided that the indemnifying party shall demonstrate to the reasonable
satisfaction of the indemnified party its financial capability to undertake the
defense. Failure to give prompt written notice of an Indemnification Claim
hereunder shall not affect the indemnifying party’s obligations under this
Section 9.4, except to the extent that the indemnifying party is actually
prejudiced by such failure to give prompt written notice. The indemnified party,
at the indemnifying party’s expense, shall, and shall cause its employees and
representatives to, reasonably cooperate with the indemnifying party in
connection with the settlement or defense of such Indemnification Claim and
shall provide the indemnifying party with all available information and
documents concerning such Indemnification Claim. If the indemnifying party,
within thirty (30) days after written notice of any such Indemnification Claim,
fails to assume the defense of such Indemnification Claim, the indemnified party
against whom such claim has been made shall (upon further written notice to the
indemnifying party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk, and at the
expense, of the indemnifying party.
     (ii) Anything in this Section 9.4 to the contrary notwithstanding: (i) the
indemnified party shall not settle a claim for which it is indemnified without
the prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld, conditioned or delayed; and (ii) the indemnifying party
shall not enter into any settlement or compromise of any action, suit or
proceeding, or consent to the entry of any judgment for relief, without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld, conditioned or delayed.
     F. Not Exclusive Indemnifications. Other than with respect to fraud or
intentional misconduct, the indemnifications in this Section 9.4 are the
exclusive indemnifications to be given by the Parties, except for any
indemnifications provided for in the Ancillary Agreements, which shall govern
and control any indemnifications given under each applicable Ancillary
Agreement.
     9.5 Exclusivity. Seller and Sparton Corporation are parties to a certain
Letter of Intent dated April 15, 2010, as amended (the “Letter of Intent”). The
Letter of Intent provides, among other things, that Seller will refrain from
taking certain actions, as more specifically set forth in Section 12 of the
Letter of Intent, during the Exclusivity Period (as defined in the Letter of
Intent). Section 12 of the Letter of Intent shall survive the execution of this
Agreement in accordance with its terms; provided, however, that the Exclusivity
Period is hereby amended to end August 13, 2010.
     9.6 Connectivity. The Parties acknowledge that phone and data connectivity
for the Miller Road portion of the Facility is provided through the Road 18
portion of the Facility. Pursuant to the Transition Services Agreement, during
the ninety (90) day period after Closing, Seller will provide phone and data
services to Purchaser in accordance with the terms of the Transition Services
Agreement. During such ninety (90) day period, Purchaser will use commercially
reasonable efforts to contract with an alternative provider of phone and data
services and install such services at the Road 18 portion of the Facility. Once
such alternative phone and data service has commenced, at Seller’s reasonable
request and with prior written notice, Purchaser will provide phone connectivity
and service (so long as Purchaser leases the

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Road 18 portion of the Facility) to the Miller Road portion of the Facility (no
greater than in accordance with the current usage) for the duration of the
Miller Road Lease, even if the Miller Road Sublease has expired or been
terminated, at Purchaser’s cost reimbursed by Seller without mark-up.
Additionally, Purchaser will ensure the availability (capacity) of voice ports
equal to the number of ports being utilized on the Closing Date. Seller shall
cooperate as reasonably requested by Purchaser in order to provide such
services.
     9.7 Sunrise Agreement. In order to allow Seller to perform its remaining
obligations under the Sunrise Agreement, which is an Excluded Asset, Seller will
issue and Purchaser will accept a Seller purchase order for the manufacture of a
specified number of products for sale by Seller to Sunrise as a final build out
of all Sunrise products, including warranty and service parts. Pricing for the
products will be consistent with the pricing contemplated in the Financial
Statements. Seller shall indemnify and hold harmless Purchaser in connection
with any loss, liability or claim incurred by Purchaser in connection with
Purchaser’s obligations or actions under this Section 9.7, other than arising
from Purchaser’s breach of the terms of the Seller purchase order or Purchaser’s
gross negligence or intentional misconduct. Provided that Purchaser procures
Inventory in accordance with the terms of Schedule 9.7, and that Purchaser
provides best efforts to perform all of its obligations under the Seller
purchase order, then Seller will purchase from Purchaser any remaining inventory
related to the Sunrise products upon receipt of Purchaser’s invoice.
     9.8 Storage. Following the Closing Date and until August 31, 2010,
Purchaser will permit Seller to store assets listed on Schedule 9.8 related to
the Excluded Business at the Facility at no cost to Seller. During such period,
Purchaser will provide Seller with reasonable access to the Facility on prior
written notice and during normal business hours or as otherwise agreed by
Purchaser to inspect any such assets, to prepare for the removal of such assets
and to remove such assets. Purchaser shall exercise a reasonable standard of
care with respect to the storage of Seller’s assets. Seller shall indemnify and
hold harmless Purchaser for any loss, liability or claim incurred by Purchaser
in connection with this Section 9.8, and; provided that Purchaser meets its
obligations as set forth herein, Purchaser shall have no liability for loss or
damage to said assets. Seller’s activities at the Facility shall not
unreasonably interfere with any ongoing production at the Facility.
     9.9 FDA Regulatory Compliance. Following the Closing, Purchaser will timely
register as a manufacturing facility as required by applicable Law. From and
after the Closing Date, Purchaser shall be responsible for compliance with the
FDA Quality System Regulations, 21 C.F.R. Part 820, for the all products
manufactured at the Facility following Closing and all Inventory.
     9.10 Warranty Claims:
     A. Following the Closing Date, in the event that Purchaser (with respect to
products sold prior to the Closing) or Seller, or any of Seller’s Affiliates,
agree or are required, pursuant to applicable Contracts or by a Governmental
Entity or by Law, to provide one or more replacement products or repairs to
customers in connection with recalls or warranty claims by such customers,
Purchaser shall supply repairs or replacement products to Seller for a total
aggregate purchase price equal to Purchaser’s cost of repairing or producing
such products or shall provide such repairs or replacement products to the
applicable customer. Seller or its Affiliates shall notify Purchaser in writing
of its requirements for repairs or replacement products as such requirements
arise and Purchaser shall deliver the required number of repairs or replacement

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Products to Seller after customary component lead time after receipt of such
written notice. The Parties shall cooperate in communicating with customers
regarding any warranty claims.
     B. In the event that Purchaser provides repairs or replacement products
directly to a customer under Section 9.10.A with respect to products sold prior
to the Closing, within thirty (30) days after the delivery of the repairs or the
replacement products, Purchaser shall deliver an invoice to Seller for
Purchaser’s cost of repairing or replacing such products (the “Warranty
Invoice”). Each Warranty Invoice shall contain a reasonable explanation of the
basis for Purchaser’s agreement to repair or replace the subject products.
Within thirty (30) days of receiving a Warranty Invoice, Seller shall reimburse
Purchaser for the total aggregate purchase price equal to Purchaser’s cost of
repairing or producing such products as set forth on the Warranty Invoice, if
Seller agrees that such repairs or replacements were required by Contract, by a
Governmental Entity or by Law, or shall deliver a written notice to Purchaser
that Seller disputes the Warranty Invoice and the basis for such dispute,
including that such repairs or replacements were not required by Contract, by a
Governmental Entity or by Law (a “Warranty Dispute”). All Warranty Disputes
shall be resolved in accordance with Section 12.18 of this Agreement and Seller
shall have the right to withhold the disputed portion of the Warranty Invoice
until the Warranty Dispute has been finally resolved. For the avoidance of
doubt, Purchaser acknowledges that Seller shall have no obligation to reimburse
Purchaser for repairs or replacements that Seller would not be required to
provide under applicable Contracts, by Governmental Entity or by Law.
     9.11 Software and Electronic Records:
     A. Immediately prior to the Closing and otherwise as set forth in
Sections 9.11.B and 9.11.C, Seller will back-up all of the data, including
attachments, housed in Seller’s AGILE system located at the Facility (the
“Back-Up”), which Back-Up will be retained by Seller. Additionally, Seller shall
have the right, during the twelve (12) month period following the Closing, to
restore the data and attachments included in the Back-Up to the AGILE system
located at the Facility, but only in a non-production environment (the
“Restoration”). During such twelve (12) month period, Purchaser will retain the
infrastructure capacity necessary to enable the Restoration and will provide
Seller with temporary network and application access as necessary to enable the
Restoration. Seller will be responsible for any costs associated with the
Restoration.
     B. For the period after Closing until thirty (30) days after the expiration
of the Sunrise Agreement (the “Data Maintenance Period”), Purchaser will
maintain all data, including attachments, related to the Sunrise Agreement and
the products manufactured by Seller under the Sunrise Agreement (the “Sunrise
Data”) in the AGILE system located at the Facility. The Sunrise Data will be
restricted to allow access to only Seller and those employees of Purchaser that
need access to perform their obligations under Section 9.7, and no modifications
are permitted without the prior written consent of Seller (i.e., only Seller
will be able modify the Sunrise Data). During the Data Maintenance Period,
Purchaser will provide Delphi with access to the Sunrise Data and the AGILE
system located at the facility for purposes of reviewing and modifying the
Sunrise Data. Within thirty (30) days of the expiration of the Data Maintenance
Period, Seller will back-up the Sunrise Data, which back-up will be retained by
Seller. Following such back-up, the Sunrise Data will be deemed part of the
Back-Up and subject to Section 9.11.A.

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     C. With respect to any data, including attachments, in the AGILE system
located at the Facility related to the Excluded Business (the “Divested Products
Data”), Purchaser will restrict access to only Seller and those employees of
Purchaser that need access to perform their obligations under this
Section 9.11.C, and no modifications are permitted without the prior written
consent of Seller (i.e., only Seller will be able to modify the Divested
Products Data and Purchaser will be able to view the Divested Products Data only
to perform the deletion set forth herein) and will not delete any such Divested
Products Data during the Data Maintenance Period. Within thirty (30) days of the
expiration of the Data Maintenance Period, Purchaser will run data deletion
scripts provided by Seller to delete the Sunrise Data and the Divested Products
Data from the AGILE system. Purchaser will provide Seller with access to the
AGILE system to confirm deletion as provided herein.
10. TAX MATTERS:
     10.1 Seller Responsibilities. Seller shall file any Tax Returns and pay any
Taxes which may be required by any federal, state, local or foreign tax
authorities or governmental agencies by reason of business conducted by Seller
on or prior to the Closing Date, including real property and ad valorem taxes
for periods prior to the Closing Date.
     10.2 Purchaser Responsibilities. Purchaser shall file any Tax Returns and
pay any Taxes which may be required by any federal, state, local or foreign tax
authorities or governmental agencies by reason of business conducted by
Purchaser after the Closing Date, including real property and ad valorem taxes
for periods after the Closing Date. All United States or foreign, national,
state or local sales taxes, documentary and stamp taxes, transfer taxes,
registration taxes, use taxes, gross receipts taxes, registration duties and all
charges for filing and recording documents in connection with the transfer of
the Acquired Assets shall be borne by Purchaser. In addition, Purchaser shall be
responsible for all intellectual property filing and recording fees, as well as
any permit, transfer and filing fees required in order to obtain governmental
approvals and consents relating to the transactions contemplated by this
Agreement or any Ancillary Agreement.
     10.3 Mutual Assistance. Without affecting the foregoing responsibilities,
Seller and Purchaser shall provide reasonable assistance during normal business
hours to one another to resolve any Tax issues which may relate to their
respective business activities utilizing the Acquired Assets and personnel. Such
assistance may include, without limitation, access to relevant business records
and personnel in connection with: (i) the preparation and filing of Tax Returns,
elections, consents, certifications and claims for refunds; (ii) the
determination of liability for Taxes; and (iii) the response to tax audits,
examination and other proceedings.
11. TERMINATION:
     11.1 This Agreement may be terminated at any time prior to the Closing:
     A. By either Party by mutual written consent;
     B. By Seller upon written notice to Purchaser if Purchaser is in material
breach of any representation, warranty or covenant herein (and Seller is not
then in material breach of any representation, warranty or covenant) and such
breach: (i) is not cured within thirty (30) days after written notice thereof;
or (ii) is incapable of being cured;

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     C. By Purchaser upon written notice to Seller if Seller is in material
breach (excluding for purposes of such determination any disclosures contained
in the Supplement) of any representation, warranty or covenant herein (and
Purchaser is not then in material breach of any representation, warranty or
covenant and such breach: (i) is not cured within thirty (30) days after written
notice thereof; or (ii) is incapable of being cured);
     D. By either Party if a federal, state or foreign court or governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree, ruling
or other action shall have become final and non-appealable; provided, however,
that the Party seeking to terminate this Agreement pursuant to this
Section 11.1.D shall have complied with Section 9.2, and with respect to other
matters not covered by Section 9.2, shall have used commercially reasonable
efforts to remove such injunction order or decree;
     E. Provided that the terminating Party is not in material breach of any
representation, warranty or covenant, by either Party if the Closing shall not
have occurred by August 15, 2010; and
     F. By either Party if the Closing shall not have occurred by September 15,
2010.
     11.2 In the event of termination of this Agreement as provided in this
Article 11, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Parties, except: (i) as set forth in
Article 12 to the extent applicable to such surviving sections each of which, to
the extent applicable, shall survive termination of this Agreement; and
(ii) that nothing herein shall relieve any Party from liability for any willful
or intentional breach of any provision hereof prior to termination. No
termination of this Agreement shall affect the obligations of the parties
contained in the Nondisclosure Agreement or this Article 11, all of which
obligations shall survive termination of this Agreement in accordance with their
terms.
12. MISCELLANEOUS:
     12.1 Notices. All notices, requests, consents or other communications
permitted or required under this Agreement will be in writing and will be deemed
to have been given when personally delivered, or when sent if sent via facsimile
(with receipt confirmed), or on the first (1st) Business Day after sent by
reputable overnight carrier, or on the third (3rd) Business Day after sent by
registered or certified first class mail (with receipt confirmed), to the
following:

     
If to Seller:
  DELPHI MEDICAL SYSTEMS, LLC
 
  5725 Delphi Drive
 
  Troy, Michigan 48098
 
  Attn: Executive Director of Mergers & Acquisitions
 
  Fax No.: 248-813-2648
 
   
With a copy to:
  DELPHI AUTOMOTIVE SYSTEMS, LLC
 
  5725 Delphi Drive
 
  Troy, Michigan 48098
 
  Attn: Deputy General Counsel
 
  Fax No.: 248-813-3445

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If to Purchaser:
  SPARTON MEDICAL SYSTEMS COLORADO, LLC
 
  425 N. Martingale Road, Suite 2050
 
  Schaumburg, Illinois 60173
 
  Attn: Cary B. Wood and Michael Osborne
 
  Fax No.: (847) 762-5820
 
   
With a copy to:
  BODMAN LLP
 
  6TH Floor at Ford Field
 
  1901 St. Antoine Street
 
  Detroit, MI 48226
 
  Attn: Joseph J. Shannon
 
  Fax No.: 313-393-7579

provided, however, if a Party will have designated a different addressee by
notice, then to the last addressee so designated.
     12.2 Bulk Sales Laws. Seller and Purchaser hereby waive compliance by
Seller with the provisions of the bulk sales law of any state or foreign
jurisdiction.
     12.3 Assignment. This Agreement will be binding and inure to the benefit of
the successors and assigns of each of the Parties, but no rights, obligations,
duties or liabilities of any Party may be assigned without the prior written
consent of the other, which will not be unreasonably withheld; provided,
however, that Purchaser may assign its rights, obligations, duties or
liabilities to any Affiliate without the prior consent of Seller, but such
assignment will not relieve Purchaser of its duties, obligations or liabilities
hereunder should such assignee fail to perform.
     12.4 Entire Agreement. This Agreement, together with the Ancillary
Agreements, represents the entire agreement and understanding between the
Parties with respect to the transactions contemplated herein. This Agreement
supersedes all prior agreements, understandings, arrangements, covenants,
representations or warranties, written or oral, by any officer, employee or
representative of either Party dealing with the subject matter hereof.
     12.5 Waiver. Any waiver by Seller or Purchaser of any breach or of a
failure to comply with any provision of this Agreement: (i) will be valid only
if set forth in a written instrument signed by the Party to be bound; and
(ii) will not constitute, or be construed as, a continuing waiver of such
provision, or a waiver of any other breach of, or failure to comply with, any
provision of this Agreement. At any time prior to the Closing Date, the Parties
may: (a) extend the time for the performance of any of the obligations or other
acts of the other Parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Except as otherwise expressly provided herein, any
agreement on the part of a Party to any such extension or waiver will be valid
only if set forth in an instrument in writing signed on behalf of such Party.
     12.6 Severability. Should any provision, or any portion thereof, of this
Agreement for any reason be held invalid or unenforceable, such decision will
not affect the validity or enforceability of any of the other provisions, or
portions thereof, of this Agreement, which other provisions, and portions, will
remain in full force and effect, and the application of such invalid or
unenforceable provision, or portion thereof, to persons or circumstances other
than those as to

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which it is held invalid or unenforceable will be valid and be enforced to the
fullest extent permitted by Law.
     12.7 Amendment. This Agreement may be amended, modified or supplemented
only upon the execution and delivery of a written agreement by duly authorized
representatives or officers of the Parties
     12.8 Expenses. Each Party will be responsible for its own expenses incurred
in connection with the preparation and negotiation of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.
     12.9 Third Parties. Nothing contained in this Agreement, express or
implied, is intended to or will be construed to confer upon or give to any
person, firm, corporation, association, labor union or trust (other than the
Parties and their respective permitted successors and assigns), any claims,
rights or remedies under or by reason of this Agreement.
     12.10 Headings. The headings contained in this Agreement are inserted for
convenience only and will not be deemed to constitute a part of this Agreement.
     12.11 Counterparts. More than one counterpart of this Agreement may be
executed by the Parties, and each fully executed counterpart will be deemed an
original.
     12.12 Governing Law. This Agreement will be construed and enforced in
accordance with the laws of the State of Michigan, without giving effect to
rules governing the conflict of laws.
     12.13 Public Announcements. Seller may inform its parent company’s
employees of the existence of this Agreement and the transactions contemplated
hereby. Seller and Purchaser will coordinate and consult with each other on
communications with Seller’s employees, customers and suppliers regarding the
existence of this Agreement and the transactions contemplated hereby. Seller and
Purchaser will consult with each other before issuing any press releases with
respect to this Agreement or the transactions contemplated hereby, and will not
issue any press release without mutual consent (not to be unreasonably
withheld), except as may be required by Law and then only with such prior
consultation. Notwithstanding the foregoing, Seller or Purchaser may make any
public filing contemplated in this Agreement without the need for prior
consultation; provided, however, to the extent practicable, Seller or Purchaser
will provide a copy of such public filing to the other Party prior to its
filing.
     12.14 Venue and Retention of Jurisdiction. The Purchaser and Seller
irrevocably and unconditionally consent to submit to the jurisdiction of the
appropriate federal or state courts in the State of Michigan for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby, including the Ancillary Agreements and agree not to commence any
litigation relating thereto except in the appropriate federal or state courts in
the State of Michigan.
     12.15 Risk of Loss. Prior to Closing, all risk of loss, damage or
destruction to all or any part of the Acquired Assets will be borne exclusively
by the Seller.
     12.16 No Right of Setoff. Unless specifically set forth herein, neither
Party nor any of its Affiliates may deduct from, set off, holdback or otherwise
reduce in any manner whatsoever

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any amount owed by it under this Agreement or any Ancillary Agreement against
any amounts owed to it under this Agreement or any Ancillary Agreement or any
other agreement between the Parties or any of their Affiliates.
     12.17 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement was not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the Parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to all other remedies
available at law or in equity.
     12.18 Dispute Resolution. Seller and Purchaser will, in the first instance,
attempt to settle any and all claims or disputes arising in connection with this
Agreement or any Ancillary Agreement by good faith negotiations by senior
management of each party. If the dispute is not resolved by senior management
within thirty (30) days after delivery of a written request for such negotiation
by either party to the other, either party may make a written demand (the
“Demanding Party”) for formal dispute resolution (the “Notice”) and specify
therein in reasonable detail the nature of the dispute. Within fifteen
(15) Business Days after receipt of the Notice, the receiving party (the
“Defending Party”) will submit to the other a written response. The Notice and
the response will include: (i) a statement of the respective party’s position
and a summary of arguments supporting that position; and (ii) the name and title
of the executive who will represent that party and of any other person who will
accompany the executive to meetings of the parties. Within fifteen (15) Business
Days after such written notification, the executives (and others named in the
Notice or response) will meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one party to the other
will be honored promptly. All negotiations pursuant to this Section 12.18 are
confidential and will be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence. In any case, the Parties agree not to
commence any litigation actions until the expiration of ninety (90) days after
the date of the Notice, and all such actions are subject to Section 12.14 above.
     12.19 Dollar Amounts. All amounts referenced in this Agreement are in US
dollars.
     12.20 Jury Trial Waiver. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THIS RIGHT MAY BE WAIVED. THE
PARTIES EACH HEREBY KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVE ALL
RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS. NO PARTY SHALL BE DEEMED TO HAVE
RELINQUISHED THE BENEFIT OF THIS WAIVER OF JURY TRIAL UNLESS SUCH RELINQUISHMENT
IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY TO WHICH SUCH RELINQUISHMENT WILL
BE CHARGED.

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     IN WITNESS WHEREOF, the Parties have caused this Asset Purchase Agreement
to be executed by their duly authorized officers.

            SPARTON MEDICAL SYSTEMS COLORADO, LLC       By: Sparton Corporation,
Its Sole Member     By: /s/ Michael Osborne         Michael Osborne        Its:
Senior Vice President        DELPHI MEDICAL SYSTEMS, LLC       By: /s/ Fred J.
Bellar       Fred J. Bellar        Its: Attorney-in-Fact 

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SCHEDULES

      Schedule A  
Machinery and Equipment
Schedule A-1  
Information Technology Assets
Schedule B  
List of Customer Contracts
Schedule C  
List of Supplier Contracts
Schedule 1.2.A  
Third Party Assets
Schedule 1.2.L  
Certain Licenses
Schedule 3.1.C  
Inventory Valuation Principals and Practices
Schedule 3.1.D  
Final Excess Inventory Value
Schedule 4.1.A  
Transferred Salaried Employees
Schedule 4.1.C  
Additional Salaried Employees
Schedule 4.2.A  
Transferred Hourly Employees
Schedule 4.3.B  
Employee Benefit Plans
Schedule 6.1  
Seller’s Knowledge
Schedule 6.1.C  
No Conflict
Schedule 6.1.E  
Permitted Lien
Schedule 6.1.F  
Litigation
Schedule 6.1.G  
Compliance with Laws
Schedule 6.1.I  
Financial Statements
Schedule 6.1.K  
Absence of Certain Changes
Schedule 6.1.L  
Leased Real Property
Schedule 6.1.M  
Inventory
Schedule 6.1.N  
Intellectual Property
Schedule 6.1.O  
Employment and Labor Matters
Schedule 6.1.Q(i)  
Material Contracts
Schedule 6.1.Q(ii)  
Exceptions to Material Contracts
Schedule 6.1.S  
Licenses, Approvals & Other Authorizations
Schedule 6.1.T  
Environmental Matters
Schedule 6.1.V  
Insurance
Schedule 6.1.W  
Product Warranty
Schedule 6.1.X  
Customers & Suppliers
Schedule 6.1.AA  
Certain Transactions
Schedule 6.1.BB  
Regulatory Compliance
Schedule 6.2  
Purchaser’s Knowledge
Schedule 6.2.D  
Consents & Approvals
Schedule 7.2.C  
Required Third Party Consents
Schedule 9.1  
Continued Operations
Schedule 9.7  
Sunrise Agreement
Schedule 9.8  
Storage

EXHIBITS

      Exhibit 3.2  
Escrow Agreement
Exhibit 8.4.A  
Assignment and Assumption Agreement
Exhibit 8.4.B  
Bill of Sale
Exhibit 8.4.C  
Transition Services Agreement
Exhibit 8.4.D  
Non-Competition Agreement

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