Exhibit 10.1

STOCK PURCHASE AGREEMENT

by and among

NDS SURGICAL IMAGING, LLC,

NDS IMAGING HOLDINGS, LLC

and

PLANAR SYSTEMS, INC.

Dated as of August 6, 2008

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TABLE OF CONTENTS

 

          Page ARTICLE I – DEFINITIONS    2

1.1

   Certain Defined Terms    2 ARTICLE II –PURCHASE AND SALE OF SHARES    11

2.1

   The Stock Purchase    11

2.2

   Closing.    11

2.3

   Books and Records    11 ARTICLE III – CONSIDERATION    11

3.1

   Consideration for Shares    11

3.2

   Calculation of Final Working Capital    12

3.3

   Adjusted Purchase Price    13

3.4

   Delivery of Shares    13 ARTICLE IV – REPRESENTATIONS AND WARRANTIES OF
THE SELLER    13

4.1

   Organization, Qualification and Corporate Power    13

4.2

   Enforceability    14

4.3

   Subsidiaries    14

4.4

   No Violations; Consents    14

4.5

   Permits; Compliance with Law    15

4.6

   Capitalization    16

4.7

   Financial Statements; No Undisclosed Liabilities; Internal Controls    16

4.8

   Conduct of Business    17

4.9

   Tangible Assets; Sufficiency of Assets    19

4.10

   Real Property    19

4.11

   Intellectual Property    20

4.12

   Material Contracts    25

4.13

   Customers, Suppliers, Etc.    26

4.14

   Product and Service Warranties    27

4.15

   Tax Matters    27

4.16

   Legal Proceedings    29

 

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4.17

   Employee Benefits    29

4.18

   Employees    30

4.19

   Environmental Matters    31

4.20

   Related Party Transactions    32

4.21

   Insurance    32

4.22

   Minute Books    32

4.23

   Brokers’ Fees    32

4.24

   Accounts Receivable    33

4.25

   FDA Compliance    33

4.26

   Healthcare Compliance    34

4.27

   Export Control Laws    35

4.28

   Foreign Corrupt Practices Act    35

4.29

   Projections; Other Representations    35

4.30

   Representations Complete    36 ARTICLE V – REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER    36

5.1

   Organization, Qualification and Corporate Power    36

5.2

   Enforceability    36

5.3

   No Violations; Consents    37

5.4

   Compliance with Law    37

5.5

   Brokers’ Fees    38

5.6

   Litigation    38

5.7

   Independent Investigation    38

5.8

   Financial Statements; No Undisclosed Liabilities    38

5.9

   Financing    39

5.10

   Solvency    39

5.11

   No Material Adverse Effect    39

5.12

   Capitalization    39 ARTICLE VI – CONDITIONS TO CLOSING    40

6.1

   Closing Deliverables to the Purchaser    40

6.2

   Closing Deliverables of the Purchaser    41 ARTICLE VII – COVENANTS    41

7.1

   Post-Closing Covenants    41

 

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7.2

   Non-Competition Agreement    48

7.3

   Employee Non-Solicitation Agreement    48

7.4

   Miscellaneous    49 ARTICLE VIII – SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION    49

8.1

   Survival    49

8.2

   Seller’s Indemnification    49

8.3

   Claims    50

8.4

   Limitations; Exclusive Remedy; Effect of Investigation; Waiver    52
ARTICLE IX – MISCELLANEOUS    53

9.1

   Expenses    53

9.2

   Publicity    53

9.3

   Notices    53

9.4

   Headings    54

9.5

   Seller Deliverables    54

9.6

   Entire Agreement; Amendments    54

9.7

   Severability    55

9.8

   Waiver    55

9.9

   Binding Effect; Assignment    55

9.10

   No Third Party Beneficiaries    55

9.11

   Specific Performance    55

9.12

   Counterparts    56

9.13

   Governing Law    56

9.14

   Consent to Jurisdiction and Venue    56

9.15

   Waiver of Jury Trial    57

9.16

   Other Remedies    57

9.17

   Interpretation    57

9.18

   Rules of Construction    57

 

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of
August 6, 2008 by and among NDS Imaging Holdings, LLC, a Delaware limited
liability company (“Purchaser”) and Planar Systems, Inc., an Oregon corporation
(the “Seller”) and NDS Surgical Imaging, LLC, a Delaware limited liability
company (“NDS”). Certain capitalized terms in this Agreement have the meanings
ascribed thereto in Section 1.1.

RECITALS

A. The Board of Managers of the Purchaser and the Board of Directors of the
Seller believe it is advisable and in the best interest of each entity and their
respective equity holders that the Purchaser acquire all issued and outstanding
capital stock of DOME imaging systems, inc., a Delaware corporation (the
“Company”) pursuant to the terms hereof.

B. The Seller is the owner of all of the issued and outstanding capital stock of
the Company.

C. The Seller desires to sell, and the Purchaser desires to purchase, all of the
issued and outstanding capital stock of the Company (the “Stock Purchase”) upon
the terms and subject to the conditions set forth herein.

D. The Seller, the Purchaser and NDS desire to make certain representations,
warranties, covenants and other agreements in connection with the transactions
contemplated herein.

E. Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to the Purchaser to enter into this Agreement, (i) each
of the Selected Employees (as defined below) shall have entered into an “at
will” employment arrangement with the Purchaser or a Subsidiary thereof to be
effective as of the Closing Date pursuant to his or her execution of an offer
letter and a proprietary information and inventions assignment agreement, each
on the Purchaser’s standard form; and (ii) each of the Selected Employees shall
have executed and delivered to the Purchaser a Non-Competition Agreement (as
defined below) substantially in the form attached hereto as Schedule A.

F. The Seller the Purchaser and NDS have approved this Agreement and the Stock
Purchase as required by Applicable Law (as defined below).

AGREEMENT

NOW THEREFORE, in consideration of the mutual agreements and respective
representations, warranties and covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

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ARTICLE I – DEFINITIONS

 

1.1 Certain Defined Terms

Unless the context requires otherwise, the following terms shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural forms of the terms defined):

“2008 Plan Year” is defined in Section 7.1(a)(iv).

“Actions” is defined in Section 4.16.

“Adjusted Purchase Price” is defined in Section 3.3(b).

“Affiliate” means, with respect to a specified Person, any Person who directly
or indirectly Controls, is Controlled by or is under common Control with the
specified Person.

“Agreement” is defined in the introductory paragraph.

“Applicable Law” is defined in Section 4.5(a).

“Arbitrator” is defined in Section 3.2.

“Balance Sheet Date” means June 27, 2008, the date of the most recent unaudited
balance sheet included in the Financial Statements.

“Benefit Plan” means any “employee benefit plan,” as that term is defined in
Section 3(3) of ERISA, and any other employment, bonus, pension, profit sharing,
deferred compensation, phantom stock, stock option or other (other than at will
offer letters that do not provide for any severance or termination benefits)
equity based award, severance, disability, change-in-control, vacation,
commission, welfare, fringe benefit or other material benefit plan, agreement,
policy, program or arrangement (whether written or unwritten, funded or
unfunded) sponsored or maintained by the Company, the Seller or any ERISA
Affiliate for the benefit of any Business Employee.

“Business” means the medical business unit of the Seller (including the business
as conducted through Planar Systems OY, Planar GmbH and the Seller’s
representative office in the People’s Republic of China) and the Company as such
business is currently conducted, including their design, development,
distribution and sale of LCD medical-grade displays and related software for use
in diagnostic imaging and medical-grade patient monitors and which, for the
avoidance of doubt, shall specifically exclude (a) any stereoscopic display
technology or Intellectual Property related thereto owned or licensed by the
Seller or (b) any technology or Intellectual Property of the Seller’s Control
Room and Signage Business Unit used in the GX46 display marketed by the
Business.

“Business Day” means any day that is not a Saturday, a Sunday or any other day
on which banks generally are required or authorized to be closed in Portland,
Oregon.

 

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“Business Employee” means any current or former officer, director, employee or
other service provider of the Company or who is employed by the Seller or
Affiliates of the Seller and devotes (or devoted) substantially all of his or
her time working for the Business.

“Cap” is defined in Section 8.4(b).

“Ceiling” is defined in Section 3.3(a).

“Claim” is defined in Section 8.3(a).

“Claim Notice” is defined in Section 8.3(a).

“Closing” is defined in Section 2.2.

“Closing Date” is defined in Section 2.2.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and any similar and applicable state statute.

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

“Company” is defined in Recital A.

“Company Collective Bargaining Agreement” is defined in Section 4.18(b).

“Company Intellectual Property” is defined in Section 4.11(g).

“Company Permits” is defined in Section 4.5(b).

“Company Products” means all products and services developed (including products
and services for which development is substantially completed), manufactured,
made commercially available, marketed, distributed, sold, imported for resale or
licensed out by or on behalf of the Company since acquired by the Seller.

“Company Registered Intellectual Property” is defined in Section 4.11(a).

“Company Source Code” is defined in Section 4.11(i).

“Continuing Employees” means the persons listed on Schedule 7.1(a)(i).

“Contract” means any mortgage, indenture, lease, contract, agreement,
instrument, obligation or any other commitment, whether oral or written.

“Control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person, whether through ownership of voting
securities or otherwise.

 

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“Current Balance Sheet” means the unaudited balance sheet of the Business dated
as of the Balance Sheet Date.

“Customer Personal Data” means data that relate to an individual who can be
identified either from that data or from that data and other information that is
in the possession of the Company.

“Delayed Payment” is defined in Section 3.1(a).

“Delayed Payment Deadline” is defined in Section 3.1(a).

“Deductible Basket” is defined in Section 8.4(b).

“Dispute Notice” is defined in Section 3.2.

“Employment-Related Liabilities” shall mean employee compensation/salaries,
accrued commissions, accrued payroll taxes, accrued 401(k), other payroll
withholding and accrued bonuses. For the avoidance of doubt, accrued vacation
shall not be included within the meaning of the term Employment-Related
Liabilities.

“Environmental Law(s)” means all federal, state and local statutes, regulations,
directives, codes, and policies having the force of law, and all court orders,
decrees and arbitration awards, and the common law, relating to pollution or
protection of the environment, natural resources or worker health and safety,
including, those related to the use, handling, transport, treatment, recycling,
labeling, manufacture, exposure of others to, sale, or disposal, release or
discharge of Hazardous Materials or any product or waste containing a Hazardous
Material, including but not limited to the European Union (“EU”) Directive
2002/96/EC on waste electrical and electronic equipment, EU Directive 2002/95/EC
on the restriction of the use of certain hazardous substances in electrical and
electronic equipment, and the Chinese Management Methods for Controlling
Pollution by Electronic Information Products.

“Environmental Permits” means all approvals, permits, registrations,
certifications, licenses, clearances or consents required to be obtained from
any Governmental Authority required under or issued pursuant to any
Environmental Law.

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

“ERISA Affiliate” means any Subsidiary of the Seller and any other person that,
together with the Seller, would be deemed a “single employer” within the meaning
of Sections 414(b), (c), (m) or (o) of the Code.

“Export Approvals” is defined in Section 4.27(a).

“FCPA” is defined in Section 4.28.

“FDA” is defined in Section 4.5.

“Fergason” is defined in Section 7.1(h)(iii).

 

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“Fergason Agreement” is defined in Section 7.1(h)(iii).

“Final Working Capital” is defined in Section 3.2.

“Financial Records” is defined in Section 7.1(e).

“Financial Statements” means the unaudited pro forma balance sheet of the
Business and the related unaudited pro forma statements of income as of and for
the fiscal years ended September 29, 2006 and September 28, 2007 and the nine
months ended June 27, 2008.

“Floor” is defined in Section 3.3(a).

“FSAs” is defined in Section 7.1(a)(iv).

“Funded Indebtedness” means, without duplication, the aggregate amount
(including the current portions thereof) of all (a) indebtedness for money
borrowed from others, letters of credit and purchase money indebtedness (other
than accounts payable in the ordinary course) of the Company (including any such
obligations that are not full recourse to the Company but are secured by assets
of the Company); (b) obligations of the Company evidenced by bonds, debentures,
notes or similar instruments; (c) all obligations under leases of the Company
that are required to be reflected as capital lease obligations on the
consolidated balance sheet of the Company by GAAP; (d) all inter-company debt of
the Company to the Seller or any Affiliate of the Seller; and (e) all guarantees
or other direct or indirect assurances of payment by the Company of any of the
foregoing types of indebtedness owed by any other Person. Funded Indebtedness
shall not include outstanding, uncashed checks or drafts on Company bank
accounts.

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied.

“Governmental Authority” means any government, governmental or regulatory
authority, agency, instrumentality, department, court, commission, body,
tribunal or other governmental entity, whether foreign or domestic and whether
national, federal, state, provincial or local.

“Government Programs” is defined in Section 4.26(a).

“Hazardous Materials” means (a) any petroleum products, by-products or breakdown
products, radioactive materials, friable asbestos-containing materials and
polychlorinated biphenals; (b) all chemical, material or substance defined or
regulated as toxic or hazardous or as a pollutant or contaminant or waste;
(c) any radioactive substances, elements or compounds; or (d) any biological
pathogens, viruses or harmful biological substances under any applicable
Environmental Law.

“Healthcare Laws” is defined in Section 4.26(c).

“Indemnified Party” is defined in Section 8.2(a).

 

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“Indemnifying Party” is defined in Section 8.3(a).

“Initial Payment” is defined in Section 3.1(a).

“Intellectual Property” means all United States and foreign trademarks, service
marks, trade names, slogans, logos, trade dress, and other similar designations
of source or origin, together with all goodwill, registrations and applications
related to the foregoing; patents, utility, models and industrial design
registrations and applications therefor (including, without limitation, any
continuations, divisionals, continuations-in-part, provisionals, extensions,
renewals, reissues, re-examinations and applications for any of the foregoing
and foreign counterparts thereof), and patent and invention disclosures;
copyrights and copyrightable subject matter (including, without limitation, any
registration and applications for any of the foregoing); mask works rights and
trade secrets and other confidential business information (including
manufacturing and production processes and techniques, research and development
information, technology, drawings, specifications, designs, plans, proposals,
technical data and know-how, financial, marketing and business data and
know-how, pricing and cost information, business and marketing plans, customer
and supplier lists and information, where confidential), and computer programs
(whether in source code, object code or other form); World Wide Web addresses
and domain registrations.

“Interim Date” is defined in Section 3.1(b).

“Interim Interest Payment” is defined in Section 3.1(b).

“Internal Controls” is defined in Section 4.7(d).

“International Employee Plan” means each Benefit Plan for the benefit of any
Business Employees who perform or performed services outside the United States.

“IRS” means the United States Internal Revenue Service.

“Leased Real Property” means all real property, land, buildings, improvements
and structures leased, subleased or occupied by the Company or that will be used
solely for the benefit of the Company immediately following the Closing.

“Leases” is defined in Section 4.10(b).

“Liabilities” is defined in Section 4.7(b).

“Lien” means any mortgage, pledge, lien, encumbrance, charge or other security
interest, restriction, equitable interest, option, easement, exception to title
of any kind, restriction or third-party right or encumbrance of any nature.

“Losses” is defined in Section 8.2(a).

 

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“Material Adverse Effect” or “Material Adverse Change” means any change,
development, fact, condition, event, occurrence or effect (any such item, an
“Effect”) with respect to the Company or the Business, taken as a whole, that,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the assets, business, properties, operations,
condition (financial or otherwise) or results of operations of the Company or
the Business, taken as a whole, or would reasonably be expected to materially
delay or prevent the consummation of the transactions contemplated by this
Agreement; provided, however, that none of the following Effects shall
constitute a Material Adverse Effect or Material Adverse Change: (a) any Effects
to the extent directly resulting from the announcement of the transactions
contemplated by this Agreement or the satisfaction of the parties’ respective
obligations set forth herein, (b) any Effects to the extent directly resulting
from the identity of the Purchaser or NDS, (c) changes in the general economic
conditions or political climate in the United States or any region where the
Business operates, (d) changes in the U.S. or global financial or banking
markets (including any disruption thereof), (e) changes generally applicable to
the industries in which the Business is conducted, (f) changes after the date
hereof in laws, rules and regulations applicable to the Company or the Business,
including changes in accounting principles and (g) any natural disasters, acts
of war, terrorism, sabotage or other “acts of God,” except, with respect to
clauses (c), (d), (e) and (f), to the extent that the Effects are materially
disproportionately adverse to the Company or the Business, taken as a whole, as
compared to other companies in the industry in which the Business operates.

“Material Contracts” is defined in Section 4.12(a).

“NDS” is defined in the introductory paragraph.

“Note” is defined in Section 3.1(a).

“Open Source Code” means any software code that is distributed as “open source
software” or is otherwise distributed or made generally available in source code
form under license terms that permit modification and redistribution of such
software in source code form, including without limitation any software code
that is licensed under the GNU General Public License, GNU Lesser General Public
License, Mozilla License, Common Public License, Apache License, BSD License,
Artistic License, or Sun Community available to the public generally under a
license approved by the Open Source Initiative of San Francisco, California as
an Open Source License.

“Ordinary Course of Business” means in the ordinary course of the Business as
conducted by the Company, consistent with past practice during the period
covered by the Financial Statements.

“Owned Real Property” means any real property, land, buildings, improvements and
structures owned by the Company.

“Participation Termination” is defined in Section 6.1(c).

“Permits” means licenses, permits, authorizations, product qualifications,
registrations, certificates, consents, accreditations, approvals and franchises,
membership affiliations, rights, approvals and orders of any Governmental
Authority, other than the Environmental Permits.

 

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“Permitted Liens” means (a) any restriction on transfer arising under applicable
securities laws, (b) Liens for current Taxes or other governmental charges not
yet due and payable, or the amount or validity of which is being contested in
good faith by appropriate proceedings by the Company to the extent reserved
against on the Current Balance Sheet, (c) mechanics’, carriers’, workers’,
repairers’, landlords’ and similar statutory Liens arising or incurred in the
Ordinary Course of Business for sums not yet due, (d) zoning, entitlement,
building and other land use regulations imposed by Governmental Authorities
having jurisdiction over the Real Property, (e) Liens of lessors arising under
lease agreements, and (f) Liens the existence of which, individually and in the
aggregate, would not reasonably be expected to materially impair the continued
use and operation of the assets to which they relate in the conduct of the
Business as currently conducted.

“Person” means an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization, any other business entity, or a Governmental Authority.

“Post-Closing Financial Statements” is defined in Section 7.1(e).

“Pre-Closing Employee Liabilities” means any liabilities arising out of or
related to any “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) or severance pay policy maintained by the Seller or any of its ERISA
Affiliates prior to the Closing Date for the benefit of any (i) current or
former employee of the Company and/or (ii) current or former employee of the
Seller or any ERISA Affiliate of the Seller (other than the Company) who devotes
or devoted his or her business time and attention to the Business prior to the
Closing.

“Pre-Closing Tax Period” means any Tax period of the Company ending on or prior
to the Closing Date, including the portion of any Straddle Period that ends on
the Closing Date.

“Private Insurance Programs” is defined in Section 4.26(a).

“Proposed Final Working Capital” is defined in Section 3.2.

“PTO” is defined in Section 3.1(a)(i).

“Purchase Price” is defined in Section 3.1.

“Purchaser” is defined in the introductory paragraph.

“Purchaser Benefit Plan” is defined in Section 7.1(a)(iii).

“Purchaser Financial Statements” is defined in Section 5.8(a).

“Purchaser Liabilities” is defined in Section 5.8(b).

“Purchaser’s Knowledge” or any phrase of similar import means the actual
knowledge, after inquiry, of Jim Ciardella, John Murphy and David Zilberman.

“Real Property” means, together, all Leased Real Property and all Owned Real
Property.

 

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“Regulatory Law” means all federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate
(a) mergers, acquisitions or other business combinations, (b) foreign
investment, or (c) actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition.

“Related Parties” is defined in Section 4.20.

“Representatives” means, with respect to any Person, that Person’s officers,
directors or managers, employees, counsel, accountants, investment bankers,
agents and others who act on such Person’s behalf in connection with the
evaluation (including due diligence), negotiation, execution, effectuation or
consummation of the transactions contemplated by this Agreement.

“Required Governmental Approvals” is defined in Section 4.4(b).

“Restricted Period” is defined in Section 7.2.

“Securities Act” means the Securities Act of 1933, as amended.

“Selected Employees” shall mean the employees of the Seller or the Company
listed on Schedule B hereto.

“Seller” is defined in the introductory paragraph.

“Seller Disclosure Schedule” is defined in Article IV.

“Shares” means all of the issued and outstanding shares of the common stock,
$0.01 par value, of the Company.

“Stock Purchase” is defined in Recital C.

“Straddle Period” means any Tax period of the Company that begins on or before
the Closing Date and ends after the Closing Date.

“Subsidiary” shall mean, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (a) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries or
(b) such Person or any other Subsidiary of such Person is a general partner
(excluding any such partnership where such Person or any Subsidiary of such
Person does not have a majority of the voting interest in such partnership).

 

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“Taxes” means any income, capital gain, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profit,
customs, capital stock, franchise, employees’ income withholding, foreign or
domestic withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, value added, alternative, add-on
minimum or other tax, fee, assessment, levy, tariff, charge or duty of any kind
whatsoever and any interest, penalty, fine, addition or additional amount
thereon imposed, assessed or collected by any Governmental Authority.

“Tax Return” means all returns, declarations, reports, claims for refunds,
information returns or similar documents (including any related or supporting
schedules or statements of information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes or the
administration of any laws relating to any Taxes.

“Third Party Claim” is defined in Section 8.3(b)(i).

“To the Seller’s knowledge” or any phrase of similar import means the actual
knowledge, after inquiry, of Doug Barnes, Steve Going, Fred Hall, Scott
Hildebrandt, Heekyung Kim, Peter Maxwell, Brent Michael, Gerry Perkel, Jarmo
Salminen, Terri Timberman, Dave Wachsmuth and Jenny Warnick.

“Transaction Documents” means this Agreement, the Note and the Transition
Services Agreement.

“Transfer Taxes” is defined in Section 7.1(b)(vi).

“Transition Services Agreement” means the Transition Services Agreement,
substantially in the form attached as Exhibit A hereto, to be entered into by
and between the Purchaser and the Seller at the Closing.

“Treasury Regulations” means the income tax regulations (final, temporary and,
as applicable, proposed) promulgated under the Code, as they may be in effect
from time to time.

“Working Capital” means the value of product inventory (net of reserves for
obsolete, damaged and excess inventory), the value of demo inventory (net of
amortization), accounts receivable (net of reserves for discounts and doubtful
accounts) and any prepaid or other current assets of the Business (excluding
cash and current deferred tax assets) less any accounts payable, deferred
revenue, sales return reserves, warranty reserves and other current liabilities
(other than Employment-Related Liabilities and income tax-related liabilities)
of the Business, in each case calculated in accordance with GAAP consistently
applied and consistent with Schedule 3.2; provided, however, that for purposes
of calculating Working Capital, the amounts used for each of the following line
items shall be the higher of (i) the actual calculated value as of the Closing
or (ii) the amount as reported on the Current Balance Sheet: bad debt reserve,
the inventory reserve (reserve for obsolete, damaged and excess inventory)
(except for reversals of sold, fully reserved products of up to $300,000 of
reserved value), the warranty reserve and the sales return reserve and within
other current liabilities any general reserves including (y) the MBU bid desk
accrual and (z) the MDF accrual. In addition, no accounts receivable credit
balances shall be reversed except with documented settlement from the customer.

 

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ARTICLE II–PURCHASE AND SALE OF SHARES

 

  2.1 The Stock Purchase.

Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing, the Seller shall sell, convey, assign, transfer and deliver to the
Purchaser the Shares, free and clear of all Liens or other defects of title, and
the Purchaser shall purchase, acquire and accept the Shares from the Seller.

 

  2.2 Closing.

Subject to the terms and conditions of this Agreement, the closing of the Stock
Purchase (the “Closing”) shall be deemed effective as of 12:02 a.m. Pacific time
on August 6, 2008 (the “Closing Date”) at the offices of Perkins Coie LLP, 1120
N.W. Couch St., Tenth Floor, Portland, Oregon. At the Closing, the parties to
this Agreement each shall deliver all documents, instruments, certificates and
other items as may be required under this Agreement.

 

  2.3 Books and Records.

At the Closing, the Purchaser shall own all books and records of the Business.
As soon as reasonably practicable following the Closing, the Seller shall
deliver the books and records of the Business to the Purchaser, subject to
Section 7.1(e).

ARTICLE III – CONSIDERATION

 

  3.1 Consideration for Shares.

(a) The Purchaser shall pay an aggregate purchase price (the “Purchase Price”)
of $34,250,000 less one-half (1/2) of the aggregate amount of accrued but unused
vacation or paid time-off balance as of the Closing (collectively, “PTO”) for
all Continuing Employees other than the Selected Employees for the Shares, which
shall be payable as follows (and later subject to adjustment pursuant to
Section 3.3):

(i) $30,000,000 of the Purchase Price (the “Initial Payment”) shall be paid by
wire transfer of immediately available funds to the Seller at Closing; and

(ii) The balance of the Purchase Price shall be paid (the “Delayed Payment”) by
wire transfer of immediately available funds to the Seller on or before
September 25, 2008 (the “Delayed Payment Deadline”), as evidenced by a
promissory note (the “Note”) in the form attached as Exhibit B hereto.

Immediately prior to Closing, the Company shall distribute all of its cash, if
any, to the Seller. At Closing, the Company shall have no Funded Indebtedness.

(b) If the Purchaser has not made the Delayed Payment on or before August 29,
2008 (the “Interim Date”), the Purchaser shall, no later than the Delayed
Payment Deadline, pay $100,000 to the Seller by wire transfer of immediately
available funds (the “Interim Interest Payment”).

 

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(c) If the Purchaser has not made the Delayed Payment and/or the Interim
Interest Payment by the Delayed Payment Deadline, interest shall accrue from the
Delayed Payment Deadline on the then unpaid amount of the Delayed Payment and
the Interim Interest Payment at the rate of 10% per annum, compounded monthly,
computed on the basis of a 360-day year of twelve 30-day months.

 

  3.2 Calculation of Final Working Capital.

On or before thirty (30) calendar days after the Closing Date, the Seller shall
deliver to the Purchaser a statement, dated as of the Closing Date, in
reasonable detail prepared in accordance with GAAP consistently applied and
consistent with Schedule 3.2 showing the amounts of Working Capital as of the
Closing Date (the “Proposed Final Working Capital”). Within forty-five
(45) calendar days of the Purchaser’s receipt of such Proposed Final Working
Capital, the Purchaser may give written notice to the Seller that it disputes
certain items contained in any of the Proposed Final Working Capital (the
“Dispute Notice”), which shall specify in reasonable detail the dollar amount of
any objection and basis therefor; provided, however, that if the Purchaser does
not deliver a Dispute Notice by such date, the Purchaser will be deemed to have
accepted such Proposed Final Working Capital and the Proposed Final Working
Capital shall be final and binding on the Purchaser and the Seller. Upon timely
delivery of the Dispute Notice, the Purchaser and the Seller agree to confer in
good faith with regard to the disputed items and an appropriate adjustment to
the Proposed Final Working Capital shall be made to the extent agreed upon by
the Purchaser and the Seller. If within twenty (20) Business Days after delivery
of a Dispute Notice, the Purchaser and the Seller are unable to resolve the
matter, either of them may within twenty (20) Business Days after the end of the
previous twenty (20) Business Day period notify in writing the other party of
its intention to submit the dispute to arbitration. Within ten (10) Business
Days after receipt of such notice, the Seller and the Purchaser shall in good
faith jointly select an arbitrator with expertise in accounting and GAAP and
experience resolving financial disputes (the “Arbitrator”), who shall adjudicate
only those items still in dispute with respect to the Proposed Final Working
Capital. The Purchaser and the Seller shall have the opportunity to provide
written submissions regarding their positions on the disputed matters, which
written submissions shall be provided to the Arbitrator, if at all, no later
than fifteen (15) Business Days after the date of referral of the disputed
matters to the Arbitrator. The Arbitrator shall deliver a written report
resolving only the disputed matters and setting forth the basis for such
resolution within thirty (30) Business Days after the Purchaser and the Seller
have submitted in writing (or have had the opportunity to submit in writing but
have not submitted) their positions as to the disputed items. The Arbitrator
shall not value any item greater than the highest amount proposed by either
party for such item or lower than the lowest amount proposed by either party for
such item. The determination of the Arbitrator with respect to the correctness
of each matter in dispute shall be final and binding on the Purchaser and the
Seller. The fees, costs and expenses of the Arbitrator shall be evenly split
between the Purchaser and the Seller. The Working Capital agreed upon by the
Seller and the Purchaser (or deemed accepted by the Purchaser) under this
subsection, as adjusted, if necessary based on a decision by the Arbitrator
hereunder, is referred to herein as the “Final Working Capital.”

 

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  3.3 Adjusted Purchase Price.

(a) If the Final Working Capital is less than $8,750,000 (the “Floor”), then the
Purchase Price shall be decreased by the difference between the Final Working
Capital and the Floor. If the Final Working Capital is greater than $9,250,000
(the “Ceiling”), then the Purchase Price shall be increased by the difference
between the Final Working Capital and the Ceiling.

(b) If the Purchase Price, adjusted pursuant to Section 3.3(a) (the “Adjusted
Purchase Price”), is greater than the Purchase Price paid by the Purchaser at
Closing, then the Purchaser shall pay or cause to be paid to the Seller the
difference between the Adjusted Purchase Price and the Purchase Price paid at
Closing. If the Adjusted Purchase Price is less than the Purchase Price paid by
the Purchaser at Closing, then the Seller shall pay to the Purchaser the
difference between the Adjusted Purchase Price and the Purchase Price paid at
Closing. Any payment due pursuant to this Section 3.3(b) shall be made by wire
transfer of immediately available funds within ten (10) Business Days after the
Final Working Capital becomes final and binding as provided above.

 

  3.4 Delivery of Shares.

At the Closing, subject to Section 6.2(b), the Seller shall deliver to the
Purchaser one or more certificates representing the Shares, each such
certificate to be duly and validly endorsed in favor of the Purchaser or
accompanied by a separate stock power duly and validly executed by the Seller
and otherwise sufficient to vest in the Purchaser legal and beneficial ownership
of the Shares, free and clear of all Liens.

ARTICLE IV – REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Purchaser that, except as set forth in
the disclosure schedules delivered by the Seller to the Purchaser concurrently
herewith (the “Seller Disclosure Schedule”), the statements contained in this
Article IV are true and correct. The Purchaser acknowledges and agrees that
(a) inclusion of information in any section of the Seller Disclosure Schedule
shall not be construed as an admission that such information is material to the
Business or the results of operations or financial condition of the Company; and
(b) if any section of the Seller Disclosure Schedule lists an item or
information in such a way as to make its relevance reasonably apparent on its
face to another section of the Seller Disclosure Schedule, the matter shall be
deemed to have been disclosed in such other section of the Seller Disclosure
Schedule, notwithstanding the omission of an appropriate cross-reference to such
other section.

 

  4.1 Organization, Qualification and Corporate Power.

Each of the Company and the Seller is duly organized, validly existing, and in
good standing, as applicable, under the laws of its jurisdiction of
organization, with full corporate power and authority to conduct its business as
currently conducted and to own and use the properties owned and used by it. The
Company is duly qualified to do business and is in good standing, as applicable,
in each jurisdiction in which the nature of the business conducted by it or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as applicable, would not have a
Material Adverse Effect.

 

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  4.2 Enforceability.

All corporate action on the part of the Seller and its officers, directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Transaction Documents to which the
Seller is or will be a party, the consummation of the Stock Purchase, and the
performance of all of the Seller’s obligations under this Agreement and the
other Transaction Documents to which the Seller is or will be a party has been
taken or will be taken as of or prior to the Closing. No additional corporate or
shareholder authorization or consent is required in connection with the
foregoing. This Agreement has been, and each of the other Transaction Documents
to which the Seller is a party at the Closing will have been, duly executed and
delivered by the Seller, and this Agreement is, and each of the other
Transaction Documents to which the Seller is or will be a party will be
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) at the Closing a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except to
the extent that enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and by the principles of equity regarding the
availability of remedies.

 

  4.3 Subsidiaries.

The Company does not have any Subsidiaries, and the Company does not own,
directly or indirectly, any capital stock or other ownership interests, or have
any obligations to acquire any capital stock or other ownership interests or
make any investment, in any corporation, partnership, joint venture or other
Person.

 

  4.4 No Violations; Consents.

(a) The execution and delivery of this Agreement and the other Transaction
Documents by the Seller do not, and the performance by the Seller of its
obligations under this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby will not: (i) conflict with
or violate any provision of the Second Amended and Restated Articles of
Incorporation or Second Amended and Restated Bylaws of the Seller or any
organizational document of the Company, (ii) conflict with or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in creation of any Lien (other than a Permitted Lien)
upon any properties or assets of the Seller, the Company or the Business, or
give to any Person any right of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any Contract to
which the Seller, the Company or the Business is a party or by which any
properties or assets of the Seller, the Company or the Business are bound, or
(iii) subject to receipt of the Required Governmental Approvals, result in a
violation of any law or any judgment, decree, order, regulation or rule of any
court or other Governmental Authority applicable to the Seller, the Company or
the Business, except in the case of (ii) or (iii) as would not be material to
the Company or the operation of the Business.

 

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(b) The execution and delivery of this Agreement and the other Transaction
Documents by the Seller does not, and the performance of this Agreement and the
other Transaction Documents by the Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated thereby will
not, require any consent, approval, authorization or permit of, or filing by the
Seller or the Company with or notification by the Seller or the Company to, any
Governmental Authority, except for (i) the consent or approval of any
Governmental Authority listed on Section 4.4(b) of the Seller Disclosure
Schedule (collectively, the “Required Governmental Approvals”) and (ii) notice
filings that are not material to the Company or the Business. Section 4.4(a) of
the Seller Disclosure Schedule sets forth all necessary consents, waivers and
approvals of parties to any Contracts as are required thereunder in connection
with the Stock Purchase, or for any such Contract to remain in full force and
effect without limitation, modification or alteration or the payment of any
additional consideration after the Closing as a result of the Stock Purchase.

 

  4.5 Permits; Compliance with Law.

(a) Neither the Company nor the Business (i) is or has been in conflict with, or
in default or in violation of any decree, order or arbitration award or (ii) is
or has been in any material respect in conflict with, or in default or in
violation of, any law, statute, rule or regulation of any Governmental Authority
applicable to the Company or the Business or by which the Company or the
Business is bound or affected (“Applicable Law”). The Company and the Business
have not received written notice or communication from any Governmental
Authority alleging noncompliance with any Applicable Law. There is no judgment,
injunction, order or decree of a Governmental Authority binding upon the Company
or the Business that materially prohibits or impairs the current operation of
the Company and the Business, taken as a whole. The Seller and the Company have
not received written notice of, and the Seller has no knowledge of, any
investigation of the Company or the Business by any Governmental Authority with
respect to any alleged failure or compliance with any Applicable Law.

(b) The Company and the Business hold, to the extent legally required, all
Permits from Governmental Authorities that are material and necessary to the
current operation of the Company and the Business, taken as a whole
(collectively, “Company Permits”). As of the date hereof, no suspension,
revocation, cancellation or material modification of any of the Company Permits
is pending or, to the knowledge of the Seller, threatened. The Company and the
Business are in compliance in all material respects with the terms of the
Company Permits. Section 4.5 of the Seller Disclosure Schedule sets forth a list
of the Company Permits.

Section 4.5(a) shall not include any representation with respect to the Federal
Food and Drug Administration or other foreign or state health and drug
regulatory authorities (“FDA”), which is addressed in Section 4.25. Section 4.5
shall not include any representation with respect to compliance with
Environmental Laws, which is addressed in Section 4.19.

 

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  4.6 Capitalization.

The authorized capital stock of the Company consists of 1,000 shares of common
stock, $.01 par value per share, of which 1,000 shares are outstanding and owned
by the Seller, are duly authorized, validly issued, fully paid and
non-assessable, are not subject to preemptive rights created by statute, the
organizational document of the Company, or any agreement to which the Company is
a party or by which it is bound, and are owned free of any Lien. The Company has
no other capital stock authorized, issued or outstanding. There are no options,
rights or agreements to which any of the Seller or the Company is a party or by
which any of them may be bound obligating any of them (a) to issue, deliver or
sell, or refrain from issuing, delivering or selling, any shares of capital
stock of the Company, or to grant, extend or enter into any such option, right
or agreement, (b) to repurchase, redeem or otherwise acquire, or to refrain from
repurchasing, redeeming or otherwise acquiring, any shares of capital stock of
the Company, or to grant, extend or enter into any such option, right or
agreement or (c) to vote, or to refrain from voting, any shares of capital stock
of the Company. All outstanding shares of the Company’s capital stock have been
issued or repurchased (in the case of shares that were outstanding and
repurchased by the Company or any stockholder of the Company) in compliance with
Applicable Law, including federal and state securities laws, and were issued,
transferred and repurchased (in the case of shares that were outstanding and, if
applicable, were repurchased by the Company or any stockholder of the Company)
in accordance with any right of first refusal or similar right or limitation,
including those in the organizational document of the Company. There are no
declared or accrued but unpaid dividends with respect to any shares of the
Company’s capital stock.

 

  4.7 Financial Statements; No Undisclosed Liabilities; Internal Controls.

(a) The Financial Statements are set forth in Section 4.7 of the Seller
Disclosure Schedule. The Financial Statements have been prepared in accordance
with GAAP consistently applied during the periods covered thereby (unless as
otherwise disclosed therein) and fairly present in all material respects the
financial position and the results of operations of the Company as of the dates
and during the periods indicated therein, except for (i) normal year-end
adjustments that are not, individually or in the aggregate, material, and
(ii) the omission of accompanying notes and schedules. To the Seller’s
knowledge, the Seller and the Company together have in their possession all
books, records, documents and other information of the Company and Seller, in
each case that is necessary to prepare audited financial statements for the
periods covered by the Financial Statements in respect of the Business in
accordance with GAAP and Regulation S-X promulgated under the Securities Act.

(b) Except as reflected in the Financial Statements, the Company has no
liabilities, obligations, indebtedness, expenses, claims, guarantees or
endorsements of any type (whether accrued, absolute, contingent, matured,
unmatured or otherwise) that are required by GAAP to be reflected on the balance
sheet of the Company (collectively, “Liabilities”), except for Liabilities
incurred since the Balance Sheet Date in the Ordinary Course of Business or that
are not material.

(c) The Seller maintains internal controls over financial reporting (“Internal
Controls”) that are designed to provide reasonable assurance, but not absolute
assurance, that (i) records are maintained in reasonable detail, to accurately
and fairly reflect the transactions and dispositions of the assets of the Seller
and its consolidated Subsidiaries; (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP,

 

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and that receipts and expenditures of the Seller and its consolidated
Subsidiaries are being made only in accordance with authorizations of management
and directors of the Seller and its consolidated Subsidiaries; and (iii) access
to the Seller’s and its consolidated Subsidiaries’ assets is permitted only in
accordance with management’s authorization.

(d) The Seller has disclosed, based on prior evaluations of such disclosure
controls and procedures prior to the date hereof, to the Seller’s auditors and
the audit committee of the Seller’s Board of Directors (i) any significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting that could adversely affect in any material
respect the Seller’s and its consolidated Subsidiaries’ ability to record,
process, summarize and report financial information, and (ii) any fraud, whether
or not material, known to the Seller that involves management or other employees
who have a significant role in the Seller’s and its consolidated Subsidiaries’
internal controls over financial reporting. The Seller has also disclosed to the
Purchaser any such significant deficiencies, material weaknesses or fraud to the
extent Seller believes such items could adversely affect either the continued
operation of the Business in the Ordinary Course of Business or the ability of
the Seller to provide the Post-Closing Financial Statements.

 

  4.8 Conduct of Business.

Except as set forth on Section 4.8 of the Seller Disclosure Schedule or in
connection with the transactions contemplated by this Agreement, since the
Balance Sheet Date, neither the Company nor the Seller (in respect of the
Business) has:

(a) taken any action or entered into or agreed to enter into any transaction,
agreement or commitment other than in the Ordinary Course of Business;

(b) had a Material Adverse Effect;

(c) increased, other than in the Ordinary Course of Business or as required by
Applicable Law, the compensation of any Business Employee;

(d) entered into, accelerated, terminated, modified or cancelled any employment
or service contract with any Business Employee;

(e) sold, leased, transferred or otherwise disposed of any of its properties or
assets (real, personal or mixed, tangible or intangible), except the sale of
inventory in the Ordinary Course of Business or disposal of obsolete property;

(f) made any change in any method of accounting or accounting practice or
internal control procedure;

(g) issued any capital stock, other securities or options or other rights to
acquire capital stock or other securities, or declared, paid or set aside for
payment any dividend or other distribution in respect of its capital stock, or
redeemed, purchased or otherwise acquired, directly or indirectly, any shares of
capital stock or other securities of the Company, or otherwise permitted the
withdrawal by any of the holders of capital stock or equity interests of the
Company of any cash or other assets (real, personal or mixed, tangible or
intangible), in compensation, indebtedness or otherwise, other than payments of
compensation in the Ordinary Course of Business;

 

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(h) experienced any destruction of, damage to, or loss of any material tangible
assets of the Company or the Business (whether or not covered by insurance);

(i) been involved in any employment dispute, including claims or matters raised
by any individual, Governmental Authority, or workers’ representative
organization, bargaining unit or union, regarding, claiming or alleging labor
trouble, wrongful discharge or any other unlawful employment or labor practice
or action with respect to the Company or the Business;

(j) adopted or changed any material election in respect of Taxes, adopted or
changed any material accounting method in respect of Taxes, entered into any
agreement or settlement of any claim or assessment in respect of material Taxes,
or extended or waived the limitation period applicable to any claim or
assessment in respect of material Taxes;

(k) loaned or advanced (other than advance or reimbursement of expenses in the
Ordinary Course of Business) any amount to, or sold, transferred or leased any
properties or assets to, or entered into any agreement or arrangement with, any
Business Employee;

(l) loaned money to any Person (except for advances or reimbursements to
employees for expenses in the Ordinary Course of Business), or purchased any
debt securities of any Person;

(m) (i) except in connection with sales of Company Products in the Ordinary
Court of Business, sold, leased, licensed or transferred any Company
Intellectual Property or executed, modified or amended any agreement with
respect to Company Intellectual Property with any Person or with respect to the
Intellectual Property of any Person, (ii) purchased or licensed any Intellectual
Property or executed, modified or amended any agreement with respect to the
Intellectual Property of any Person, or (iii) entered into any agreement or
modification or amendment of an existing agreement with respect to the
development of any Intellectual Property with another Person;

(n) acquired, or entered into any agreement to acquire, by merging or
consolidating with, or by purchasing any assets or equity securities of, or by
any other manner, any business or corporation, partnership, association or other
business organization or division thereof, or other acquisition of any assets
(outside the Ordinary Course of Business) or any equity securities that are
material individually or in the aggregate to the Company or the Business;

(o) issued or agreed to issue any refunds, credits, allowances or other
concessions with customers outside of the Ordinary Course of Business;

(p) amended or otherwise changed its articles of incorporation or bylaws (or
comparable governing documents); or

 

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(q) agreed, whether in writing or otherwise, to take any action described in
this Section 4.8.

 

  4.9 Tangible Assets; Sufficiency of Assets.

(a) The Company has good title to, or a valid lease, license or right to use,
all tangible assets and properties used in the conduct of the Business as it is
currently conducted, free of any Liens, other than Permitted Liens.

(b) The Company’s tangible assets described in paragraph (a) above, together
with the Intellectual Property owned by the Company or for which it has a valid
right to use immediately following the Closing (as supplemented by the services
and supplies to be provided under the Transition Services Agreement and which
includes, for the avoidance of doubt, any assets of the Seller or Planar Systems
OY contributed to the Company), constitute all the assets necessary for the
operation of the Business as currently conducted and shall constitute all of the
assets and properties necessary for the Company to continue to operate and
conduct the Business immediately following the Closing in substantially the same
manner as conducted by the Seller and the Company immediately prior to the
Closing.

 

  4.10  Real Property.

(a) The Company has no Owned Real Property and the Company has never owned any
Owned Real Property.

(b) Section 4.10(b) of the Seller Disclosure Schedule sets forth the address of
each parcel of Leased Real Property and identifies all of the leases or other
occupancy agreements with respect to the Leased Real Property and any
amendments, modifications, guarantees and consents related thereto. All Leased
Real Property is leased by the Company pursuant to written leases, true and
complete copies of which have been made available to the Purchaser (the
“Leases”).

(c) The Company has not subleased, licensed or granted any other right to occupy
any Leased Real Property, and, to the Seller’s knowledge, other than the
Company, there are no parties occupying or having any current or future right to
occupy any of the Leased Real Property during the term of any Lease.

(d) The Real Property constitutes all of the real property leased, occupied or
used by the Company in connection with the Business. The Real Property is
sufficient for the conduct of the Business as it is currently conducted. All
material licenses and approvals necessary to the Company’s current occupancy and
use of the Real Property have been obtained and are in full force and effect and
there have been no material violations thereof. To the Seller’s knowledge, the
Real Property is in good operating condition and repair. To the Seller’s
knowledge, the Company would not be required as a result of any alterations made
to any Leased Real Property by the Seller or the Company to expend more than
$50,000 in causing any Leased Real Property to comply with the surrender
conditions set forth in the applicable Lease.

 

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  4.11  Intellectual Property.

(a) Section 4.11(a) of the Seller Disclosure Schedule sets forth true, complete
and correct lists of the following Intellectual Property, both U.S. and foreign,
that are owned or claimed by the Company or the Business as of the date of this
Agreement along with the jurisdiction in which each such item of Intellectual
Property has been registered or filed and the applicable registration,
application or serial number or similar identifier:

(i) all patents and pending patent applications, including any and all
extensions, continuations, continuations-in-part, divisions, reissues,
reexaminations, substitutes, renewals, and foreign counterparts thereof;

(ii) all trademark registrations and pending trademark registration
applications;

(iii) all copyright registrations and pending copyright registration
applications; and

(iv) all domain name registrations and pending domain name registrations.

For purposes of this Agreement, the “Company’s Registered Intellectual Property”
shall mean the Intellectual Property set forth in Section 4.11(a) of the Seller
Disclosure Schedule.

(b) All of the Company’s Registered Intellectual Property is owned exclusively
by the Company.

(c) All of the Company’s Registered Intellectual Property (excluding
applications) is subsisting, and, to the Seller’s knowledge, valid and in full
force and effect (except with respect to applications), and has not expired or
been cancelled or abandoned. All necessary documents and certificates in
connection with such Company’s Registered Intellectual Property (excluding
applications) have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions, as the case may
be, for the purposes of avoiding abandonment, prosecuting and maintaining of
such Company’s Registered Intellectual Property (excluding applications).

(d) Except for actions of the relevant jurisdiction’s patent and trademark
office or other government intellectual property office (“Office Actions”), the
Company has not received written notice of any pending or threatened Action
before any Governmental Authority challenging the use, ownership, validity,
enforceability or registerability of any of the Company Intellectual Property
(as defined below). Rejections of pending applications before a national patent,
trademark or intellectual property office shall not constitute such written
notice. Except for Office Actions, neither the Company nor the Seller is a party
to any settlements, covenants not to sue, consents, decrees, stipulations,
judgments or orders resulting from Actions which permit third parties to use any
of the Company’s Registered Intellectual Property. Section 4.11(d) of the Seller
Disclosure Schedule lists all Office Actions with respect to pending
applications for the Company’s Registered Intellectual Property that may affect
the validity, enforceability or registerability of such Registered Intellectual
Property, and all such Office Actions have been made available to the Purchaser.

 

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(e) To the Seller’s knowledge, the Company owns or has valid rights to use all
the Intellectual Property used in or necessary to the conduct of the Business as
currently conducted, without infringing the Intellectual Property of any Person.
Without limiting the generality of the foregoing, to the Seller’s knowledge, the
Company has the right to use all data, customer lists, log files, hardware
designs, programming processes, software and other information used by the
Company in the conduct of the Business as currently conducted, and has not been
provided written notice that any of the foregoing that is provided to the
Company by third parties will not continue to be provided to the Company on the
same or similar terms and conditions as currently exist. The Company’s ownership
of all Company Intellectual Property is free and clear of any Lien; provided
that the representation and warranty in this sentence shall not be deemed or
construed as a representation or warranty, express or implied, regarding
non-infringement, misappropriation or violation of any intellectual Property of
any Person (which is addressed solely in the first two sentences of this
Section 4.11(e)). To the Seller’s knowledge, the Company’s inbound license
rights under the Intellectual Property in which the Company has any inbound
license rights are subject to no restrictions except as set forth in the
relevant inbound licenses or applicable Law. Without limiting or expanding the
foregoing, in respect of the Business of the Company, on the one hand, and the
other business of the Seller and its Affiliates, on the other hand, the Company
exclusively owns all Intellectual Property primarily related to the Business,
including (i) all patents and patent applications (x) that claim inventions or
processes that primarily relate to, or that are primarily in the field of, the
Business, (y) for which the inventors were primarily employed by or primarily
engaged as contractors for the Company, or (z) the costs for which were
attributed to or considered expenses of the Business, or that were otherwise
acquired by the Seller pursuant to the Agreement and Plan of Merger dated as of
March 18, 2002 among the Seller, the Company, Bone Doctor Acquisition
Corporation and certain stockholders of the Company, (ii) all rights to enforce
and to past and future damages for the infringement of any such Intellectual
Property, and all goodwill of the Business associated with any trademark rights
included in such Intellectual Property.

(f) To the Seller’s knowledge, the conduct of the Business as it has been
conducted and is currently conducted has not infringed upon or misappropriated
and does not infringe upon or misappropriate any Intellectual Property or other
proprietary right owned by any Person, violate any right to privacy or publicity
of any person, or constitute unfair competition or unfair trade practices under
the laws of any jurisdiction where the Business is currently conducted. As of
the date of this Agreement, the Seller has not received written notice of any
pending or threatened Actions against the Company alleging that such operation
of the Business or any of its acts, products, services, technology or
Intellectual Property infringes, misappropriates or otherwise violates the
Intellectual Property of any Person, and neither the Company nor the Seller has
received any written notice of any claims alleging that the Company or the
Business infringes, misappropriates or otherwise violates the Intellectual
Property of any Person (nor does the Seller have knowledge of any reasonable
basis therefor).

 

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(g) To the Seller’s knowledge, no third party is misappropriating, infringing,
diluting (with respect to trademarks) or violating any Intellectual Property
owned by the Company (collectively, and including the Company’s Registered
Intellectual Property, the “Company Intellectual Property”), and no Intellectual
Property or other proprietary right, misappropriation, infringement, trademark
dilution or violation Actions have been brought against any third party by the
Company. The Company has not granted any exclusive license of or exclusive right
to use, or authorized the retention of any exclusive rights to use or joint
ownership of, any Company Intellectual Property.

(h) Except for Office Actions pertaining to Company’s Registered Intellectual
Property, the Company is not party to any settlement, covenant not to sue,
consent, decree, stipulation, judgment, or order resulting from any Action which
(i) restricts the Company’s rights to use any Intellectual Property,
(ii) restricts the Business in order to accommodate a third party’s Intellectual
Property rights or (iii) requires any future payment by the Company. Except for
restrictions set forth in inbound licenses of Intellectual Property, the Company
is not subject to any covenant not to compete or contract, agreement or other
arrangement limiting its ability to transact business in any market, field or
geographical area or with any Person or prohibiting or impairing any acquisition
of property (tangible or intangible by the Company). The Company is not subject
to any contract, agreement or other arrangement that: (x) restricts the use,
transfer, delivery or licensing of Company Intellectual Property or (y) grants
to the Company any inbound license rights under any Person’s Intellectual
Property rights that contains restrictions on use that are inconsistent with the
Company’s business as currently conducted.

(i) All current and former employees, consultants and contractors of the Company
who contribute or have contributed to the creation or development of any of the
Company Intellectual Property have executed written instruments with the Company
that assign all rights, title and interest in and to any such contributions to
the Company substantially in the Company’s standard forms which have been made
available to the Purchaser. No current or former employee, officer, director,
stockholder, consultant or independent contractor has any right, claim or
interest in or with respect to any such contributions, any Company Intellectual
Property or any Intellectual Property purported to be Company Intellectual
Property. Other than under an appropriate confidentiality or nondisclosure
agreement or contractual provision relating to confidentiality and
nondisclosure, there has been no disclosure to any third party of material
confidential or proprietary information or trade secrets of the Company. Without
limiting the foregoing, neither the Company nor any Person acting on the
Company’s behalf has disclosed, delivered or licensed to any Person, agreed to
disclose, deliver or license to any Person, or permitted the disclosure or
delivery to any escrow agent or other Person of any source code or related
proprietary or confidential information or algorithms owned by the Company or
used in its business (“Company Source Code”). No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time
or both) will, or would reasonably be expected to, result in the disclosure or
delivery by or on behalf of the Company of any Company Source Code.

(j) Except for implied licenses attendant to the sale of non-software products,
agreements relating solely to nondisclosure of confidential information and
licenses granted to end-user customers in the Ordinary Course of Business,
Section 4.11(j)(i) of the Seller Disclosure Schedule lists all contracts,
licenses and agreements between the Company, on the

 

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one hand, and any other Person, on the other hand, with respect to any Company
Intellectual Property, including any agreements with respect to the licensing
and distribution thereof. Section 4.11(j)(ii) of the Seller Disclosure Schedule
lists all contracts, licenses and agreements between the Company, on the one
hand, and any other Person, on the other hand, with respect to any Intellectual
Property of any other Person, including any agreements with respect to the
licensing and distribution thereof, except for generally available commercial
binary code-only software product supplied under end-user licenses and implied
licenses attendant to the purchase of non-software products.

(k) Section 4.11(k) of the Seller Disclosure Schedule identifies each item of
Open Source Code that is contained in any current or past product or service
offered by the Company. The Company’s use and/or distribution of each component
of Open Source Code complies with all material provisions of the applicable
license agreement, and in no case does such use or distribution give rise under
such license agreement to any rights in any third parties under any Company
Intellectual Property or obligations for the Company with respect to any Company
Intellectual Property, including without limitation any obligation to disclose
or distribute any such Company Intellectual Property in source code form, to
license any such Company Intellectual Property for the purpose of making
derivative works, or to distribute any such Company Intellectual Property
without charge, royalty-free or on terms that otherwise limit the ability of the
Company to recover remuneration for the Company Products and services.

(l) To the Seller’s knowledge, the Company has no obligation to pay any third
party any future royalties or other fees for the continued use of Intellectual
Property and will not have any obligation to pay such royalties or other fees
arising from the consummation of the transactions contemplated by this
Agreement. The Company has not licensed any of its Intellectual Property to any
Person on an exclusive basis.

(m) The Company is not in violation of any contract, agreement, license or other
instrument to which it is a party or otherwise bound relating to Intellectual
Property that is material to the Business as currently conducted. The
consummation by the Seller and the Company of the transactions contemplated
hereby, including the Stock Purchase, will not result in any violation, loss or
impairment of ownership by the Company of, or impair or restrict the right of
any of the Company to use, any Intellectual Property that is material to the
Business as currently conducted, and will not require the consent of any
Governmental Authority or third party with respect to any such Intellectual
Property. Neither this Agreement nor the transactions contemplated by this
Agreement will, pursuant to any Contract to which the Seller or its Affiliate,
including the Company, is a party, result in the Purchaser or the Company or any
Subsidiaries of the Purchaser: (i) granting to any third party any right to or
with respect to any Intellectual Property owned by, or licensed to the Company,
(ii) being bound by or subject to, any exclusivity obligations, non-compete or
other restriction on the operation or scope of the Business, except as may be
imposed by Applicable Law, or (iii) being obligated to pay any royalties or
other material amounts to any third party in excess of those payable by any of
them, respectively, in the absence of this Agreement or the transactions
contemplated hereby.

 

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(n) Except for inbound licenses for generally available commercial binary
code-only software product supplied under end user licenses, implied licenses
attendant to the sale or purchase of non-software products, and licenses to
end-user customers in the Ordinary Course of Business, the contracts, licenses
and agreements listed in Section 4.11(n) of the Seller Disclosure Schedule
constitute all material contracts, licenses and agreements currently in effect
to which the Company is a party with respect to any Intellectual Property,
including all licenses currently in effect of Intellectual Property granted to
or by the Company or the Business and all assignments of material Intellectual
Property (relating to Intellectual Property that is material to the Business as
currently conducted) to or by the Company or the Business, except for
assignments by employees pursuant to invention or copyright assignment
agreements.

(o) To the Seller’s knowledge, no government funding, facilities of a
university, college, other educational institution or research center was used
in the development of any Company Intellectual Property. No Governmental
Authority, university, college or other educational institution or research
center has been granted any rights under, or to the Seller’s knowledge, has any
claim or right in or to, any Company Intellectual Property (or any Intellectual
Property purported to be Company Intellectual Property), other than licenses of
the same standard commercial rights as the Company grants to end users of the
Company Products or services in the Ordinary Course of Business in connection
with the sale or license of Company Products or services. The Company has not
sponsored any research and development with any Governmental Authority,
university, college or other educational institution or research center except
pursuant to an agreement whereby the Company acquired exclusive rights to the
results of such research and development for the term of any underlying
Intellectual Property rights.

(p) To the Seller’s knowledge, the Company has complied with all laws regarding
the protection of Customer Personal Data, including without limitation the
requirements of EU Directive 95/46/EC and corresponding enabling legislation in
member states and the Health Insurance Portability and Accountability Act of
1996. The transactions contemplated by the Agreement will not violate any laws
or agreements between the Company or the Seller and its customers relating to
Customer Personal Data.

(q) The Company is not and was never a member or promoter of, a contributor to,
or a participant in, any industry standards body or similar organization that
could require or obligate the Company to grant or offer to any other Person any
license or right to any Intellectual Property.

(r) All of the Company Products, in the form existing on the Closing Date,
perform substantially in accordance with the documentation and other written
material used in connection with such products and are free of material defects
in programming and operation. To the Seller’s knowledge, none of the Company
Products contains any virus, computer instructions, circuitry or other
technological means intended to disrupt, damage or interfere with operation of
applicable software.

(s) Immediately following the Closing, the Company will not infringe upon, or
require any license or consent to use, any Intellectual Property of the Seller
in the conduct of the Business as currently conducted.

 

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  4.12  Material Contracts.

(a) Set forth on Section 4.12(a) of the Seller Disclosure Schedule are all of
the following Contracts (with remaining rights or obligations) either entered
into by the Company or entered into by the Seller primarily for the benefit of
the Business (collectively, together with the Contracts set forth in
Section 4.11(j)(i) and (ii) of the Seller Disclosure Schedule, the “Material
Contracts”):

(i) any Contracts with directors and officers (not related to equity
compensation or employment) of the Company or which involve any advance or loan
to any of the Company’s directors or officers;

(ii) employment, severance, change of control, retention, bonus, commission,
indemnification and any similar agreements with any Business Employee;

(iii) collective bargaining agreements;

(iv) leases or subleases, either as lessee or sublessee, lessor or sublessor, of
real property, personal property or intangibles, where the lease or sublease
provides for an annual rate in excess of $100,000;

(v) Contracts with customers or suppliers that require the receipt of, or
expenditure by, the Company of more than $100,000 since September 30, 2006
(excluding purchase orders entered into in the Ordinary Course of Business);

(vi) any other Contracts which provide for the receipt or expenditure of more
than $100,000 since September 30, 2006, except Contracts for the purchase or
sale of goods or services by the Company in the Ordinary Course of Business;

(vii) Contracts restricting in any manner the Company’s right to compete with
any other Person, or restricting the Company’s right to sell to or purchase from
any other Person;

(viii) any Contract of which the Seller has knowledge to which any employee,
consultant or independent contractor of the Company or the Business is bound
that in any manner purports to (A) restrict such employee’s consultant’s or
independent contractor’s freedom to engage in any line of business or activity
consistent with the Business, or (B) assign to any other Person such employee’s
consultant’s or independent contractor’s right to any Company Intellectual
Property;

(ix) Contracts for the purchase or sale of assets or for any merger, acquisition
or disposition of a business, in each case outside of the Ordinary Course of
Business;

(x) any joint venture, partnership or similar type Contract involving a sharing
of profits, losses, costs or liabilities by the Company with any other Person;

 

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(xi) loan or credit agreements, pledge agreements, notes, security agreements,
mortgages, debentures, indentures, factoring agreements or letters of credit;

(xii) Contracts of agency, representation, distribution, or franchise that
cannot be cancelled by the Company without payment or penalty upon notice of 30
days or less;

(xiii) guaranties, performance, bid or completion bonds, or surety agreements
not made in the Ordinary Course of Business; and

(xiv) any other Contract that the Seller believes is material to the Business or
the Company.

(b) The Seller has made available to the Purchaser true and complete copies of
all of the Material Contracts. With respect to the Material Contracts, (i) each
Material Contract is valid, binding and enforceable in accordance with its
terms; (ii) the Company is not in material default under or in material
violation of any provision of any of the Material Contracts; (iii) neither the
Company nor the Seller has received notice of alleged nonperformance or other
noncompliance with respect to its obligations under any of the Material
Contracts, which alleged nonperformance or other noncompliance is currently
unresolved, nor any notice that is currently unresolved that any of the Material
Contracts may be totally or partially terminated or suspended by any other party
thereto; and (iv) to the Seller’s knowledge, no other party to any Material
Contract is in breach or noncompliance with its obligations under such Material
Contract. To the Seller’s knowledge, there are no pending renegotiations of any
of the Material Contracts and all new Contracts which are being actively
negotiated and which would be required to be listed on Section 4.12(a) of the
Seller Disclosure Schedule are so listed and indicated as “pending.”

 

  4.13  Customers, Suppliers, Etc.

(a) Section 4.13(a) of the Seller Disclosure Schedule sets forth the names of
the ten largest customers of the Company as measured by the aggregate revenue
for the twelve months ended on September 28, 2007 and the nine-month period
ended on the Balance Sheet Date, and the five largest suppliers of the Company
as measured by aggregate cost of items or services purchased for the twelve
months ended on September 28, 2007 and the nine-month period ended on the
Balance Sheet Date.

(b) In the six months preceding the date hereof, no customer listed in
Section 4.13(a) of the Seller Disclosure Schedule has canceled or terminated its
relationship with the Company or the Seller with respect to the Business, or to
the Seller’s knowledge, provided notice to the Seller that it intends to
substantially decrease the aggregate annual amount of Company Products it
purchases from the Business, including as a result of designing the Company
Products out of its products or offerings. There is no existing dispute between
the Company or the Seller, on the one hand, and any customer listed in
Section 4.13(a) of the Seller Disclosure Schedule, on the other hand, that the
Seller expects to substantially decrease the aggregate annual amount of Company
Products purchased from the Business. To the Seller’s knowledge, no supplier has
threatened to stop doing Business with the Company.

 

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  4.14  Product and Service Warranties.

The Company does not provide a guaranty, warranty or other indemnity beyond the
standard warranty set forth in Section 4.14 of the Seller Disclosure Schedule or
as set forth in a Material Contract delivered to the Purchaser.

 

  4.15  Tax Matters.

(a) All Tax Returns required to be filed by the Seller in respect of the
Business or the Company on or prior to the Closing Date have been or will be
duly and timely filed in all required jurisdictions (taking into account all
applicable extensions), and all such Tax Returns are or will be true, correct
and complete in all material respects. The Seller and the Company have duly and
timely paid or properly accrued all Taxes and other charges for which the
Company is or may be liable (whether or not shown on or required to be shown on
any Tax Return). There are no Liens for Taxes on assets of the Company or the
Business except for Permitted Liens.

(b) No audit or other proceeding by any Governmental Authority is pending or, to
the Seller’s knowledge, threatened with respect to any Taxes due from the
Company or related to the Business or any Tax Return filed or required to be
filed by the Seller in respect of the Business or the Company. No assessment or
deficiency for any Tax has been proposed or, to the Seller’s knowledge,
threatened against the Seller in respect of the Business or the Company. There
are no unexpired waivers of any statute of limitations with respect to any Taxes
for which the Company may be liable.

(c) None of the Company, the Seller or any of the Seller’s ERISA Affiliates has
made any payments to any Business Employee or is a party to a contract,
agreement or arrangement with any Business Employee to make payments
individually or considered collectively with any other such agreements, plans,
arrangements or other contracts, that will, or could reasonably be expected to,
be characterized as a “parachute payment” within the meaning of
Section 280G(b)(1) of the Code. There is no agreement, plan, arrangement or
other contract by which the Company, the Seller or any of its ERISA Affiliates
is bound to compensate any Business Employee for excise taxes paid pursuant to
Section 4999 of the Code.

 

(d) Each “nonqualified deferred compensation plan” (as that term is defined in
Section 409A(d)(1) of the Code), if any, sponsored or maintained by the Company,
Seller or any ERISA Affiliate on or after January 1, 2005 in which a Business
Employee participates has been operated since January 1, 2005 in good faith
compliance with Section 409A of the Code and the Treasury Regulations
thereunder, to the extent applicable. No deferred compensation plan sponsored or
maintained by the Company, the Seller or any ERISA Affiliate in which a Business
Employee participates and existing prior to January 1, 2005, which would
otherwise be subject to Section 409A, has been “materially modified” at any time
after October 3, 2004.

(e) The Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.

 

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(f) The Company is not a party to any Tax allocation, sharing or similar
agreement. The Company (i) has never been a member of an affiliated group filing
a consolidated income Tax Return under Section 1501 of the Code or any similar
provision of state, local, foreign or other law (other than a group the common
parent of which was the Seller) and (ii) has no present liability for Taxes of
any Person (other than its own) and will not have any liability for Taxes
attributable to the Seller under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local, foreign or other law).

(g) The Seller in respect of the Business and the Company has withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any independent contractor, creditor, stockholder or other
third party.

(h) Neither the Seller nor the Company has engaged in a “reportable
transaction,” within the meaning of Treasury Regulations Section 1.6011-4(b).

(i) No written claim has ever been made by a tax authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction.

(j) The Company is in compliance in all material respects with all applicable
transfer pricing laws and regulations, including the maintenance of
contemporaneous documentation substantiating the transfer pricing practices and
methodology of the Company.

(k) The Company has not distributed stock of another Person, or has had its
stock distributed by another Person, in a transaction that was purported or
intended to be governed in whole or in part by Section 355 or 361 of the Code.

(l) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any:

(i) change in method of accounting made prior to the Closing for a taxable
period ending on or prior to the Closing Date pursuant to Section 481 of the
Code (or any similar provision of state, local, foreign or other law);

(ii) “closing agreement” as described in Section 7121 of the Code (or any
similar provision of state, local, foreign or other law) executed on or prior to
the Closing;

(iii) intercompany transaction or excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any similar provision of state,
local, foreign or other law) in connection with a transaction consummated prior
to the Closing;

(iv) installment sale or open transaction disposition made on or prior to the
Closing; or

(v) prepaid amount received on or prior to the Closing.

 

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  4.16  Legal Proceedings.

There is no action, suit, claim or proceeding (collectively, “Actions”) of any
nature pending, or to the Seller’s knowledge, threatened, against the Company or
the Business, their respective properties (tangible or intangible) or any of the
Company’s officers or directors (in their capacities as such).

 

  4.17  Employee Benefits.

(a) There are no Benefit Plans sponsored by the Company; and, immediately after
Closing, there will be (i) no Benefit Plans sponsored by the Seller or any of
its ERISA Affiliates (other than the Company) with respect to which the Company
will have any material liability or obligation on or after the Closing and
(ii) no Benefit Plans previously (but no longer) sponsored by the Company for
which the Company will have any material liability or obligation on or after the
Closing.

(b) From and after the Closing, any Benefit Plans sponsored by the Seller and
any of its ERISA Affiliates will no longer be available to any Business Employee
and, upon the Closing, all Business Employees shall cease to be eligible to
participate in the Benefit Plans of Seller and, as applicable, its ERISA
Affiliates.

(c) Neither Seller nor any of its ERISA Affiliates has ever maintained,
established, sponsored, participated in, contributed to (or been obligated to
contribute to) any (A) employee pension benefit plan (as defined in Section 3(2)
of ERISA) which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV
of ERISA or Section 412 of the Code, (B) multiple employer plan (within the
meaning of Section 4063 or 4064 of ERISA or Section 413 of the Code) which is
subject to ERISA, or (C) any multiemployer plan (as defined in Section 3(37) of
ERISA) which is subject to ERISA.

(d) Neither the Seller nor any of its ERISA Affiliates has any obligation to,
maintain, establish, sponsor, participate in, or contribute to any International
Employee Plan, except to the extent required by Applicable Law.

(e) Section 4.17(e) of the Disclosure Schedule contains a complete list of all
material Benefit Plans sponsored by the Seller and its ERISA Affiliates in which
Business Employees are eligible to participate. Seller and, as applicable, its
ERISA Affiliates, are in material compliance with the terms of each such Benefit
Plan and all applicable laws for each such Benefit Plan including ERISA and the
Code.

(f) No Benefit Plan (provides, or has any liability to provide, life insurance,
medical or other welfare benefits within the meaning of Section 3(1) of ERISA)
to any current or former Business Employee upon his or her retirement or
termination of employment for any reason, except as may be required by
Applicable Law, including COBRA, and neither Seller nor any of its ERISA
Affiliates has ever represented, promised or contracted (whether in oral or
written form) to any Business Employee (either individually or as a group) that
any such individual would be provided with life insurance, medical or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by Applicable Law.

 

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  4.18  Employees.

(a) Section 4.18(a) of the Disclosure Schedule lists as of the date hereof all
the employees of the Company or who are employed by the Seller or Affiliates of
the Seller and devote substantially all of their time working for the Business,
for each employee, the position and location of employment. As of the date of
this Agreement, no employee of the Company is on long-term disability leave or
extended absence. Except as otherwise set forth in Section 4.18(a) of the Seller
Disclosure Schedule, the employment of all of the employees is terminable at
will without prior notice.

(b) Neither the Seller nor the Company is a party to or bound by any collective
bargaining agreement or other labor union or foreign works council contract
applicable to Business Employees (each a “Company Collective Bargaining
Agreement”), and no Company Collective Bargaining Agreement is being negotiated
by the Seller or Company. As of the date of this Agreement, there is no labor
dispute, strike, grievance, work stoppage or other collective bargaining
disputes against the Company or the Business pending or, to the Seller’s
knowledge, threatened that would interfere with the Company or the operation of
the Business, nor since January 1, 2003, has the Seller with respect to the
Business Employees or the Company experienced any such labor dispute, strike,
grievance, work stoppage, or other collective bargaining disputes. As of the
date of this Agreement, to the Seller’s knowledge, neither the Company nor the
Business has committed any unfair labor practice in connection with the
operation of the Businesses, nor to the Seller’s knowledge, has any Person
complained of unfair labor practices.

(c) The Company (i) is in compliance in all material respects with Applicable
Law respecting employment, employment practices, terms and conditions of
employment and wages and hours, including classification of employment or wage
law exemption status, with respect to all workers, (ii) has withheld and
reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to all workers, (iii) is not
liable for any arrears of wages or any taxes or penalties or any penalty for
failure to comply with any of the foregoing and (iv) is not liable for payment
to any trust or other fund governed by or maintained by or on behalf of any
Governmental Authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the Ordinary Course of Business). There are no
pending or, to the Seller’s knowledge, threatened Actions or administrative
claims against the Seller or Company in respect of Business Employees: (u) with
respect to harassment, whether sexual or otherwise; (v) with respect to
negligence or other wrongdoing on the part of the Company or the Seller, whether
occurring on or off the Company or the Seller’s property; (w) under any workers’
compensation policy or long-term disability policy; (x) with respect to a
violation of any occupational safety or health standards; (y) with respect to a
charge of discrimination in employment or employment practices, for any reason,
including age, gender, race, religion or other legally protected category; or
(z) with respect to payment of wages, compensation or benefits.

 

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(d) To the knowledge of Seller, no Business Employee is in violation of any term
of any patent disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Seller or Company because of the nature of the
Business conducted by the Seller or Company or to the use of trade secrets or
proprietary information of others. To the knowledge of Seller, no substantial
group of Business Employees intends to terminate employment with the Seller or
the Company.

 

  4.19  Environmental Matters.

(a) The Company possesses all material Environmental Permits that are required
for the operation of the Business as currently conducted by the Company, and the
Company has complied in all material respects with such Environmental Permits.
Complete copies of such Environmental Permits, if any, have been delivered or
made available to the Purchaser. All of the Environmental Permits are in full
force and effect, and there is no actual or threatened proceeding to revoke any
such Environmental Permit.

(b) The Company and the Business have been and are in material compliance with
all applicable Environmental Laws.

(c) The Company has not received any written notice from any Governmental
Authority regarding any actual or alleged material violation of Environmental
Laws or Environmental Permits, including any investigatory, remedial, or
corrective obligations relating to the Company or its facilities arising under
Environmental Laws.

(d) Except in compliance with Environmental Laws and in a manner that would not
reasonably be expected to subject the Company to material liability, no
asbestos-containing materials, polychlorinated biphenyls, underground storage
tank, or landfill, impoundment or other disposal area containing Hazardous
Materials, is present on any real property owned, leased or operated by the
Company or were present on any other real property at the time it ceased to be
owned, leased, or operated by the Company or the Seller with respect to the
Leased Real Property.

(e) All waste materials generated by the Company have been properly stored,
transported, treated and disposed of in accordance with all applicable
Environmental Laws. Neither the Company nor the Seller has entered into any
agreement that may require it to guarantee, reimburse, pledge, defend, hold
harmless or indemnify any other party with respect to liabilities arising out of
Environmental Laws of the Company or the Business.

(f) The Seller made available for inspection by the Purchaser, all assessments
and investigations in the possession of the Company and the Seller concerning
possible non-compliance by the Company or the Seller with Environmental Laws or
the presence of Hazardous Materials on real property owned, leased, or operated
by the Company or the Seller with respect to the Leased Property at any time.

 

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  4.20  Related Party Transactions.

The Company is not party to any Contract with the Seller or any of the Company’s
or Seller’s current or former directors or officers, the Seller’s Affiliates or,
to the Seller’s knowledge, any immediate family member of any of such Persons,
or any trust, partnership or corporation in which any of such Persons has or has
had an interest (the “Related Parties”) other than normal employment
arrangements. No Related Party (other than the Seller and its Subsidiaries) has
or has had, directly or indirectly, (i) any interest in any entity which
furnished or sold, or furnishes or sells, services, products, or technology that
the Company furnishes or sells, or proposes to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to the Company,
any goods or services. The Company is not owed and does not owe any amount from
or to the Related Parties (excluding employee compensation and other ordinary
incidents of employment). No property or interest in any property that is
material to the Business as currently conducted is owned or leased by or to any
Related Party. All transactions pursuant to which any Related Party (other than
the Seller and its Subsidiaries) has purchased any services, products, or
technology from, or sold or furnished any services, products or technology to,
the Company have been on an arms-length basis on terms no less favorable to the
Company than would be available from an unaffiliated party.

 

  4.21  Insurance.

The Seller maintains insurance covering the Company and the Business in
customary forms and amounts. There is no claim by the Company or Business
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed or that the Company or Business has a reason to
believe will be denied or disputed by the underwriters of such policies or
bonds. There is no pending claim of which its total value (inclusive of defense
expenses) will exceed the policy limits. All premiums due and payable under all
such policies and bonds have been paid (or if installment payments are due, will
be paid if incurred prior to the Closing Date), and the Company and the Business
are otherwise in material compliance with the terms of such policies and bonds
(or other policies and bonds providing substantially similar insurance
coverage). The Company has not maintained, established, sponsored, participated
in or contributed to any self-insurance plan.

 

  4.22  Minute Books.

The minutes of the Company made available to the Purchaser contain complete and
accurate records of all actions taken, and summaries of all meetings held, by
the stockholders and the Board of Directors of the Company (and any committees
thereof) since March 18, 2002.

 

  4.23  Brokers’ Fees.

No investment banker, broker, finder, consultant or intermediary, other than
Chela Capital Partners, the fees and expenses of which will be paid by the
Seller, is entitled to any investment banking, broker, finder’s or similar fee
or commission in connection with this Agreement or the transactions contemplated
hereby based upon arrangements made by or on behalf of the Company. The Contract
currently in effect between the Seller and Chela Capital Partners relating to
the transactions contemplated hereby does not give rise to any obligations that
bind or will bind the Company or the Business as of or following the date
hereof.

 

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  4.24  Accounts Receivable.

To the Seller’s knowledge, the accounts receivable of the Company are not
subject to any set-off or counterclaim or agreement for deduction or discount,
other than any amount for which the Company has reflected in recording the
receivable or a reserve has been established in accordance with GAAP
consistently applied (as shown on the Current Balance Sheet or, for receivables
arising subsequent to the Balance Sheet Date, as reflected on the books and
records of the Company).

 

  4.25  FDA Compliance.

(a) The operation of the Company and the Business, including the import, export,
testing, development, processing, packaging, labeling, storage, marketing, and
distribution of all Company Products, at all times has been in material
compliance with all Applicable Law, Company Permits and orders administered by
the FDA for Company Products.

(b) The Company and the Business are not subject to any enforcement proceedings
by the FDA and, to the Seller’s knowledge, no such proceedings have been
threatened. There is no civil, criminal or administrative action, suit, demand,
claim, complaint, hearing, investigation, demand letter, warning letter,
untitled letter or proceeding pending by the FDA against the Company or the
Business. There has not been any violation of Applicable Law by the Company or
the Business in its submissions, record keeping and reports to the FDA that
could reasonably be expected to require or lead to investigation, corrective
action or regulatory enforcement action. To the Seller’s knowledge, there is no
civil or criminal proceeding relating to the Company, the Company Products or
the Business which involves a matter within FDA’s jurisdiction. To the Seller’s
knowledge, no director, officer, employee, consultant or agent of the Company or
the Business has: (i) made any untrue statement of material fact or fraudulent
statement to the FDA; (ii) failed to disclose a material fact required to be
disclosed to the FDA; or (iii) committed an act, made a statement, or failed to
make a statement that would reasonably be expected to provide the basis for the
FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 4691 (September
10, 1991) or substantially similar document. To the Seller’s knowledge, no
director, officer, employee, consultant or agent of the Company or the Business
has been convicted of any crime or engaged in any conduct for which debarment is
mandated or permitted by 21 U.S.C. §335a.

(c) No vigilance report or medical device report with respect to the Company
Products has been reported by the Company or the Business, and to the Seller’s
knowledge, no vigilance report or medical device report is under investigation
by the FDA with respect to the Company Products.

 

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(d) All preclinical and clinical trials in respect of the Company Products or
the Business being conducted by or on behalf of the Company or the Business that
have been submitted to any Governmental Authority, including the FDA and its
counterparts worldwide, in connection with any Company Permit, are being or have
been conducted in compliance in all material respects with the required
experimental protocols, procedures and controls pursuant to Applicable Law,
including 21 C.F.R. Parts 11, 50, 54, 56, 58, 812 and 814. Neither the Company
nor the Business have received any notices, correspondence or other
communications in respect of the Business from the FDA requiring the termination
or suspension of any clinical trials conducted by or on behalf of the Company or
the Business or in which the Company or the Business has participated.

(e) The manufacture of Company Products by the Company and the Business is being
conducted in compliance with all Applicable Law including the FDA’s Quality
Systems Regulation at 21 CFR Part 820 for products sold in the United States,
and the respective counterparts thereof promulgated by Governmental Entities in
countries outside the United States.

 

  4.26  Healthcare Compliance.

(a) There is no pending, nor to the Seller’s knowledge, threatened, proceeding,
informational inquiry or investigation under Medicare, Medicaid or any other
government-sponsored health care program (collectively, “Government Programs”)
involving the Company or the Business, nor is the Seller aware of any pending,
or to the Seller’s knowledge, threatened, proceeding, informational inquiry or
investigation under any private third party health care insurance program
(collectively, “Private Insurance Programs”) involving the Company or the
Business.

(b) To the Seller’s knowledge, neither the Company nor the Business has arranged
with or contracted with (by employment or otherwise) any person who is excluded
from participation in any Government Program for the provision of items or
services for which payment may be made under any such Government Program. None
of the officers, directors, agents or managing employees (as such term is
defined in 42 U.S.C. Section 1320a-5(b)) of the Company or the Business has been
excluded from any Government Program or been subject to sanction pursuant to
42 U.S.C. Section 1320a-7a or 1320a-8 or been convicted of a crime described at
42 U.S.C. Section 1320a-7b.

(c) The Company and the Business are not in violation of applicable Healthcare
Laws. For purposes of this Agreement, “Healthcare Laws” means (i) all federal
and state fraud and abuse laws, including the federal Anti-Kickback Statute (42
U.S.C. 1320a-7(b)), the State Law (42 U.S.C. § 1395nn and § 1395 (q)), the
Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the Civil False Claims Act
(31 U.S.C. § 3729 et seq.), the Administrative False Claims Law (42 U.S.C.
§ 1320a-7b(a), the exclusion laws (42 U.S.C. § 1320a-7), the Civil monetary
penalty laws (42 U.S.C. § 1320a-7a) and the regulations promulgated pursuant to
such statutes; (ii) the administrative simplification provisions of the Health
Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), the
regulations promulgated thereunder and comparable state privacy and security
laws; (iii) Medicare (Title XVIII of the Social Security Act) and the
regulations promulgated thereunder; and (iv) Medicaid (Title XIX of the Social
Security Act) and the regulations promulgated thereunder.

 

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  4.27  Export Control Laws.

The Company has at all times conducted its export transactions in accordance
with (1) all applicable U.S. export and re-export controls, including the United
States Export Administration Act and Regulations and Foreign Assets Control
Regulations and (2) all other applicable import/export controls in other
countries in which the Company conducts business. Without limiting the
foregoing:

(a) The Company has obtained all necessary export licenses, license exceptions
and other consents, notices, waivers, approvals, orders, authorizations,
registrations, declarations, classifications and filings with any Governmental
Authority required for (i) the export and re export of products, services,
software and technologies and (ii) releases of technologies and software to
foreign nationals located in the United States and abroad (“Export Approvals”).

(b) The Company is in compliance with the terms of all applicable Export
Approvals.

(c) There are no pending or, to the Seller’s knowledge, threatened Actions
against the Company with respect to such Export Approvals.

(d) Section 4.27(d) of the Seller Disclosure Schedule sets forth the true,
complete and accurate export control classifications applicable to the Company
Products, services, software and technologies of the Company. Except for exports
or re-exports to terrorist or embargoed countries (e.g., Cuba, North Korea,
Syria, Sudan, and Iran), no Export Approvals for the transfer of export licenses
to the Purchaser are required for Company Products based on their classification
as set forth in Section 4.27(d) of the Seller Disclosure Schedule, or such
Export Approvals can be obtained without material cost.

 

  4.28  Foreign Corrupt Practices Act.

Neither the Company nor the Seller in the context of operating the Business
(including any of their respective officers, directors, agents, employees or
other Person associated with or acting on their behalf) have, directly or
indirectly, taken any action which would cause it to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations
thereunder (the “FCPA”), used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
made, offered or authorized any unlawful payment to foreign government officials
or employees, whether directly or indirectly, or made, offered or authorized any
bribe, rebate, payoff, influence payment, kickback or other similar unlawful
payment, whether directly or indirectly.

 

  4.29  Projections; Other Representations.

In connection with the Purchaser’s investigation of the Business, the Purchaser
and its Affiliates may have received from or on behalf of the Seller and the
Company certain estimates, projections or forecasts, including, without
limitation, any projections of revenues, income from operations or cash flows.
The Purchaser acknowledges that there are uncertainties inherent in

 

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attempting to make such estimates, projections and forecasts, and the Purchaser
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and forecasts and future plans so
furnished or made available to it (including, without limitation, the
reasonableness of the assumptions underlying such estimates, projections,
forecasts and plans). Accordingly, the Seller makes no representation or
warranty with respect to such estimates, projections, forecasts and plans
(including, without limitation, the reasonableness of the assumptions underlying
such estimates, projections, forecasts and plans). The Seller makes no other
representation or warranty with respect to the Company or the Business except as
specifically set forth in this Agreement.

 

  4.30  Representations Complete.

None of the representations or warranties made by the Seller (as modified by the
Seller Disclosure Schedule) in this Agreement, and none of the statements made
in any exhibit, schedule or certificate furnished by the Seller pursuant to this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.

ARTICLE V – REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser and NDS, jointly and severally, represent and warrant to the
Seller that the statements contained in this Article V are true and correct.

 

  5.1 Organization, Qualification and Corporate Power.

Each of the Purchaser and NDS is duly organized, validly existing, and in good
standing, as applicable, under the laws of the jurisdiction of its organization,
with full limited liability company power and authority to conduct its business
as currently conducted and to own and use the properties owned and used by it.
Each of the Purchaser and NDS is duly qualified to do business and is in good
standing, as applicable, in each jurisdiction in which the nature of the
business conducted by it or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
applicable, would not have a material adverse effect on their ability to
consummate the transactions contemplated by this Agreement.

 

  5.2 Enforceability.

All limited liability company action on the part of each of the Purchaser and
NDS and its officers, managers and members necessary for the authorization,
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Purchaser and NDS is a party and the performance of all
of the Purchaser’s and NDS’ obligations under this Agreement and the other
Transaction Documents to which the Purchaser or NDS is or will be a party has
been taken or will be taken as of or prior to the Closing. This Agreement has
been, and each of the other Transaction Documents to which each of the Purchaser
and NDS is a party at the Closing will have been, duly executed and delivered by
the Purchaser and NDS, and this Agreement is, and each of the other Transaction
Documents to which the Purchaser and NDS is or will be a party will be (assuming
the due authorization, execution and delivery by the other

 

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parties hereto and thereto) at the Closing a legal, valid and binding obligation
of the Purchaser and NDS, enforceable against the Purchaser and NDS in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally and by the
principles of equity regarding the availability of remedies.

 

  5.3 No Violations; Consents.

(a) The execution and delivery of this Agreement and the other Transaction
Documents by the Purchaser and NDS does not, and the performance by the
Purchaser and NDS of its obligations under this Agreement and the other
Transaction Documents will not: (i) conflict with or violate any provision of
the governing documents of the Purchaser or NDS, (ii) conflict with or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in creation of any Lien upon any
properties or assets of the Purchaser, the Company or NDS, or give to any Person
any right of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any Contract to which the Purchaser
or NDS is a party or by which any material properties or assets of the Purchaser
is bound, or (iii) subject to receipt of the Required Governmental Approvals,
result in a material violation of any law or any judgment, decree, order,
regulation or rule of any court or other Governmental Authority applicable to
the Purchaser or NDS that would materially and adversely impact the Purchaser’s
ability to consummate the Stock Purchase or timely perform its obligations under
this Agreement and the other Transaction Documents or that would materially
delay the consummation of the Stock Purchase or the Delayed Payment.

(b) The execution and delivery of this Agreement and the other Transaction
Documents by the Purchaser and NDS does not, and the performance of this
Agreement and the other Transaction Documents by each of the Purchaser and NDS
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby will not, require any consent,
approval, authorization or permit of, or filing by the Purchaser or NDS with or
notification by the Purchaser to, any Person.

 

  5.4 Compliance with Law.

Each of the Purchaser and NDS (i) is not in conflict with, or in default or in
violation of any decree, order or arbitration award and (ii) has not been in any
material respect in conflict with, or in default or in violation of, any law,
statute, rule or regulation of any Governmental Authority applicable to the
Purchaser or NDS or by which the Purchaser or NDS is bound or affected
(“Purchaser Applicable Law”). Neither the Purchaser nor NDS has received written
notice or communication from any Governmental Authority alleging noncompliance
with any Purchaser Applicable Law. There is no judgment, injunction, order or
decree of a Governmental Authority binding upon the Purchaser or NDS that would
affect the transactions contemplated by or obligations under this Agreement.
Neither the Purchaser nor NDS has received written notice of, and the Purchaser
has no knowledge of, any investigation of the Purchaser by any Governmental
Authority with respect to any alleged failure or compliance with any Purchaser
Applicable Law.

 

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  5.5 Brokers’ Fees.

No investment banker, broker, finder, consultant or intermediary is entitled to
any investment banking, broker, finder’s, or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of the Purchaser or NDS.

 

  5.6 Litigation.

No Action is pending or, to the Purchaser’s knowledge, threatened against the
Purchaser or NDS, that questions the validity of this Agreement or any of the
Transaction Documents to which the Purchaser or NDS is a party or the
transactions contemplated by this Agreement or any such Transaction Documents,
and (ii) neither the Purchaser nor NDS is subject to any order, writ, judgment,
injunction, decree, determination or award that prohibits or restricts the
transactions contemplated by this Agreement or any such Transaction Document.
There are no such Actions pending or threatened against the Purchaser or NDS
that would materially and adversely impact the ability of the Purchaser or NDS
to consummate the Stock Purchase or timely make the Delayed Payment.

 

  5.7 Independent Investigation.

The Purchaser has conducted an independent investigation of the Business and the
financial condition, results of operations, assets, liabilities, properties and
prospects of the Company and, in making its determination to proceed with the
transactions contemplated by this Agreement, the Purchaser has relied solely on
the results of such investigation and on the representations and warranties of
the Seller expressly set forth in Article IV of this Agreement, including the
Seller Disclosure Schedule.

 

  5.8 Financial Statements; No Undisclosed Liabilities.

(a) The Purchaser or NDS has delivered to the Seller the audited consolidated
financial statements (including an income statement, statement of cash flow and
balance sheet) of NDS for the two years ended December 31, 2007 and the
unaudited consolidated financial statements for the six-month(s) ended June 30,
2008 (collectively, the “Purchaser Financial Statements”). The Purchaser
Financial Statements have been prepared in accordance with GAAP consistently
applied during the periods covered thereby (unless as otherwise disclosed
therein) and fairly present in all material respects the financial position and
the results of operations of the Purchaser as of the dates and during the
periods indicated therein, except with respect to the unaudited Purchaser
Financial Statements for (i) normal year-end adjustments that are not,
individually or in the aggregate, material, and (ii) the omission of
accompanying notes and schedules.

(b) Except as reflected in the Purchaser Financial Statements, the Purchaser has
no liabilities, obligations, indebtedness, expenses, claims, guarantees or
endorsements of any type (whether accrued, absolute, contingent, matured,
unmatured or otherwise) that are required by GAAP to be set forth on the
consolidated balance sheet of NDS (collectively, “Purchaser Liabilities”),
except for Purchaser Liabilities incurred since the Balance Sheet Date in the
ordinary course of the business of NDS (and its Subsidiaries) as conducted by
NDS (and its Subsidiaries), consistent with past practice during the period
covered by the Purchaser Financial Statements or that are not material.

 

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  5.9 Financing.

The Purchaser has, or has (or will have) access to through one or more
Affiliates, sufficient funds to timely make the Delayed Payment.

 

  5.10  Solvency.

Immediately after giving effect to the Stock Purchase, the Purchaser and NDS
shall be able to pay their debts as they become due and shall own property
having a fair saleable value greater than the amounts required to pay their
debts (including a reasonable estimate of the amount of all contingent
liabilities). Immediately after giving effect to the Stock Purchase, each of the
Purchaser and NDS shall have adequate capital to carry on its business. No
transfer of property is being made and no obligation is being incurred in
connection with the Stock Purchase with the intent to hinder, delay or defraud
either present or future creditors of the Purchaser or NDS.

 

  5.11  No Material Adverse Effect.

Since June 30, 2008, neither the Purchaser nor NDS has had any change,
development, fact, condition, event, occurrence or effect with respect to the
Purchaser, NDS and NDS’ Subsidiaries, taken as a whole, that, individually or in
the aggregate, would reasonably be expected to have a material adverse effect on
the assets, business, properties, operations, condition (financial or otherwise)
or results of operations of the Purchaser or NDS, taken as a whole, or would
reasonably be expected to materially delay or prevent the consummation of the
transactions contemplated by this Agreement or the timely payment of the Delayed
Payment.

 

  5.12  Capitalization.

The membership interests in the Purchaser are not subject to preemptive rights
created by statute, the organizational document of the Purchaser, or any
agreement to which the Purchaser is a party or by which it is bound, and are
100% owned by NDS free of any Lien. The Purchaser has no other interests
authorized, issued or outstanding. There are no options, rights or agreements to
which any of the Purchaser or NDS is a party or by which any of them may be
bound obligating any of them (a) to issue, deliver or sell, or refrain from
issuing, delivering or selling, any membership interests in the Purchaser, or to
grant, extend or enter into any such option, right or agreement, (b) to
repurchase, redeem or otherwise acquire, or to refrain from repurchasing,
redeeming or otherwise acquiring, any membership interests in the Purchaser, or
to grant, extend or enter into any such option, right or agreement or (c) to
vote, or to refrain from voting, any membership interests in the Purchaser.

 

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ARTICLE VI – CONDITIONS TO CLOSING

 

  6.1 Closing Deliverables to the Purchaser.

At the Closing, the Seller shall cause to be delivered to the Purchaser each of
the following:

(a) Seller Closing Certificate. The Purchaser shall have received a certificate
dated the Closing Date and executed by a senior officer of the Seller addressing
the accuracy of the representations and warranties and compliance with
covenants, such certificate in form and substance reasonably satisfactory to the
Purchaser.

(b) Release of Liens. Evidence that all Liens set forth in Section 4.6 or
Section 4.9 of the Seller Disclosure Schedule and any Liens with respect to
Intellectual Property have been released.

(c) Termination of Participating Employer Status. Effective no later than the
day immediately preceding the Closing Date, the Seller and its ERISA Affiliates,
as applicable, shall each terminate the participation of the Company and the
Company shall withdraw from (i) any and all group severance, separation or
salary continuation plans, programs or arrangements and (ii) any and all plans
sponsored by the Company or any ERISA Affiliate and intended to include a Code
Section 401(k) arrangement pursuant to resolutions of the board of directors of
the Seller (the “Participation Termination”).

(d) Resignation of Officers and Directors. The Purchaser shall have received a
duly executed resignation and release letter in a form reasonably satisfactory
to the Purchaser from each of the officers and directors of the Company
effective as of the Closing.

(e) Other Closing Deliveries. The Seller shall have delivered to the Purchaser
the following:

(i) Secretary’s Certificate. A certificate, dated as of the Closing Date, signed
by the secretary or an assistant secretary of the Seller certifying as to
(i) the incumbency of officers executing this Agreement and the Transaction
Documents and (ii) the resolutions of the board of directors of the Seller
authorizing the execution, delivery and performance by the Seller of this
Agreement and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.

(ii) Certification of Non-Foreign Status. An affidavit from the Seller dated as
of the Closing Date, in the form required by Treasury Regulations
Section 1.1445-2(b)(2) and signed under penalties of perjury, stating that the
Seller is not a foreign person for purposes of Sections 897 and 1445 of the
Code.

(iii) Material Consents. The Seller shall have obtained and delivered to the
Purchaser the consent to assignment of the Contracts listed on Schedule 6.1(e).

(iv) Transition Services Agreement. The Seller shall have executed and delivered
to the Purchaser the Transition Services Agreement.

 

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(v) Certificates of Good Standing. The Purchaser shall have received a long-form
certificate of good standing from the Secretary of State of the State of
Delaware which is dated within two Business Days prior to Closing with respect
to the Company. The Purchaser shall have received a Certificate of Status of
Foreign Corporation (or equivalent) of the Company issued by the Secretary of
State of the State of Massachusetts dated within two Business Days prior to the
Closing.

 

  6.2 Closing Deliverables of the Purchaser.

On or at the Closing, the Purchaser shall cause to be delivered each of the
following:

(a) Transition Services Agreement. The Purchaser shall have executed and
delivered to the Seller the Transition Services Agreement.

(b) Note. The Purchaser and the Company shall have executed and delivered to the
Seller the Note.

(c) Purchaser Closing Certificate. The Seller shall have received certificates
dated the Closing Date and executed by a senior officer of the Purchaser and NDS
addressing the accuracy of the representations and warranties and compliance
with covenants, such certificate in form and substance satisfactory to the
Seller.

(d) Release of Liens. Evidence of all Liens set forth in Section 4.6 or
Section 4.9 of the Seller Disclosure Schedule and any Liens with respect to
Intellectual Property shall have been released.

(e) Secretary Certificates. The Purchaser shall have delivered Certificates,
dated as of the Closing Date, signed by the secretary or an assistant secretary
certifying as to (i) the incumbency of officers executing this Agreement and the
Transaction Documents, and (ii) the resolutions of the Purchaser’s governing
bodies authorizing the execution, delivery and performance by the Purchaser of
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.

(f) Material Consents. The Seller shall have received the Material Consents
listed on Schedule 6.1(e).

ARTICLE VII – COVENANTS

 

  7.1 Post-Closing Covenants.

From and after the Closing Date, the parties covenant and agree as follows in
this Section 7.1.

(a) Continuation of Employee Benefits.

(i) As of the Closing Date, the Purchaser shall provide each Continuing Employee
who continues to be employed after the Closing Date with the Purchaser or any of
its Subsidiaries (and employees of the Seller who are hired by the Purchaser or
any of its Subsidiaries (including the Company) in connection with the
transactions contemplated herein),

 

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with at least the same base salary or wage levels as in place immediately prior
to the Closing by the Seller or the Company, as applicable, and, at a minimum,
with the retirement benefits and primary group health benefits, including, but
not limited to, medical, dental and vision benefits, similar to those maintained
by the Purchaser and its Subsidiaries and that are offered by the Purchaser and
its Subsidiaries to its similarly-situated employees; provided that, nothing
herein is intended to result in a duplication of benefits for any Continuing
Employee or to bind the Purchaser or any of its Subsidiaries to sponsor or
maintain any employee benefit plan, program or policy.

(ii) PTO for Continuing Employees (other than the Selected Employees) shall be
carried forward by the Company and the Seller shall not have liability for such
PTO except as set forth in Section 3.1(a). The Seller shall pay all of the PTO
for the Selected Employees.

(iii) For purposes of determining vesting, eligibility to participate, and
entitlement to benefits where length of service is relevant under any employee
benefit plan or arrangement of Purchaser or its affiliates for which Continuing
Employees become eligible (other than a defined benefit plan, as such term is
defined in Section 414(j) of the Code), the Purchaser and its affiliates shall
provide Continuing Employees with service credit under such employee benefit
plans and arrangements (the “Purchaser Benefit Plans”) for their period of
service with the Company prior to the Closing Date, except where doing so would
cause a duplication of benefits. The Purchaser shall use its commercially
reasonable efforts to cause any and all pre-existing condition (or actively at
work or similar) limitations, eligibility waiting periods and evidence of
insurability requirements under any group health plans to be waived with respect
to such Continuing Employees and their eligible dependents and shall provide
them with credit for any co-payments, deductibles, out-of-pocket expenses, and
offsets (and similar payments) made during the plan year in which the Closing
Date occurs for the purposes of satisfying any applicable deductible,
out-of-pocket, or similar requirements under the Purchaser Benefit Plans.

(iv) On or as soon as administratively practicable after the Closing Date, the
Seller shall transfer to the Purchaser (or such other Person(s) a the Purchaser
may designate) (A) the health care spending accounts and the dependent care
spending accounts of all Continuing Employees who continue to be employed after
the Closing Date with the Purchaser or any of its Subsidiaries (and employees of
the Seller who are hired by the Purchaser or any of its Subsidiaries (including
the Company) in connection with the transactions contemplated herein) under the
Planar Systems, Inc. Flexible Benefits Plan (such plan is hereinafter referred
to as the “Flexible Benefits Plan” and such accounts are hereinafter referred to
collectively as the “FSAs”) and the Purchaser shall assume all liabilities
related thereto, and (B) a cash payment equal to the amount by which the
aggregate salary reductions (and other contributions) made for the plan year in
which the Closing Date occurs (the “2008 Plan Year”) by or on behalf of
Continuing Employees under the FSAs on or before the Closing Date exceed the
aggregate claims for the 2008 Plan Year paid to Continuing Employees under the
FSAs on or before the Closing Date; provided, however, that if the aggregate
salary reductions (and other contributions) made for the 2008 Plan Year by (or
on behalf of) Continuing Employees under the FSAs on or before the Closing Date
are exceeded by the aggregate claims for 2008 Plan Year paid to Continuing
Employees under the FSAs on or before the Closing Date, the Purchaser shall

 

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transfer to the Seller a cash payment equal to the amount of such deficit.
Within a reasonable period of time after the date of this Agreement, the Seller
shall provide to the Purchaser copies of the 2008 Plan Year Flexible Benefits
Plan elections of all Continuing Employees. As soon as administratively
practicable after the Closing Date, Seller shall provide the Purchaser with the
calculation of the amount to be transferred pursuant to clause (B) above.

(b) Tax Matters.

(i) The Seller shall prepare or cause to be prepared consistent with past
practice in respect of the Company and file or cause to be filed all
consolidated, combined, or unitary Tax Returns of the Seller or its Affiliates
that include the Company, and shall pay or cause to be paid (and shall indemnify
Purchaser against) all such Taxes to which such Tax Returns relate or that are
attributable to a Pre-Closing Tax Period including any liability arising under
Treasury Regulations Section 1.1502-6 or any similar provision of Applicable
Law.

(ii) The Purchaser shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns (other than Tax Returns described in clause (i)) for the
Company for Tax periods ending on or before the Closing Date, and any Straddle
Periods, that are required to be filed after the Closing Date, and shall pay or
cause to be paid all Taxes to which such Tax Returns relate. Such Tax Returns
shall be prepared in a manner consistent with past practices of the Company. The
Purchaser shall provide all such Tax Returns to the Seller for review and
comment at least fifteen (15) days prior to the due date for filing such Tax
Returns (including any applicable extensions), and shall consider in good faith
any reasonable comments of the Seller with respect to such Tax Returns. The
Seller shall reimburse the Purchaser for all such Taxes shown on such Tax
Returns of the Company that relate to a Pre-Closing Tax Period, except to the
extent such Taxes were or are to be taken into account in computing Final
Working Capital pursuant to Section 3.2.

(iii) With respect to Straddle Periods, Taxes shall be allocated between the
period ending on the Closing Date and the period beginning after the Closing
Date, (A) in the case of Taxes based on or measured by income or receipts of the
Company, on the basis of an interim closing of the books as of the close of
business on the Closing Date, and (B) in the case of any other Tax of the
Company, pro rata on the basis of the number of days in such Tax period.

(iv) The Purchaser, as and to the extent reasonably requested by the Seller, and
the Seller, as and to the extent reasonably requested by the Purchaser, shall,
and shall cause the Company to, (A) cooperate fully with each other in
connection with, and make available to each other in a timely fashion, such data
and other information as may reasonably be required for the preparation and
filing of such Tax Returns and any audit, litigation or other proceeding with
respect to Taxes, and (B) preserve such data and other information until the
expiration of any applicable limitation period with respect to Taxes to which
such data or information relates. The Seller shall control the conduct of,
through its counsel, any audit or administrative or judicial proceeding
involving any Taxes for which the Seller would have exclusive liability
hereunder (either directly or by way of indemnification); provided, however,
that the Seller shall not settle any audit or proceeding with respect to Taxes
that could have the effect of increasing the Tax liability of the Purchaser for
any Post-Closing Tax Period of the

 

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Company without the prior written consent of the Purchaser (which shall not be
unreasonably withheld, delayed or conditioned). The Purchaser shall control all
other audit or administrative or judicial proceedings with respect to Taxes of
the Company or in respect of the Business, including, without limitation, with
respect to any Straddle Period; provided, however, that the Purchaser shall not
settle any such audit or proceeding with respect to Taxes for which the Seller
would have liability hereunder (either directly or by way of indemnification)
without the prior written consent of the Seller (which shall not be unreasonably
withheld, delayed or conditioned). The Purchaser shall not (and shall not cause
or permit the Company to) file any amended return for any Pre-Closing Tax Period
without the written consent of the Seller (which shall not be unreasonably
withheld, delayed or conditioned). Notwithstanding anything to the contrary
herein, in the event of a conflict between the procedures set forth in this
Section 7.1(b)(iv) and Section 8.3(b), the provisions of this Section 7.1(b)(iv)
shall govern.

(v) The amount of any Tax refund of the Company for any Tax period ending on or
before the Closing Date shall be for the account of the Seller, except to the
extent such refund was taken into account in computing Final Working Capital
pursuant to Section 3.2. The amount of any Tax refund of the Company for any Tax
period beginning after the Closing Date shall be for the account of the
Purchaser. The amount of any Tax refund of the Company for any Straddle Period
shall be equitably apportioned between the Purchaser and the Seller in
accordance with the allocation of such Taxes under clause (iii).

(vi) All transfer, documentary, sales, use, stamp and registration Taxes
incurred in connection with the purchase and sale of the Shares (collectively,
“Transfer Taxes”) shall be paid one-half by the Seller and one-half by the
Purchaser when due. The Purchaser shall cause to be filed all necessary Tax
Returns and other documentation with respect to all such Transfer Taxes, and, if
required by Applicable Law, the Seller shall join in the execution of any such
Tax Returns and other documentation.

(vii) All Tax sharing agreements or similar agreements with respect to or
involving the Company, if any, shall be terminated as of the Closing Date and,
shall have no further effect.

(c) Further Assurances. Each of the parties hereto shall execute such further
documents, and perform such further acts, as may be reasonably necessary by it
to consummate the transactions contemplated hereby, on the terms herein
contained, and to otherwise comply with the terms of this Agreement and
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. In furtherance of the foregoing, at any time and from
time to time after the Closing, at the Purchaser’s reasonable request and
without further consideration therefor, the Seller shall take such actions as
may reasonably be necessary by it in order to transfer, convey, assign and
deliver to the Purchaser or the Company, as applicable, in or to, all of the
assets and properties of the Business (including, for the avoidance of doubt,
any assets contributed by the Seller or Planar Systems OY to the Company) as
operated by the Company immediately prior to the Closing, consistent with this
Agreement, and otherwise to fulfill the Seller’s obligations under this
Agreement. Without limiting the generality of the foregoing, the Seller agrees
to, and the Seller shall, assist the Purchaser in any manner the Purchaser may
reasonably request in connection with (i) securing from certain third parties

 

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identified by the Purchaser to the Seller in writing prior to the Closing, such
third parties’ written consent to the assignment by the Seller to the Purchaser
and/or the Company of the existing confidentiality and/or non-disclosure
agreements between such third parties and the Seller relating to the Business
and (ii) assisting in the enforcement of any rights that the Seller, the Company
or the Purchaser may have in the event of such third parties’ breach of such
confidentiality and/or non-disclosure agreements.

(d) Access. In order to facilitate the resolution of any third party claims made
by or against or incurred by the Seller or the Company with respect to the
period prior to the Closing, after the Closing, upon reasonable notice, the
Purchaser or the Seller, as the case may be, shall (a) afford the Seller or the
Purchaser, as the case may be, and their respective agents and representatives
reasonable access, during normal business hours, to the offices, properties,
books and records of the Company and the Business related solely to such period
prior to the Closing, and (b) furnish to the Seller or the Purchaser, as the
case may be, and its agents and representatives such additional financial and
other information regarding the Company and the Business related solely to such
period prior to the Closing as the Seller or the Purchaser, as the case may be,
may from time to time reasonably request; provided, however, that such
investigation shall be conducted in a manner so as not to disrupt or interfere
with or damage any of the businesses or operations of the Seller, the Purchaser
or the Company and in no event shall the Seller, the Company or the Purchaser be
required to provide access to any information which might constitute a waiver of
the attorney-client or similar privilege.

(e) Audited Financial Statements; Unaudited Quarterly Financial Statements;
Financial Records. The Seller shall use its best efforts to prepare: (i) audited
financial statements and financial data, for the period from the end of the
Company’s last fiscal year to the Closing Date and the fiscal years ended
September 28, 2007 and September 29, 2006, to the extent and of the type
required by Regulation S-X in connection with any initial public offering by the
Purchaser or its Affiliates, and (ii) unaudited financial statements and
financial data for the four (4) most recent fiscal quarters ended June 27, 2008,
in each case reviewed by KPMG LLP or its affiliates in accordance with Statement
of Auditing Standards No. 100 (collectively, the “Post-Closing Financial
Statements”). Promptly following the Closing, the Seller shall commence work
preparing the Post-Closing Financial Statements, which shall be delivered to the
Purchaser promptly following the Closing, and in any event within four
(4) months following the Closing Date. The Purchaser shall pay for the first
$300,000 of expenses in connection with the preparation of the Post-Closing
Financial Statements and such expenses in excess of $300,000 shall be borne
equally by the Purchaser and the Seller. The Seller shall preserve and retain
all records, including all financial records, policies and procedures
customarily required for the completion of an audit by an independent accounting
firm, in its and its Affiliates possession (the “Financial Records”) following
the Closing and through completion of the audit contemplated by this
subparagraph (e), and shall provide the Purchaser access to all such Financial
Records, and to its financial personnel and independent accounting firm, at the
Purchaser’s expense, at reasonable times upon reasonable notice until completion
of such audit. Thereafter, Seller shall deliver the Financial Records to the
Purchaser; provided, however, that Seller may retain a copy of the Financial
Records for its files. In furtherance and not in limitation of the obligations
set forth in this Section 7.1(e), Seller shall not take any actions or omit to
take any actions with the intent of preventing KPMG LLP or its affiliates from
providing its or their consent for Purchaser to include such Post-Closing
Financial Statements in any registration statement or other document or report
to be filed by the Purchaser with the Securities and Exchange Commission.

 

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(f) Seller Marks. The Purchaser acknowledges and agrees that it does not have,
and following the Closing shall not have, any interest in or to any names,
marks, trade names, trademarks and corporate symbols and logos of the Seller,
including those incorporating “Planar” (collectively, the “Seller Marks”).
Notwithstanding the foregoing, the parties agree that the Purchaser and the
Company shall be entitled to, and only to, (a) sell products included in the
inventory of the Company, products on order and products in transit, in each
case as of the Closing, and (b) sell products under the Seller Marks in certain
jurisdictions, for such period of time after the Closing as required to obtain
the necessary regulatory approvals in such jurisdictions to sell products under
the Company’s or the Purchaser’s marks, notwithstanding in either case that such
products contain one or more of the Seller Marks. Except as may be the result of
an inaccuracy of the Seller’s representations and warranties hereunder, Seller
shall have no liability for, and the Purchaser and the Company shall hold the
Seller harmless from, any and all Losses from third party claims relating to or
arising out of the sale by the Purchaser or the Company after the Closing of
products bearing the Seller Marks, subject to the procedural requirements set
forth in Article VIII as they would apply in the event that the Purchaser or the
Company was the Indemnifying Party. If the Purchaser breaches this
Section 7.1(f), the Seller shall be entitled to specific performance and to
injunctive relief against further violations, as well as any other remedies at
law or in equity available to the Seller.

(g) Confidentiality. From and for three (3) years after the Closing, the Seller
and its Affiliates shall keep secret and retain in confidence (in a manner
consistent with Seller’s protection of its proprietary information, but in any
event using not less than reasonable care), and shall not use for the benefit of
itself or others, all confidential matters relating to the Business or the
Company obtained prior to the Closing, and shall not disclose any of the
foregoing to anyone outside of the Purchaser and its Affiliates, provided,
however, this covenant shall not apply to any information which is or becomes
generally available to the public other than as a result of disclosure by the
Seller or its Affiliates. The Seller shall have the right to disclose the
foregoing to the extent so required in any legally required government or
securities filings, legal proceedings, subpoena, civil investigative demand or
other similar process (provided the Seller (A) except to the extent legally
prohibited, provides the Purchaser with prompt notice of such required
disclosure so the Purchaser may attempt to obtain a protective order (and in the
case of securities law filings, obtain exemptive relief from disclosure),
(B) cooperates with the Purchaser, at the Purchaser ‘s expense, in obtaining
such protective order or exemptive relief, and (C) only discloses that
information which he or it is absolutely required to disclose as advised by
counsel). Notwithstanding the foregoing, with respect to any Company
Intellectual Property maintained by the Company as a trade secret, the
provisions of this Section 7.1(g) shall survive for as long as Company maintains
such Company Intellectual Property as a trade secret.

(h) Intellectual Property Matters.

(i) To the extent the conduct of the Business by the Company immediately
following the Closing Date (consistent with how the Business is being currently
conducted) infringes any Intellectual Property right of the Seller or its
Affiliates existing prior to and subsisting after the Closing Date, the Seller
(on behalf of itself and its Affiliates) hereby irrevocably waives and agrees
never to assert such Intellectual Property rights against the Purchaser, its
Affiliates and their successors in interest to such Intellectual Property
rights.

 

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(ii) At the Closing, the Company shall be in the possession of complete and
correct copies of all Company Source Code (including all commented versions to
the extent the same exist) and user and technical documentation related to the
Company Products, as the same exists as of the Closing Date.

(iii) Following the Closing, the Seller and its Affiliates will not use the
www.planar-dome.com and www.planardome.com domain names.

(iv) Following the Closing, upon the request of the Purchaser, the Seller shall
cooperate with the Purchaser and/or the Company by facilitating an introduction
of the Purchaser and/or the Company to Fergason Patent Properties LLC
(“Fergason”) for the purpose of allowing the Purchaser or the Company to
commence negotiations with Ferguson regarding a license to the stereoscopic
display technology currently licensed by the Seller from Fergason pursuant to
that certain License Agreement between the Seller and Fergason dated July 9,
2004 (as amended, the “Fergason Agreement”). To the extent the Purchaser agrees
to procure a license from Fergason under which the Seller is paid a royalty
pursuant to the terms of the Fergason Agreement the Seller will agree to waive
or otherwise restructure its medical exclusivity so as to permit the Purchaser
or the Company to make and sell medical-grade diagnostic imaging or patient
monitors incorporating stereoscopic display technology licensed from Fergason.

(i) Operations and Indebtedness. Until the payment in full of the Delayed
Payment and any additional payment required pursuant to Section 3.1, each of NDS
and the Purchaser shall not permit any assets of the Company to become assets of
the Purchaser or any of its affiliates, shall not permit the Company to incur
any indebtedness of any kind, contingent or otherwise (other than trade payables
in the ordinary course of business), or guarantee in any form the obligations of
others and shall do all things necessary to ensure the Purchaser and the Company
operate as separate and distinct entities from NDS and its Affiliates. Other
than obligations under this Agreement and the Transaction Documents, NDS shall
not permit the Purchaser to, and the Purchaser shall not, incur any indebtedness
or obligations of any kind (other than trade payables in the ordinary course of
business) or cause a Lien to be placed on the Shares, including the guarantee in
any form of any other obligations, or have any activities or operations other
than owning the stock of the Company and operating the Business.

 

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(j) Third Party Consents.

(i) At Purchaser’s election, Seller shall use commercially reasonable efforts to
assign to Purchaser or its designated subsidiary, affiliate or representative
office, that certain Tenancy Agreement between Beijing Metropol Co., Ltd., as
lessor, and Seller’s Shanghai Representative Office, as lessee. The parties
shall endeavor to make such assignment promptly following Purchaser’s written
notice to Seller requesting such assignment and pursuant to an assignment
instrument reasonably acceptable to Purchaser.

(ii) To the extent any payment or consideration is required to obtain the
consent or approval of any party under any of the agreements listed on
Schedule 7.1(j) in connection with the Stock Purchase or for any such agreement
to remain in full force or effect following the Closing, the costs shall be
borne as set forth on Schedule 7.1(j), which costs shall not include any that
result from any change in terms on which a party is willing to do business with
a successor, including the Company or the Purchaser. The Seller will use
commercially reasonable efforts to assist the Purchaser in connection with
obtaining consents of the parties to the agreements listed in Schedule 7.1(j).
For the avoidance of doubt, the Seller shall not have liability under this
Agreement, other than as set forth in Schedule 7.1(j), for the failure of a
third party to consent to the assignment of a Contract of the Business set forth
in Section 4.4(a) in connection with the transactions contemplated by this
Agreement, including the contribution of the Contracts to the Company by the
Seller.

 

  7.2 Non-Competition Agreement.

During the period beginning on the date hereof and ending on the date that is
the three (3) year anniversary of the Closing Date (the “Restricted Period”),
neither the Seller nor any of its Affiliates shall, without the prior written
consent of the Purchaser, (i) design, develop, distribute and sell LCD
medical-grade displays and related software for use in diagnostic imaging and
medical-grade patient monitors, or otherwise compete with the Business as and in
the manner in which it is conducted by the Company as of the Closing Date, or
(ii) design, develop, distribute and sell products incorporating any
stereoscopic display technology with medical-grade displays for use in
diagnostic imaging and patient monitoring applications, in the case of both
(i) and (ii) in any country, province, state, city or other political
subdivision of the world in which the Business operates or otherwise
distributes, licenses or sells related products or services during the
Restricted Period.

 

  7.3 Employee Non-Solicitation Agreement.

During the one-year period following the Closing Date, the Seller shall not, and
shall cause its Subsidiaries not to, hire or solicit the employment or
engagement of services by the Seller or any of its Subsidiaries of any
Continuing Employee without the prior written consent of the Purchaser. For
purposes of the prior sentence: (i) any general solicitation for employment
(including general solicitation via the internet, newspaper advertisements and
the like) that may be targeted to a particular geographical or technical area
but that are not targeted specifically towards the Continuing Employees;
(ii) the employment of any Continuing Employee who contacts the Seller or its
Subsidiaries on his or her own initiative and without any direct or indirect
solicitation by the Seller or its Subsidiaries; and (iii) the employment of any
Continuing Employee who is no longer an employee of the Company shall not be
considered a “solicitation” of employees.

 

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  7.4 Miscellaneous.

The Seller acknowledges that the restrictions contained in Sections 7.3 and 7.4
are reasonable and necessary to protect the legitimate interests of the
Purchaser and constitute a material inducement to the Purchaser to enter into
this Agreement and consummate the transactions contemplated by this Agreement.
The Seller acknowledges that any violation of Sections 7.3 and 7.4 will result
in irreparable injury to the Purchaser and agrees that the Purchaser shall be
entitled to seek preliminary and permanent injunctive relief, without the
necessity of proving actual damages, which rights shall be cumulative and in
addition to any other rights or remedies to which the Purchaser may be entitled.

ARTICLE VIII – SURVIVAL OF REPRESENTATIONS, WARRANTIES AND

COVENANTS; INDEMNIFICATION

 

  8.1 Survival.

All representations and warranties of the Seller in Article IV of this Agreement
or in the certificates delivered pursuant to Section 6.1 shall survive until the
first anniversary of the Closing Date; provided, however, that the
representations and warranties in Sections 4.1 (Organization, Qualification and
Corporate Power), 4.2 (Enforceability), 4.6 (Capitalization), and 4.15 (Tax
Matters) shall survive until, and shall terminate upon, 90 days after the
expiration of the applicable statute of limitations with respect to the
liability in question; and, provided, further, that the representations and
warranties in Section 4.11 (Intellectual Property) shall survive until, and
shall terminate upon, the third anniversary of the Closing Date. All
representations and warranties of the Purchaser in Article V or in the
certificates delivered pursuant to Section 6.2 shall survive until the earlier
to occur of (i) payment of the Delayed Payment or (ii) the first anniversary of
the Closing Date; provided, however, that the representations and warranties in
Sections 5.1 (Organization, Qualification and Corporate Power), and 5.2
(Enforceability) shall survive until, and shall terminate upon, 90 days after
the expiration of the applicable statute of limitations with respect to the
liability in question. The covenants and agreements to be performed after
Closing set forth in this Agreement, including those set forth in Section 7.1,
shall survive the Closing and continue until all obligations with respect
thereto shall have been performed or satisfied or shall have been terminated in
accordance with their terms.

 

  8.2 Seller’s Indemnification.

(a) Subject to the limitation set forth in this Article VIII, from and after the
Closing Date, the Seller shall indemnify the Purchaser and its officers,
managers, members, Affiliates, successors and assigns (the “Indemnified
Parties”) for and hold them harmless from any and all claims, liabilities,
losses, damages, Taxes, costs and expenses, including reasonable fees and
disbursements of counsel and consultants and including any such reasonable
out-of-pocket expenses incurred in investigating, defending against or settling
any of the foregoing

 

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(collectively, “Losses”), suffered or incurred by the Indemnified Parties,
related to or arising out of: (i) any breach or inaccuracy of any representation
and warranty made by the Seller to the Purchaser in this Agreement; (ii) any
failure by the Seller to perform or comply with any covenant in or obligation
under this Agreement; (iii) any Funded Indebtedness outstanding as of the
Closing (other than as a result of any financing arranged by the Purchaser); and
(iv) any Pre-Closing Employee Liabilities.

(b) The Indemnifying Party (as defined below) shall not have any right of
contribution, indemnification or right of advancement from the Purchaser or the
Company with respect to any Loss claimed by an Indemnified Party.

(c) Nothing in this Agreement shall limit the right of any party to the
Transition Services Agreement to pursue remedies under the Transition Services
Agreement against the parties thereto or any rights of the Seller to
contribution under any Contract assigned to the Company or an Affiliate of the
Purchaser under Applicable Law.

 

  8.3 Claims.

(a) Notice and Determination of Claims. An Indemnified Party seeking
indemnification hereunder, whether or not the applicable dollar amount
limitations specified in Section 8.4 have been exceeded, shall promptly notify
Seller (sometimes referred to in this Article VII as the “Indemnifying Party”)
in writing (the “Claim Notice”) of any claim, action, suit, proceeding, demand
or breach (collectively, a “Claim”) with respect to which the Indemnified Party
claims indemnification hereunder. Any Claim Notice delivered under this
Section 8.3 shall describe in reasonable detail the facts and circumstances on
which the asserted indemnification claim is based, specify the amount of such
indemnification claim if then ascertainable and, if not then ascertainable, the
estimated amount thereof, shall specify the basis for indemnification pursuant
to this Agreement. After receipt of the Claim Notice, the Indemnified Party and
the Indemnifying Party shall first attempt to negotiate in good faith a written
resolution of such disputed Claim within a period not to exceed sixty (60) days
from the date of receipt of a request for such negotiation. Such negotiations
shall be conducted by officers of each of the Indemnifying Party and the
Indemnified Party who have authorization to resolve such disputed claim. In the
event the Indemnifying Party and the Indemnified Party cannot negotiate a
written resolution to such disputed claim during such sixty (60) day negotiation
period, the disputed Claim will be resolved in accordance with this Agreement. A
failure by the Indemnified Party to deliver a Claim Notice shall not relieve the
Indemnifying Party of its obligations under this Article VIII except to the
extent, if at all, that such Indemnifying Party shall have been materially
prejudiced thereby and except as set forth in Section 8.4(a).

(b) Third Party Claims.

(i) If any Claim against the Indemnified Party is made by or in respect of a
third party (a “Third Party Claim”), the Indemnified Party shall promptly after
receiving notice of such Third Party Claim, deliver to the Indemnifying Party a
Claim Notice, accompanied by copies of all documents and information relevant to
the Third Party Claim and in the Indemnified Party’s possession.

 

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(ii) Upon written notice to the Indemnified Party within thirty (30) days after
receipt of the Claim Notice, the Indemnifying Party shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
Third Party Claim at its own expense. If the Indemnifying Party elects to direct
the defense of any Third Party Claim, the Indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability unless the Indemnifying Party consents in writing to such payment
(which consent shall not be unreasonably withheld or delayed) or unless the
Indemnifying Party, withdraws from the defense of such asserted liability, or
unless a final judgment from which no appeal may be taken by or on behalf of the
Indemnifying Party is entered against the Indemnified Party for such liability.
The Indemnifying Party shall keep the Indemnified Party timely apprised of the
status of such Third Party Claim. The Indemnified Party shall retain the right
to employ its own counsel and to participate, at its own expense, in the defense
or handling of any Third Party Claim, the defense of which has been assumed by
the Indemnifying Party pursuant hereto.

(iii) If there is a Third Party Claim that, if adversely determined would give
rise to a right of indemnification for Losses under this Article VIII, then any
amounts incurred, paid or accrued in defense or settlement of such Third-Party
Claim, regardless of the outcome of such Third Party Claim, shall be deemed to
be Losses that were actually sustained, suffered or incurred by the Indemnified
Party for purposes of the indemnification obligations of the Indemnifying Party
set forth in this Article VIII. If the Indemnifying Party does not give written
notice to the Indemnified Party within thirty (30) days after receipt of the
Claim Notice of a Third Party Claim that the Indemnifying Party has elected to
assume the defense of such Third Party Claim or if the Indemnifying Party shall
fail to defend or, if after commencing or undertaking any such defense, shall
fail to prosecute or shall withdraw from such defense, the Indemnified Party
shall have the right to undertake the defense or settlement thereof, at the
Indemnifying Party’s expense. If the Indemnified Party assumes the defense of
any Third Party Claim pursuant to this Section 8.3(b)(iii) and proposes to
settle such Third Party Claim prior to a final judgment thereon or to forgo any
appeal with respect thereto, then the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof, and the Indemnifying Party
shall have the right to participate in the settlement or assume or reassume the
defense of such Third Party Claim. If the Indemnified Party assumes the defense
of a Third Party Claim pursuant to the terms of this Section 8.3(b)(iii), the
Indemnified Party shall keep the Indemnifying Party timely apprised of the
status of such Third Party Claim and shall, subject to this Section 8.3(b)(iii),
not settle such Third Party Claim without the prior written consent of the
Indemnifying Party (which shall not be unreasonably delayed or withheld). If an
Indemnified Party defends or handles such Third Party Claim, the Indemnifying
Party shall be entitled to participate in the defense or handling of such Third
Party Claim with its own counsel and at its own expense.

(iv) In connection with any defense of a Third Party Claim, each of the parties
to this Agreement shall, and shall use commercially reasonable efforts to cause
their respective controlled Affiliates to, cooperate in the defense or
prosecution thereof and to in good faith retain and furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested by any other party
in connection therewith.

 

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  8.4 Limitations; Exclusive Remedy; Effect of Investigation; Waiver.

The obligations set forth in this Article VIII are subject to the following
limitations:

(a) Claim Notice. No Indemnifying Party shall be obligated to defend and hold
harmless any Indemnified Party, or otherwise be liable to such Indemnified
Party, with respect to any indemnification claim made by the Indemnified Party
pursuant to Section 8.2(a)(i) unless a Claim Notice with respect to such
indemnification claim shall have been delivered to the Indemnifying Party prior
to the expiration of the survival period for such claim specified in Section 8.1
above.

(b) Deductible Basket; Maximum Liability. The Indemnified Parties shall not be
entitled to indemnification for any Losses pursuant to Section 8.2(a)(i) unless
and until such time as the cumulative aggregate amount of all indemnifiable
Losses exceeds $342,500 (the “Deductible Basket”), after which the Indemnified
Parties shall be entitled to recover only for amounts in excess of the
Deductible Basket. The aggregate maximum amount of Losses for which the
Indemnified Parties are entitled to indemnification pursuant to
Section 8.2(a)(i) shall be limited to $5,137,500 (the “Cap”). The Deductible
Basket and the Cap shall not apply to any Claims based upon fraud or breaches of
the Seller’s representations in Sections 4.1 (Organization, Qualification and
Corporate Power), 4.2 (Enforceability), 4.6 (Capitalization), 4.15 (Tax Matters)
and 4.23 (Brokers’ Fees).

(c) Calculation of Losses. Any payments to the Indemnified Parties pursuant to
Section 8.2 shall be limited to the amount of any Losses that remain after
deducting therefrom any insurance, indemnity, contribution or other similar
payments actually recovered by the Purchaser, the Company or any of their
respective Affiliates from any third party with respect thereto (net of all
related costs).

(d) Effect of Investigation; Waiver. An Indemnified Party’s right to
indemnification or other remedies based upon the representations and warranties
of the Seller will not be affected by any investigation of the Indemnified
Party. Such representations and warranties shall not be affected or deemed
waived by reason of the fact that the Indemnified Party should have known that
any representation or warranty might be inaccurate. Any investigation by the
Purchaser shall be for its own protection only and shall not affect or impair
any right or remedy of the Purchaser.

(e) Exclusive Remedy; Consequential and Other Special Damages.

(i) Each of the Indemnified Parties hereby acknowledges and agrees that,
following the Closing, its sole and exclusive remedy with respect to any and all
Losses relating to the subject matter of this Agreement, other than any Losses
arising from the fraud of the Seller or for Taxes pursuant to Section 7.1(b),
shall be pursuant to the indemnification provisions set forth in this
Article VIII. This Section 8.4(e)(i) will not limit any party’s right to seek
equitable or injunctive relief.

 

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(ii) In no event shall any indemnifying party be liable for special, indirect,
incidental, punitive or consequential damages; provided, however, that the
parties acknowledge and agree that for purposes of this Article XIII, any
damages actually paid to a third party in respect of a Third Party Claim shall
be considered direct damages rather than special, indirect, incidental, punitive
or consequential damages, and shall therefore constitute indemnifiable Losses
hereunder.

(f) Adjustment to Purchase Price. All payments made pursuant to this
Article VIII shall be deemed adjustments to the Purchase Price for Tax and all
other purposes.

(g) No Right of Set-Off. No Indemnified Party may set off any claim for
indemnification or otherwise against the Delayed Payment or the Note.

ARTICLE IX – MISCELLANEOUS

 

  9.1 Expenses.

Subject to Section 7.1(e) and regardless of whether the transactions
contemplated by this Agreement are consummated and unless otherwise expressly
set forth in this Agreement, each party to this Agreement shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby; the parties acknowledging that prior to Closing, expenses
of the Company in connection with this Agreement and the transactions
contemplated hereby are expenses of the Seller.

 

  9.2 Publicity.

The Purchaser agrees that immediately after the execution and delivery of this
Agreement and immediately after the Closing the Seller shall, after consultation
with the Purchaser, issue a press release concerning this Agreement and the
Closing, as the case may be, and, within four Business Days of the execution of
this Agreement, file a report on Form 8-K with the U.S. Securities and Exchange
Commission disclosing the entry into this Agreement and attaching a copy of this
Agreement.

 

  9.3 Notices.

Any notice, request or demand desired or required to be given hereunder shall be
in writing given by personal delivery, confirmed facsimile transmission or
overnight courier service, in each case addressed as respectively set forth
below or to such other address as any party shall have previously designated by
such a notice. The effective date of any notice, request or demand shall be the
date of personal delivery, the date on which successful facsimile transmission
is confirmed or the date actually delivered by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.

To the Purchaser or NDS or, after the Closing, the Company:

NDS Imaging Holdings, LLC

5750 Hellyer Avenue

San Jose, California 95138

Fax: (408) 776-9878

Attention: Legal Counsel

 

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with a copy to:

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, California 94304

Fax: (650) 493-6811

Attention: Jeffrey D. Saper

To the Seller:

Planar Systems, Inc.

1195 N.W. Compton Drive

Beaverton, Oregon 97006-1992

Fax: (503) 748-1541

Attention: General Counsel

with a copy to:

Perkins Coie LLP

1120 N.W. Couch St., 10th Floor

Portland, Oregon 97209-4128

Fax: (503) 346-2048

Attention: Roy W. Tucker

 

  9.4 Headings.

The headings contained in this Agreement are intended solely for convenience and
shall not in any way affect the meaning or interpretation of this Agreement.

 

  9.5 Seller Deliverables.

When a Section of this Agreement provides that an item has been made available
for inspection or delivered to the Purchaser, such obligation of the Seller will
have been satisfied if such item was available on the date of this Agreement in
the electronic data room provided by Pandesa ShareVault pursuant to which due
diligence materials were made available to the Purchaser and its
Representatives.

 

  9.6 Entire Agreement; Amendments.

This Agreement, including any exhibits hereto and the Seller Disclosure
Schedule, and the Transaction Documents constitute the entire agreement of the
parties with respect to the subject matter hereof and thereof and supersede any
and all prior understandings, written or oral, between the parties, or any of
them, with regard to the subject matter hereof and thereof. This Agreement may
not be amended, modified or waived orally, but only by an instrument in writing
signed by an authorized representative of each of the parties hereto.

 

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  9.7 Severability.

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

 

  9.8 Waiver.

Waiver of any term or condition of this Agreement by any party hereto shall be
effective if in writing and shall not be construed as a waiver of any subsequent
breach or failure of the same term or condition or any other terms or conditions
of this Agreement. No waiver shall be effective unless it is in writing signed
by an authorized representative of the waiving party.

 

  9.9 Binding Effect; Assignment.

This Agreement shall be binding upon, and shall be enforceable by and inure to
the benefit of, the parties and their respective successors and assigns;
provided, however, that neither this Agreement nor any rights or obligations of
a party hereunder may be assigned or transferred by operation of law or
otherwise by such party without the prior written consent of the other parties,
and any attempted assignment of this Agreement or any of such rights or
obligations without such consent shall be void and of no effect. Notwithstanding
the foregoing, (a) the indemnification and other rights hereunder of a party may
be assigned as collateral to any lender of such party or any its Affiliates,
(b) any party may assign its rights and obligations hereunder to an Affiliate,
and (c) any party may assign its rights and obligations hereunder in connection
with a sale of all or substantially all of its assets, business or securities,
provided that, in any case, such assignment shall not relieve the assigning
party of its obligations under this Agreement.

 

  9.10  No Third Party Beneficiaries.

Nothing in this Agreement shall confer any rights or liabilities upon any Person
that is not a party to this Agreement, except as expressly provided hereunder.

 

  9.11  Specific Performance.

The parties to this Agreement agree that irreparable damage would occur in the
event that the parties do not consummate the Stock Purchase in accordance with
the specific terms of this Agreement. It is accordingly agreed that the parties
to this Agreement shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in order to cause the Stock Purchase to be consummated in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.

 

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  9.12  Counterparts.

This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.

 

  9.13  Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, applicable to agreements made and to be performed
entirely within such State, without regard to the conflict of laws principles
thereof.

 

  9.14  Consent to Jurisdiction and Venue.

ANY ACTION INVOLVING THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
SHALL BE BROUGHT AND MAINTAINED SOLELY IN THE COURT OF CHANCERY OF THE STATE OF
DELAWARE. EACH OF THE PARTIES HERETO (I) IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF THE COURT OF CHANCERY IN THE STATE OF DELAWARE, IN
CONNECTION WITH ANY MATTER BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE
MATTERS CONTEMPLATED HEREIN AND IRREVOCABLY CONSENTS TO THE SERVICE OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER ACTION OR PROCEEDING
RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ON BEHALF OF ITSELF
OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF COPIES OF SUCH PROCESS TO SUCH
PARTY (PROVIDED, THAT, THE FOREGOING SHALL NOT AFFECT THE RIGHT OF ANY PARTY TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW) AND WAIVES AND
COVENANTS NOT TO ASSERT OR PLEAD ANY OBJECTION WHICH THEY MIGHT OTHERWISE HAVE
TO SUCH JURISDICTION, VENUE AND SUCH PROCESS AND (II) AGREES NOT TO COMMENCE ANY
LEGAL PROCEEDINGS RELATED HERETO EXCEPT IN SUCH COURTS. THE PARTIES AGREE THAT
FOR THE PURPOSE OF ENFORCING THE COVENANTS IN THIS AGREEMENT, THE PARTIES MAY
APPLY DIRECTLY TO ANY COURT OF COMPETENT JURISDICTION WHEREVER LOCATED FOR A
TEMPORARY RESTRAINING ORDER, INJUNCTION OR INJUNCTIVE RELIEF OR OTHER INTERIM OR
CONSERVATORY RELIEF, AS NECESSARY, TO ENFORCE THE COVENANTS IN THIS AGREEMENT
WITHOUT BREACH OF THIS PROVISION AND WITHOUT ABRIDGEMENT OF THE POWERS OF THE
DELAWARE COURTS.

 

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  9.15  Waiver of Jury Trial.

EACH OF THE PURCHASER AND THE SELLER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PURCHASER AND THE SELLER IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

  9.16  Other Remedies.

Except as otherwise set forth herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, and the exercise by a party of any one right or
remedy hereunder will not preclude the exercise of any other right or remedy.

 

  9.17  Interpretation.

The words “include,” “includes” and “including” when used herein shall be deemed
in each case to be followed by the words “without limitation.” The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

  9.18  Rules of Construction.

The parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefor, waive the application
of any law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

[Signatures appear on following page]

 

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IN WITNESS WHEREOF, the parties hereto have entered into and signed this Stock
Purchase Agreement as of the date and year first above written.

 

PLANAR SYSTEMS, INC. By:   /s/ Gerald Perkel Name:   Gerald Perkel Title:  
President and Chief Executive Officer NDS IMAGING HOLDINGS, LLC By:   /s/ John
P. Murphy Name:   John P. Murphy Title:   President and CEO NDS SURGICAL
IMAGING, LLC By:   /s/ John P. Murphy Name:   John P. Murphy Title:   President
and CEO

Signature Page to Stock Purchase Agreement