**ASSET PURCHASE AND SALE AGREEMENT**

    THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") ismade, effective as of December 15, 2004, by and between SYS, a Californiacorporation ("Buyer" or "SYS") and Xsilogy, Inc., a Delaware corporation("Seller" or "Xsilogy") with reference to the following:

    Seller is engaged in the business of wireless networksensors.  Seller desires to sell its business and substantially all of itsassets to Buyer, and Buyer desires to purchase such business and assets inreliance upon, and subject to, the terms and conditions of this Agreement.

    NOW, THEREFORE, in consideration of these premises andtheir respective covenants, representations and warranties set forth below, theparties agree as follows:

**ARTICLE IDEFINITIONS**

As used in this Agreement and in any Exhibits hereto, thefollowing terms shall have the following meanings:

   1.1           "Acquired Assets" means any and all tangible and intangible assets, rightsand interests owned, used, useful, acquired for use or held by Seller inconnection with the conduct of Seller's Business (as hereinafter defined)including goodwill and including, but not limited to, those types of assetslisted on Exhibit A hereto, but excluding all Excluded Assets (ashereinafter defined).

    1.2           "Closing" means the consummation of the transactions provided for inthis Agreement to take place at Luce, Forward, Hamilton & Scripps LLP,600 West Broadway, Suite 2600, San Diego, California 92101 onDecember 15, 2004, or on such other date as the parties shall agree.

    1.3           "Closing Date" means the date on which the Closing occurs.

    1.4           "Equipment" means those items of machinery, equipment and othertangible personal property and fixtures which are part of the Acquired Assets.

    1.5           "Excluded Assets" means the following assetsof the Seller:

                    1.5.1       The Leased Premises (as hereinafter defined);

                    1.5.2       Seller's corporate charter, qualifications to conduct business as aforeign corporation in any state, taxpayer and other identification numbers,seals, minute books, stock transfer books, blank stock certificates and all otherdocuments relating to Seller's corporate organization, maintenance orexistence; and

                    1.5.3       Any of Seller's rights under this Agreement or any other agreementbetween Seller and Buyer entered into before, on or after the date of thisAgreement.

    1.6           "Intellectual Property" means (a) all inventions (whether patentable orunpatentable and whether or not reduced to practice), all improvements thereto,and all patents, patent applications and patent disclosures, together with allreissuances, continuations, continuations-in-part, revisions, extensions andreexaminations thereof, including those listed on Section 5.11 of theXsilogy Disclosure Schedule, (b) all trademarks, service marks, tradedress, logos, trade names, and corporate names, including the name "Xsilogy,"together with all translations, adaptations, derivations, and combinationsthereof and including all goodwill associated therewith, (c) all works ofauthorship, all copyrightable works, all copyrights, and all applications,registrations, and renewals in connection therewith, (d) all mask worksand all applications, registrations, and renewals in connection therewith,(e) all confidential business information and trade secrets (includingideas, research and development, know-how, formulas, compositions, manufacturing,engineering, and production documentation, processes and techniques, technicaldata, designs, drawings, specifications, customer and supplier lists, pricingand cost information, and business and marketing plans and proposals),(f) all other proprietary rights, and (g) all copies and tangibleembodiments thereof (in whatever form or medium).

    1.7           "Inventory" means those items of inventory of the types described as"inventory" in Exhibit A which are included in the Acquired Assets.

    1.8           "Leased Premises" means all land and buildings currently owned or occupied bySeller located at 6042 Cornerstone Court West, Suite A, San Diego,California 92121, and covered by the Lease described in paragraph 4.22 ofthis Agreement.

    1.9           "Seller's Business" means the business of providing wireless network sensormodules and related infrastructure for industrial monitoring applications asconducted by Seller at any time prior to Closing.

                    Additional terms may be defined in the text of thisAgreement for purposes of readability.

**ARTICLE IIPURCHASE AND SALE OF THE ACQUIRED ASSETS**

   2.1           Asset Purchase and Sale.  Subject to the terms and conditions of this Agreement,and pursuant to a Bill of Sale delivered by Seller in a form and with asubstance satisfactory to Buyer, at the Closing Seller shall sell, transfer,assign and deliver, and Buyer shall purchase, accept and receive, all right,title and interest in, to or arising from the Acquired Assets and allassociated goodwill, free and clear of any and all security interests,mortgages, pledges, conditional sale and other title retention agreements,assessments, covenants, restrictions, commitments, liens, charges andencumbrances, obligations, liabilities and other burdens of every nature(collectively referred to as "Encumbrances"), in exchange for the "PurchasePrice" as defined in Paragraph 2.2 hereof.  At least twelve (12) daysbefore the Closing, Buyer shall give notice of the transfer of the AcquiredAssets in the manner prescribed by Section 6107 of the California UniformCommercial Code.

    2.2           Purchase Price.  The purchase price for the Acquired Assets shall consistof an Initial Purchase Price, a Milestone Purchase Price, an Earnout PurchasePrice, and a Revenue Purchase Price.  The Initial Purchase Price, any MilestonePurchase Price, any Earnout Purchase Price, and any Revenue Purchase Price, aretogether referred to in this Agreement as the "Purchase Price."

                    2.2.1       The Initial Purchase Price shall be One Hundred Thirty-Seven ThousandDollars ($137,000) in cash, payable at the Closing.

                    2.2.2       The Milestone Purchase Price shall consist of the following:

                                    (a)               If Buyer, as the operator of Seller's Business, has entered into adirect or indirect agreement with San Diego Gas and Electric, or anothercustomer or customers, which provides for at least $455,000 in future revenuesto Buyer, by March 31, 2005, Buyer shall pay Seller Three HundredForty-Eight Thousand Dollars ($348,000) in cash within thirty (30) daysfollowing the execution of the agreement.

                                    (b)              If Buyer, as the operator of Seller's Business after the Closing, hasreceived and accepted a firm order from Smart Structures, Inc. in an amount notless than $270,000 by March 31, 2005, then Buyer shall pay Seller OneHundred Thirty Thousand Dollars ($130,000) in cash within thirty (30) daysfollowing Buyer's receipt of a copy of the order but not earlier thanJanuary 2, 2005.

                                    (c)               If Buyer receives an acceptance of product by San Diego Gas &Electric ("SDGE") within the schedule and milestones set forth in any such SDGEorder, or if Buyer receives a new contract or a follow on agreement to theagreement described in Section 2.2.2(a), with terms acceptable to Buyer,then Buyer shall pay Seller an additional One Hundred Thirty-Five ThousandDollars ($135,000) in cash.

                                    (d)              Attached to this Agreement as Exhibit B is the Operating Plan forSeller's Business for the fiscal year ended June 30, 2005 (the "2005Operating Plan").  Within 30 days following the end of fiscal 2005, Buyer shalldetermine whether the 2005 Operating Plan has been achieved and whether thefiscal 2005 operating goal (the "2005 Goal") has been met.

                                                        (i)                 If the 2005 Operating Plan has been achieved, Buyer shall pay Seller anadditional Eighty-Five Thousand Dollars ($85,000), $18,333 of which shall be incash and $66,667 of which shall be in SYS Common Stock, valued at $2.50 pershare.  To the extent that the 2005 Operating Plan has not been achieved, suchadditional payment will be reduced on a dollar-for-dollar basis allocated prorata between stock and cash.

                                                        (ii)               If the 2005 Goal is met or exceeded, Buyer shall pay Seller $36,667 incash and $133,333 in SYS Common Stock, valued at $2.50 per share.  If the 2005Goal is exceeded, Buyer shall also pay Seller sixty percent (60%) of the amountof such excess in cash or restricted stock at the election of Buyer.

                                    (e)               If the 2005 Operating Plan is not achieved or if the 2005 Goal is notmet or exceeded, the maximum amount of stock issuable under subparagraphs(i) and (ii) above shall nevertheless be issued to Buyer if Seller'sBusiness has received and accepted at least $500,000 in new, firm orders byJune 30, 2005.

                                    (f)                As the operator of Seller's Business following the Closing, Buyer, atits sole discretion, may effect changes in Seller's Business which may have animpact on the realization by Seller's Business of the 2005 Operating Plan or the2005 Goal.  Such changes may include, without limitation, increases ordecreases in salaries, the employment or dismissal of personnel, theacceleration or delay of payments to creditors, the purchase or sale ofinventory, the retention of independent contractors, the conduct of researchand development, or any other business matter.  Seller agrees that Buyer'sexercise of discretion in this regard in good faith shall not be a basis forchallenging the determination of whether or not Seller's Business has achievedthe 2005 Operating Plan or met the 2005 Goal.  For purposes of thisparagraph (f), a change shall be deemed to be in good faith if it is notmade primarily to prevent Seller's business from achieving the 2005 OperatingPlan or meeting the 2005 Goal.  Buyer may also, in its discretion, create a newoperating plan for Seller's Business to reflect changes in Seller's Business,including changes in revenues.

                    2.2.3       The Earnout Purchase Price shall consist of the following:  As soon aspracticable, but in any event not later than four months following the end ofeach fiscal year, commencing with the fiscal year ended June 30, 2005, andending with the fiscal year ended June 30, 2009, Buyer will pay Seller apercentage of the revenues earned by Seller's Business during that fiscalyear.  The percentage of revenues paid to Seller with respect to a fiscal yearwill be determined by the cumulative revenues earned by Seller's Business fromJuly 1, 2004 through the end of that fiscal year.  The percentage appliedto a given fiscal year will be determined in accordance with the followingtable:
| **Cumulative  Revenue Levels** | **Percentage  of Revenues** |
|--------------------------------|-----------------------------|
| $0  - $3.5M (Million)          | 0%                          |
| $3.5M  - $10.0M                | 5%                          |
| $10.0M  - $20.0M               | 4%                          |
| $20.0M  - $40.0M               | 3%                          |
| $40.0M  - $75.0M               | 2%                          |

    Not more than Two Million Dollars ($2,000,000) shall bepaid by Buyer to Seller pursuant to this Section 2.2.3.  At any time priorto June 30, 2009, Buyer may elect, at its sole discretion, to extinguishits obligations under this Section 2.2.3, by paying to Seller the remainderof the amount due under this Section 2.2.3, up to the $2,000,000 maximumpayment.  Up to fifty percent (50%) of any payment of the Earnout PurchasePrice or the buyout of the Earnout Purchase Price may be made, at Buyer'soption, in restricted shares of SYS Common Stock, valued as set forth inSection 2.2.5 of this Agreement.  As a consequence of the payment by Buyerof certain expenses of Seller prior to the Closing, the first Fifty-TwoThousand Dollars ($52,000) otherwise payable by Buyer to Seller pursuant tothis Section 2.2.3 shall not be paid to Seller and shall instead beretained by Buyer.

                    2.2.4       The Revenue Purchase Price shall consist of the following:  Buyer shallpay Seller up to $1,500,000 in restricted shares of SYS Common Stock.  Onedollar worth of restricted Common Stock shall be issued to Seller for every $2of revenues earned by Seller's Business during the 12 months following theClosing if and to the extent that (i) such revenues are attributed tosales generated by any of Xsilogy's shareholders and noteholders other thanRichard Kriss ("Principal Stockholder") and (ii) Buyer has receivedassurances from its auditors that such issuances should properly be capitalizedas part of the Purchase Price.  Shares issued pursuant to this Section 2.2.4shall be issued following the end of each calendar quarter and shall be valuedas set forth in Section 2.2.5 of this Agreement.

                    2.2.5       For purposes of this Agreement, the per share value of any SYS CommonStock to be issued pursuant hereto, other than stock as to which a fixed valueis stated in this Agreement, shall be equal to the average closing price of SYSCommon Stock, as reported on the principal exchange on which it is then traded,during the ten (10) trading days immediately preceding the date of the eventgiving rise to the obligation to issue SYS Common Stock.

    2.3           Advance Fee.  Buyer has provided funding to Seller to finance Seller'sBusiness prior to the Closing.  In the event that the Closing does not occur byDecember 15, 2004 or such later date as Buyer may designate to provide for(i) the completion of its investigation with Seller as described inSection 7.3.6, or (ii) compliance with the California Bulk TransferLaw (the "Termination Date"), Seller will transfer to Buyer all of its interestin Seacoast Sciences, including any royalties due in the future from SeacoastSciences.  If Buyer has advanced Seller at least $150,000 pursuant to thisSection 2.3, and the Closing does not occur by December 15, 2004,Seller shall also transfer to Buyer the underlying intellectual property("MEMS" sensor, U.S. Patent Number 10/177,133) which has been licensed bySeller to Seacoast Sciences.  Additionally, and in consideration of theagreement by Buyer to make the advances described in this Section 2.3,Seller hereby grants to Buyer a license to use Seller's Sensorworx programpursuant to the License Agreement attached hereto as Exhibit C.

    2.4           Allocation of Purchase Price.  The Purchase Price shall be allocated among the AcquiredAssets as determined by Buyer subsequent to the Closing.

**ARTICLE IIIASSUMPTION OF LIABILITIES AND OBLIGATIONS**

    3.1           Assumed Liabilities.  Buyer shall not assume or pay, perform or discharge, anyof Seller's liabilities, obligations or duties whatsoever, except for thosedescribed in subparagraphs 3.1.1 and 3.1.2 below; provided, however, thatBuyer shall not assume any such liability, obligation or duty (i) whichresults from any breach by Seller of any of its obligations, duties orcommitments, (ii) for which, if known by Seller, a reserve or any otherreference would have been required by generally accepted accounting principles,but which was omitted by Seller from the Xsilogy Financial Statements,(iii) which constitutes, or forms the basis of, a breach of any ofSeller's representations, warranties or covenants under this Agreement, or(iv) which is not assignable to Buyer pursuant to its terms, or is notvalidly assigned to Buyer at the Closing:

                    3.1.1       All customer orders entered into in the ordinary course of businessconsistent with past practice; and

                    3.1.2       The executory portion of those contracts, leases, license agreements,commitments and other agreements which are listed on Exhibit A to thisAgreement, provided that Buyer shall not assume Seller's duties andliabilities, under any agreement for monitoring services but shall insteadcontinue to provide such service, until the earlier of sixty (60) daysfollowing the Closing Date or the date on which the agreement is renegotiated;and

                    3.1.3       Accrued vacation pay of Seller's employees in an amount not to exceedForty Five Thousand Dollars ($45,000).

    3.2           Non-Assignable Obligations.  If any customer, vendor or other party refuses orotherwise fails to give any consent necessary to assign or transfer to Buyerall of Seller's rights and obligations under any contract, commitment, right orother agreement to be transferred to and assumed by Buyer under this Agreement,Buyer and Seller will cooperate with each other in any reasonable arrangementdesigned to provide Buyer with all benefits and obligations under suchcontract, commitment, right or agreement including, without limitation, for atleast six (6) months following the Closing, (i) the purchase by Seller ofany items required under any contract or order with any vendor, with Buyeragreeing to purchase such items from Seller upon the same terms as Selleracquired such items and (ii) the performance by Buyer as an independentcontractor of all work necessary to fill any such customer order and to shipthe product called for thereunder to the customer in question with the understandingthat Seller will purchase such products from Buyer at the net price whichSeller resells such products to such customer.

**ARTICLE IVREPRESENTATIONS AND WARRANTIESOF BUYER**

    In order to induce Seller to enter into this Agreement,Buyer hereby represents and warrants to Seller that the statements contained inthis Article IV are true, correct and complete, except as otherwiseexpressly set forth in this Article IV, as of the date hereof and as ofthe Closing Date unless another date is expressly stated below.

    4.1           Organization and Standing.  Each of Buyer and each subsidiary of Buyer is acorporation duly organized, validly existing and, where applicable, in goodstanding under the laws of its state of incorporation with corporate power andauthority to own, lease, use and operate its properties and to conduct itsbusiness as and where now owned, leased, used, operated and conducted.  Each ofSYS and each subsidiary of SYS is duly qualified to do business and in goodstanding in each jurisdiction in which the nature of the business conducted byit or the property it owns, leases or operates, requires it to so qualify,except where the failure to be so qualified or in good standing in suchjurisdiction would not have a Material Adverse Effect on SYS and itssubsidiaries taken as a whole.  SYS is not in default in the performance,observance or fulfillment of any provision of the SYS Articles ofIncorporation, as amended (the "SYS Articles"), or the SYS Amended and RestatedBylaws, as amended, as in effect on the date hereof (the "SYS Bylaws"), andeach other subsidiary of SYS is not in default in the performance, observanceor fulfillment of any provisions of its Certificate of Incorporation orBylaws.  SYS has heretofore furnished to Seller complete and correct copies ofthe SYS Articles and the SYS Bylaws.

    4.2           Corporate Power and Authority.  SYS has all requisite corporate power and authority toenter into and deliver this Agreement, to perform its obligations hereunder andto consummate the transactions contemplated by this Agreement.  The executionand delivery of this Agreement and the consummation of the transactionscontemplated hereby by SYS has been duly authorized by all necessary corporateaction on the part of SYS.  This Agreement has been duly executed and deliveredby SYS and constitutes the legal, valid and binding obligation of SYSenforceable against it in accordance with its terms, except to the extent thatsuch enforceability may be subject to applicable bankruptcy, insolvency,reorganization, moratorium and similar laws affecting the enforcement ofcreditors' rights generally or by general equitable principles. 

    4.3           Conflicts; Consents and Approvals.  Neither the execution anddelivery of this Agreement by SYS nor the consummation of the transactionscontemplated hereby or thereby will: 

                    4.3.1       Conflict with, or result in a breach of any provision of, the SYSArticles or the SYS Bylaws or the governing documents of any other subsidiaryof SYS; 

                    4.3.2       Materially violate, or conflict with, or result in a material breach ofany provision of, or constitute a material default (or an event that, with thegiving of notice, the passage of time or otherwise, would constitute a default)under, or entitle any party (with the giving of notice, the passage of time orotherwise) to terminate, accelerate, modify or call a material default under,any of the terms, conditions or provisions of any material note, bond,mortgage, indenture, deed of trust, license, contract, undertaking, agreement,lease or other instrument or obligation to which SYS or any of its subsidiariesis a party;

                    4.3.3       Materially violate any (i) order, writ, injunction, decree,statute, ruling, assessment, or arbitration or award of any governmentalauthority or (ii) applicable laws relating to SYS or any of itssubsidiaries or their respective properties or assets; or 

                    4.3.4       Require any action or consent or approval of, or review by, orregistration or filing by SYS or any of its affiliates with, any third party orany governmental authority, other than registrations or other actions requiredunder federal and state securities laws as are contemplated by this Agreement. 

    4.4           Actions.  There is no Action against SYS which questions thevalidity of this Agreement or any action taken or to be taken pursuant hereto. For purposes of this Agreement, "Action" means any action, arbitration, audit,examination, suit, proceeding, hearing or litigation, whether formal orinformal, and whether public or private, commenced, brought, conducted or heardby or before, pending or threatened, or otherwise.  Since July 1, 2001,neither SYS nor any of its subsidiaries has been subject to any order, writ,injunction or decree relating to its method of doing business or itsrelationship with past, existing or future users or purchasers of any goods orservices.

    4.5           Capitalization of SYS.  The authorized capital stock of SYS consists of48,000,000 common shares (the "SYS Common Stock"), 250,000 preferred shares(the "SYS Preferred Stock"), and 2,000,000 preference shares (the "SYSPreference Stock").  At the date of this Agreement, (i) 8,161,566 sharesof SYS Common Stock are issued and outstanding, (ii) 2,038,840 shares ofSYS Common Stock are reserved for issuance upon the exercise or conversion ofoptions, warrants or convertible securities granted or issuable by SYS, notincluding SYS's Stock Option and Stock Purchase Plans, (iii) 3,708,219shares of SYS Common Stock are reserved for issuance under SYS's Stock Optionand Stock Purchase Plans, (iv) no shares of SYS Preferred Stock are issuedand outstanding, and (v) no shares of SYS Preference Stock are issued andoutstanding.  The SYS Common Stock, the SYS Preferred Stock, and the SYSPreference Stock are referred to herein collectively as the "SYS CapitalStock."  Each outstanding share of SYS Capital Stock is duly authorized andvalidly issued, fully paid and nonassessable and has not been issued inviolation of any preemptive or similar rights.  SYS Common Stock is traded onthe Over-the-Counter Bulletin Board.

    4.6           SYS SEC Documents.  SYS has timely filed with the U.S. Securities andExchange Commission (the "Commission") all forms, reports, schedules,statements and other documents (including exhibits and other informationincorporated therein) required to be filed by it since July 1, 2004 underthe Securities Act of 1933, as amended (the "Securities Act"), or theSecurities Exchange Act of 1934, as amended (the "Exchange Act") (suchdocuments, as supplemented and amended since the time of filing, collectively,the "SYS SEC Documents"). No subsidiary of SYS is required to file any form,report, registration statement, prospectus or other document with theCommission.  To the Knowledge of SYS, the SYS SEC Documents, including, withoutlimitation, any financial statements or schedules included in the SYS SECDocuments, at the time filed (and, in the case of registration statements andproxy statements, on the dates of effectiveness and the dates of mailing,respectively and, in the case of any SYS SEC Document amended or superseded bya filing prior to the date of this Agreement, then on the date of such amendingor superseding filing): (a) did not contain any untrue statement of amaterial fact or omit to state a material fact required to be stated therein ornecessary in order to make the statements therein, in light of the circumstancesunder which they were made, not misleading and (b) complied in allmaterial respects with the applicable requirements of the Exchange Act and theSecurities Act, as the case may be.

    4.7           No Material Adverse Change.  To Buyer's Knowledge, since September 24, 2004,there has been no material adverse change in the assets, liabilities, resultsof operations, business prospects, or financial condition of SYS or any event,occurrence or development that would reasonably be expected to have a MaterialAdverse Effect on SYS and its subsidiaries taken as a whole. 

    4.8           Brokerage and Finders' Fees.  Neither SYS nor any stockholder, director, officer oremployee thereof, has incurred or will incur on behalf of SYS or any of itsaffiliates, any brokerage, finders' or similar fee in connection with thetransactions contemplated by this Agreement.

    4.9           Board Recommendation; Required Vote.  The board of directors of SYS, at a meeting duly calledand held, has by majority vote of those directors present and constituting a quorumof the directors then in office determined that this Agreement and thetransactions contemplated hereby, are fair to and in the best interests of theSYS Stockholders.  No vote of any holder of SYS Capital Stock is required underthe SYS Articles, SYS Bylaws or applicable law with respect to this Agreementor the transactions contemplated hereby.

**ARTICLE VREPRESENTATIONS AND WARRANTIES OF XSILOGY**

    In order to induce SYS to enter into this Agreement, Sellerhereby represents and warrants to SYS that the statements contained in thisArticle V are true, correct and complete, except as otherwise expresslyset forth in this Article V or in the disclosure schedule previouslydelivered by Seller to SYS and incorporated herein by reference (the "XsilogyDisclosure Schedule"), as of the date hereof and as of the Closing Date unlessanother date is expressly stated below or in the Xsilogy Disclosure Schedule.

    5.1           Organization and Standing.  Seller is a corporation duly organized and validlyexisting under the laws of the State of Delaware with full corporate power andauthority to own, lease, use and operate its properties and to conduct businessas and where now owned, leased, used, operated and conducted.  Seller is dulyqualified or licensed to do business and is in good standing in eachjurisdiction in which the nature of the business conducted by it or theproperty it owns, leases, uses, or operates requires it to so qualify, belicensed or be in good standing.  Seller is not in default in the performance,observance or fulfillment of any provision of its Certificate or Articles ofIncorporation (the "Xsilogy Articles") or its Bylaws (the "Xsilogy Bylaws"), asin effect on the date hereof.  Xsilogy has previously furnished to SYS completeand correct copies of the Xsilogy Articles and the Xsilogy Bylaws, each as ineffect on the date hereof.  Listed in Section 5.1 in the XsilogyDisclosure Schedule is each jurisdiction in which Xsilogy is qualified orlicensed to do business and whether Xsilogy is in good standing in each applicablejurisdiction as of the date of this Agreement.

    5.2           Corporate Power and Authority.  Seller has all requisite corporate power and authority toenter into and deliver this Agreement, to perform its obligations hereunderand, subject to approval of the transactions contemplated hereby by therequisite majorities of the holders of all classes and series of XsilogyCapital Stock (the "Xsilogy Stockholders"), to consummate the transactionscontemplated by this Agreement.  The execution and delivery of this Agreementand the consummation of the transactions contemplated hereby by Seller havebeen duly authorized by all necessary corporate action on the part of Seller,subject to approval of the transactions contemplated hereby by the XsilogyStockholders.  This Agreement has been duly executed and delivered by Xsilogyand constitutes the legal, valid and binding obligation of Xsilogy, enforceableagainst Xsilogy in accordance with its terms, except to the extent that suchenforceability may be subject to applicable bankruptcy, insolvency,reorganization, moratorium and similar laws affecting the enforcement ofcreditors' rights generally or by general equitable principles.

    5.3           Capitalization of Xsilogy.  The authorized capital stock of Xsilogy consists of190,000,000 common shares (the "Xsilogy Common Stock") and 10,000,000 preferredshares (the "Xsilogy Preferred Stock").  At the date of this Agreement,(i) 34,366,659 shares of Xsilogy Common Stock are issued and outstanding,and (ii) no shares of Xsilogy Preferred Stock are issued and outstanding. The Xsilogy Common Stock and the Xsilogy Preferred Stock are referred to hereincollectively as the "Xsilogy Capital Stock."  Each outstanding share of XsilogyCapital Stock is duly authorized and validly issued, fully paid andnonassessable, and has not been issued in violation of any preemptive orsimilar rights.

    As of the date hereof, Seller has no obligation of any kindto pay for or repurchase any securities of Seller or any predecessor.  Setforth in Section 5.3 in the Xsilogy Disclosure Schedule is anaccurate and complete list of the names of all holders of Xsilogy CapitalStock, and the number and class and series of shares held by each such XsilogyStockholder.

    5.4           Conflicts; Consents and Approvals.  Neither the execution anddelivery of this Agreement by Seller, nor the consummation of the transactionscontemplated hereby will: 

                    5.4.1       Conflict with, or result in a breach of any provision of, the XsilogyArticles or the Xsilogy Bylaws; 

                    5.4.2       Violate or conflict with, or result in a breach of any provision of, orconstitute a default (or an event that, with the giving of notice, the passageof time or otherwise, would constitute a default) under, or entitle any party(with the giving of notice, the passage of time or otherwise) to terminate,accelerate, modify or call a default under, or result in the creation of anyEncumbrance upon any of the properties or assets of Seller under, any of theterms, conditions or provisions of any note, bond, mortgage, indenture, deed oftrust, license, contract, undertaking, agreement, lease or other instrument orobligation to which Seller is a party, including without limitation, anyContract; 

                    5.4.3       Violate any (i) order, writ, injunction, decree, ruling,assessment, arbitration, or award of any governmental authority or arbitratoror (ii) applicable laws relating to Seller or any of its properties orassets; or 

                    5.4.4       Except as set forth in Section 5.4.4 of the Xsilogy DisclosureSchedule, require any action or consent or approval of, or review by, or registrationor filing by Seller or any of its affiliates with, any third party or anygovernmental authority, other than approval of the transactions contemplatedhereby by the Xsilogy Stockholders.

    5.5           Brokerage and Finders' Fees.  Neither Xsilogy nor any stockholder, director, officer oremployee thereof, has incurred or will incur on behalf of Xsilogy, anybrokerage, finders' or similar fee in connection with the transactionscontemplated by this Agreement. 

    5.6           Books and Records; Financial Statements.  

    From its date of incorporation, the minute books, stockbooks and stock ledgers of Seller (the "Books of Account") have beenmaintained, in all respects, in accordance with applicable law.  The signaturesof Xsilogy personnel appearing on all documents contained in such Books ofAccount are the true signatures of the persons purporting to have signed thesame, and complete and correct copies of such Books of Account have beenprovided to SYS.

                    5.6.1       Attached as an exhibit to Section 5.6.1 in the Xsilogy DisclosureSchedule, as previously delivered to SYS, are complete and correct copies of(i) the unaudited balance sheets of Seller, as applicable, as ofDecember 31, 2003 and December 31, 2002, and the related statementsof income and sources and uses of cash for the 12-month periods then ended and(ii) the unaudited balance sheet of Seller as of October 31, 2004,and the related statements of income and sources and uses of cash for theten-month period then ended (collectively, the "Xsilogy Financial Statements"). The Xsilogy Financial Statements (including the related notes) were prepared ingood faith on a consistent basis during the periods involved and fairly present(subject to normal, recurring adjustments not material in amount and to theabsence of footnotes) in all material respects the consolidated financialposition of Xsilogy and its consolidated subsidiaries as at the dates thereofand the consolidated results of their operations for the periods then ended. However, such Financial Statements do not include any purchase allocation fromthe acquisition of the Graviton assets.

    5.7           Compliance with Law.  Except with respect to applicable laws discussedelsewhere in this Article V including without limitation those relating toTaxes (as set forth in Section 5.10), employee benefit plans (as set forthin Section 5.13), labor matters (as set forth in Section 5.15),Permits (as set forth in Section 5.18), Environmental Laws (as set forthin Section 5.20), product warranties (as set forth in Section 5.24),Data Protection Laws (as set forth in Section 5.25) and the ForeignCorrupt Practices Act (as set forth in Section 5.26), to Seller'sKnowledge, Seller is in compliance, in all respects, and at all times sinceJanuary 1, 2002 has been in compliance, in all respects, with allapplicable laws relating to Seller or its businesses or properties, exceptwhere the failure to be in compliance with such applicable laws (individuallyor in the aggregate) would not have a Material Adverse Effect on Xsilogy, orwhere such noncompliance has been cured.  Seller has received no written noticeof any pending investigation or review by any governmental authority withrespect to Xsilogy and no such investigation or review is threatened, nor hasany governmental authority indicated an intention to conduct the same.

    5.8           Actions.  Section 5.8 in the Xsilogy DisclosureSchedule sets forth each instance in which Xsilogy has received notice ofan Action pending and each instance in which, to the Knowledge of Xsilogy, anyAction is threatened against Xsilogy.  Since January 1, 2002, Xsilogy hasnot received notice of Xsilogy being subject to any order, writ, injunction ordecree relating to its method of doing business or its relationship with past,existing or future users or purchasers of any goods or services.

    5.9           No Material Adverse Change.  Except as set forth in Section 5.9 of the XsilogyDisclosure Schedule, since September 30, 2004, to Seller's Knowledge,there has been no material adverse change in the assets, liabilities, resultsof operations, business prospects, or financial condition of Xsilogy or anyevent, occurrence or development that would reasonably be expected to have aMaterial Adverse Effect on Xsilogy.

    5.10       Taxes.  

                    5.10.1   With regard to federal and state taxes:

                                    (a)               Seller has filed all Tax Returns (including, but not limited to, thosefiled on a consolidated, combined or unitary basis) required to have been filedby Seller prior to the date hereof; 

                                    (b)              To Seller's Knowledge, all such Tax Returns referred to inclause (a)(i) above were true and correct (except for such inaccuracieswhich are individually, and in the aggregate, not material) and Seller has paidor, prior to the Closing, will pay within the time and manner prescribed byapplicable law, all Taxes, interest and penalties required to be paid inrespect of the periods covered by such Tax Returns due to any federal, state,foreign, local or other Tax authority;

                                    (c)               Seller has no liability for Taxes that is in excess of the amountreserved on the Seller Financial Statements;

                                    (d)              Seller has not requested or filed any document having the effect ofcausing any extension of time within which to file any returns in respect ofany fiscal year which have not since been filed;

                                    (e)               Seller has not received written notice of any currently due and payabledeficiency for any Tax from any Tax authority;

                                    (f)                Seller has not received written notice that it is the subject of anycurrently ongoing Tax audit;

                                    (g)               As of the date of this Agreement, Seller has not received notice fromany Tax authority of any pending requests for waivers of the time to assess anyTax, other than those made in the ordinary course and for which payment hasbeen made;

                                    (h)               Seller has not voluntarily waived any statute of limitations in respectof Taxes or agreed to any extension of time with respect to a Tax assessment ordeficiency;

                                    (i)                 There are no recorded Encumbrances with respect to Taxes upon any of theproperties or assets, real or personal, tangible or intangible of Seller (otherthan liens for Taxes not yet due and/or delinquent); and

                                    (j)                No claim has ever been received by Seller from a governmental authorityin a jurisdiction where Seller files Tax Returns that Seller is or may besubject to taxation by that jurisdiction.

                    5.10.2   Seller is not obligated by any Contract, agreement or other arrangementto indemnify any other person with respect to Taxes.  Seller is not now and hasever been a party to or bound by any agreement or arrangement (whether or notwritten and including, without limitation, any arrangement required orpermitted by law) binding Seller that (i) requires Seller to make any Taxpayment to or for the account of any other person, (ii) affords any otherperson the benefit of any net operating loss, net capital loss, investment Taxcredit, foreign Tax credit, charitable deduction or any other credit or Taxattribute which could reduce Taxes (including, without limitation, deductionsand credits related to alternative minimum Taxes) of Seller, or(iii) requires or permits the transfer or assignment of income, revenues,receipts or gains to Seller, from any other person. 

                                    (a)               Seller has withheld and paid over all Taxes required to have beenwithheld and paid over in connection with amounts paid or owing to anyemployee, independent contractor, creditor, stockholder or other third party. 

                                    (b)              Seller has not agreed to make, or has received any written notice fromthe Internal Revenue Service proposing that Seller make, any adjustmentspursuant to Sections 263A or 481(a) of the Code or any similarprovision of state, local or foreign law by reason of a change in accountingmethod initiated by Seller, and Seller has no application pending with anygovernmental authority requesting permission for any changes in accountingmethods that relate to the business or operations of Seller.

                                    (c)               Seller has not requested any private letter ruling of the InternalRevenue Service or comparable ruling of other Governmental Authorities.

                                    (d)              The Tax Returns of Seller for the two most recently completed tax years,complete and correct copies of which are attached as an exhibit toSection 5.10 in the Seller Disclosure Schedule, list all deductions givingrise to any current-year Tax loss set forth on the applicable Tax Returns andthe amount of each such Tax loss in each jurisdiction.

                                    (e)               Xsilogy has never been a member of an affiliated group of corporations,within the meaning of Section 1504 of the Code, other than as a commonparent corporation, within the meaning of Section 1504 of the Code (or anysimilar provision of state or local law), except where Seller was the commonparent corporation of such affiliated group.

                                    (f)                Seller has no liability for the Taxes of any person other than any ofXsilogy under Regulation Section 1.1502-6 (or any similar provision ofstate, local or foreign law), as a transferee or successor, by contract orotherwise.

                                    (g)               All elections with respect to the Tax Returns are reflected in the TaxReturns.

                                    (h)               Seller is not or has not been, a United States real property holdingcorporation (as defined in section 897(c)(2) of the Code) during theapplicable period specified in section 897(c)(1)(A)(ii) of the Code.

                                    (i)                 Seller is nor or has nor been a party to any joint venture, partnership,or other agreement that would be treated as a partnership for U.S. federalincome tax purposes.

                                    (j)                Seller has not participated in an international boycott as defined inSection 999 of the Code (or any similar provision of state, local orforeign law).

                                    (k)              As used in this Agreement, "Tax Returns" means all federal, state, localand foreign Tax returns, declarations, schedules, information returns, reportsand forms, and any amendments to any of the foregoing relating to Taxes,required to be filed with any governmental authority responsible for theimposition or collection of Taxes. 

                                    (l)                 As used in this Agreement, "Tax" or "Taxes" means (i) any federal,state, county, local or foreign taxes, charges, fees, levies or otherassessments, including all net income, gross income, premium, sales and use, advalorem, transfer, gains, profit, windfall profits, excise, franchise, real andpersonal property, gross receipts, capital stock, production, business andoccupation, employment, disability, payroll, license, estimated, customsduties, severance or withholding taxes, other taxes or similar charges of anykind imposed by a governmental authority and includes any interest andpenalties (civil or criminal) on or additions to any such taxes or in respectof a failure to comply with any requirement relating to any Tax Return and anyexpenses incurred in connection with the determination, settlement orlitigation of any tax liability.

    5.11       Intellectual Property.  

                    5.11.1   Set forth in Section 5.11.1 in the Xsilogy DisclosureSchedule is an accurate and complete list of (i) all foreign anddomestic patents, patent applications, invention disclosures, trademarks,service marks, trade names, internet domain names (and any registrations orapplications for registration for any of the foregoing trademarks, servicemarks, trade names and internet domain names) and all copyright applicationsand registrations and all other material Intellectual Property rights owned or usedby Xsilogy, (ii) other than as set forth in Section 5.11.1 in theXsilogy Disclosure Schedule, all customer agreements with respect to whichXsilogy received gross revenue of at least US$10,000 during the 24-month periodfrom October 1, 2002 to September 30, 2004 and (iii) allnon-customer agreements to which Seller is a party which concern any of itsIntellectual Property.

                    5.11.2   With regard to Intellectual Property:

                                    (a)               Seller owns, free and clear of any Encumbrances, or has sufficientrights to, the Intellectual Property; 

                                    (b)              No written claim of invalidity or ownership with respect to theIntellectual Property has been received by Seller from any third party and, toSeller's knowledge, no Intellectual Property is the subject of any pending orthreatened Action; 

                                    (c)               To Seller's Knowledge, it is not infringing on the intellectual propertyof any other person.  No person or entity has asserted against Seller thatSeller or any licensee of Seller or, to Seller's knowledge, Graviton, isinfringing or has infringed any domestic or foreign patent, trademark, servicemark, trade name, or copyright or design right, or has misappropriated orimproperly used or disclosed any trade secret, confidential information orknow-how; 

                                    (d)              All fees, annuities, royalties, honoraria and other payments which aredue from Xsilogy on or before the date of this Agreement for any of theIntellectual Property or under any agreement related to the IntellectualProperty have been paid;

                                    (e)               Except as limited by the terms of any license relating thereto, to Seller'sKnowledge, the making, using, selling, manufacturing, marketing, licensing,reproduction, distribution, disposal, modification, display, transmission orpublishing of any process, machine, manufacture, composition of matter, ormaterial related to any part of the Intellectual Property, does not and willnot infringe in any material respect any domestic or foreign patent, trademark,service mark, trade name, copyright, moral right or other intellectual propertyright of any third party, and does not and will not involve themisappropriation or improper use or disclosure of any trade secrets,confidential information or know-how of any third party; 

                                    (f)                To Seller's Knowledge, no unexpired foreign or domestic patents orpatent applications exist that are adverse to the interests of Xsilogy; 

                                    (g)               There exists no (A) prior act of Xsilogy or, to Seller's Knowledge,any third party that would void or invalidate any of the Intellectual Propertyor (B) conduct or use by Xsilogy or, to Seller's Knowledge, any third partythat would void or invalidate any of the Intellectual Property; and 

                                    (h)               The execution, delivery and performance of this Agreement by Xsilogy,and the consummation of the transactions contemplated hereby, will notmaterially breach, violate or conflict with any instrument or agreementrelating to the Intellectual Property to which Xsilogy is a party, will notcause the forfeiture or termination or give rise to a right of forfeiture ortermination of any of the Intellectual Property or in any way impair the rightof Xsilogy, to make, use, sell, license or dispose of, distribute, modify,display or transmit or to bring any action for the infringement of, anyIntellectual Property. 

                                    (i)                 Xsilogy has taken commercially reasonable steps to safeguard andmaintain the secrecy and confidentiality of (i) all trade secrets and(ii) to the extent required by applicable law, patent applications andtheir related inventions prior to the issuance of a patent registrationcontained in the Intellectual Property.

    5.12       Title to Assets and Properties.  Xsilogy has good, valid, and marketable title to, or avalid leasehold interest in, and unrestricted possession (other than under theterms of relevant leases) of, the assets and properties used by Xsilogy,located on its premises or shown on the Xsilogy Financial Statements, free andclear of all Encumbrances, except for assets and properties disposed of in theordinary course of business since September 30, 2004.

   5.13          Employee Benefit Plans.  

                    5.13.1   With respect to each Xsilogy Plan, Xsilogy has made available to SYS asubstantially correct and complete copy of the following (where applicable):(i) each writing constituting a part of such Xsilogy Plan, includingwithout limitation all plan documents, benefit schedules, trust agreements, andinsurance contracts and other funding vehicles; (ii) the three mostrecently filed Annual Reports (Form 5500 Series) and accompanyingschedules, if any; (iii) the current summary plan description, if any;(iv) the most recent annual financial report, if any; and (v) themost recent determination letter from the Internal Revenue Service, if any.

                                    (a)               To the Knowledge of Xsilogy, there are no existing circumstances or anyevents that have occurred that could adversely affect the qualified status ofany Xsilogy Plan that is a Qualified Plan or the related trust. 

                                    (b)              All contributions required to be made by Xsilogy to any Xsilogy Plan byapplicable laws or by any Xsilogy Plan document or other contractualundertaking, and all premiums due or payable with respect to insurance policiesfunding any Xsilogy Plan, for any period through the date hereof, have beenmade or paid in full. 

                                    (c)               To Seller's Knowledge, each Xsilogy Plan has been maintained andadministered in compliance with its terms and applicable law, including ERISAand the Code.  There is not now, and there are no existing circumstances thatcould reasonably be expected to give rise to, any requirement for the postingof security with respect to a Xsilogy Plan or the imposition of any Encumbranceon the assets of Xsilogy under ERISA or the Code with respect to a XsilogyPlan.

                                    (d)              Xsilogy has not, at any time within six years before the date hereof,maintained, contributed to or been obligated to contribute to any MultiemployerPlan or Multiple Employer Plan or any plan covered by Section 412 of theCode or Title IV of ERISA. 

                                    (e)               To the Knowledge of Xsilogy, there does not now exist, and there are noexisting circumstances that could reasonably be expected to result in, anyControlled Group Liability that would be a liability of Xsilogy following theClosing.  Without limiting the generality of the foregoing, Xsilogy has notengaged in any transaction described in Section 4069 or Section 4204of ERISA. 

                                    (f)                Except for health continuation coverage as required bySection 4980B of the Code or Part 6 of Title I of ERISA (orother applicable law pertaining to COBRA or Cal-COBRA), Xsilogy has noliability for life, health, medical or other welfare benefits to formeremployees or beneficiaries or dependents thereof and there has been nocommunication to employees of Xsilogy that promises or guarantees suchemployees retiree health or life insurance benefits or other retiree deathbenefits. 

                                    (g)               Neither the execution and delivery of this Agreement nor theconsummation of the transactions contemplated hereby will result in, cause theaccelerated vesting or delivery of, or increase the amount or value of, anypayment or benefit to any employee, officer, director or consultant ofXsilogy.  Without limiting the generality of the foregoing, no amount paid or payableby Xsilogy in connection with the transactions contemplated hereby, eithersolely as a result thereof or as a result of such transactions in conjunctionwith any other events, will be an "excess parachute payment" within the meaningof Section 280G of the Code. 

                                    (h)               Xsilogy has not received written notice of any pending, and to theKnowledge of Xsilogy there are no threatened, claims (other than claims forbenefits in the ordinary course), lawsuits or arbitrations that have beenasserted or instituted against the Xsilogy Plans, any fiduciaries thereof withrespect to their duties to the Xsilogy Plans, or the assets of any of thetrusts under any of the Xsilogy Plans that would reasonably be expected toresult in any material liability of Xsilogy to the Pension Benefit GuarantyCorporation, the US Department of Treasury, the US Department of Labor or anyMultiemployer Plan. 

                    5.13.2   As used in this Agreement, the following terms have the meanings givenbelow:

                                    (a)               "Benefit Obligation" means Xsilogy's aggregate financial liability toprovide all current, projected and contingent benefits to an employee, or suchemployee's beneficiaries or dependents, as the case may be, under the terms ofany of the Xsilogy Plans, regardless of whether an amount less than suchaggregate financial liability is reflected on Xsilogy's financial statementsunder applicable accounting rules.

                                    (b)              "Controlled Group Liability" means any and all liabilities(i) under Title IV of ERISA, (ii) under section 302 of ERISA,(iii) under sections 412 and 4971 of the Code, (iv) resulting from aviolation of the continuation coverage requirements of section 601 et seq. ofERISA and section 4980B of the Code or the group health plan requirements ofSection 701 et seq. of ERISA, and (v) under corresponding or similarprovisions of foreign laws or regulations, in each case other than pursuant tothe Xsilogy Plans.

                                    (c)               "ERISA" means the Employee Retirement Income Security Act of 1974, asamended. 

                                    (d)              "ERISA Affiliate" means, with respect to any entity, trade or business,any other entity, trade or business that is a member of a group described inSection 414(b), (c), (m) or (o) of the Code orSection 4001(b)(1) of ERISA that includes the first entity, trade orbusiness, or that is a member of the same "controlled group" as the firstentity, trade or business pursuant to Section 4001(a)(14) of ERISA.  As ofthe date hereof, Xsilogy has no ERISA Affiliates.

                                    (e)               "Xsilogy Employee" means a person who is, as of the Closing, an activeor inactive employee of Xsilogy.

                                    (f)                "Xsilogy Plans" means all employee benefit plans, programs and otherarrangements providing benefits to any current or former employee, officer,director or consultant (or any beneficiary or dependent thereof) in respect ofservices provided to Xsilogy, and whether covering one person or more than oneperson, sponsored or maintained by Xsilogy or to which Xsilogy contributes (oris obligated to contribute) or has any liability.  Without limiting thegenerality of the foregoing, the term "Xsilogy Plans" includes each "employeepension benefit plan" as defined in Section 3(2) of ERISA, each "employeewelfare benefit plan" as defined in Section 3(1) of ERISA, and eachagreement, plan, program, fund, policy, contract or arrangement (whetherwritten or unwritten) providing compensation, benefits, pension, retirement,superannuation, profit sharing, stock bonus, stock option, stock purchase,phantom or stock equivalent, bonus, thirteenth month, incentive, deferredcompensation, hospitalization, medical, dental, vision, vacation, lifeinsurance, death benefit, sick pay, disability, severance, termination,indemnity, redundancy pay, educational assistance, holiday pay, housingassistance, moving expense reimbursement, fringe benefit or similar employeebenefits covering any employee, former employee, or the beneficiaries anddependents of any employee or former employee, regardless of whether it ismandated under local law, voluntary, private, funded, unfunded, financed by thepurchase of insurance, contributory or non-contributory.

                                    (g)               "Multiemployer Plan" means a "multiemployer plan" within the meaning ofSection 4001(a)(3) of ERISA.  As of the date hereof, Xsilogy has noMultiemployer Plans.

                                    (h)               "Multiple Employer Plan" means a plan that has two or more contributingsponsors at least two of whom are not under "common control" within the meaningof Section 4063 of ERISA.  As of the date hereof, Xsilogy has no MultipleEmployer Plans.

                                    (i)                 "Qualified Plan" means a "qualified plan" within the meaning ofSection 401(a) of the Code.

    5.14       Contracts.  

                    5.14.1   Section 5.14 in the Xsilogy Disclosure Schedule lists each,and Xsilogy has provided SYS with correct and complete copies or summaries ofeach, Contract ("Contract" means all written or oral contracts, agreements,guarantees, licenses and executory commitments, other than Xsilogy Plans andreal property leases) to which Xsilogy is a party as of the date hereof andwhich falls within any one or more of the following categories: 

                                    (a)               Contracts not entered into in the ordinary course of Xsilogy's businessand that involve expenditures or receipts by Xsilogy of US$10,000 per month;

                                    (b)              Joint venture, partnership, strategic alliances and other Contracts(however named) involving a sharing of profits, losses, costs or liabilities;

                                    (c)               Leases for equipment or other personal property assets; 

                                    (d)              Contracts with respect to which Xsilogy received gross revenue of atleast US$10,000 during the 24-month period from October 1, 2002 toSeptember 30, 2004; 

                                    (e)               Contracts containing covenants purporting to limit the freedom ofXsilogy to compete in any line of business or in any geographic area or to hireany individual or group of individuals; 

                                    (f)                Contracts providing for the settlement of disputed claims (includingdisputed dollar amounts) with third parties;

                                    (g)               Powers of attorney that are currently outstanding;

                                    (h)               Contracts entered into other than in the ordinary course of businessthat contain or provide for an express undertaking to be responsible forconsequential damages;

                                    (i)                 Contracts which contain minimum purchase conditions in excess ofUS$10,000 or requirements or other terms that restrict or limit the purchasingrelationships of Xsilogy; 

                                    (j)                Contracts relating to any outstanding commitment for capitalexpenditures in excess of US$25,000; 

                                    (k)              Contracts with any labor organization, union, employee representative orgroup of employees;

                                    (l)                 Indentures, mortgages, promissory notes, loan agreements, guarantees ofborrowed money, letters of credit or other agreements, instruments orcommitments for the borrowing or the lending of money;

                                    (m)             Contracts providing for the creation of any Encumbrance upon any of theassets of Xsilogy;

                                    (n)               Contracts involving annual revenues to the business of Xsilogy in excessof 2.5% of Xsilogy's annual revenues during either of its past two fiscalyears; 

                                    (o)              Contracts providing for "earn-outs," "savings guarantees," "performanceguarantees," or other contingent payments involving more than US$10,000 peryear or US$50,000 over the term of the Contract;

                                    (p)              Contracts with or for the benefit of (A) any corporate affiliate ofXsilogy or (B) any immediate family member of any shareholder, director orofficer of Xsilogy;

                                    (q)              Contracts involving payments by Xsilogy of more than US$5,000 in any onemonth during the past 6 months; 

                                    (r)                Any Contracts that purport to limit the ability of the directors,officers, agents or employees of Xsilogy to engage in or continue any conduct,activity or practice relating to the business of Xsilogy, or assign to Xsilogyany rights to any invention, improvement or discovery; 

                                    (s)               Any cost-sharing, tax-sharing or transfer pricing agreements betweenXsilogy and any related or unrelated party; and

                                    (t)                Each amendment, supplement and modification with respect to any of theforegoing.

                    5.14.2   All such Contracts are valid, binding and enforceable obligations ofXsilogy and each other party thereto. 

                    5.14.3   Neither Xsilogy nor any other party thereto is in violation of or indefault in respect of, nor has there occurred an event or condition which withthe passage of time or giving of notice (or both) would constitute a defaultunder or permit the termination of, any such Contract.

                    5.14.4   As of the date hereof, Xsilogy is not engaged in any renegotiation ofand, to the Knowledge of Xsilogy, neither Xsilogy nor any third party theretohas any outstanding rights to renegotiate, any material amounts paid or payableunder such Contracts.

    5.15       Labor Matters.  

                    5.15.1   Xsilogy is not a party to any collective bargaining agreement or laborunion contract and is not required to consult or negotiate with any local workscouncil, union, labor board or any governmental authority concerning thetransactions contemplated by the Agreement.

                    5.15.2   Set forth in Section 5.15 in the Xsilogy Disclosure Schedule is alist of each agreement to which Xsilogy is a party pursuant to which anyindividual employed by Xsilogy or otherwise performing services primarily forXsilogy receives compensation in excess of $20,000 per annum, and Xsilogy hasfurnished or made available to SYS substantially complete and correct copies ofany such agreements in writing.  Xsilogy has not breached or otherwise failedto comply with any provisions of any agreement set forth therein and, to theKnowledge of Xsilogy, there are no grievances outstanding thereunder.  There isno labor strike, dispute or stoppage pending or, to the Knowledge of Xsilogy,threatened against Xsilogy.  To the Knowledge of Xsilogy, no campaign or otherattempt for recognition is pending by any labor organization or employee withrespect to employees of Xsilogy.

                    5.15.3   To its Knowledge, Xsilogy is in compliance with applicable laws and itsown policies respecting employment and employment practices, terms andconditions of employment, wages and hours, equal opportunity, equal pay, civilrights, labor relations, immigration, and occupational health and safety. Xsilogy has paid all payroll and wage taxes owed by it.

                    5.15.4   As of the date of this Agreement and except as required by applicablelaw, (i) Xsilogy is not a party to any outstanding employment agreementsor contracts with officers, managers and directors (or foreign equivalents) orXsilogy Employees that are not terminable at will, or that provide for thepayment of any bonus or commission; and (ii) Xsilogy is not a party to anyagreement, policy or practice that will require it to pay termination orseverance pay to salaried, non-exempt or hourly Xsilogy Employees after the Closing.

    5.16       Undisclosed Liabilities.  To its Knowledge, Xsilogy has no liabilities orobligations of any nature, whether absolute, accrued, contingent, choate,inchoate or otherwise and whether due or to become due, that, individually orin the aggregate, would reasonably be expected to have a Material AdverseEffect on Xsilogy, other than (a) liabilities disclosed to SYS in theXsilogy Financial Statements, (b) liabilities contemplated by thisAgreement and/or set forth in the Xsilogy Disclosure Schedule, and (c) liabilitiesincurred or accrued after the date hereof in the ordinary course of businessconsistent with past practice and not prohibited by this Agreement.

    5.17       Operation of Xsilogy's Business; Relationships.  Except as set forth inSection 5.17 of the Xsilogy Disclosure Schedule, since December 31,2003, no customer of Xsilogy has indicated to Xsilogy that such customer willstop or decrease purchasing materials, products or services from Xsilogy and nosupplier of Xsilogy has indicated to Xsilogy that such supplier will stop ordecrease the supply of materials, products or services to Xsilogy.

    5.18       Permits.  To its Knowledge, Xsilogy is in possession of alllicenses, permits, easements, variances, exemptions, consents, certificates,approvals and orders legally required in each jurisdiction to own, lease andoperate its properties and to carry on its business as currently conducted,including under any applicable Environmental Laws (collectively, the"Permits").  Xsilogy has not received notice of any Action pending, and to theKnowledge of Xsilogy no Action is threatened, regarding any of the Permitswhich, if successful, would reasonably be expected to have a Material AdverseEffect on Xsilogy.  Xsilogy is not in conflict with, or in default or violationof, any of the Permits, except for any such conflicts, defaults or violationswhich, individually or in the aggregate, would not reasonably be expected tohave a Material Adverse Effect on Xsilogy. 

    5.19       Real Property.  

                    5.19.1   Xsilogy does not own any real property. 

                    5.19.2   Section 5.19 in the Xsilogy Disclosure Schedule lists eachlease for real property to which Xsilogy is a party (each a "Lease"). Xsilogydoes not sublease any real property.  Xsilogy has delivered to SYS asubstantially correct and complete copy of each Lease.  With respect to eachLease:

                                    (a)               the Lease is legal, valid, binding, enforceable, and in full force andeffect with respect to Xsilogy, and, to the Knowledge of Xsilogy, with respectto the other party thereto, the Lease is legal, binding, enforceable, and infull force and effect;

                                    (b)              to the Knowledge of Xsilogy, no party to the Lease is in breach ordefault thereunder, and no event has occurred which, with notice or lapse oftime, would constitute a breach or default or permit termination, modification,or acceleration thereunder;

                                    (c)               Xsilogy has not, and to the Knowledge of Xsilogy no other party theretohas, repudiated any provision thereof;

                                    (d)              Xsilogy has not received written notice of any disputes with respectthereto, and Xsilogy is not party to any oral agreements or forbearanceprograms in effect as to the Lease;

                                    (e)               Xsilogy has not assigned, transferred, conveyed, mortgaged, deeded intrust, or encumbered any interest in the leasehold; and

                                    (f)                to the Knowledge of Xsilogy, the facility leased under the Lease hasreceived all approvals of Governmental Authorities (including Permits) requiredto be received by Xsilogy in connection with the operation thereof and havebeen operated and maintained by Xsilogy in accordance with applicable laws.

    5.20       Environmental Matters.  

                    5.20.1   With regard to environmental matters:

                                    (a)               To the Knowledge of Seller, the properties, operations and activities ofXsilogy are in compliance in all material respects with all applicableEnvironmental Laws and all past noncompliance of Xsilogy with any applicableEnvironmental Laws has been resolved without any pending, ongoing or futureobligation, cost or liability;

                                    (b)              Xsilogy has not received notice of any pending Action by or before anycourt or governmental authority under any Environmental Law, and to theKnowledge of Xsilogy no such Action is pending or threatened and there is nobasis for any present or future Action against it that may reasonably be likelyto lead to any liability;

                                    (c)               There has been no release, discharge or emission of any HazardousMaterial into the environment in material violation of applicable EnvironmentalLaws by Xsilogy in connection with its currently leased or formerly leasedproperties or operations that would be reasonably likely to have a MaterialAdverse Effect on Xsilogy; and

                                    (d)              There has been no material exposure in violation of applicableEnvironmental Laws of any person or property to any Hazardous Material inconnection with the properties, operations and activities of Xsilogy that wouldbe reasonably likely to have a Material Adverse Effect on Xsilogy.

                                    (e)               For purposes of this Agreement, the term "Environmental Laws" means allfederal, state, local or foreign laws relating to pollution or protection ofhuman health or the environment (including, without limitation, ambient air,surface water, groundwater, land surface or subsurface strata), including,without limitation, laws relating to emissions, discharges, releases orthreatened releases of Hazardous Materials into the environment, or otherwiserelating to the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of Hazardous Materials, as well as allauthorizations, codes, decrees, demands or demand letters, injunctions,judgments, licenses, notices, orders, permits, plans or regulations issued,entered, promulgated or approved thereunder.

                                    (f)                For purposes of this Agreement, the term "Hazardous Materials" meanschemicals, pollutants, contaminants, or industrial, toxic or hazardoussubstances or wastes as those terms are defined or identified in any EnvironmentalLaw or regulated by any Permit required by applicable Environmental Law,including but not limited to petroleum products or by-products, asbestos, andpolychlorinated materials.

    5.21       Board Recommendation.  The board of directors of Xsilogy, at a meeting dulycalled and held, has by majority vote of those directors present, whether inperson or telephonically, and constituting a quorum of the directors then inoffice, (i) determined that this Agreement and the transactionscontemplated hereby, are fair to and in the best interests of the XsilogyStockholders, and (ii) resolved to recommend to the holders of the sharesof Xsilogy Capital Stock that such holders approve this Agreement and thetransactions contemplated herein, (the "Xsilogy Board Recommendation").

    5.22       Accounts Receivable.  The accounts and notes receivable reflected in theXsilogy Financial Statements (i) arose from bona fide sales transactionsin the ordinary course of business and are payable on ordinary trade terms,(ii) are legal, valid and binding obligations of the respective debtorsenforceable in accordance with their terms, (iii) are not subject to validset-off or counterclaim, and (iv) are collectible in the ordinary courseof business consistent with past practice in the aggregate recorded amountsthereof.

    5.23       Insurance.  Section 5.23 in the Xsilogy DisclosureSchedule lists all insurance policies pursuant to which Xsilogy ispresently insured and during each of the past three calendar years has beeninsured (each, an "Insurance Policy" and, collectively, the "InsurancePolicies").  Each Insurance Policy is, in all material respects, in full forceand effect in accordance with its terms and all premiums reflected on invoicesreceived by Xsilogy to date have been paid in full.  No written notice ofcancellation with respect to any Insurance Policy has been received by Xsilogyand, to the Knowledge of Xsilogy, there is no existing default or event which,with the giving of notice or lapse of time or both, would constitute a defaultthereunder.  Xsilogy is a "named insured" or an "insured" under each InsurancePolicy.  Xsilogy has not been refused any insurance, nor has the coverage ofXsilogy been limited, by any insurance carrier to which it has applied forinsurance or with which it has carried insurance during the past three years. The Insurance Policies are of the type and in the amounts that would reasonablybe expected to be maintained in the ordinary course of business for similarlysituated companies in the same or a similar industry.  Set forth inSection 5.23 in the Xsilogy Disclosure Schedule is (a) withrespect to each Policy under which the annual premium amount is fixed, thecurrent amount of such premium, and (b) with respect to each Policy underwhich the periodic or annual premium amount is variable, the amount of the mostrecent periodic payment made and the calculation formula with respect to suchpremium. 

    5.24       Product or Service Warranty.  To the Knowledge of Xsilogy, within the three years priorto the date hereof: (a) each product or service sold or delivered byXsilogy has been in material conformity with any applicable express and impliedwarranties, (b) Xsilogy has no current liability for damages in connectionwith any such warranty (and there is no basis for any present or future Actionagainst it that may reasonably be likely to lead to any liability) and(c) no product or service sold or delivered by Xsilogy is subject to anyguaranty, warranty, or other indemnity beyond the applicable standard terms andconditions of sale given by Xsilogy, if any, or as required by applicable law.

    5.25       Data Protection Matters.  

                    5.25.1   Xsilogy has not received notice of any existing or pending, and to theKnowledge of Xsilogy there is no threatened, Action against Xsilogy by orbefore any court or governmental authority under any Data Protection Law. Xsilogy has never instituted a policy with respect to, or taken steps to complywith or protect Personal Data as required under, any Data Protection Law.

                    5.25.2   As used in this Agreement, the term "Data Protection Laws" means allfederal, state, local or foreign laws, statutes, orders, rules, regulations,policies or guidelines, or judgments, decisions or orders entered by anygovernmental authority, relating to Personal Data.

                    5.25.3   As used in this Agreement, the term "Personal Data" means any and allinformation that Xsilogy maintains or otherwise processes that relates to anidentified or identifiable natural person, including employees, stockholders,customers, customers of customers, vendors, contractors, and other businesspartners of Xsilogy, and any employees of or contractors to any of theforegoing.

    5.26       Foreign Corrupt Practices Act.  

                    5.26.1   Xsilogy has not, to secure any improper advantage in order to obtain orretain business, directly or indirectly offered, paid, given, or promised topay, or authorized the payment of, any money, offer, gift, or other thing ofvalue, to:

                                    (a)               an officer or employee of any governmental authority, or any personacting in an official capacity for or on behalf of any governmental authority;

                                    (b)              any political party or official thereof;

                                    (c)               any candidate for political or political party office; or

                                    (d)              any other individual or entity;

                                    (e)               while knowing or having reason to believe that all or any portion ofsuch money or thing of value would be offered, given, or promised, directly orindirectly, to any person or entity listed in clauses (i) -(iii) above.

                                    (f)                Xsilogy maintains a system of internal accounting controls adequate toinsure that it maintains no off-the-books accounts and that its assets are usedonly in accordance with its management's directives.

                                    (g)               No product sold or service provided by Xsilogy has been directly orindirectly sold to or performed on behalf of Cuba, Iraq, Iran, Libya, or Sudan.

    5.27       Government Contracts.  With respect to any Government Authority Contracts, thereis, as of the date of this Agreement, no (a) civil fraud or criminalinvestigation by any governmental authority that, individually or in theaggregate, has had or would reasonably be expected to have a Material AdverseEffect on Xsilogy, (b) suspension or debarment proceeding (or equivalentproceeding) against Xsilogy that, individually or in the aggregate, has had orwould reasonably be expected to have a Material Adverse Effect on Xsilogy,(c) request by a governmental authority for a contract price adjustmentbased on a claimed disallowance by the Defense Contract Audit Agency (or otherapplicable governmental authority) or claim of defective pricing,(d) dispute between Xsilogy and a governmental authority which, sinceDecember 31, 2000, has resulted in a government contracting officer'sfinal decision where the amount in controversy exceeds or is expected to exceed$50,000, (e) claim or request for equitable adjustment by Xsilogy againsta governmental authority in excess of $50,000, or (f) any claim orassertion by a governmental authority that Xsilogy may have violated applicablerules regarding conflicts of interest or statutes, rules or regulationsregarding the integrity of the purchase process.  For purposes of thisAgreement, the term "Government Authority Contract" means any contract,agreement, subcontract, or bid with or to any agency or department of thefederal government of the United States, any state government, any county ormunicipality of any state, or any foreign government.

    5.28       Relations with Governments.  Neither Xsilogy, nor any director, officer, agent oremployee of Xsilogy, has (a) used any funds for unlawful contributions,gifts, entertainment or other unlawful expenses related to political activity,(b) made any unlawful payment or offered anything of value to foreign ordomestic government officials or employees or to foreign or domestic governmentofficials or employees or to foreign or domestic political parties orcampaigns, (c) made any other unlawful payment, or (d) violated anyapplicable export control, money laundering or anti-terrorism law orregulation.

    5.29       No Existing Discussions.  As of the date of this Agreement, Xsilogy is not engaged,directly or indirectly, in any negotiations or discussions with any other partywith respect to an acquisition of a controlling interest in Xsilogy or theassets of Xsilogy.

    5.30       Disclosure.  The representations and warranties contained in thisArticle V, taken as a whole, do not contain any untrue statement of amaterial fact or omit to state any material fact necessary in order to makesuch representations and warranties, in light of the circumstances under whichthey were made, not misleading.

**ARTICLE VICOVENANTS OF THE PARTIES**

    6.1           Mutual Covenants.  

                    6.1.1       Reasonable Efforts; Notification.  Each of the parties agrees touse all commercially reasonable efforts to take, or cause to be taken, allactions, and to do, or cause to be done, and to assist and cooperate with theother parties in doing, all things necessary, proper or advisable to consummateand make effective, in the most expeditious manner practicable, thetransactions contemplated by this Agreement, including (A) the obtainingof all other necessary actions or nonactions, waivers, consents, licenses,permits, authorizations, orders and approvals from Governmental Authorities andthe making of all other necessary registrations and filings (including otherfilings with Governmental Authorities, if any), (B) the obtaining of allconsents, approvals or waivers from third parties set forth in Schedule 5.4.4in the Xsilogy Disclosure Schedule, and (C) the execution and delivery ofany additional instruments necessary to consummate the transaction contemplatedby this Agreement. 

                    6.1.2       Public Announcements.  SYS and Xsilogy shall consult with eachother before issuing, and give each other the opportunity to review and commentupon, any other press release or public statements with respect to thetransactions contemplated by this Agreement, and shall not issue any such pressrelease or make any such public statement prior to such consultation, except asmay be required by applicable law, court process or by obligations pursuant toany listing agreement of SYS with any national securities exchange or nationalsecurities quotation system.

    In addition to the foregoing, neither SYS nor Xsilogy shallissue any press release or otherwise make any public statement or disclosureconcerning non-public information relating to the other party's business,financial condition or results of operations without the consent of the otherparty, which consent shall not be unreasonably withheld, conditioned ordelayed, or except as required by applicable law.

                    6.1.3       Notices of Certain Events.  Each party hereto shall promptlynotify the other parties in writing of:

                                    (a)               The receipt by such party or any of such party's subsidiaries of anynotice or other communication from any person alleging that the consent of suchperson is or may be required in connection with the transactions contemplatedby this Agreement;

                                    (b)              Subject to any applicable legal restrictions, the receipt by such partyor any of such party's subsidiaries of any notice or other communication fromany governmental authority in connection with the transactions contemplated bythis Agreement;

                                    (c)               Such party's obtaining Knowledge of any Actions commenced or threatenedagainst, relating to or involving or otherwise affecting any of the otherparties hereto, as the case may be, or, with respect to SYS or Xsilogy, any oftheir respective subsidiaries, which relate to the consummation of thetransactions contemplated by this Agreement; and

                                    (d)              Such party's obtaining Knowledge of the occurrence, or failure to occur,of any event which occurrence or failure to occur will be likely to cause theconditions set forth in Article VII not to be satisfied; provided,however, that no such notification shall affect the representations,warranties or obligations of the parties or the conditions to the obligationsof the parties hereunder, or limit or otherwise affect the remedies availablehereunder to the party receiving such notice.

                    6.1.4       Notification.  Between the date of this Agreement and theClosing, each party hereto shall promptly notify the other parties hereto inwriting if such party becomes aware of any fact or condition that causes orconstitutes a breach in any of its representations and warranties as of thedate of this Agreement or any other date applicable to a  representation orwarranty as set forth herein.  Should any such fact or condition require anychange in the Xsilogy Disclosure Schedule, Xsilogy shall promptly deliver toSYS a written statement specifying such change.  Such delivery will not affectany rights of any party under any other provision of this Agreement.  Duringthe same period, each party shall promptly notify the other parties in writingif such party becomes aware of the occurrence of any breach of any covenant ofsuch party in this Agreement or the occurrence of any event that may make thesatisfaction of the conditions in Article VII impossible or unlikely.

    6.2           Covenants of SYS.  

                    6.2.1       Registration.

                                    (a)               All shares of SYS Common Stock issued pursuant to this Agreement shallbe issued without registration under the Securities Act of 1933, as amended,and applicable state securities law.  The certificates evidencing such sharesshall bear restrictive legends.  SYS will use its best efforts to register forresale with the SEC all SYS shares issued pursuant to this Agreement.  For aperiod of eighteen (18) months following the effectiveness of any suchregistration, SYS will not voluntarily terminate the registration and, to theextent that the registration statement or the prospectus which is a partthereof requires amendment or supplement under the Securities Act of 1933 andthe rules adopted thereunder, will exercise reasonable commercial efforts toexpeditiously amend or supplement such registration statement, including theprospectus which is a part thereof.

                                    (b)              SYS shall provide to each person whose Registrable Securities areregistered a suitable number of prospectuses, and supplements thereto, as soonas possible following the effectiveness of the registration or the filing ofthe supplement, as the case may be.

                                    (c)               SYS shall have the right to terminate or withdraw any registrationinitiated by it under this Section 6.2.1 prior to the effectiveness ofsuch registration, but without prejudice to its obligations pursuant to thisSection 6.2.1.

                    6.2.2       Preferred Customer Status.  Following the Closing, SYS willextend preferred customer status to any commercial investor who was an XsilogyStockholder at the time of the Closing.  Preferred customer status will entitlesuch Xsilogy Stockholder to a 2% credit against the cost of Xsilogy productspurchased by such Xsilogy Stockholder.

                    6.2.3       Product Warranties.  Following the Closing, Buyer shall fulfillthe obligation of Seller to provide replacement parts under existing warrantiesissued by the Seller solely to the extent of the inventory of Seller which isacquired by Buyer at the Closing.

    6.3           Covenants of Xsilogy.  Xsilogy agrees andwarrants that:

                    6.3.1       Xsilogy Stockholders Meeting.  Xsilogy shall take all actionsrequired by applicable law, the Xsilogy Articles and the Xsilogy Bylaws to dulycall, give notice of, convene and hold a special meeting of XsilogyStockholders (the "Xsilogy Stockholders Meeting") on the earliest practicabledate, to consider and vote upon approval of this Agreement and the transactionscontemplated hereby to the extent the approval of such other transactions bythe Xsilogy Stockholders is required thereby.

                    6.3.2       Access to Information; Confidentiality.  Upon reasonable notice,Xsilogy shall afford to the officers, employees, accountants, counsel,financial advisors and other representatives of SYS reasonable access duringnormal business hours, during the period prior to the Closing, to such of itsproperties, books, contracts, commitments, records, all other information anddata, officers and employees as SYS may reasonably request and, during suchperiod, Xsilogy shall furnish promptly to SYS (a) a copy of each report,schedule, and other document filed, published, announced or received by itduring such period pursuant to the requirements of applicable laws (other thandocuments which such party is not permitted to disclose under applicable laws),and (b) consistent with its legal obligations, all other informationconcerning it and its business, properties and personnel as SYS may reasonablyrequest; provided, however, that Xsilogy may restrict theforegoing access to the extent that it reasonably concludes, after consultationwith outside legal counsel, that (i) any applicable law requires Xsilogyto restrict access to any properties or information, (ii) providing suchaccess would result in the loss of the attorney-client privilege,(iii) such documents discuss the pricing or dollar value of the transactionscontemplated by this Agreement, (iv) such documents contain competitivelysensitive information, the sharing of which could constitute a violation of anyapplicable Antitrust Laws or (v) such disclosure is reasonably likely toresult in a breach of or default under any contract or agreement to whichXsilogy is a party.  The parties shall hold any such information in confidenceto the extent required by, and in accordance with, the provisions of the letterof intent dated as of October 29, 2004, between SYS and Xsilogy (the"Letter of Intent").  Each party shall make all commercially reasonable effortsto minimize disruption to the business of the other party and its subsidiarieswhich may result from the requests for data and information hereunder.  All requestsfor access and information shall be coordinated through senior executives ofthe parties to be designated.

                    6.3.3       No Solicitation.  Subject to the legal obligations of the XsilogyBoard of Directors to the shareholders of Xsilogy, until the Closing or thetermination of this Agreement:

                                    (a)               Xsilogy will not, and will not permit or cause any Subsidiary or any ofthe directors or officers of Xsilogy or any Subsidiary, and will directXsilogy's employees, agents and representatives not to, directly or indirectly,solicit, initiate, encourage, or furnish or disclose information in furtheranceof, or otherwise facilitate any inquiries that may be reasonably expected tolead to, the making of any proposal or offer with respect to a merger,reorganization, share exchange, consolidation, or similar transactioninvolving, or any purchase of 10% or more of the assets or any equity of,Xsilogy or any Subsidiary or any other business combination other than thetransactions contemplated by this Agreement (any such proposal or offer, an"Acquisition Proposal").

                                    (b)              Xsilogy will not, and will not permit or cause any Subsidiary or any ofthe officers or directors of it or any Subsidiary to, and shall direct its andsuch Subsidiary's employees, agents and representatives not to, directly orindirectly, engage in any negotiations concerning, or provide any confidentialinformation or data to, or have any discussions with, any person relating to anAcquisition Proposal, whether such Acquisition Proposal arises or has arisenbefore or after the date of this Agreement, or otherwise facilitate any effortor attempt to make or implement an Acquisition Proposal.

                                    (c)               Xsilogy will immediately cease all existing activities, discussions andnegotiations with any parties conducted heretofore with respect to anyAcquisition Proposal and request the return of all confidential informationregarding such party provided to any such parties prior to the date hereofpursuant to the terms of any confidentiality agreements or otherwise.  Xsilogywill notify SYS immediately if any such inquiries, proposals, or offers arereceived by, any such information is requested from, or any such discussions ornegotiations are sought to be initiated or continued with, any of itsrepresentatives indicating, in connection with such notice, the name of suchperson and the material terms and conditions of any proposals or offers andthereafter shall keep SYS informed, on a reasonably current basis, on thestatus and terms of any such proposals or offers and the status of any suchnegotiations or discussions.

                   6.3.4       Noncompetition.

                                    (a)               For a period beginning on the Closing Date and ending on the earlier ofthe date on which neither Buyer nor any of its Affiliates are engaged inSeller's Business or five (5) years after the Closing, Seller shall not,directly or indirectly, anywhere in the United States of America or in anyother part of the world where Seller has conducted any activity, withoutBuyer's prior written consent (i) carry on or engage in any business thesame as, similar to or in competition with any activity engaged in by Sellerprior to the Closing Date including, but not limited to, Seller's Business("Competing Business") as a principal, or on its own account, or solely orjointly with others as an agent, consultant, officer, director, employee,owner, creditor or in any other capacity; (ii) give advice to, orotherwise act on behalf of, a Competing Business; (iii) solicit anyemployee of Buyer for employment with a Competing Business; or (iv) useany trade secret, know-how, proprietary or other confidential information orany other information included in the Acquired Assets ("ConfidentialInformation") in any way or disclose, divulge or communicate any confidentialinformation concerning Seller's Business to any third party.

                                    (b)              Seller understands that it would be difficult to ascertain with anydegree of accuracy the dollar amount of damage resulting from a continuingbreach by Seller of any covenants contained in paragraph 6.3.4(a) hereof,and that money damages would not adequately compensate Buyer for any suchbreach and, therefore, that Buyer would not have an adequate remedy at law.  Inthe event any action or proceeding shall be instituted by Buyer to enforce anyprovision of paragraph 6.3.4(a), Seller shall waive the claim or defensein such action that there is an adequate remedy at law available to Buyer, andSeller shall not urge in any such action or proceeding the claim or defensethat such remedy at law exists.  Buyer shall have, in addition to any and allremedies at law, the right, without posting of bond or other security, to aninjunction, both temporary or permanent, specific performance and/or otherequitable relief to prevent the violation of any obligation underparagraph 6.3.4(a).  Buyer's remedies for any breach ofparagraph 6.3.4(a) by Seller shall be cumulative, and seeking or obtaininginjunctive or other equitable relief shall not preclude the making of a claimfor damages or other relief.

                                    (c)               If any provision of paragraph 6.3.4(a) as applied to anycircumstance shall be adjudged by a court to be invalid or unenforceable, thesame shall in no way affect any other provision of this Agreement, theapplication of such provision in any other circumstances, or the validity ofenforceability of this Agreement.  If any such provision, or any part thereof,is held to be unenforceable because of the duration or scope of such provisionor activity or area covered thereby, Buyer and Seller agree that the courtmaking such determination shall have the power to limit, construe or reduce theduration, scope, activity and/or area of such provision, and/or delete specificwords or phrases, and in its reduced form, such provision shall then beenforceable and shall be enforced.

                    6.3.5       Payments to Creditors.  Immediately following the Closing, Sellershall (i) make the payments to its trade creditors described inSection 7.3.10 and (ii) provide Buyer with copies of the checks bywhich such payments are made.

**ARTICLE VIICONDITIONS**

    7.1           Conditions to the Obligations of Each Party.  The obligations of SYS and Xsilogy to consummate thetransactions contemplated by this Agreement shall be subject to thesatisfaction or waiver of the following conditions: 

                    7.1.1       This Agreement and the transactions contemplated hereby shall have beenunanimously approved and adopted by the Xsilogy Stockholders in the mannerrequired by applicable law.

                    7.1.2       No provision of any applicable law or regulation and no judgment,injunction, order, decree, ruling, assessment or arbitration award of anygovernmental authority or arbitrator and any Contract with any governmentalauthority pertaining to compliance with applicable law shall prohibit or enjointhe consummation of the transactions contemplated by this Agreement or limitthe ownership or operation by SYS, Xsilogy or any of their respective subsidiariesof any material portion of the businesses or assets of SYS or Xsilogy. 

                    7.1.3       There shall not be pending any Action (i) challenging or seeking torestrain or prohibit the consummation of the transactions contemplated by thisAgreement, or (ii) seeking to prohibit or limit the ownership or operationby SYS, Xsilogy or any of their respective subsidiaries of, or to compel SYS,Xsilogy or any of their respective subsidiaries to dispose of or hold separate,any material portion of the business or assets of SYS, Xsilogy or any of theirrespective subsidiaries, as a result of the transactions contemplated by thisAgreement.

                    7.1.4       Buyer shall have entered into an employment agreement with PrincipalStockholder, effective as of the Closing, which shall include termssubstantially similar to those applicable to persons in positions of equivalentcapacity or responsibility with Buyer.

    7.2           Conditions to Obligations of Xsilogy.  The obligations of Xsilogyto consummate the transactions contemplated hereby shall be subject to thefulfillment of the following conditions unless waived by Xsilogy:

                    7.2.1       Each of the representations and warranties of SYS contained in thisAgreement shall be true and correct in all material respects (but withoutregard to any materiality qualifications or references to Material AdverseEffect contained in any specific representation or warranty), in each case onthe date of this Agreement and on and as of the Closing as though made on andas of the Closing (except for representations and warranties made as of someother specified date, in which case as of such specified date), except whereany such failure of the representations and warranties to be true and correct,individually or in the aggregate, could not reasonably be expected to have aMaterial Adverse Effect on SYS, Xsilogy or the transactions contemplated bythis Agreement.

                    7.2.2       SYS (i) shall have performed or complied in all material respectswith all agreements and covenants required to be performed by it under thisAgreement at or prior to the Closing that are qualified as to Material AdverseEffect and (ii) shall have performed or complied in all material respectswith all agreements and covenants required to be performed by it under thisAgreement at or prior to the Closing that are not qualified as to MaterialAdverse Effect except where such non-performance or non-compliance individuallyor in the aggregate would not reasonably be expected to have a Material AdverseEffect on SYS.

                    7.2.3       SYS shall have furnished Xsilogy with a certificate dated the ClosingDate signed on behalf of it by its President and Chief Executive Officer or itsChief Financial Officer to the effect that the conditions set forth inSections 7.2.1 and 7.2.2 have been satisfied.

    7.3           Conditions to Obligations of SYS.  The obligations of SYS toconsummate the transactions contemplated hereby shall be subject to thefulfillment of the following conditions unless waived by SYS: 

                    7.3.1       Each of the representations and warranties of Xsilogy contained in thisAgreement shall be true and correct in all material respects (but withoutregard to any materiality qualifications or references to Material AdverseEffect contained in any specific representation or warranty), in each case, onthe date of this Agreement and on and as of the Closing as though made on andas of the Closing (except for representations and warranties made as of someother specified date, in which case, as of such specified date), except whereany such failure of the representations and warranties to be true and correctwould not reasonably be expected to have a Material Adverse Effect on Xsilogy,SYS or the transactions contemplated by this Agreement.

                    7.3.2       Xsilogy (i) shall have performed or complied in all materialrespects with all agreements and covenants required to be performed by it underthis Agreement at or prior to the Closing that are qualified as to MaterialAdverse Effect and (ii) shall have performed or complied in all materialrespects with all agreements and covenants required to be performed by it underthis Agreement at or prior to the Closing that are not qualified as to MaterialAdverse Effect except where such non-performance or non-compliance would notreasonably be expected to have a Material Adverse Effect on Xsilogy.

                    7.3.3       Xsilogy shall have furnished SYS with an officer's certificate, datedthe Closing Date and in the form set forth as Exhibit D to this Agreement,to the effect that the conditions set forth in Sections 7.3.1 and 7.3.2have been satisfied.

                    7.3.4       All consents set forth in Section 5.4.4 in the Xsilogy DisclosureSchedule shall have been obtained by Xsilogy or waived by SYS. 

                    7.3.5       Buyer shall have (1) completed, to its satisfaction, its duediligence investigation of Seller, including, without limitation, physicalinspection of the assets to be acquired, review of all appropriatedocumentation supporting all of such assets, review of the Xsilogy FinancialStatements (including particularly the adequacy of the reserves contained inthe Xsilogy Financial Statements), and any and all documents related to theGraviton transaction and (2) found the results of its due diligenceinvestigation to be acceptable in its sole discretion.

                    7.3.6       Buyer shall have engaged a third party valuation firm to conduct apreliminary assessment of the anticipated purchase price allocation of thetransactions contemplated by this Agreement, which assessment shall include inparticular the allocation of the purchase price as it relates to the Gravitonassets to be acquired, and such allocation shall be satisfactory to Buyer inits sole discretion.

                    7.3.7       Seller shall have contractual commitments for at least $150,000 infuture revenues to the satisfaction of Buyer at the time of Closing.

                    7.3.8       The promissory notes of Xsilogy to the former Graviton shareholdersshall have been converted into an equity interest in Xsilogy upon termssatisfactory to the Xsilogy Board of Directors.

                    7.3.9       All of the Xsilogy Stockholders (including those persons who becomestockholders as a consequence of the conversion to equity of the notesdescribed in Section 7.3.8), all of the employees of Xsilogy, and all ofthe current note holders of Xsilogy shall have executed a form of release ofany and all claims against SYS or Xsilogy, which release shall be satisfactoryin form and content to SYS.  Principal Stockholder shall have executed anddelivered to Buyer any and all documents deemed necessary by Buyer to terminateany security interest which Principal Stockholder may have in the AcquiredAssets.

                    7.3.10   Each current trade creditor of Seller shall have executed a letterindicating the amount owed such creditor by Seller and releasing Seller andBuyer from further claims upon payment of such amount.  The form of this tradecreditor letter is attached to this Agreement as Exhibit E.

                    7.3.11   Seller shall have delivered to Buyer originally signed documentsnecessary to change its corporate name, including without limitation documentsreflecting the reservation of a new corporate name with the State of Delawareand an amendment to its Certificate of Incorporation changing its corporatename to the name so reserved.

                    7.3.12   Principal Stockholder shall have executed and delivered to Buyer theNoncompetition Agreement, a copy of which is attached hereto as Exhibit F.

**ARTICLE VIIITERMINATION**

    8.1           Termination.  This Agreement may beterminated prior to the Closing (notwithstanding any approval of this Agreementby Xsilogy Stockholders): 

                    8.1.1       By mutual written consent of SYS and Xsilogy;

                    8.1.2       By SYS or Xsilogy:

                                    (a)               if there shall be any law or regulation that makes consummation of thetransactions contemplated hereby illegal or otherwise prohibited, or if anyjudgment, injunction, order or decree of a court or other competentgovernmental authority enjoining SYS or Xsilogy from consummating thetransactions contemplated hereby shall have been entered and such judgment,injunction, order or decree shall have become final and nonappealable;provided, that the party seeking to terminate this Agreement pursuant to thisSection 8.1.2 shall have used commercially reasonable efforts to preventthe entry of and to remove such impediment to the transactions contemplated hereby;

                                    (b)              if the transactions contemplated hereby shall not have been consummatedbefore the Termination Date, provided, however, that the right to terminatethis Agreement under this Section 8.1.2(b) shall not be available to anyparty whose failure to perform any material covenant or obligation under thisAgreement has been the cause of or resulted in the failure of the transactionscontemplated hereby to occur on or before such date; or

                                    (c)               if at the Xsilogy Stockholders Meeting (including any adjournment orpostponement thereof) the unanimous vote of the Xsilogy Stockholders to approvethe transactions contemplated hereby shall not have been obtained.

                    8.1.3       By SYS if Xsilogy has breached any of its representations and warrantiesin Article IV of this Agreement and as a result thereof, the condition setforth in Section 7.3.1 could not be satisfied; 

                    8.1.4       By SYS if there has been any change in the assets, liabilities, businessprospects, results of operations or financial condition of Xsilogy that wouldconstitute a Material Adverse Effect on Xsilogy; or

                    8.1.5       By Xsilogy if SYS shall have breached any of its representations andwarranties in Article IV of this Agreement and as a result thereof, thecondition set forth in Section 7.2.1 could not be satisfied.

    8.2           Effect of Termination.  In the event of the termination of this Agreementpursuant to Section 8.1, this Agreement, except for Section 2.3,shall become void and have no effect, without any liability on the part of anyparty or such party's directors, officers or stockholders.  Notwithstanding theforegoing, nothing in this Section 8.2 shall relieve any party to thisAgreement of liability for a material breach of any provision of thisAgreement. 

**ARTICLE IXSURVIVAL OF REPRESENTATIONS AND WARRANTIES**

    9.1           Survival of Representations and Warranties.  

                    9.1.1       The representations, warranties, covenants and agreements made herein byXsilogy shall survive, irrespective of any different survival period under anyapplicable statute of limitation, until the third anniversary of the Closing.

                    9.1.2       This Section 9.1 shall not limit any covenant or agreement of theparties hereto, which by its terms contemplates performance after the Closingor after the termination of this Agreement.

                    9.1.3       Notwithstanding any right of SYS to investigate the affairs of Xsilogyor of Xsilogy to investigate the affairs of SYS, SYS shall have the right torely fully upon the representations, warranties, covenants and agreementscontained in this Agreement, or in any instrument required to be deliveredpursuant to this Agreement, and Xsilogy shall have the right to rely fully uponthe representations, warranties, covenants, and agreements of SYS contained inthis Agreement or in any such instrument.  No information or knowledge obtainedby a party hereto in an investigation conducted by such party shall affect orbe deemed to modify any representation or warranty of any other party containedherein or the conditions to the obligations of the parties to consummate thetransactions contemplated hereby.  The right to indemnification contained inthis Article IX, or to any other remedy based on a breach of therepresentations, warranties, covenants, and obligations of another party, willnot be affected by any investigation conducted by a party with respect to, orany knowledge acquired (or capable of being acquired) at any time, whetherbefore or after the execution and delivery of this Agreement or the ClosingDate, about an accuracy or inaccuracy of or compliance with, anyrepresentation, warranty, covenant or obligation of any other party.

**ARTICLE XMISCELLANEOUS**

    10.1       Notices.  All notices and other communications hereunder shall bein writing and shall be deemed given if delivered personally, sent by facsimile(with written confirmation of successful delivery) or dispatched by anationally recognized overnight courier service to the parties at the followingaddresses (or at such other address for a party as shall be specified by likenotice from such party to the other parties hereto):  
> If to SYS:  
SYS Technologies				5050 Murphy Canyon Road, Suite200				San Diego, CA 92123				Facsimile:  (858) 715-5510				Attention:  Michael W. Fink,Secretary
With a copy to:  
Luce, Forward, Hamilton &Scripps LLP				600 West Broadway, Suite 2600				San Diego, CA 92101				Attention:  Otto E. Sorensen,Esq.				Facsimile:  (619) 645-5324
If to Xsilogy:  
Xsilogy, Inc.				6042 Cornerstone Court West,Suite A				San Diego, CA 92121				Attention: Richard Kriss, ChiefExecutive Officer				Facsimile:  ______________
With acopy to:  
Blanchard, Krasner &French, APC				800 Silverado Street, 2ndFloor				La Jolla, CA 92037				Attention: Robert W. Blanchard,Esq.				Facsimile: (858) 551-2434

    10.2       Interpretation.  

                    10.2.1    When a referenceis made in this Agreement to an Article or Section, such reference shallbe to an Article or Section of this Agreement unless otherwiseindicated.  The headings, the table of contents and the index of defined termscontained in this Agreement are for reference purposes only and shall notaffect in any way the meaning or interpretation of this Agreement.  Wheneverthe words "include," "includes," or "including" are used in this Agreement,they shall be deemed to be followed by the words "without limitation."  

                    10.2.2   For the purposes of any provision of this Agreement, a "Material AdverseEffect" with respect to any party shall be deemed to occur if any event, changeor effect has occurred which has a material adverse effect on the business,assets (including intangible assets), liabilities (contingent or otherwise),results of operations, business prospects, or financial condition of such partytaken as a whole, or a material adverse effect on the ability of such party totimely perform its obligations under this Agreement and the other transactiondocuments contemplated hereby; provided, however, none of thefollowing shall be deemed in themselves, either alone or in combination, toconstitute, and none of the following shall be taken into account indetermining whether there has been, a Material Adverse Effect: 

                                    (a)               with respect to any party, any change in or effect upon the assets(including intangible assets), liabilities (contingent or otherwise), financialcondition, business prospects, or results of operations of such party directlyor indirectly arising out of or attributable to any decrease in the marketprice of SYS Common Shares (but not any change or effect underlying suchdecrease to the extent such change or effect would otherwise constitute aMaterial Adverse Effect on SYS); 

                                    (b)              with respect to any party, any change in or effect upon the assets(including intangible assets), liabilities (contingent or otherwise), financialcondition, business prospects, or results of operations of such party directlyor indirectly arising out of or attributable to (A) conditions, events, orcircumstances generally affecting the economy of the United States, or(B) the general state of industries and market sectors in which such partyoperates; and

                                    (c)               with respect to Xsilogy, any change in or effect upon the assets(including intangible assets), liabilities (contingent or otherwise), financialcondition, or results of operations of Xsilogy directly or indirectly arisingout of or attributable to the loss by Xsilogy of any of its business prospectsor customers (including business of such business prospects or customers),suppliers or employees (including, without limitation, any financialconsequence of such loss of customers (including business of such customers),suppliers or employees) due primarily to the transactions contemplated herebyor the public announcement of this Agreement, in each case arising after thedate of this Agreement.

                    10.2.3   For purposes of this Agreement, a "Subsidiary" when used with respect toany party means any individual partnership, firm, corporation, association,trust, unincorporated organization (including any representative office orbranch) or other entity under the laws of any jurisdiction, (i) of whichsuch party or another subsidiary of such party is a general partner (excludingpartnerships, the general partnership interests of which held by such party orthe Subsidiary of such party do not have 50% or more of the voting interests insuch partnership) or (ii) 50% or more of the securities or other interestsof which having by their terms ordinary voting power to elect at least 50% ofthe board of directors or others performing similar functions with respect tosuch corporation or other organization is directly or indirectly owned  orcontrolled by such party or one or more of its subsidiaries (or if there are nosuch voting securities or interests, 50% or more of the equity interests ofwhich is directly or indirectly owned or controlled by such party or one ormore of its subsidiaries).

                    10.2.4   For purposes of this Agreement, "Affiliate" means a person thatdirectly, or indirectly through one or more intermediaries, controls, iscontrolled by or is under common control with another person or beneficiallyowns or has the power to vote or direct the vote of 10% of more of the votingstock (or of any other form of general partnership, limited partnership orvoting equity interest in the case of a person that is not a corporation) ofsuch other person.  For purposes of this definition, "control," including theterms "controlling and "controlled" means through the ownership of votingsecurities, by contract or credit arrangement, as trustee, partner or executoror otherwise.

                    10.2.5   For purposes of this Agreement, "Knowledge" means with respect toXsilogy and SYS, the actual knowledge of the following individual orindividuals:  (a) with respect to Xsilogy, the Principal Stockholder, and(b) with respect to SYS, Cliff Cooke and Edward Lake.

    10.3       Counterparts.  This Agreement may be executed in counterparts, whichtogether shall constitute one and the same Agreement.  The parties may executemore than one copy of the Agreement, each of which shall constitute anoriginal. 

    10.4       Entire Agreement.  This Agreement (including the documents and theinstruments referred to herein) constitute the entire agreement among theparties and supersede all prior agreements and understandings, agreements orrepresentations by or among the parties, written and oral, with respect to thesubject matter hereof and thereof; provided, however, that the parties'nondisclosure/nonuse agreement shall survive, and shall also survive anytermination of this Agreement.

    10.5       Third-Party Beneficiaries.  Nothing in this Agreement, express or implied, is intendedor shall be construed to create any third-party beneficiaries.

    10.6       Governing Law; Venue.  

                    10.6.1    Except to theextent that the laws of the jurisdiction of organization of any party hereto,or any other jurisdiction, are mandatorily applicable to matters arising underor in connection with this Agreement, this Agreement shall be governed by thelaws of the State of California without regard to its conflict of laws rules,and any action arising out of or in connection with this Agreement shall bebrought only in the appropriate federal or state court in San Diego County,California.  Each of the parties hereto agrees that a final judgment in anyaction or proceeding shall be conclusive and may be enforced in otherjurisdictions by suit on the judgment or in any other manner provided by law. 

                    10.6.2   Each of the parties hereto irrevocably consents to the service of anysummons and complaint and any other process in any other action or proceedingrelating to this Agreement, on behalf of itself or its property, by the personaldelivery of copies of such process to such party.  Nothing in thisSection 10.6 shall affect the right of any party hereto to serve legalprocess in any other manner permitted by law. 

    10.7       Arbitration.  The parties to this Agreement shall submit to binding arbitrationbefore a single, neutral arbitrator of any dispute, controversy or claimarising out of, or relating to, the transactions contemplated by this Agreementor any breach hereof, provided, however, that the parties retaintheir right to, and shall not be prohibited, limited or in any other wayrestricted from, seeking or obtaining equitable relief from a court havingjurisdiction over the parties.  Such arbitration shall be governed by andconducted through the American Arbitration Association in accordance with theCommercial Dispute Resolution Procedures.  The arbitration hearing shall beheld in San Diego, California at a place to be designated by the partiesor, in the absence of their agreement, by the arbitrator. 

    10.8       Specific Performance.  The transactions contemplated by this Agreement areunique.  Accordingly, each of the parties acknowledges and agrees that, inaddition to all other remedies to which it may be entitled, each of the partieshereto is entitled to a decree of specific performance, provided such party isnot in material default hereunder.  The party prevailing in any proceedingseeking such a decree shall be entitled to payment of all reasonable legal feesand expenses by the non-prevailing party. 

    10.9       Assignment.  Neither this Agreement nor any of the rights, interestsor obligations hereunder shall be assigned by any of the parties hereto(whether by operation of law or otherwise) without the prior written consent ofthe other parties.  Subject to the preceding sentence, this Agreement shall bebinding upon, inure to the benefit of and be enforceable by the parties andtheir respective successors and assigns.  Additionally, notwithstanding theforegoing or anything to the contrary contained in this Agreement, SYS isspecifically permitted to adopt a holding company structure pursuant toSection 251(g) of the Delaware General Corporation Law and assignthis Agreement to the holding company or consummate SYS's previously approvedreincorporation into the State of Delaware, in which case the references hereinto receipt and registration of actual and underlying SYS shares shall insteadrefer to the equivalent shares of the Delaware corporation.

    10.10    Expenses.  All costs and expenses incurred in connection with thisAgreement and the transactions contemplated hereby and thereby shall be paid bythe party incurring such expenses.

    10.11    Severability.  The invalidity or unenforceability in whole or in part ofany covenant, promise or undertaking, or any section, subsection, sentence,clause, phrase, word, or any of the provisions of this Agreement will notaffect the validity or enforceability of the remaining portions of thisAgreement.  If for any reason, any provision is determined to be invalid or inconflict with any existing, or future law or regulation by a court or agencyhaving valid jurisdiction, such will not impair the operation or have any othereffect upon such other provisions of this Agreement as may remain otherwisevalid, and the latter will continue to be given full force and effect and bindthe parties hereto.

    10.12    Letter ofIntent.  SYS and Xsilogy acknowledge and agree that the executionand delivery of this Agreement by the parties hereto terminates the Letter ofIntent and that their respective obligations thereunder are hereby null and void.

   10.13    Amendment.  This Agreement may be amended only by agreement inwriting executed by all of the parties hereto; provided, however,that Xsilogy shall be entitled to provide written statements regarding newinformation as to the Xsilogy Disclosure Schedule without the written consentof the other parties hereto.

----

**IN WITNESS WHEREOF**, SYS and Xsilogy have signed thisAgreement as of the date first written above. 
|   | **SYS**                                                                          |
|--------|----------------------------------------------------------------------------------|
|   |                                                                             |
|   | By:                                                                              |   |
|   | Name:  Edward M. LakeTitle:     Chief Financial Officer |
|   |                                                                             |
|   | **XSILOGY, INC.**                                                                |
|   |                                                                             |
|   | By:                                                                              |   |
|   | Name:  Richard KrissTitle:     Chief Executive Officer  |

** **[Signature Page to AssetPurchase and Sale Agreement]

 

----

**EXHIBIT A**

Acquired Assets
| Schedule 1:       Inventory                 | To be Provided                                                                             |
|---------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
| Schedule 2:       Fixed  Assets             | To be Provided                                                                             |
| Schedule 3:       Intellectual  Property    |                                                                                            |
| Schedule 4:       Accounts  Receivable, Net | Schedule 5.22 of the Xsilogy  Disclosure Schedule is incorporated herein by this reference |
| Schedule 5:       Contracts                 | Schedule 5.14 of the Xsilogy  Disclosure Schedule is incorporated herein by this reference |

----

**EXHIBIT B**

Xsilogy Fiscal 2005Operating Plan

[To be Provided]

----

**EXHIBIT C**

License Agreement

[To be Provided, ifNecessary]

----

**EXHIBIT D**

ComplianceCertificate

----

**EXHIBIT E**

Trade Creditor Letter

----

**EXHIBIT F**

NoncompetitionAgreement

----

| ARTICLE I DEFINITIONS                                  |
|--------------------------------------------------------|
|                                                   | 1.1      "Acquired Assets" |
|                                                   | 1.2      "Closing" |
|                                                   | 1.3      "Closing Date" |
|                                                   | 1.4      "Equipment" |
|                                                   | 1.5      "Excluded Assets" |
|                                                   | 1.6      "Intellectual Property" |
|                                                   | 1.7      "Inventory" |
|                                                   | 1.8      "Leased Premises" |
|                                                   | 1.9      "Seller's Business" |
| ARTICLE II PURCHASE AND SALE OF THE ACQUIRED ASSETS    |
|                                                   | 2.1      Asset Purchase and Sale |
|                                                   | 2.2      Purchase Price |
|                                                   | 2.3      Advance Fee |
|                                                   | 2.4      Allocation of Purchase Price |
| ARTICLE III ASSUMPTION OF LIABILITIES AND		OBLIGATIONS |
|                                                   | 3.1      Assumed Liabilities |
|                                                   | 3.2      Non-Assignable Obligations |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF		BUYER    |
|                                                   | 4.1      Organization and Standing |
|                                                   | 4.2      Corporate Power and Authority |
|                                                   | 4.3      Conflicts; Consents and Approvals |
|                                                   | 4.4      Actions |
|                                                   | 4.5      Capitalization of SYS |
|                                                   | 4.6      SYS SEC Documents |
|                                                   | 4.7      No Material Adverse Change |
|                                                   | 4.8      Brokerage and Finders' Fees |
|                                                   | 4.9      Board Recommendation; Required Vote |
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF XSILOGY    |
|                                                   | 5.1      Organization and Standing |
|                                                   | 5.2      Corporate Power and Authority |
|                                                   | 5.3      Capitalization of Xsilogy |
|                                                   | 5.4      Conflicts; Consents and Approvals |
|                                                   | 5.5      Brokerage and Finders' Fees |
|                                                   | 5.6      Books and Records; Financial Statements |
|                                                   | 5.7      Compliance with Law |
|                                                   | 5.8      Actions |
|                                                   | 5.9      No Material Adverse Change |
|                                                   | 5.10     Taxes |
|                                                   | 5.11    Intellectual Property |
|                                                   | 5.12     Title toAssets and Properties |
|                                                   | 5.13     EmployeeBenefit Plans |
|                                                   | 5.14     Contracts |
|                                                   | 5.15     LaborMatters |
|                                                   | 5.16    Undisclosed Liabilities |
|                                                   | 5.17     Operationof Xsilogy's Business; Relationships |
|                                                   | 5.18     Permits |
|                                                   | 5.19     RealProperty |
|                                                   | 5.20    Environmental Matters |
|                                                   | 5.21     BoardRecommendation |
|                                                   | 5.22     AccountsReceivable |
|                                                   | 5.23     Insurance |
|                                                   | 5.24     Product orService Warranty |
|                                                   | 5.25     DataProtection Matters |
|                                                   | 5.26     ForeignCorrupt Practices Act |
|                                                   | 5.27     GovernmentContracts |
|                                                   | 5.28     Relationswith Governments |
|                                                   | 5.29     NoExisting Discussions |
|                                                   | 5.30     Disclosure |
| ARTICLE VI COVENANTS OF THE PARTIES                    |
|                                                   | 6.1      Mutual Covenants |
|                                                   | 6.2      Covenants of SYS |
|                                                   | 6.3      Covenants of Xsilogy |
| ARTICLE VII CONDITIONS                                 |
|                                                   | 7.1      Conditions to the Obligations of Each Party |
|                                                   | 7.2      Conditions to Obligations of Xsilogy |
|                                                   | 7.3      Conditions to Obligations of SYS |
| ARTICLE VIII TERMINATION                               |
|                                                   | 8.1      Termination |
|                                                   | 8.2      Effect of Termination |
| ARTICLE IX SURVIVAL OF REPRESENTATIONS AND		WARRANTIES |
|                                                   | 9.1      Survival of Representations and Warranties |
| ARTICLE X MISCELLANEOUS                                |
|                                                   | 10.1     Notices |
|                                                   | 10.2    Interpretation |
|                                                   | 10.3    Counterparts |
|                                                   | 10.4     EntireAgreement |
|                                                   | 10.5    Third-Party Beneficiaries |
|                                                   | 10.6     GoverningLaw; Venue |
|                                                   | 10.7    Arbitration |
|                                                   | 10.8     SpecificPerformance |
|                                                   | 10.9     Assignment |
|                                                   | 10.10   Expenses |
|                                                   | 10.11   Severability |
|                                                   | 10.12   Letter of Intent |
|                                                   | 10.13   Amendment |

**EXHIBITS**

| Exhibit A |                       Acquired Assets                   |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit B |                       Xsilogy Fiscal 2005 OperatingPlan |
| Exhibit C |                       License Agreement                 |
| Exhibit D |                       Compliance Certificate            |
| Exhibit E |                       Trade Creditor Letter             |
| Exhibit F |                        Noncompetition Agreement    |