**Exhibit 2.1**

 
| **URNr.** |   | **H 637/2003** |
|-----------|--------|----------------|

 

vom 21stFebruary 2003

 

 

**SHARE PURCHASE AND TRANSFER AGREEMENT**

 

 

On this day,twentyfirst of February

twothousandandthree

- 21st  February 2003 -

appeared beforeme,

 

**Bernd   H ö f l i n g**

**Notary in Munich,**

 

in my office at80333 Munich, Pacellistrasse 14:

 

 

1.                                       **Mrs. Dr. Andrea vonDrygalski**, withbusiness address at Kardinal-Faulhaber-Straße 10, 80333 Munich, not acting inher own name, but for

 

acting on behalf of

 

a)

 

**YXLON Beteiligungs-Verwaltungs-GmbH**

**having its seat in  Berlin**

**(c/o Pöllath + Partner, Linkstraße 2, 10785 Berlin )**

**- AG Berlin-Charlottenburg, HRB 61 107 -**

 

*on the basis  of an  written  power of attorney a faxcopie of which is attached to this deed with theobligation to deliver the original immediately.*

 

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b)

 

**NDT International Holdings A/S**

**having its seat in Copenhagen**

**(DK-2300 Copenhagen, Halfdangsgade 8)**

**- Danish Commerce and Companies Agency,**

**registration number A/S219553 -**

 

*on the basis  of an  written  power of attorney a faxcopie of which is attached to this deed with theobligation to deliver the original immediately.*

 

 

c)

**Botts & Company Ltd.**

**having its seat in  London**

**(Lintas House, 15-19 New Fetter Lane, London BC4A 1BA)**

 

*on the basis  of an  written  power of attorney the original of which is attached to this deed.*

 

 

2.                                       **Mr. Dr.Joseph   K o s a n e t z k y ,**

born 26.03.1953,

business adress 22419 Hamburg, Essener Straße99.

 

3.                                       **Mr.Reinhard    B ö n i s c h ,**

born 07.05.1950,

business adress 22419 Hamburg, Essener Straße99.

 

*Bothacting in their own name and on behalf of*

 

2

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*a)*                                                                                                                                                                                                                          **YXLON International Holding GmbH**

**having its seat in Hamburg**

**(22419 Hamburg, Essener Straße 99)**

**- AG Hamburg, HRB 69 331-**

 

*asmanaging directors.*

 

*b)*

 

**YXLON International X-Ray GmbH**

**having its seat in Hamburg**

**(22419 Hamburg, Essener Straße 99)**

**- AG Hamburg, HRB 51 821 -**

 

 

*asmanaging directors.*

 

 

4.                                       **Mrs.Tram   P h i ,**

born 10.09.1970,

business adress: 7151 Gateway Boulevard,Newark, California, USA

 

acting on behalf of

 

**Invision Technologies, Inc.**

**having its seat in Newark, California, USA**

**(7151 Gateway Boulevard, Newark, California, USA)**

 

a corporation duly organized  and existing under the laws of the State ofDelaware, USA,

 

on the basis of an written power of attorney, the original is attachedto this deed. The original of a secretary’s certificate is also attached tothis deed.

 

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Thepersons  appeared  before me  identified themselves bytheir identity cards.

 

The notary first instructed  the  parties, that  he  only knows the  *law* of the Federal Republic of Germany and that he declinesall responsibility according to foreign law.

 

According totheir  request  I  record  their statements as follows:

 

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**(1) YXLONBeteiligungs-Verwaltung GmbH**

** **

**(2) NDTInternational Holdings A/S**

** **

**(3)YXLON International Holding GmbH**

** **

**(4)YXLON International X-Ray GmbH**

** **

**(5)Joseph Kosanetzky**

** **

**(6)Reinhard Bönisch**

** **

**(7)Botts & Company Ltd**

** **

**-and -**

** **

**(8) InVision Technologies, Inc.**

** **

** **

**TRANSACTION AGREEMENT**

 

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**THIS AGREEMENT** ismade on 21 February 2003.

 

**BETWEEN**

 

(1)                                  **YXLON BETEILIGUNGS-VERWALTUNGGMBH,**Berlin,registered at the local court ofBerlin-Charlottenburg, docket number HR-B 61107, business address P+P Pöllath +Partner, Linkstrasse 2, D-10785 Berlin

 

(2)                                  **NDT INTERNATIONAL HOLDINGSA/S,** Copenhagen, registered at the Danish Commerce and CompaniesAgency, registration number A/S219553, business address Halfdansgade 8, DK-2300Copenhagen

 

(collectivelythe “**Vendors**”)

 

(3)                                  **Dr. JOSEPH KOSANETZKY,** business addressEssener Strasse 99, 22419 Hamburg

 

(4)                                  **REINHARD BÖNISCH,** business address Essener Strasse99, 22419 Hamburg

 

(collectivelythe “**Individual Vendors**”)

 

(5)                                  **YXLON INTERNATIONAL HOLDING GMBH,** Hamburg,registered at the local court of Hamburg, Germany, docket number HR-B 69331,business address Essener Strasse 99, 22419 Hamburg

 

(the “**Company**”)

 

(6)                                  **YXLON INTERNATIONAL X-RAY GMBH,** Hamburg,registered at the local court of Hamburg, Germany, docket number HR-B 51821,business address Essener Strasse 99, 22419 Hamburg

 

(the “**X-Ray Company**”)

 

(7)                                  **BOTTS & COMPANY LTD,** business addressLintas House, 15-19 New Fetter Lane, London EC4A 1BA

 

(“**Botts & Company**”)

 

**AND**

 

(8)                                  **INVISION TECHNOLOGIES, INC.,** businessaddress 7151 Gateway Boulevard, Newark, California, USA (the “**Purchaser**”)

 

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**RECITALS**

 

(A)                              The Company is a companyregistered at the local court of Hamburg, Germany, docket number HR-B 69331.Further information relating to the Company is set out in **Schedule 1**. The Company is the direct orindirect holder and beneficial owner of all the shares in various subsidiariesin the X-Ray business (including the NDT Business and the SEC Business) (singlya “**Subsidiary**” and collectivelythe “**Subsidiaries**”) as set out in **Schedule 2**.

 

(B)                                YXLONBeteiligungs-Verwaltung GmbH and NDT International Holdings A/S are the holdersand owners of the entire issued share capital of the Company. In this regardYXLON Beteiligungs-Verwaltung GmbH is acting as a nominee for certainbeneficial owners. YXLON Beteiligungs-Verwaltung GmbH, NDT InternationalHoldings A/S, Joseph Kosanetzky and Reinhard Bönisch are the holders and ownersof all of the Shareholder Loans.

 

(C)                                The Purchaser isa company incorporated in Delaware,USA. Further information relating to the Purchaser is set out in **Schedule 3**.

 

(D)                               The X-Ray Company agreesto sell and transfer to Purchaser or a Purchaser’s Nominee the entire issuedshare capital of YXLON International Inc. (the “**US Company**”) and the Vendors and the Individual Vendors agreeto sell and transfer to the Purchaser or a Purchaser’s Nominee the entireissued share capital of the Company (the “**VendorShares**”) and the Shareholder Loans for the consideration and uponthe terms and conditions set out in this Agreement.

 

**IT IS HEREBY AGREED:**

 

**1.****                                      DEFINITIONS AND INTERPRETATION**

 

1.1                                 In this Agreement thefollowing words and expressions shall (except where the context otherwiserequires) have the following meanings:

 

*“**Accounts**”means the audited consolidated accounts of the Company comprising the auditedconsolidated balance sheet and the audited consolidated profit and lossaccount  prepared  in accordance with IAS.*

 

*“**AccountsDate**” means 30 September 2002.*

 

*“**AdjustmentReport**” means the report set out in Clause 5.3.*

* *

*“**AgreedAmount**” shall have the meaning set out in Clause 7.1.2.*

 

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*“**Agreement**”means this agreement signed by the Parties.*

* *

*“**ArbitrationDecision**” shall have the meaning set out in Clause 7.1.6.*

* *

*“**Auditor**”means KPMG.*

* *

*“**Budget**”means the budget approved by the shareholders of the Company on 10 October2002.*

* *

*“**BusinessDay**” means a day other than a Saturday or Sunday on which banks areopen for commercial business in Hamburg, Germany.*

* *

*“**Cap**”shall have the meaning set out in Clause 7.2.*

* *

*“**Cash**”shall mean cash and cash equivalents in the meaning of Sec. 266 para. 2subpara. B IV German Commercial Code (HGB).*

* *

*“**Certification**”means the certification by the TSA of the YXLON XES 3000 system or, if sooner,its variant the YXLON XES 3500 system as an EDS (applied for underDOT/FAA/AR-01/19 dated 26 February 2001).*

* *

*“**ClaimNotice**” shall have the meaning set out in **Clause 7.1.1.***

* *

*“**ClaimedAmount**” shall have the meaning set out in **Clause 7.1.1.***

* *

*“**Companies**”means the Company and its Subsidiaries.*

* *

*“**Company**”shall have the meaning pursuant to Recital (A).*

* *

*“**CompletionDate**” means the later to occur of 31 March 2003 or the fifthBusiness Day upon which the last of the Conditions is satisfied, unlessotherwise agreed by the Parties.*

* *

*“**CompletionDate Accounts**” means the Accounts set out in **Clause 5.1.***

* *

*“**CompletionSteps**” shall mean the steps set out in **Clause 3.2** or **3.3**.,as the case may be.*

* *

*“**Conditions**”means the conditions set out in **Clause 3.1.***

* *

*“**ContestedAmount**” shall have the meaning set out in **Clause 7.1.2.***

* *

*“**ContingentPurchase Price**” means the purchase price set out in **Clause 4.4.***

 

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*“**Debt**”means (i) financial interest-bearing liabilities of the Companies owed to banksand financial institutions (including overdrafts (Überziehungen), bonds(Schuldverschreibungen) and promissory notes (Wechsel)) including allobligations resulting from the IKB Partnership and the loan with IKB dated 5April 2000, including in each case any unpaid or accrued interest and allredemption premiums, termination fees and similar fees thereon, (ii) allunfunded pension and retirement liabilities (for the avoidance of doubt pensionliabilities backed by insurance are deemed to be funded), (iii) all netobligations under any hedging transactions outside the ordinary course ofbusiness, (iv) all obligations of the Companies under any off-balance sheetfinancing and (v) any dividends declared but unpaid. For the avoidance ofdoubt, Debt does not include the Shareholder Loans, accounts payable, tradecreditors, payment guarantees by banks in the ordinary course of business and accrualsin each case incurred in the normal course of business or any other currentoperating liability arising from the normal course of business.*

* *

*“**De MinimisAmount**” shall have the meaning set out in **Clause 7.3.***

* *

*“**EDS**”means explosive detection system as defined in the Aviation SecurityImprovement Act of 1990 and the Aviation and Transportation Security Act of2001 as amended.*

* *

*“**Environmental Liabilities**”are, in the meaning of this Agreement, defined as all costs and expenses,liabilities, claims and damages (including, without limitation, those set forthin § 24 (1) of the Federal Soil Protection Act (Bundes-Bodenschutzgesetz,BBodSchG)) incurred in connection with (i) the reasonable investigation(Maßnahmen der Gefahrenerkundung) and/or (ii) securing or protective measures(Sicherungsmaßnahmen) and/or clean-up (Sanierung) (including also the planningand preparation thereof) or (iii) measures to remedy any danger to the public,to the well-being or to the health (Maßnahmen zur Abwehr von Gefahren) or (iv)other measures to eliminate, reduce or remedy any Contamination (as definedbelow) or to fulfil any redevelopment obligations, resulting from the pollutionor contamination (Belastungen oder Verunreinigungen) of the ground, buildings,machines, other installations and equipment, ground water, ground air orsurface water with hazardous substances (Schadstoffe) (herein “**Contamination**”) as well as from allliabilities and damages incurred by them due to any Contamination or anynon-compliance with environmental laws (including, without limitation,regulations and orders and standards of conduct relating to emissions,discharges and releases of wastes and hazardous substances) in each case to theextent that (v) there is a danger to the public health and safety(Gefahr für die öffentliche Sicherheit), (vi) that the Environmental Liabilityhas been caused due to circumstances prior to the Completion Date for whichcircumstance the Purchaser shall bear*

 

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*the burden of proof (Beweislast) and (vii)the competent public authority or body has issued a final and bindingadministrative order in writing ordering the removal, clean-up or any othermeasure (including investigation) based on a danger to the public health andsafety.*

* *

*“**Expert**”shall have the meaning set out in **Clause 5.7.***

* *

*“**Extra Cap**”shall have the meaning set out in Clause **7.2.***

* *

*“**IAS**”means**InternationalFinancial Reporting Standards.*

* *

*“**IKBPartnership**” means the silent partnership agreement between the Companyand IKB Beteiligungsgesellschaft mbH dated February 10, 2000, as amended.*

* *

*“**InitialResolution Period**” shall have the meaning set out in **Clause 7.1.6.***

* *

*“**JuniorSubordinated Loans**” means shareholder loans with par value €8,621,649 together with interest accrued and outstanding thereon that theVendors have provided to the Company by agreements dated 3 April 1998 and 21May 1999.*

* *

*“**KeyEmployee**” and “**Key Employees**”shall have the meaning set out in **Schedule 8Clause 8.2.***

* *

*“**LIContribution Agreement**” means the agreement between YXLONInternational X-Ray GmbH and Philips GmbH dated 3 April 1998, notarial deed no.193/1998 of the notary Marion Graff-Woelk at Berlin.*

* *

*“**MaterialAdverse Change**” shall have the meaning set out in **Clause 3.6.***

* *

*“**MaterialAssets**” shall have the meaning set out in **Schedule 8 Clause 6.2.***

* *

*“**MaterialContracts**” shall have the meaning set out in **Schedule 8 Clause 12.1.***

* *

*“**MezzanineLoans**” means shareholder loans with par value € 3,000,000 togetherwith interest accrued and outstanding thereon that the Vendors have provided tothe Company by agreement dated 27 July 2002.*

* *

*“**NDTBusiness**” means the business activities of the Companies involvingthe design, assembly, installation and maintenance in the field of x-raycomponents, sub-assemblies and systems for non-destructive testing purposes forcustomers in a variety of industrial applications.*

 

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*“**Net AssetValue**” means the sum of the consolidated assets of the Company andits Subsidiaries minus the consolidated liabilities of the Company and itsSubsidiaries prepared using the same accounting principles, policies, bases andpractices as were used in the preparation of the Accounts, consistently appliedas shown in the model calculations contained in **Schedule 6.**  For theavoidance of doubt, Net Asset Value does not include Cash, Debt, accruedinterest or deferred taxes.*

* *

*“**Parties**”means the Vendors, the Individual Vendors, the Purchaser, Botts & Company,the Company, and the X-Ray Company.*

* *

*“**Permits**”shall have the meaning set out in **Schedule 8Clause 13.1**.*

* *

***“PreliminaryPurchase Price****”has the meaning set out in **Clause 4.2**.*

* *

*“**PurchasePrice**” means the purchase price set out in **Clause 4.2.***

* *

*“**PurchasePrice Adjustment**” means an increase or decrease in the PurchasePrice pursuant to **Clause 4.3.***

* *

*“**Purchaser’sNominee**” shall mean one or more acquisition entities directly orindirectly owned by the Purchaser.*

* *

*“**RealProperty**” means any real property currently owned or leased by anyof the Companies.*

* *

*“**RelevantClaim**” shall have the meaning pursuant to **Schedule 10 Clause 1.2**.*

* *

*“**ResponseNotice**” shall have the meaning set out in **Clause 7.1.2.***

* *

*“**Schedules**”means all the schedules attached to this Agreement.*

* *

*“**SecurityBusiness**” means the business activities of the Companies involvingthe design, assembly, installation and maintenance in the field of x-raycomponents, sub-assemblies and systems for explosives and contraband detectionpurposes.*

* *

*“**SeniorSubordinated Loans**” means shareholder loans with par value €1,533,876 together with interest accrued and outstanding thereon that theVendors have provided to the Company by agreement dated 3 April 1998.*

* *

*“**ShareholderLoans**” means collectively the Senior Subordinated Loans, the JuniorSubordinated Loans and the Mezzanine Loans.*

 

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*“**Signing**”means the date on which this Agreement is signed by the Parties.*

* *

*“**Subsidiary**”means individually any one of YXLON International A/S, Denmark, YXLONInternational KK, Japan, YXLON International Inc., USA, and YXLON InternationalX-Ray GmbH, Germany.*

* *

*“**Subsidiaries**”means collectively all of YXLON International A/S, Denmark, YXLON InternationalKK, Japan, YXLON International Inc., USA, and YXLON International X-Ray GmbH, Germany.*

* *

*“**SumRecovered**” shall have the meaning set out in **Schedule 10 Clause 5.3.***

* *

*“**Tax**” means any tax (Steuer) within themeaning of section 3 of the German Tax Code (AO) or equivalent tax under the laws of any other jurisdiction, any levy (Abgabe) andany other charge (including, without limitation, any customs duties (Zölle) aswell as any social security contribution (in all cases including anywithholding on amounts paid to or by any person), together with any interest,penalty or addition thereto, no matter how they are levied or determined.*

* *

*“**TaxingAuthority**” means anycompetent governmental authority in charge of imposing any Tax.*

* *

*“**TaxWarranties**” means the tax warranties set out in **Schedule 9.***

* *

*“**TSA**”means the Transportation Security Administration of the Government of theU.S.A. or the Federal Aviation Administration or any other predecessor to theTransportation Security Administration appointed to test and administer thecertification of EDS for deployment in airport or other security use.*

* *

*“**US Company**”means YXLON International Inc.*

* *

*“**USPurchase Price**” shall have the meaning pursuant to **Clause 3.2.3.***

* *

*“**US Shares**”means all outstanding shares in the US Company.*

* *

*“**VendorShares**” shall have the meaning pursuant to Recital (D).*

* *

*“**Warranties**”means the warranties set out in **Schedule 8.***

 

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1.2                                 The Recitals andSchedules form part of this Agreement and have the same force and effect as ifset out in the body of this Agreement. Any reference to this Agreement includesthe Recitals and the Schedules.

 

1.3                                 The headings and anydescriptive notes in this Agreement do not form part of and shall not affectthe interpretation of this Agreement or any part of it except as provided inClause 21.3.

 

1.4                                 In this Agreement(unless the context requires otherwise):

 

1.4.1                        Any reference to any statute orstatutory provision includes a reference to any subordinate legislation madeunder that statute or statutory provision before the date of this Agreement, toany modification, re-enactment or extension of that statute or statutoryprovision made before that date and to any former statute or statutoryprovision which it consolidated or re-enacted before that date;

 

1.4.2                        Any gender includes a referenceto the other genders;

 

1.4.3                        The singular includes areference to the plural and vice versa (except as otherwise defined in theDefinitions);

 

1.4.4                        Any reference to a recital,Clause or Schedule is to a recital, Clause or Schedule (as the case may be) ofor to this Agreement;

 

1.4.5                        The term “including” meansincluding without limiting the generality of any description preceding suchterm; and

 

1.4.6                        For the purposes of Clauses 7,8, 11.1.2 (b) and (e), and Schedule 10 the term “Vendors” shall also includethe Individual Vendors.

 

**2.****                                      SALE AND PURCHASE**

 

2.1                                 The Vendors and theIndividual Vendors agree to sell and to transfer to the Purchaser or aPurchaser’s Nominee the Vendor Shares and the Shareholder Loans with effectfrom the Completion Date with the effect that as from the Completion Dateall rights accruing to, and all obligations falling on, the Vendor Shares andthe Shareholder Loans after the Completion Date shall belong to the Purchaseror a Purchaser’s Nominee including, without limiting the generality of theforegoing, the rights to receive dividends for the current fiscal year. Indetail:

 

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2.1.1                        YXLON Beteiligungs-VerwaltungGmbH agrees to sell and transfer its future share in the Company in the nominalamount of € 169,950 and its future share in the nominal amount of € 2,052,550.

 

2.1.2                        YXLON Beteiligungs-Verwaltung GmbHagrees to sell and transfer the Senior Subordinated Loans of € 1,533,876together with interest accrued and outstanding thereon, the Junior SubordinatedLoans of € 7,259,056 together with interest accrued and outstanding thereon,and the Mezzanine Loans of € 3,000,000 together with interest accrued andoutstanding thereon, all with the right to waive, in whole or in part, itsJunior Subordinated Loan until the Completion Date.

 

2.1.3                        NDT International Holdings A/Sagrees to sell and transfer its future share in the Company in the nominalamount of € 231,000.

 

2.1.4                        NDT International Holdings A/Sagrees to sell and transfer its portion of the Junior Subordinated Loans of €1,090,074 together with interest accrued and outstanding thereon all with theright to waive, in whole or in part, its Junior Subordinated Loan until theCompletion Date.

 

2.1.5                        Joseph Kosanetzky agrees to sell andtransfer his portion of the Junior Subordinated Loans of € 218,015 togetherwith interest accrued and outstanding thereon with the right to waive, in wholeor in part, the Junior Subordinated Loan until the Completion Date.

 

2.1.6                      Reinhard Bönisch agrees to sell andtransfer his portion of the Junior Subordinated Loans of € 54,504 together withinterest accrued and outstanding thereon with the right to waive, in whole orin part, the Junior Subordinated Loan until the Completion Date.

 

2.2                                 It is the intention of the Vendorsand the Purchaser to jointly until Completion Date develop a structure underwhich the Purchaser shall acquire the US Shares separately and have theintercompany liability between the X-Ray Company and the US Company contributedto the US Company prior to Completion (the “**2-StepCompletion Process**”) in both cases without a Tax exposure on theside of the Vendors. Within ten days prior to the Completion Date, the Vendors,acting in good faith, shall conclude whether there is any Tax exposure on theirside resulting from the 2-Step Completion Process. Promptly following suchconclusion the Vendors shall provide notice to the Purchaser of such conclusionand the basis, in reasonable detail, for such conclusion period. Provided thatthe Vendors, acting in good faith, conclude

 

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that there is no Tax exposurethey shall allow the Purchaser to complete this Agreement by way of the 2-StepCompletion Process without any indemnification given by the Purchaser therefor.Provided that the Vendors, acting in good faith, conclude that there is Taxexposure on their side due to the 2-Step Completion Process, the Purchaser mayeither

 

2.2.1                        elect to complete this Agreement byway of a 2-Step Completion Process and give an unlimited indemnification of theVendors against any Tax liability (and associated interest costs) to the extentfinally determined, created solely by the 2-Step Completion Process accordingto this Clause 2.2 or

 

2.2.2                        elect to complete this Agreement noteffectuating the 2-Step Completion Process thereby not being obliged to provideany indemnity to the Vendors in connection with this Clause 2.

 

Within five days prior to theCompletion Date the Purchaser shall provide notice to the Vendors as to whetherit elects to proceed pursuant to Clause 2.2.1 or Clause 2.2.2.

 

**3.****                                      COMPLETION DATE**

 

3.1                                 The Completion Date shallbe the later to occur of 31 March 2003 or the fifth Business Day upon which thelast of the following Conditions are satisfied, unless otherwise agreed by theParties:

 

3.1.1                        Kreditanstalt für Wiederaufbau(German Reconstruction Bank) has validly approved the repayment of theShareholder Loans as contemplated in this Agreement.

 

3.1.2                        The 401(k) Plan of the USCompany has been terminated.

 

3.1.3                        All agreements between any ofthe Companies on the one hand and any or all Vendors on the other hand havebeen terminated, in each case without any remaining obligation on the part ofthe Companies. All agreements between any of the Companies with IKB have beenvalidly terminated as of Completion Date without any remaining obligation onthe part of any of the Companies.

 

3.1.4                        The share capital increase ofthe Company resolved upon on 18 February 2003, notarial deed of the notary Dr.Wolfgang Engelhardt in Hamburg has been registered with the commercialregister.

 

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3.1.5                        The Purchaser has releasedBotts & Company from the guarantee issued vis-à-vis the City of Hamburg.

 

3.2                                 At Completion Date,the following actions (“**Completion Steps**”)shall be taken (in the following order), provided that the Purchaser elects toeffectuate the 2-Step Completion Process in accordance with Clause 2.2 above:

 

3.2.1                        The Vendors shall deliver tothe Purchaser a certificate of good standing issued by each of the DelawareSecretary of State and the Ohio Secretary of State with respect to the USCompany dated not earlier than five Business Days prior to Completion Date.

 

3.2.2                        The X-Ray Company shallcontribute its inter-company claim against the US Company into the US Company.

 

3.2.3                        All shares in the US Companyshall be transferred by the X-Ray Company to the Purchaser or a Purchaser’sNominee in line with the transfer agreement attached hereto as **Schedule 4 a** against (*Zug um Zug*) payment of the US PurchasePrice (as defined in Clause 4.1 below).

 

3.2.4                        The following actions shallthen take place simultaneously (*Zug um Zug*):

 

(i)                                     The Vendors andthe Individual Vendors shall transfer the Vendor Shares and the ShareholderLoans to the Purchaser or the Purchaser’s Nominee in line with the sharetransfer agreement set forth in **Schedule 4 b**.

 

(ii)                                  The Purchaser shallpay the Preliminary Purchase Price (as defined in Clause 4 below).

 

(iii)                               The Vendors shallprovide evidence satisfactory to the Purchaser showing that the Companies haverepaid in full all Debt identified prior to or on Completion Date and theholders of such Debt, including IKB, have signed a written acknowledgement that(a) such Debt has been paid in full, (b) all liens and security interests havebeen released, and (c) all property, whether tangible or intangible, securingsuch Debt has been retransferred to the Companies. A model example of thecalculation of Debt is attached as Schedule 5.

 

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The Purchaser assumes, following the Completion Date, fullresponsibility for discharging all liabilities of any and all kinds whatsoeverof the Company and its Subsidiaries, whether disclosed or undisclosed, unlessprovided for otherwise under this Agreement and except that the Debt identifiedprior to the Completion Date shall be repaid in full by the Companies on orprior to the Completion Date.

 

3.3                                 At the CompletionDate, the following Completion Steps shall be taken (in the following order)provided that the Purchaser elects not to effectuate the 2-Step CompletionProcess in accordance with Clause 2.2 above:

 

3.3.1                        The Vendors shall deliver tothe Purchaser a certificate of good standing issued by each of the DelawareSecretary of State and the Ohio Secretary of State with respect to the USCompany dated not earlier than five Business Days prior to the Completion Date.

 

3.3.2                        The following actions shallthen take place simultaneously (*Zug um Zug*):

 

(i)                                     The Vendors andthe Individual Vendors shall transfer the Vendor Shares and the ShareholderLoans to the Purchaser or the Purchaser’s Nominee in line with the sharetransfer agreement set forth in **Schedule 4 b**.

 

(ii)                                  The Purchaser shallpay the Preliminary Purchase Price (as defined in Clause 4 below).

 

(iii)                               The Vendors shallprovide evidence satisfactory to the Purchaser showing that the Companies haverepaid in full all Debt identified prior to or on Completion Date and theholders of such Debt, including IKB, have signed a written acknowledgement that(a) such Debt has been paid in full, (b) all liens and security interests havebeen released, and (c) all property, whether tangible or intangible, securingsuch Debt has been retransferred to the Companies. A model example of the calculationof Debt is attached as Schedule 5.

 

3.4                                 If the Conditionspursuant to Clause 3.1 are not satisfied by 30 June 2003 at the latest, eachparty shall be entitled (the Vendors, however, only jointly) to rescind thisAgreement by serving written notice on the other party to be effected until 15July 2003 at the latest, such notice to be effective upon the expiry of threeBusiness Days of delivery upon the other party. In case this Agreement isrescinded pursuant to this Clause, this Agreement shall cease to

 

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have force and effect and shall not create any binding obligationbetween the Parties except that Clause 14 (Confidentiality and Announcements),Clause 15 (Costs/Finder’s Fee), Clause 20 (Notices), and Clause 21(Governing Law, Jurisdiction and Language) shall survive.

 

3.5                                 The Parties shall usetheir best efforts to ensure that the Conditions set forth in Clauses 3.1.1through 3.1.5 above are fulfilled as soon as possible after the date of thisAgreement. If a Condition has been satisfied the party responsible for thefulfillment of the Condition shall serve written notice on the other party onthe fulfillment of the Condition without undue delay. In the event of a breachof any Warranty or any Tax Warranty or a material adverse change in anyCompany, the Vendors shall serve written notice of such breach to the Purchaserwithout undue delay and shall use reasonable best efforts to cure such breachor such material adverse change.

 

3.6                                 The Purchaser maywithdraw from this Agreement at any time prior to the Completion Date in theevent of a Material Adverse Change. “**MaterialAdverse Change**” means one or more events that result in or arereasonable likely to result in (i) the Companies not being able to lawfully ownor use their essential intellectual property rights necessary to conduct theNDT Business or Security Business, or (ii) the Companies not being able to usea material part of their current production sites for a substantial period oftime (e.g. through an act of god or terrorism), or (iii) the Companies losing amaterial percentage of their customers (e.g. through a material warranty orproduct liability case).

 

**4.****                                      PURCHASE PRICE AND DUE DATES**

 

4.1                                 The US Purchase Pricefor the US Shares, if any, shall be an amount to be mutually agreed upon ingood faith between the Purchaser and the X-Ray Company prior to the CompletionDate.

 

4.2                                 ThePurchase Price for the Vendor Shares and the Shareholder Loans shall be the amountof € 38,600,000

 

4.2.1                        less Debt,

 

4.2.2                        plus Cash,

 

4.2.3                        less any amount the NetAsset Value is less than 95% of € 14,400,000,

 

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4.2.4                        plus any amount the NetAsset Value is more than 105% of € 16,800,000,

 

in each case as of the Completion Date,

 

4.2.5                        less the US PurchasePrice, if any

 

(“**Purchase Price**”). If andto the extent the Junior Subordinated Loans are waived, the Purchase Price tobe allocated for the Shareholder Loans shall be reduced accordingly and thePurchase Price to be allocated to the Vendor Shares shall be raisedaccordingly.

 

On the Completion Date, Purchaser or a Purchaser’s Nominee shall pay toVendors an amount of € 38,600,000 less the amount of Debt plus the amount ofCash, in each case as of the Completion Date and as reasonably estimated by theVendors and notified to the Purchaser for its review together with reasonabledetails of the calculation at least two Business Days prior to Completion Date(“**Preliminary Purchase Price**”).

 

4.3                                 Tothe extent that the Purchase Price differs from the Preliminary Purchase Price,a further payment will be payable (“**PurchasePrice Adjustment**”) as set out below.

 

If the Purchase Price is less than the Preliminary Purchase Price, theVendors shall reimburse the Purchaser the difference on a € for € basis.

 

If the Purchase Price is greater than the Preliminary Purchase Price,the Purchaser shall pay to the Vendors an additional amount equal to thedifference on a € for € basis.

 

4.4                                 ThePurchaser or a Purchaser’s Nominee shall pay to the Vendors a contingentpurchase price (“**Contingent Purchase Price**”)amounting to € 10,000,000 provided that

 

4.4.1                        the Company or one of itsSubsidiaries has received Certification on or before 31 December 2003; or

 

4.4.2                        the Company or one of itsSubsidiaries has received, on or before 31 December 2003, confirmation in aform satisfactory to the Purchaser, acting reasonably, that the YXLON XES 3000system or, if sooner, the YXLON XES 3500 system has passed a certification testby the TSA such that the YXLON XES 3000 system or, if sooner, the YXLON XES3500 system will be certified in due course after 31 December 2003 subject onlyto delays in time as a result of the administrative process.

 

The Purchaser undertakes to continue to support the efforts of theCompany and the Subsidiaries to achieve Certification by 31 December 2003 andshall assist the Company as

 

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reasonably required and if so requested to obtain Certification. ThePurchaser shall not and shall procure that its affiliates shall not disparagethe Company or its products. The Purchaser shall not and shall procure that itsaffiliates shall not prior to the Completion Date approach the TSA with respectto the Certification process without the Vendors’ prior written approval.

 

4.5                                 ThePreliminary Purchase Price, the US Purchase Price, the Purchase PriceAdjustment and the Contingent Purchase Price shall be due and payable asfollows:

 

4.5.1                        The Preliminary Purchase Priceand the US Purchase Price shall be due and payable on the Completion Date.

 

4.5.2                        The Purchase Price Adjustmentshall be due and payable to the Vendors or the Purchaser (or the Purchaser’sNominee), as the case may require, on the fifth Business Day after theagreement of the Completion Date Accounts by the Parties pursuant to Clause 5.6or after the decision of the Expert pursuant to Clause 5.7.

 

4.5.3                        The Contingent Purchase Price shallbe due and payable to the Vendors

 

4.5.3.1               On the fifth Business Day after receiptof the Certification by the Company or one of its Subsidiaries; or

 

4.5.3.2               if no Certification is obtained by theCompany or one of its Subsidiaries due to fraud or willful misconduct of thePurchaser, upon the event of such fraud or willful misconduct irrespective ofthe receipt of any Certification by the Company or one of its Subsidiaries.

 

4.6                                 ThePreliminary Purchase Price, the Purchase Price Adjustment and the ContingentPurchase Price shall, as from their respective due dates, bear interest at aninterest rate of 8% p.a. for the benefit of the Vendors or the Purchaser (orthe Purchaser’s Nominee), as the case may be, irrespective of default. Theinterest bearing period shall end as of the day of payment.

 

4.7                                 Intentionallyleft free.

 

4.8                                 Allpayments to the Vendors under this Agreement shall be made to the followingtrust account held by Pöllath+Partner, attorneys at law in trust fordistribution to the Vendors: Bayerische Hypo- und Vereinsbank, Account No. 2485362, Sort Code 700 202 270.

 

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4.9                                 Allpayments to the X-Ray Company under this Agreement shall be made to thefollowing account: Dresdner Bank AG, Account No. 323718700, Sort Code 200 80000 (International Banking Account IBAN DE 1820080000 0323718700).

 

4.10                           Allpayments to the Purchaser under this Agreement shall be made to the followingaccount: Silicon Valley Bank, 3003 Tasman Drive, Santa Clara, CA, 95055,Routing No. 121140399, Account No. 3300044177. All payments to a Purchaser’sNominee shall be made to the accounts designated by such Purchaser’s Nominee.

 

**5.****                                      COMPLETIONDATE ACCOUNTS**

 

5.1                                 TheDebt, Cash and the Net Asset Value, each existing as of the Completion Date, aswell as any Purchase Price Adjustment resulting therefrom, shall be determinedon the basis of consolidated accounts of the Company as of the Completion Datewhich shall be prepared using the same accounting principles, policies, basesand practices as were used in the preparation of the Accounts and the YxlonInternal Accounting Rules, consistently applied, at all times, however, incompliance with IAS (“**Completion DateAccounts**”).

 

5.2                                 TheParties agree that any amounts transferred under the Completion Steps shall bedisregarded for the purposes of the Completion Date Accounts except for thepayment of the US Purchase Price regarding Cash. The parties agree that for thepurpose of calculating the Net Asset Value, the effects of the Completion Stepsshall be disregarded. For the avoidance of doubt, if the Purchaser elects toeffectuate the 2-Step Completion Process, the assets and liabilities of the USCompany shall be included in the calculation of the Net Asset Value as if theCompletion Steps had not taken place.

 

5.3                                 TheCompletion Date Accounts shall be prepared by the Company and reviewedaccording to ISA, at the equal expense of the Vendors and the Purchaser, byKPMG (the “**Auditor**”). Togetherwith the Completion Date Accounts the Auditor shall prepare a report on theDebt and the Net Asset Value and the calculation of the Purchase Price exceptthe Contingent Purchase Price as of Completion Date (“**Adjustment Report**”). The Adjustment Reportshall clearly show how the calculation of the Purchase Price was derivedincluding detailed information regarding all of the components of the relevantdefined terms.

 

5.4                                 TheCompany shall deliver the reviewed Completion Date Accounts and the AdjustmentReport to the Purchaser and the Vendors simultaneously as soon as reasonablypracticable but in no event later than 40 Business Days after Completion Date.

 

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5.5                                 TheVendors and the Purchaser shall have the right to review the Completion DateAccounts and the Adjustment Report and to appoint their own auditors to assistin this, having the same rights as the Auditor, including but not limited toaccess to the management records and all books and records of the Companies andworking documents of the Auditor.

 

5.6                                 TheVendors and the Purchaser shall consult no later than 60 Business Days afterCompletion Date and notify each other in writing of any matters in theCompletion Date Accounts and the Adjustment Report with which they disagree andsetting out the reasons for such disagreement. In the absence of suchnotification by the Vendors or the Purchaser within 80 Business Days ofCompletion Date, the Completion Date Accounts and the Adjustment Report shallbe deemed to have been agreed by the Vendors and the Purchaser.

 

5.7                                 Ifthe Vendors or the Purchaser notify each other in writing that they do notagree with the Completion Date Accounts and/or the Adjustment Report, thePurchaser and the Vendors shall meet together promptly with a view to reachingagreement on the matter(s) in dispute and in the absence of such agreementwithin 90 Business Days of the Completion Date, the Vendors or the Purchasermay by notice in writing to the other require the matter to be referred to anindependent firm of auditors (“**Expert**”)to be jointly appointed by the Vendors and Purchaser or, failing agreementbetween them as to the identity of such independent firm of auditors, nominatedon the application of either of them by the Institute of Certified PublicAccountants in Düsseldorf (*Institut derWirtschaftsprüfer e.V. in Düsseldorf*). In making his calculation ofthe correct amount of the matters in dispute, the Expert shall be bound bythose items or amounts in respect of which no objections were raised or onwhich Vendors and Purchaser have agreed after a notice of objections;accordingly, the Expert shall only review those items or amounts as to whichthe Parties disagree and in his decision on each disputed item shall not cometo a decision which is beyond the positions taken by the Parties. If a disputeditem concerns the exercise of an accounting or valuation discretion left by theprinciples specified in Clause 5.1, the Expert shall be free to exercisehis own discretion subject to such principles. The Expert shall also beentitled to decide on the interpretation of this Agreement to the extent thisis needed for his decision. The Expert shall give Vendors and Purchaseradequate opportunity to present their views in writing and at a hearing orhearings to be held in the presence of Vendors and Purchaser and theiradvisors. The Parties shall jointly instruct the Expert to deliver his writtenopinion to them as soon as reasonably practicable but no later than eight weeksafter the remaining differences are referred to him. The Expert shall give reasonsfor his decision in writing and on all issues which are in dispute betweenVendors and Purchaser.

 

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5.8                                 TheExpert appointed pursuant to Clause 5.7 shall act as an expert and not as anarbitrator and his fully reasoned decision as to the matter(s) referred to himshall be final and binding on the Parties in the absence of manifest error. TheExpert shall allocate his costs between the Vendors and the Purchaser pursuantto section 91 of the German Civil Procedure Act (*ZPO*).

 

**6.****                                      WARRANTIES AND BANK GUARANTEE BY VENDORS**

 

6.1                                 TheVendors and the Individual Vendors (to the extent set forth in Schedule 8)warrant and undertake to the Purchaser under the terms of the Warranties andthe Tax Warranties as at Signing unless provided otherwise herein. AllWarranties and Tax Warranties shall be guarantees (*Garantien*) pursuant to sections 311 para 1, 276 para 1German Civil Code (in the version effective since 1 January 2002), i.e.representations sui generis the violation of which does not require fault onthe part of the Vendors, except as otherwise provided for in this Agreement (*verschuldensunabhängige Rechtsfolgenvereinbarung*).For the avoidance of doubt, it is being understood between the Parties that allprovisions of this Agreement relating to the consequences of a breach ofWarranties and Tax Warranties including but not limited to the limitations onremedies, form an integral part and define the scope of the respectiverepresentations which shall under no circumstances be considered or deemed as aguarantee pursuant to sections 443 para 1, 444 of the German Civil Code (in theversion effective since 1 January 2002). Vendors’ guarantees shall be governedby the specific remedies of the Purchaser set forth below and the limitationscontained herein. The assumption of Vendors’ guarantees shall not be construedor interpreted so as to provide Purchaser with any other claims than those setforth in this Agreement.

 

6.2                                 TheVendors shall repeat in writing the Warranties and Tax Warranties as of theCompletion Date unless expressly provided otherwise herein.

 

6.3                                 TheVendors shall submit to the Purchaser, on the Completion Date,

 

6.3.1                        a bank guarantee by a majorGerman bank in favor of Purchaser in the amount of € 3,860,000 (the “**Warranty Guarantee**”) as security for (i)any claim pursuant to Clause 7 as well as (ii) 50 % of any claim under theExtra Cap (as defined under Clause 7.2) to the extent such amount exceeds theExtra Cap and

 

6.3.2                        a bank guarantee by a majorGerman bank in favor of the Purchaser in the amount of € 500,000 (the “**Extra Warranty Guarantee**”) as a securityfor any and all claims in regard of the Extra Cap.

 

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The Warranty Guarantee shall permit the Purchaser to make drawings onfirst demand to the extent as it is set out in Schedule 7 A and shall be issuedand used as set forth in Schedule 7 A. The Extra Warranty Guarantee shallpermit the Purchaser to make drawings on first demand to the extent as it isset out in Schedule 7 B and shall be issued and used as set forth in Schedule 7B.

 

On the first anniversary of the Completion Date, Purchaser shall beobliged to return the Warranty Guarantee to Vendors in exchange for anotherbank guarantee which will expire on the second anniversary of the CompletionDate and which shall be issued as € 1,930,000 less agreed claims, plusany claims under Clause 7.1.1 (the “**ReplacedWarranty Guarantee**”), for which Vendors have receipt of a ClaimNotice (“**Pending Claim**”) pursuantto the notice provision under Clause 7.1.1, provided, however, that theReplaced Warranty Guarantee shall not expire before the last of the PendingClaims either has been agreed or settled by an Arbitration Decision orunconditionally paid by the Vendors to the Purchaser. If and to the extent thePending Claims are being resolved as above, the Replaced Warranty Guaranteeshall be released by the respective amount without undue delay. For theavoidance of doubt, the amount of such Replaced Warranty Guarantee shall at notime be higher than the amount of the Warranty Guarantee.

 

The Extra Warranty Guarantee shall be returned to the Vendors theearlier to occur of (i) claims under the Extra Cap having been settled ordecided by an Arbitration Decision and unconditionally paid by the Vendors to the Purchaser or (ii) the secondanniversary of the Completion Date.

 

Should the bank guarantees foreseen under this Clause 6.3 not beobtainable under reasonable conditions, the Vendors and the Purchaser shallnegotiate in good faith on alternative measures (e.g. escrow), provided,however, that the Purchaser and the Vendors shall equally bear the costsresulting therefrom.

 

**7.****                                      REMEDIES, COMPENSATION AND LIMITATION**

 

7.1                                 Ifand to the extent to which any of the Warranties or Tax Warranties proves notto be correct as of the Completion Date, Vendors shall indemnify the Purchasertherefore in accordance with the following procedures:

 

7.1.1                        If damages have been incurredor suffered for which the Purchaser believes it is or may be entitled toindemnification pursuant to the Warranties or Tax Warranties the Purchaser maydeliver a notice of claim (a “**Claim Notice**”)to the Vendors. Each

 

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Claim Notice shall state that Purchaser believes that there is or hasbeen a breach and that the Purchaser is entitled to indemnification,compensation or reimbursement, and contain a description of the circumstancessupporting Purchaser’s belief that there is or has been such a breach to thatPurchaser is so entitled to indemnification, and shall, to the extent possible,contain a good faith, non-binding, preliminary estimate of the amount ofdamages Purchaser claims to have so incurred or suffered (the “**Claimed Amount**”).

 

7.1.2                        Within 20 Business Days ofreceipt by the Vendors of a Claim Notice, the Vendors may deliver to thePurchaser a written response (the “**ResponseNotice**”) in which the Vendors: either (i) agree with Purchaser’sestimate of such Claimed Amount; or (ii) agree with part, but not all, of thePurchaser’s estimate of the Claimed Amount (such amount as agreed to being the“**Agreed Amount**”); or (iii)indicate that the Vendors do not agree with any portion of Purchaser’s estimateof the Claimed Amount. Any part of the Claimed Amount that has not been agreedto by the Vendors within such 20 Business Days period shall be the “**Contested Amount**”. If a Response Notice isnot received by the Purchaser within such 20 Business Days period, then theVendors shall be conclusively deemed to have agreed to indemnify the Purchaserfor the full Claimed Amount.

 

7.1.3                        If the Vendors deliver aResponse Notice agreeing to the full Claimed Amount or do not deliver aResponse Notice within the time limit set forth in Clause 7.1.2, the Vendorsshall, within five Business Days following the expiration of the 20 BusinessDay period referred to in Clause 7.1.2, pay the full Claimed Amount toPurchaser by wire transfer of immediately available funds to an accountdesignated by Purchaser in the Claim Notice. Such payment shall be deemed to bemade in full satisfaction of the claim described in such Claim Notice.

 

7.1.4                        If Vendors deliver a ResponseNotice agreeing to only the Agreed Amount, then Vendors shall within fiveBusiness Days following the delivery of such Response Notice, pay the AgreedAmount to Purchaser by wire transfer of immediately available funds to anaccount designated by Purchaser in the Claim Notice.  Such payment shall not be deemed to be made in full satisfactionof the claim described in such Claim Notice, but shall count toward thesatisfaction of the claim described in such Claim Notice.

 

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7.1.5                        If Vendors deliver a ResponseNotice indicating that there is a Contested Amount, Vendors and Purchaser shallattempt in good faith to resolve the dispute related to the ContestedAmount.  If Purchaser and Vendorsresolve such dispute, such resolution shall be binding on Vendors and Purchaser.  To the extent that such settlement requiresVendors to pay any portion of the Contested Amount, Vendors shall pay suchamount to Purchaser by wire transfer of immediately available funds to anaccount designated by Purchaser in the Claim Notice.  Such payment shall be deemed to be made in full satisfaction ofthe Contested Amount.

 

7.1.6                        If Vendors and Purchaser areunable to resolve the dispute relating to any Contested Amount within 20Business Days after the delivery of the Claim Notice (“**Initial Resolution Period**”), then the claimdescribed in the Claim Notice shall be settled by binding arbitration inHamburg in accordance with the rules provided for in Clause 20 with thefollowing specifications as against proceedings pursuant to Clause 20:  Arbitration will be conducted by one arbitrator,mutually selected by Purchaser and Vendors. If Purchaser and Vendors fail tomutually select an arbitrator within three Business Days following theexpiration of the Initial Resolution Period, then arbitration will be conductedby three arbitrators: one selected by Purchaser; one selected by Vendors; andthe third selected by the first two arbitrators who shall have a good commandof the English language. If Purchaser or Vendors fail to select an arbitratorwithin five Business Days following the expiration of the Initial ResolutionPeriod, then the other shall be entitled to select the second arbitrator.  The Parties agree to use all reasonableefforts to cause the arbitration hearing to be conducted within 30 BusinessDays after the appointment of the mutually-selected arbitrator or the last ofthe three arbitrators, as the case may be, and to use all reasonable efforts tocause the decision of the arbitrator(s) to be furnished within 50 Business Daysafter the appointment of the mutually-selected arbitrator or the last of thethree arbitrators, as the case may be. The final decision of the arbitrator(s)(the “**Arbitration Decision**”) shallbe furnished to Vendors and Purchaser in writing and shall constitute aconclusive determination of the issue(s) in question, binding upon Vendors andPurchaser and shall not be contested by either of them.  The non-prevailing Party in any arbitrationshall pay the reasonable expenses (including reasonable attorneys’ fees) of theprevailing Party and the fees and expenses associated with the arbitration(including the arbitrators’ fees and expenses).  For purposes of this Clause 7.1.6, the non-prevailing Party shallbe determined solely by the arbitrator(s). To the extent that the ArbitrationDecision requires Vendors to pay any portion of the Contested

 

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Amount, Vendors shall pay such amount to Purchaser by wire transfer ofimmediately available funds to an account designated by Purchaser in the ClaimNotice. Such payment shall be deemed to be made in full satisfaction of theContested Amount.

 

7.2                                 Theaggregate maximum liability of theVendors in respect of all claims under or in connection with the Warranties andthe Tax Warranties shall be limited to an amount of € 3,860,000 (the “**Cap**”) except for claims under Schedule 8Clause 3 for which the maximum liability of the Vendors shall be limitedby the Purchase Price and except for claims pursuant to a separate cap in theamount of  € 500,000  (“**ExtraCap**”). The Extra Cap shall exist for claims under the Tax Warrantieswith respect to the X-Ray Company and concerning the Vendors’ buyout in 1998.The Parties acknowledge and agree that, to the extent that there is any Taxliability relating to the X-Ray Company and the Vendors’ buyout in 1998, thePurchaser shall be entitled to make a claim for indemnification pursuant tothis Agreement for damages for a breach of the Tax Warranties.  Any such claim shall not be subject to theDe Minimis Amount. In case of such a claim the Vendors shall be fully liablefor any claim up to the amount of the Extra Cap. Such claims exceeding theExtra Cap shall be borne by the Vendors at a rate of 50 % for theunutilized element of the Cap.

 

7.3                                 TheVendors shall have no liability in respect of any claims under the Warrantiesand Tax Warranties unless the amount which would otherwise be recoverable inrespect of that claim exceeds € 100,000 (“**DeMinimis Amount**”), provided, however that where a series of claimsarise out of a single event, cause, circumstance, act or omission or a relatedor linked series thereof such claims shall be aggregated and treated as asingle claim for the purposes of this Clause 7.3. In case claims exceed the DeMinimis Amount, the Purchaser can claim the full amount of such claims (*Freigrenze*).

 

7.4                                 Therights and remedies of the Purchaser in respect of any breach of any of theWarranties and Tax Warranties shall survive the Completion Date.

 

7.5                                 Theprovisions of **Schedule 10**shallapply in respect of the operation of this Clause 7 and shall constituteadditional specifications / limitations of the Vendors’ liability.

 

7.6                                 Paymentsof the Vendors made according to this Clause 7 and the indemnities containedherein shall constitute in the relationship between the Vendors and Purchaser areduction of the Purchase Price and, to the extent they are made directly toany of the Companies, in the relationship between Purchaser and the recipient acapital contribution (*Einlage*).

 

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**8.****                                      LIMITATION PERIODS**

 

8.1                                 Theright to make claims related to Clause 7 shall survive until 12 months fromCompletion Date and shall be time barred thereafter except for:

 

8.1.1                        claims pursuant to **Schedule 9**which survive until 24 monthsfollowing the Completion Date, at least, however, until six months after (i)the relevant final and binding tax assessment or (ii) the lapse of the relevantstatutory limitation period; and

 

8.1.2                        claims pursuant to **Schedule 8 Clause 10 and Schedule 8 Clause 12.2**(the latter to the extent they relate to the LI Contribution Agreement) whichsurvive until 24 months following the Completion Date; and

 

8.1.4                        claims pursuant to **Schedule 8 Clause 3** which survive for 10years following the Completion Date.

 

8.2                                 Thelimitation periods mentioned above shall be tolled (*gehemmt*) in the event the Purchaser brings a Claim Notice inaccordance with Clause 7.1. until the end of the dispute resolution processdescribed in Clause 7.1.

 

8.3                                 Section203 (prescription in the event of negotiations) of the German Civil Code (*BGB*) shall not apply.

 

**9, 10.****                 ****INTENTIONALLY LEFTFREE**

 

**11.****                               VENDORS’ COVENANTS**

 

11.1                           Pre-completionCovenants of Vendors

 

11.1.1                  For the period between Signing andthe Completion Date the Vendors shall procure, to the extent permissible underapplicable laws, that the Companies shall operate their business in allmaterial respects in the ordinary course of business and consistent with pastpractice. In particular, in the period indicated in the previous sentence, noneof the Companies will

 

(a)                                  declare or pay outany dividend or make any other distribution, or repurchase, redeem or otherwiseacquire shares of capital stock or other securities of any of the Companies;

 

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(b)                                 issue any sharecapital or similar interest to any person;

 

(c)                                  undertake to make anycapital expenditure or commitment outside the Budget;

 

(d)                                 grant any increase inwages, salaries, bonus or other remuneration of any employee including anybenefit payments under any incentive or pension scheme or any materialvariation to the terms and conditions of employment of any employee outside theordinary course of business;

 

(e)                                  acquire or dispose ofany fixed assets outside the Budget;

 

(f)                                    incur, assume orguarantee any indebtedness vis-à-vis any third party outside the ordinarycourse of business with a value in excess of € 10,000;

 

(g)                                 make any advance orextend any loan outside the ordinary course of business with a value in excessof € 10,000;

 

(h)                                 make any change inaccounting principles, practices or methods;

 

(i)                                     accelerate thecollection of accounts receivable; or

 

(j)                                     agree, whether ornot in writing, to do any of the foregoing.

 

11.1.2                  For the period between Signing andthe Completion Date, the Vendors shall ensure that the Companies shall

 

(a)                                  preserve theirMaterial Assets in good working condition, reasonable wear and tear excepted;

 

(b)                                 give the Purchaseraccess to the management of the Companies and reasonable access to all recordsand information of the Companies to the extent the Purchaser requests suchaccess in connection with the implementation of this Agreement;

 

(c)                                  provide the Purchaserwith the monthly management accounts of the Companies within 10 Business Daysof the relevant month end, and in no event more than 15 Business Days of therelevant month’s end;

 

(d)                                 prepare and file allTax returns due for periods prior to the Completion Date, subject to thePurchaser’s review and, with regard to income tax filings,

 

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subject to the Purchaser’s prior approval, which shall not beunreasonably withheld; and

 

(e)                                  use best efforts toensure that the managing directors of the Companies and H. Strecker,U. Sassmanshausen, Bruno Stehr and Marten von Ascheraden enter intoamended employment or service agreements to the satisfaction of the Purchaserat substantially equivalent or better terms compared to their existingemployment or service agreements as soon as reasonably possible after the datehereof but at the latest until Completion Date.

 

11.1.3                  The Vendors undertake to use theirbest efforts to ensure that the business relationships of the Companies willnot be adversely affected by the change of ownership in the Company ascontemplated by this Agreement.

 

11.1.4                  The Vendors shall procure that theCompanies and their business remain insured until the Completion Date insubstantially the same way as they are as of Signing, and that all premiums forsuch insurance taken out are duly and timely paid.

 

11.2                           Covenantnot to Compete

 

11.2.1                  For a period of two years after theCompletion Date, Botts & Company undertakes towards the Purchaser thatneither Botts & Company nor any entity managed by Botts & Company willenter into any investment in the X-Ray NDT business or in the area of explosivedetection technology used in the aviation security business.

 

For a period of three years after the Completion Date, each of theVendors and Botts & Company undertakes towards the Purchaser that they andany entity managed by Botts & Company shall not

 

(a)                                  directly orindirectly solicit or otherwise contact any present or past customers of theCompanies, for itself or any other person, firm, or corporation, for thepurpose of obtaining business in competition with the NDT Business or SecurityBusiness as it exists as of Signing and the Completion Date; or

 

(b)                                 actively entice awayor solicit any employee of the Companies or to offer employment to any senioremployee (*leitende Angestellte*)of the Companies.

 

11.2.2                  In the event that any of the Vendors,Botts & Company, or any entity managed by Botts & Company,individually, intentionally or negligently violate their obligations

 

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under Clause 11.2.1, such violating entity shall pay to the Purchaserfor each violation a penalty of € 50,000. In the case of a continuedviolation, the violating entity shall waive the defense of continued acting (*Verzicht auf die Einrede desFortsetzungszusammenhangs*). The penalty shall, in such cases, be duefor each four week period of violation.

 

**12.****                               RELATIONSHIP AMONG THE COMPANIES, THE VENDORSAND BOTTS & COMPANY**

 

12.1                           TheVendors and Botts & Company herewith waive, with effect as from theCompletion Date, any rights they may have under the constitutional documents ofthe Companies, and shall cooperate with the Purchaser to implement anyamendment to such documents as may be appropriate in the Purchaser’s reasonableopinion for such purpose. The Vendors and Botts & Company furtherindividually undertake that immediately following the Completion Date, theVendors will not have any claim whatsoever against any of the Companies or anyof their respective employees, and none of the Companies will have anyliability to the Vendors or Botts & Company, or any notice of anyobligation, in respect of any act, event, omission or circumstance which hasoccurred before Signing or which will arise before the Completion Date. If,after the Completion Date, any such claim or liability arises, the Vendors andBotts & Company individually agree to waive on demand all rights againstany of the Companies or its employees, in respect of such claim or liability.

 

12.2                           TheVendors individually shall reasonably cooperate with the Purchaser and, to theextent it is not to their detriment (to be assessed in good faith), allowindividually for the preparation of any future tax restructuring of theCompanies by the Purchaser (also with regard to the separate businesses (*Teilbetriebe*) NDT Business and SECBusiness) and not take individually any measure which would frustrate suchrestructuring. This provision shall survive the Completion Date.

 

**13.****                               PURCHASER’S WARRANTIES AND COVENANTS**

 

13.1                           ThePurchaser hereby warrants to the Vendors that:

 

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13.1.1                  It is a corporation dulyincorporated, validly existing and in good standing under the laws of the Stateof Delaware, USA, with full power and authority to enter into and perform itsobligations under this Agreement;

 

13.1.2                  This Agreement constitutes valid andbinding obligations in accordance with its terms on the Purchaser;

 

13.1.3                  The execution, delivery and thecompletion of this Agreement and the performance of its terms will notcontravene the Certificate of Incorporation and Bylaws of the Purchaser;

 

13.1.4                  It possesses sufficient funds tocomplete the purchase in the manner set out in this Agreement and that itsobligation to complete this Agreement is not subject to or conditional uponfinancing from any source; and

 

13.1.5                  It has not had, during the last fullfiscal year before Signing, turnovers exceeding € 25,000,000 in Germany or€ 40,000,000 in Denmark.

 

13.2                           Tothe extent that a Purchaser’s Nominee purchases and accepts the transfer of theVendor Shares, the US Shares or the Shareholder Loans under this Agreement, thePurchaser shall guarantee the obligations of such Purchaser’s Nominee.

 

**14.****                               CONFIDENTIALITY AND ANNOUNCEMENTS**

 

14.1                           TheParties mutually undertake to keep the contents and the fact of the enteringinto this Agreement confidential vis-à-vis any third party exceptvis-à-vis their advisors and their beneficial owners except that the Vendorsshall be entitled to disclose Clause 3 to the lending banks of the Companies.

 

14.2                           Noannouncement, communication or circular concerning this Agreement (inparticular press releases) shall be made (whether prior to or after CompletionDate) by or on behalf of the Parties hereto without the prior written approvalof the other (which approval shall not be unreasonably withheld) save for suchannouncements as may be required by law or by the rules and regulations ofrelevant stock market authorities. At the Purchaser’s request, the Vendorsshall, together with the Companies, issue a joint communication to third partycustomers stating the change of ownership pursuant to this Agreement and arequest to maintain the current relationships.

 

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14.3                           TheVendors and Botts & Company shall keep confidential and not disclose to anythird party and not use any business or trade secrets of the Companies withoutthe prior written consent of the Purchaser.

 

**15.****                               COSTS / FINDER’S FEE**

 

15.1                           TheVendors and the Purchaser shall bear and pay all of their respective legal,accountancy, and other fees and expenses incurred in and incidental to thepreparation of this Agreement and of all other documents in connection herewithexcept for the costs of the notarisation of this Agreement and the costs forall regulatory filings which shall be borne by Purchaser.

 

15.2                           TheVendors hereby guarantee that none of the Companies has any obligation orliability to pay any fees or commissions to any broker, finder or agent withrespect to this Agreement and its implementation.

 

**16.****                               SUCCESSORS AND ASSIGNMENT**

 

16.1                           ThisAgreement shall be binding upon and inure for the benefit of each Party’ssuccessors and personal representatives.

 

16.2                           Exceptas otherwise expressly provided, all rights, benefits and obligations under orin connection with this Agreement are personal to the Parties and may not beassigned in whole or in part without the prior written consent of each other partyexcept that the Purchaser may assign all rights and benefits to one or more ofits wholly owned subsidiaries (including any Purchaser’s Nominee) until allobligations of the Purchaser under or in connection with this Agreement haveexpired.

 

**17.****                               ENTIRE AGREEMENT**

 

This Agreement including the Schedules constitutes the entire agreementbetween the Parties with respect to the subject matter of this Agreement.

 

**18.****                               VARIATIONS**

 

No variation of this Agreement or any of the documents in connectionherewith shall be valid unless it is in the form of this Agreement.

 

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**19.****                               SEVERABILITY**

 

The invalidity, illegality or unenforceability of any provision of thisAgreement shall not affect the continuation in force of the remainder of thisAgreement. In the event any provision hereof is for any reason held to be orbecome invalid or unenforceable, the validity of the remaining provisionshereof shall not be affected or impaired thereby. Instead of the invalid orunenforceable provision hereof, such valid and enforceable provision shall bedeemed to be agreed upon which most closely corresponds to the intendedeconomic purpose of the invalid or unenforceable provision. The same shallapply to any supplementary interpretation of any of the terms of thisAgreement.

 

**20.****                               NOTICES**

 

20.1                           Anynotice to be served in connection with this Agreement shall be in writing andshall be delivered by hand, sent by registered mail or recorded delivery orshall be transmitted by fax.

 

20.1.1                  In the case of the Vendors to eitherDr. Andrea von Drygalski, Dr. Matthias Bruse or Otto Haberstock whom theVendors hereby appoint their collective process agents (*Zustellungsbevollmächtigte*) for theservice of process and notices under this Agreement, at the following address:

 

P+P Pöllath+Partner

Kardinal-Faulhaber-Str. 10

D-80333 München

 

20.1.2                  In the case of the Purchaser to theChief Executive Officer of the Purchaser, with a copy to the Corporate Counselof the Purchaser, to the address 7151 Gateway Boulevard, Newark, California94560, U.S.A. or to any other address of which the party serving or sending thedocument has received notice in writing from the Purchaser.

 

20.1.3                  In the case of the Individual Vendorsto the business addresses specified in the introductory paragraphs.

 

20.1.4                  In the case of Botts & Companyto: Finance Director, Lintas House, 15-19 New Fetter Lane, LondonEC4A 1BA.

 

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20.2                           Anysuch notice shall be deemed to have been served as follows:

 

20.2.1                  In the case of delivery by hand, ondelivery;

 

20.2.2                  In the case of service by mail orairmail, on the third Business Day after the day on which it was posted; and

 

20.2.3                  In the case of transmission by fax,on the day it is transmitted;

 

20.2.4                  Provided that in each case wheredelivery by hand or fax occurs after 6pm, service shall be deemed to occur at9am on the next following Business Day. References to time in this Clause areto local time in the country of the addressee.

 

**21.****                               GOVERNING LAW, JURISDICTIONANDLANGUAGE**

 

21.1                           ThisAgreement shall be governed by and construed exclusively in accordance with thelaws of Germany without regard to principles of conflicts of laws and withoutregard to the UN Convention of the Sale of Goods.

 

21.2                           TheParties irrevocably agree that an arbitration court set up pursuant to therules of arbitration for the German Institution for Arbitration (DIS) shallhave exclusive jurisdiction to settle any dispute which may arise out of or inconnection with this Agreement other than disputes subjected to specificarbitration pursuant to Clause 7.1 and that accordingly, any suit, action orproceedings arising out of or in connection with this Agreement shall bebrought to such arbitration court without recourse to courts of law. The placeof jurisdiction shall be Hamburg. The language of the arbitration shall beEnglish.

 

21.3                           Thebinding language of this Agreement shall be English. The binding language ofthis Agreement shall be German if a German expression is stated in brackets. Inthis event the English expression shall be for convenience only.

 

21.4                           AllSchedules are well known to all parties.

 

Reference is made to the Schedules 1, 2, 3, 4 a, 4 b, 5, 6, 7 A, 7 B, 8, 9, and 10.

 

They form an integral part of this agreement(§ 9 Abs. 1 Satz 2 BeurkG).

 

Reference is made to the Schedules 8.3.1 to 8.13 as part of Schedule 8above. They also form an integral part of this agreement (§ 14 Abs. 1 BeurkG)and are signed on each page by the parties. The parties waive in reading thisdocuments.

 

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In witness thereof this Notarial Deed, together with its Schedules 1,2, 3, 4 a, 4 b, 5, 6, 7 A, 7 B, 8, 9 and 10 has been read aloud to the personsappearing by the officiating Notary Public or in presence of the officiatingnotary public, was submitted to them for inspection together with Schedules 1,2, 3, 4 a, 4 b, 5, 6, 7 A, 7 B, 8, 9 and 10 was approved by them and waspersonally signed by them and by the officiating Notary Public as follows:

 
| /s/ Reinhard Bonisch     |   |
|--------------------------|--------|
|                     |   |
| /s/ Joseph Kozanetsky    |   |
|                     |   |
| /s/ Andrea von Drygalski |   |
|                     |   |
| /s/ Tram Phi             |   |

 

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