EX-10.1



 





Exhibit 10.1

Execution Version




ASSET PURCHASE AGREEMENT




dated as of




May 31, 2007




by and among




TOLLGRADE COMMUNICATIONS, INC.




and




TERADYNE, INC.




 









 





	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	     1.01.
	 	Definitions	 	 	1	 
	1.02.
	 	Interpretation	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE II PURCHASE AND SALE	 	 	10	 
	 
	 	 	 	 	 	 
	2.01.
	 	Purchase and Sale	 	 	10	 
	2.02.
	 	Excluded Assets	 	 	12	 
	2.03.
	 	Assumption of Liabilities	 	 	13	 
	2.04.
	 	Excluded Liabilities	 	 	14	 
	2.05.
	 	Assignment of Contracts and Rights	 	 	16	 
	2.06.
	 	Licensed Intellectual Property	 	 	16	 
	2.07.
	 	Purchase Price; Closing	 	 	16	 
	2.08.
	 	Post-Closing Purchase Price Adjustment	 	 	18	 
	2.09.
	 	British Telecom Adjustment	 	 	19	 
	2.10.
	 	Allocation of Purchase Price	 	 	21	 
	2.11.
	 	Accounts Receivable	 	 	21	 
	2.12.
	 	Transfer of IP Assets	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	22	 
	 
	 	 	 	 	 	 
	3.01.
	 	Corporate Existence and Power; Qualification	 	 	22	 
	3.02.
	 	Corporate Authorization	 	 	22	 
	3.03.
	 	Governmental Authorization	 	 	23	 
	3.04.
	 	Non-Contravention	 	 	23	 
	3.05.
	 	Financial Statements	 	 	23	 
	3.06.
	 	Absence of Certain Changes or Events	 	 	23	 
	3.07.
	 	Consents	 	 	24	 
	3.08.
	 	Purchased Assets	 	 	24	 
	3.09.
	 	Litigation	 	 	25	 
	3.10.
	 	Contracts	 	 	26	 
	3.11.
	 	Compliance with Laws	 	 	28	 
	3.12.
	 	Seller’s Proprietary Rights	 	 	28	 
	3.13.
	 	Employees; Employee Benefits	 	 	30	 
	3.14.
	 	Finders’ Fees	 	 	33	 
	3.15.
	 	Absence of Undisclosed Liabilities	 	 	33	 
	3.16.
	 	Affiliate Transactions	 	 	33	 
	3.17.
	 	Accounts Receivable	 	 	33	 
	3.18.
	 	Inventory	 	 	33	 
	3.19.
	 	Taxes	 	 	33	 
	3.20.
	 	Labor Matters	 	 	34	 
	3.21.
	 	Insurance	 	 	34	 
	3.22.
	 	Licenses and Approvals	 	 	35	 
	3.23.
	 	Environmental	 	 	35	 
	3.24.
	 	Customers and Suppliers	 	 	35	 
	3.25.
	 	Trade Compliance	 	 	35	 
	3.26.
	 	Products	 	 	36	 
	3.27.
	 	Product Liabilities	 	 	36	 






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(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	     3.28.
	 	Books and Records	 	 	36	 
	3.29.
	 	Competition/Antitrust Law	 	 	36	 
	3.30.
	 	Compliance	 	 	37	 
	3.31.
	 	No Fraudulent Intent	 	 	37	 
	 
	 	 	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	37	 
	 
	 	 	 	 	 	 
	4.01.
	 	Corporate Existence	 	 	37	 
	4.02.
	 	Corporate Authorization	 	 	37	 
	4.03.
	 	Governmental Authorization	 	 	38	 
	4.04.
	 	Non-Contravention	 	 	38	 
	4.05.
	 	Finders’ Fees	 	 	38	 
	4.06.
	 	Litigation	 	 	38	 
	4.07.
	 	Financial Ability	 	 	38	 
	4.08.
	 	No Other Representations or Warranties of Seller	 	 	38	 
	 
	 	 	 	 	 	 
	ARTICLE V COVENANTS OF SELLER	 	 	38	 
	 
	 	 	 	 	 	 
	5.01.
	 	Conduct of the Business	 	 	38	 
	5.02.
	 	No Negotiation with Third Parties	 	 	40	 
	5.03.
	 	Access to Information	 	 	41	 
	5.04.
	 	Supplemental Disclosure	 	 	41	 
	5.05.
	 	Non-Interference, Non-Solicitation
and Non-Competition Agreement	 	 	41	 
	5.06.
	 	Audited Financial Statements	 	 	42	 
	5.07.
	 	Excess Warranty Claims	 	 	43	 
	5.08.
	 	Inventory Schedule	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE VI COVENANTS OF PARTIES	 	 	43	 
	 
	 	 	 	 	 	 
	6.01.
	 	Notices of Certain Events	 	 	43	 
	6.02.
	 	Further Assurances	 	 	44	 
	6.03.
	 	Certain Filings	 	 	44	 
	6.04.
	 	Public Announcements	 	 	45	 
	6.05.
	 	Confidentiality Agreement	 	 	45	 
	 
	 	 	 	 	 	 
	ARTICLE VII TAX MATTERS	 	 	45	 
	 
	 	 	 	 	 	 
	7.01.
	 	Tax Definitions	 	 	45	 
	7.02.
	 	Tax Cooperation; Allocation of Taxes	 	 	46	 
	7.03.
	 	Value Added Tax	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE VIII EMPLOYEE MATTERS	 	 	47	 
	 
	 	 	 	 	 	 
	8.01.
	 	Employment Matters Relating to
United States Employees	 	 	47	 
	8.02.
	 	Employment Matters Relating to EU Employees	 	 	49	 
	8.03.
	 	Pensions	 	 	51	 
	8.04.
	 	No Third Party Beneficiaries	 	 	51	 
	 
	 	 	 	 	 	 
	ARTICLE IX CONDITIONS TO CLOSING	 	 	51	 
	 
	 	 	 	 	 	 
	9.01.
	 	Conditions to the Obligations of Each Party	 	 	51	 






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(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	9.02.
	 	Conditions to Obligation of Buyer	 	 	51	 
	9.03.
	 	Condition to Obligations of Seller	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE X SURVIVAL; INDEMNIFICATION	 	 	52	 
	 
	 	 	 	 	 	 
	10.01.
	 	Survival	 	 	52	 
	10.02.
	 	Indemnification	 	 	53	 
	10.03.
	 	Certain Limitations	 	 	54	 
	10.04.
	 	Procedure for Indemnification	 	 	55	 
	10.05.
	 	Remedies Exclusive	 	 	55	 
	 
	 	 	 	 	 	 
	ARTICLE XI TERMINATION	 	 	56	 
	 
	 	 	 	 	 	 
	11.01.
	 	Grounds for Termination	 	 	56	 
	11.02.
	 	Effect of Termination	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE XII MISCELLANEOUS	 	 	57	 
	 
	 	 	 	 	 	 
	12.01.
	 	Notices	 	 	57	 
	12.02.
	 	Amendments; Waivers	 	 	58	 
	12.03.
	 	Expenses	 	 	58	 
	12.04.
	 	Successors and Assigns	 	 	58	 
	12.05.
	 	Governing Law; Jurisdiction and Venue	 	 	58	 
	12.06.
	 	WAIVER OF JURY TRIAL	 	 	58	 
	12.07.
	 	Counterparts; Effectiveness	 	 	59	 
	12.08.
	 	Entire Agreement	 	 	59	 
	12.09.
	 	Bulk Sales Laws	 	 	59	 
	12.10.
	 	Severability	 	 	59	 
	12.11.
	 	Headings	 	 	59	 
	12.12.
	 	Terms	 	 	59	 
	12.13.
	 	No Third Party Beneficiaries	 	 	59	 
	12.14.
	 	Captions	 	 	60	 






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(continued)




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule 1.01(a)

	 	Seller’s Premises	 	 
	Schedule 1.01(b)

	 	German Pension Plan Employees	 	 
	Schedule 2.01(a)

	 	Purchased Assets — Personal Property	 	 
	Schedule 2.01(b)

	 	Purchased Assets — Assigned Contracts	 	 
	Schedule 2.01(d)

	 	Purchased Assets — Licenses and Approvals	 	 
	Schedule 2.01(e)

	 	Purchased Assets — Accounting Books and Records	 	 
	Schedule 2.01(f)

	 	Purchased Assets — Real Property Leases	 	 
	Schedule 2.01(g)

	 	Purchased Assets — Patents and Trademarks	 	 
	Schedule 2.01(h)

	 	Purchased Assets — Copyrights and Software	 	 
	Schedule 2.01(j)

	 	Purchased Assets — Accounts Receivable	 	 
	Schedule 2.02(i)

	 	Other Excluded Assets	 	 
	Schedule 2.03(j)

	 	Other Assumed Liabilities	 	 
	Schedule 2.08(b)

	 	Closing Balance Sheet Line Items	 	 
	Schedule 2.10

	 	Allocation Statement	 	 
	Schedule 3.03

	 	Governmental Authorization	 	 
	Schedule 3.04

	 	Non-Contravention	 	 
	Schedule 3.05

	 	Reference Statement	 	 
	Schedule 3.06

	 	Absence of Certain Changes or Events	 	 
	Schedule 3.07

	 	Consents	 	 
	Schedule 3.08(d)

	 	Permitted Liens	 	 
	Schedule 3.08(e)

	 	Locations of Purchased Assets	 	 
	Schedule 3.09

	 	Litigation	 	 
	Schedule 3.10(a)

	 	Assigned Contracts	 	 
	Schedule 3.10(b)

	 	Defaults under Assigned Contracts	 	 
	Schedule 3.10(c)

	 	Conflicting Contracts	 	 
	Schedule 3.12(b)

	 	Software Programs	 	 
	Schedule 3.12(c)

	 	License Agreements	 	 
	Schedule 3.12(e)

	 	Restrictions on Seller Intellectual Property	 	 
	Schedule 3.12(g)

	 	Infringement by Seller	 	 
	Schedule 3.12(h)

	 	Royalties, Fees and Other Payments	 	 
	Schedule 3.12(j)

	 	Infringement by Others	 	 
	Schedule 3.12(k)

	 	Source Code	 	 
	Schedule 3.13(b)

	 	Collective Bargaining and Labor Agreements	 	 
	Schedule 3.13(c)

	 	Employee Benefits	 	 
	Schedule 3.13(e)

	 	EU Employees	 	 
	Schedule 3.14

	 	Finders’ Fees of Seller	 	 
	Schedule 3.15

	 	Absence of Undisclosed Liabilities	 	 
	Schedule 3.16

	 	Affiliate Transactions	 	 
	Schedule 3.17

	 	Accounts Receivable	 	 
	Schedule 3.21

	 	Insurance	 	 






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Table of Contents

(continued)




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule 3.22

	 	Licenses and Approvals	 	 
	Schedule 3.23

	 	Environmental	 	 
	Schedule 3.24

	 	Customers and Suppliers	 	 
	Schedule 3.25

	 	Trade Compliance	 	 
	Schedule 4.03

	 	Governmental Authorization	 	 
	Schedule 4.05

	 	Finders’ Fees of Buyer	 	 
	Schedule 5.01

	 	Conduct	 	 
	Schedule 5.05

	 	Non-Competition	 	 
	Schedule 8.01(b)

	 	US Transferred Employees	 	 
	Schedule 8.02(b)

	 	EU Employees	 	 
	Schedule 9.02(f)

	 	Closing Consents	 	 






EXHIBITS




Exhibit A — Assignment and Assumption Agreement

Exhibit B — Bill of Sale

Exhibit C — Copyright Assignment

Exhibit D — Deerfield Letter Agreement

Exhibit E — Intellectual Property Agreement

Exhibit F — Lease Assignments

Exhibit G — Patent Assignment

Exhibit H — Sublease Agreement

Exhibit I — Trademark Assignment

Exhibit J— Transition Services Agreement

Exhibit K — Disclosure Schedule





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ASSET PURCHASE AGREEMENT




     AGREEMENT dated as of May 31, 2007, by and among (i) TOLLGRADE COMMUNICATIONS, INC., a
Pennsylvania corporation and/or, subject to the provisions of Section 12.04, one or more of its
direct or indirect wholly-owned subsidiaries to be designated (collectively, “Buyer”) and
(ii) TERADYNE, INC., a Massachusetts corporation (“Seller”). Buyer and Seller are
sometimes referred to herein individually as a “Party” and, collectively, as the
“Parties”.



WITNESSETH:




     WHEREAS, Seller currently operates the Business (as defined below); and



     WHEREAS, Buyer desires to purchase the assets, and to assume certain of the liabilities,
related to the Business identified herein from Seller, and Seller desires to sell the assets, and
to assign certain of the liabilities, related to the Business identified herein to Buyer, upon the
terms and subject to the conditions hereinafter set forth.



     WHEREAS, Buyer desires to hire certain of Seller’s employees employed in the Business;



     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:



ARTICLE I




DEFINITIONS




     1.01. Definitions. The following terms, as used herein, have the following meanings:



          “Access Period” has the meaning specified in Section 5.03.




          “Accounting Referee” means that independent nationally recognized accounting firm
mutually agreed upon by Buyer and Seller.




          “Accounts Receivable” has the meaning specified in Section 2.01(j).




          “Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such other Person.




          “Allocation Statement” has the meaning specified in Section 2.10.




          “Ancillary Documents” means the Assignment and Assumption Agreement, the Bill of Sale,
the Transition Services Agreement, the Intellectual Property License Agreement, the Patent
Assignment, the Copyright Assignment, the Lease Assignments, the Deerfield Letter Agreement, the
Sublease Agreement, the Trademark Assignment and each of the other agreements, certificates and
instruments to be executed and delivered by all or some of the Parties in connection with the
transactions contemplated hereby.




 









 








          “Ancillary Transfer Documents” means the Intellectual Property License Agreement, the
Assignment and Assumption Agreement, the Bill of Sale, the Copyright Assignment, the Patent
Assignment and the Trademark Assignment.




          “Apportioned Obligations” has the meaning specified in Section 7.02(b).




          “Assigned Contracts” has the meaning specified in Section 2.01(b).




          “Assignment and Assumption Agreement” means one or more Assignment and Assumption
Agreements, substantially in the form attached hereto as Exhibit A.




          “Assumed Liabilities” has the meaning specified in Section 2.03.




          “Beckmann Claim” means all losses, costs, liabilities, expenses, actions, proceedings,
claims and demands incurred or paid as a result of any claim by or in respect of any EU Employee
directly or indirectly arising out of:




               (i) the decision of the European Court of Justice in Beckmann v Dynamco Whicheloe Macfarlane
Limited or Martin v South Bank University or any legislation or judgment (including any tribunal or
Pensions Ombudsman decision) introduced or promulgated directly or indirectly as a result of such
decision; or



               (ii) any failure by the Buyer to provide to or in respect of any EU Employee occupational
pension scheme benefits other than those relating to old age, invalidity and survivors (as referred
to in Article 3 of the Directive) enjoyed by the EU Employees prior to Closing.



          “Benefit Arrangement” means an employment, severance or similar contract, arrangement
or policy and each plan or arrangement providing for severance, insurance coverage (including any
self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits that is not an Employee Plan,
and is or was maintained or contributed to by Seller or any of its ERISA Affiliates (as such term
is defined in Section 3(3) of ERISA) and covers any employee of the Seller engaged in the operation
of the Business.




          “Bill of Sale” means one or more Bills of Sale, substantially in the form attached
hereto as Exhibit B.




          “Book and Records” has the meaning specified in Section 2.01(e).




          “BT Amendment” has the meaning specified in Section 2.09(b).




          “BT Certificate” has the meaning specified in Section 2.09(a)(i).




          “BT Contract” means Post Acceptance Support for the Teradyne Line Test/Celerity System
Agreement (Contract Number 673751), dated as of December 23, 2004, by

2









 








and between British Telecommunications plc and Teradyne Limited, as amended on April 12, 2007,
as amended, modified or supplemented from time to time, including any renewal, extension,
restatement or replacement thereof.




          “BT Measurement Period” means the twelve month period commencing on the Closing Date
and ending on the first anniversary thereof.




          “BT Revenues” means the actual revenues recognized by Buyer, as determined under GAAP,
and attributable to the BT Contract.




          “Business” means the business and commercial operations of Seller’s Broadband Test
Division as they are currently conducted by Seller.




          “Business Claims” has the meaning specified in Section 2.01(c).




          “Business Day” means any day other than a Saturday, Sunday or day on which banks in
New York, New York are authorized or required by law to close.




          “Business Licenses” has the meaning specified in Section 3.12(c).




          “Buyer” has the meaning specified in the preamble.




          “Buyer Benefit Arrangements and Plans” means an employment, severance, salary
continuation or similar contract, arrangement or policy and each plan or arrangement providing for
severance, salary continuation, insurance coverage (including any self-insured arrangements),
workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits that is maintained or contributed to by Buyer or any of its
ERISA Affiliates and covers any employee of Buyer, and shall include each “employee benefit plan”
maintained or contributed to by Buyer or any of its ERISA Affiliates, as such term is defined in
Section 3(3) of ERISA.




          “Buyer’s Field” means test and measurement applications for telephone and cable
service providers and specifically for long line DSL and CATV high speed data and voices services
networks.




          “Claims” has the meaning specified in Section 2.01(c).




          “Closing” has the meaning specified in Section 2.07(b).




          “Closing Balance Sheet” has the meaning specified in Section 2.08(b).




          “Closing Consents” has the meaning specified in Section 9.02(f).




          “Closing Date” means the date of the Closing.




          “Closing Net Asset Value” has the meaning specified in Section 2.08(b).




3









 








          “Closing Purchase Price” has the meaning specified in Section 2.07(a).




          “COBRA” has the meaning specified in Section 3.13(a).




          “Confidentiality Agreement” means the confidentiality agreement dated April 26, 2007,
between Buyer and Seller.




          “Consent” has the meaning specified in Section 3.07.




          “Contracts” means all customer accounts of the Business and all of Seller’s and
Seller’s Affiliates’ rights to service such customer accounts, and all rights under all current and
open customer purchase orders, customer contracts, vendor contracts, licenses, leases (other than
the Real Property Leases) and any other agreements, contracts, promises, commitments, undertakings,
guarantees, warranties, representations, grant of rights, licenses, permits, registrations and
authorizations (whether oral or written and whether express or implied) to which Seller or any of
Seller’s Affiliates is a party, to the extent related to the Business and related documents.




          “Copyright Assignment” means that certain Copyright Assignment, substantially in the
form of Exhibit C.




          “Copyrights” means all copyrights, including in and to works of authorship and all
other rights corresponding thereto throughout the world, whether published or unpublished,
including rights to prepare, reproduce, perform, display and distribute copyrighted works and
copies, compilations and derivative works thereof.




          “Deerfield Letter Agreement” means a letter agreement substantially in the form of
Exhibit D, to be entered into between Seller and Buyer with respect to the treatment of
lease abatement charges at the Deerfield, Illinois facility.




          “Directive” means the Acquired Rights Directive and applicable national laws
implementing that directive including: (a) in the United Kingdom, the Transfer of Undertakings
(Protection of Employment) Regulations 2006; (b) in Germany, Section 613a Civil Code (BGB); (c) in
Belgium, Chapter II of the Collective Bargaining Agreement No. 32bis of 7 June 1985; (d) in the
Czech Republic, the Labour Code (as currently in effect) and (e) in the Netherlands, Book 7, Title
10, Section 8 Dutch Civil Code, each as amended, or replaced by similar legislation, from
time-to-time.




          “Disclosure Schedule” has the meaning specified in the introduction of Article III.




          “Disputed Items” has the meaning specified in Section 2.09(a)(iii).




          “Disputed Items Notice” has the meaning specified in Section 2.09(a)(ii).




          “Employee List” has the meaning specified in Section 3.13(a).




4









 








          “Employee Plan” means each “employee benefit plan”, as such term is defined in Section
3(3) of ERISA, that is maintained or contributed to by Seller or any of its ERISA Affiliates, as
such term is defined in Section 3(3) of ERISA, and covers any employees of the Seller engaged in
the operation of the Business.




          “Environmental Laws” means all applicable federal, state, local and foreign statutes,
laws, rules, regulations, ordinances, by-laws, directives, orders, decrees and other provisions
having the force and effect of law, all judicial and administrative orders and determinations, and
all common law relating to the quality or protection of public health and safety, or the
environment or the production, generation, use, storage, transportation, treatment, distribution,
labeling, testing, processing, discharge, release, threatened release, cleanup, handling or
disposal of Hazardous Material, including the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”), the Hazardous Materials
Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251 et
seq., and the Clean Air Act, 42 U.S.C. § 7401 et seq., as presently in effect.




          “Environmental Liabilities” means any and all costs, damages, expenses, liabilities,
obligations or other responsibilities arising from or under any Environmental Law, including
without limitation obligations to pay the amount of any judgment or settlement, the cost of
complying with any settlement, judgment or order for injunctive or other equitable relief, the cost
of compliance or corrective action, the amount of any civil penalty or criminal fine, and any court
costs and attorney’s fees, fees for experts and consultants.




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




          “EU Employees” has the meaning specified in Section 3.13(e).




          “EU Employment Liabilities” has the meaning specified in Section 2.03(a).




          “EU Transferred Employees” has the meaning specified in Section 8.02(b).




          “Excluded Assets” has the meaning specified in Section 2.02.




          “Excluded Liabilities” has the meaning specified in Section 2.04.




          “Financials” has the meaning specified in Section 3.05.




          “Financial Statement Expense” has the meaning specified in Section 5.06.




          “First Year BT Contract Revenue” means the BT Revenues recognized by Buyer during the
BT Measurement Period.




          “GAAP” means U.S. generally accepted accounting principles, consistently applied.




5









 








          “German Pension Plan” means the Teradyne Gmbh Pension Plan effective as of July 1,
2003.




          “German Pension Plan Employees” means those employees whose names are set forth on
Schedule 1.01(b).




          “German Pension Plan Liabilities” means all liabilities under the German Pension Plan
to the German Pension Plan Employees, whether arising before or after Closing.




          “German Pension Plan Reduction Amount” means an amount per German Pension Plan
Employee who becomes an EU Transferred Employee, as set forth on Schedule 1.01(b).




          “Governmental Authority” means any agency, authority, body, board, commission, court,
instrumentality, legislature and office of any nature whatsoever of any government,
quasi-governmental unit or political subdivision, whether foreign, federal, state, county,
district, municipality, city or otherwise.




          “Hazardous Material” means any substance, chemical, waste, compound or other material:




               (i) the presence of which requires notification, investigation monitoring, or remediation
under any Environmental Law; or



               (ii) that is or becomes defined as a “toxic substance”, “hazardous waste”, “hazardous
material”, “hazardous substance”, “pollutant” or “contaminant” under any Environmental Law;



               (iii) that is toxic, explosive, corrosive, reactive, flammable, infectious, radioactive,
carcinogenic, teratogenic, mutagenic or otherwise hazardous and is or becomes subject to the
jurisdiction of any Governmental Authority;



               (iv) the presence of which on, within, or beneath the Seller’s Premises causes or threatens to
cause a nuisance on, in, or emanating from the Seller’s Premises or onto adjacent properties or
poses or threatens to pose a hazard to the Seller’s Premises or to the health or safety of persons
on or about the Seller’s Premises;



               (v) that contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic
compounds; or



               (vi) that contains polychlorinated biphenyls (“PCBs”), lead paint, radon gas, asbestos or urea
formaldehyde foam insulation.



          “Indemnified Party” has the meaning specified in Section 10.04(a).




          “Indemnifying Party” has the meaning specified in Section 10.04(a).




          “Insurance Policies” has the meaning specified in Section 3.21.




6









 








          “Intellectual Property Assets” has the meaning specified in Section 2.12.




          “Intellectual Property License Agreement” means that license agreement between Buyer
and Seller substantially in the form set forth in Exhibit E hereto.




          “Inventory” has the meaning specified in Section 2.01(i).




          “Lease Assignments” means the Assignment and Assumption Agreements substantially in
the form of Exhibit F hereto, to be entered into between the Seller and Buyer at the
Closing with respect to the Seller’s facilities in Deerfield, Illinois, Kontich, Belgium and
Wuppertal, Germany.




          “Letter Agreement” means that certain letter agreement dated May 31, 2007, by and
between Buyer and Seller.




          “Licensed Intellectual Property” means the intellectual property licensed by Seller to
Buyer pursuant to the Intellectual Property License Agreement.




          “Licenses and Approvals” has the meaning specified in Section 2.01(d).




          “Lien” means any mortgage, lien (including any mechanics, warehousemen, laborers and
landlords liens), claim, pledge, charge, security interest, equitable interest, right-of-way,
encumbrance, restriction on or conditions to transfer or assignment, defects, claims or similar
restrictions of any kind.




          “Loss” has the meaning specified in Section 10.02(a).




          “Major Customers” has the meaning specified in Section 3.24.




          “Major Suppliers” has the meaning specified in Section 3.24.




          “Material Adverse Effect” means, with respect to Seller, any change, circumstances,
event or effect with respect to the Business that, individually or in the aggregate (taking into
account all other such changes, circumstances, events or effects), is, or could reasonably be
expected to have a material adverse effect on the Business, assets (including intangible assets),
condition (financial or otherwise), or results of operations of the Business taken as a whole or
the ability of Seller to timely consummate the transactions contemplated hereby or on the rights of
Buyer under this Agreement, other than any such effect or change, directly or indirectly, (a)
resulting from or arising in connection with (i) general political, economic, financial, capital
market or industry-wide conditions which do not have a disproportionate impact on the Business or
its material assets taken as a whole, (ii) regulatory changes, (iii) this Agreement, the
transactions contemplated hereby or the authorized announcement or other disclosure of this
Agreement or the transactions contemplated hereby, (iv) any breach by Buyer of this Agreement or
(v) any failure by the Business to meet any projections or forecast (but not the underlying
material adverse change, event, circumstance or development, if any, giving rise thereto), or (b)
attributable to the fact that the prospective owner of the Business, the Purchased Assets and the
Assumed Liabilities is the Buyer or any Affiliate of the Buyer.




7









 








          “Moral Rights” means collectively, rights to claim authorship of a work, to object to
or prevent any modification of a work, to withdraw from circulation or control the publication or
distribution of a work, and any similar rights, whether existing under judicial or statutory law of
any country or jurisdiction worldwide, or under any treaty or similar legal authority, regardless
of whether such right is called or generally referred to as a “moral right.”




          “Party” has the meaning specified in the preamble.




          “Patent Assignment” means the Patent Assignment substantially in the form of
Exhibit G hereto.




          “Permitted Lien” has the meaning specified in Section 3.08(d).




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




          “Personal Data” has the meaning given to it in the UK Data Protection Act 1998.




          “Personal Property” has the meaning specified in Section 2.01(a).




          “Post-Closing Tax Period” has the meaning specified in Section 7.01.




          “Pre-Closing Tax Period” has the meaning specified in Section 7.01.




          “Purchase Price” has the meaning specified in Section 2.10.




          “Purchased Assets” has the meaning specified in Section 2.01.




          “PwC” has the meaning specified in Section 5.06.




          “Real Property Leases” has the meaning specified in Section 2.01(f).




          “Reference Net Asset Value” has the meaning specified in Section 2.08.




          “Reference Statement” has the meaning specified in Section 3.05.




          “Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the environment of any
Hazardous Materials.




          “Representatives” means the representatives of a recognized trade union or, if there
are none, existing works council representatives or, if there are none, representatives elected
specifically to represent EU Employees for the purpose of information and/or consultation
obligations under the Directive.




          “SEC” has the meaning specified in Section 5.06.




          “Seller” has the meaning specified in the preamble.




8









 








          “Seller Intellectual Property” has the meaning specified in Section 2.01(h).




          “Seller’s Knowledge” or “to the Knowledge of Seller” shall mean the actual
knowledge of a particular fact or other matter, after reasonable inquiry, of Grant Cushney, Neil
Owen, James Dawson, Jeff Hotchkiss and Fletcher Bishop.




          “Seller’s Premises” means the real property leased by the Seller identified on
Schedule 1.01(a).




          “Software Programs” has the meaning specified in Section 3.12(b).




          “Special Representations” has the meaning specified in Section 10.01(c).




          “Sublease Agreement” means the underlease agreement and the license to sublet part
substantially in the form of Exhibit H hereto, to be entered into between Buyer and Seller
at the Closing with respect to Seller’s facility in Bracknell, U.K.




          “Target First Year BT Contract Revenue” means $2,700,000.




          “Tax” has the meaning specified in Section 7.01.




          “Tax Code” has the meaning specified in Section 7.01.




          “Tax Information” has the meaning specified in Section 2.02(e).




          “Tax Returns” has the meaning specified in Section 7.01.




          “Technology” means algorithms, data, databases, hardware, inventions (whether or not
patentable), know-how, processes, proprietary information, protocols, specifications, software,
software code (in any form including source code and executable or object code), techniques, works
of authorship, and other information, materials and technology (whether or not embodied in any
tangible form and including all tangible embodiments of the foregoing such as instruction manuals,
laboratory notebooks, prototypes, samples, studies and summaries).




          “Trademark Assignment” means the trademark assignment in substantially the form of
Exhibit I hereto.




          “Transferred Employees” means collectively the EU Transferred Employees and the US
Transferred Employees.




          “Transferred IP Assets” has the meaning specified in Section 3.12(e).




          “Transition Services Agreement” means the transition services agreement between Buyer
and Seller substantially in the form set forth in Exhibit J hereto.




          “Unidentified Employee” has the meaning specified in Section 8.02(h).




          “US Terminated Employees” has the meaning specified in Section 8.01(a).




9









 








          “US Transferred Employees” has the meaning specified in Section 8.01(b).




          “VAT” has the meaning specified in Section 7.01.




          “WARN Act” has the meaning specified in Section 3.13(a).




          “Warranty Limitation Amount” has the meaning specified in Section 5.07.




     1.02. Interpretation. Unless the context otherwise requires, the terms defined in
Section 1.01 shall have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms defined herein. All
accounting terms defined in Section 1.01, and those accounting terms used in this Agreement not
defined in Section 1.01, except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless otherwise indicated.
Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” When a reference is made in this Agreement
to “ordinary course of business”, such reference shall be deemed to be followed by the words
“consistent with past practice.” All payments required to be made hereunder shall be made in US
dollars, all references to any monetary amounts hereunder are references to US dollars and, in the
event any amount is determined hereunder based on a currency other than US dollars, such amount
shall be converted to US dollars based on the exchange rate published by the Wall Street Journal as
of the end of the Business Day such amount is fixed.



ARTICLE II




PURCHASE AND SALE




     2.01. Purchase and Sale. Subject to Section 2.02, upon the terms and subject to the
conditions of this Agreement and in reliance on the representations, warranties, covenants and
agreements of Seller herein, Buyer agrees to purchase from Seller and Seller agrees to sell,
transfer, assign and deliver, or cause to be sold, transferred, assigned and delivered (in the case
of any assets owned by Affiliates of Seller), to Buyer at Closing, free and clear of all Liens
other than Permitted Liens, the Purchased Assets. As used in this Agreement, the term
“Purchased Assets” shall mean the assets identified below in this Section 2.01:



          (a) Subject to Section 2.02(i), (i) the personal property and equipment used in the operation
of the Business at any time during the twelve (12) month period preceding the date of this
Agreement and located at the Seller’s Premises and (ii) such other personal property and equipment
used in the Business and set forth on Schedule 2.01(a) (collectively, the “Personal
Property”);




          (b) Subject to Sections 2.02 and 2.05, the rights under the Contracts identified on
Schedule 2.01(b) (the “Assigned Contracts”);




          (c) Seller’s and any of Seller’s Affiliates’ rights, claims, credits, causes of action or
rights of set-off against third parties (“Claims”) exclusively relating to the Business




10









 







(“Business Claims”), including unliquidated rights under manufacturers’ and vendors’
warranties, and any other Claims that would exclusively relate to the Business if severed from a
Claim that relates to other operations of Seller;




          (d) the licenses, government certificates, permits, approvals or other governmental
authorizations identified on Schedule 2.01(d) (collectively, the “Licenses and
Approvals”);




          (e) the books, records, files and papers used exclusively in the Business, whether in hard
copy or computer format, including engineering information; product drawings; bill of materials;
production routings; manuals and data; service and warranty records; sales and purchase
correspondence; catalogs; brochures; sales, promotion and creative materials; market studies;
analyses; projections; pricing and other marketing information and similar data; lists of present
and former suppliers, customers, subcontractors and distributors; personnel and employment records
relating directly to the operation of Business (but excluding Tax Information), provided, however,
that with respect to accounting books and records, only those specific accounting books and records
identified on Schedule 2.01(e), and with respect to personnel and employment records, only
to the extent permitted by applicable law with respect to Transferred Employees (collectively, the
“Books and Records”);




          (f) a sublease and/or assignment of the leasehold interests in the real property or a portion
thereof that is leased to Seller and to any of Seller’s Affiliates or used by Seller and any of
Seller’s Affiliates with respect to the operation of the Business under the leases identified on
Schedule 2.01(f) (collectively, the “Real Property Leases”), in each case subject
to the terms and conditions of the Deerfield Letter Agreement, the Lease Assignments and Sublease
Agreement;




          (g) all (i) patents, patent applications and patent disclosures listed on Schedule
2.01(g); (ii) trademarks, service marks, trade dress, trade names, logos, corporate names and
other commercial product or service designations (in each case, whether registered or unregistered)
listed on Schedule 2.01(g); and (iii) any and all other rights to existing and future
registrations and applications for any of the foregoing and all other proprietary rights in, or
relating to, any of the foregoing, including remedies against and rights to sue for past
infringements, and rights to damages and profits due or accrued in or relating to any of the
foregoing; subject to the Intellectual Property License Agreement and rights and restrictions
contained in the licenses or agreements with third parties identified on Schedule 2.01(g);




          (h) all (i) Copyrights (registered or unregistered) and copyrightable works and registrations
and applications for registration thereof; (ii) computer software, data, data bases and
documentation thereof; (iii) trade secrets and other confidential information (including ideas,
formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced
to practice), know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial and marketing plans and customer and supplier lists and
information); (iv) Moral Rights; and (v) domain names, in each case under (i) through (v), only to
the extent either listed on Schedule 2.01(h) or owned by Seller and exclusively used in the
Business (or, if not yet in use, were developed for the exclusive use in the Business) and

11









 








further subject to the rights and restrictions contained in licenses or agreements with third
parties identified on Schedule 2.01(h) (collectively with the assets described in Section
2.01(g), the “Seller Intellectual Property”);




          (i) all inventory as of the Closing Date used by Seller and any of Seller’s Affiliates or held
by or on behalf of Seller and any of Seller’s Affiliates for use exclusively in connection with the
Business, wherever located, including raw materials, work-in-process, finished goods, component
parts, supplies and other inventories, marketing materials and production, shipping and packaging
supplies, and all rights of Seller and any of Seller’s Affiliates in and to materials held by
Seller and any of Seller’s Affiliates on consignment and consigned inventory which is in the
possession of others but for which Seller retains title (collectively, the “Inventory”);




          (j) all (i) trade accounts receivable and other rights to payment from customers of Seller and
Seller’s Affiliates arising from the Business and the full benefit of all security for such
accounts or rights to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or services rendered to customers of Seller
and Seller’s Affiliates in connection with the Business, (ii) all other accounts or notes
receivable of Seller and any Affiliate of Seller arising from the Business and the full benefit of
all security for such accounts or notes, and (iii) any claim, remedy or other right related to any
of the foregoing (collectively, the “Accounts Receivable”) including, without limitation,
those items identified on Schedule 2.01(j);




          (k) all refunds, deposits, prepayments or prepaid expenses and similar items relating to the
Business or the Assigned Contracts, but in each case only to the extent set forth on the Reference
Statement; and




          (l) all goodwill relating exclusively to the Purchased Assets or the Business.




     2.02. Excluded Assets. Buyer expressly understands and agrees that the assets and
properties of Seller and Seller’s Affiliates, whether related to the Business or otherwise, that
are not specifically identified as Purchased Assets herein (collectively the “Excluded
Assets”) shall be excluded from the Purchased Assets, including, without limitation, the
following assets:



          (a) Seller’s and Seller’s Affiliates’ cash and cash equivalents on hand and in banks;




          (b) the real property owned by Seller in Deerfield, Illinois together with the buildings,
fixtures, and improvements erected thereon, excluding, for avoidance of doubt, any items specified
on Schedule 2.01(a);




          (c) subject to Buyer’s purchase of the Accounts Receivable hereunder, Inventory sold or
otherwise disposed of in the ordinary course of the operation of the Business during the period
from the date hereof until the Closing Date;




          (d) the refunds or rebates or similar payments of Taxes and VAT to the extent such Taxes or
VAT were paid by or on behalf of Seller or any Affiliate of Seller and result from

12









 








the conduct of the Business by Seller for the taxable periods ending on or before the Closing,
or would not otherwise constitute an Assumed Liability;




          (e) Seller’s and Seller’s Affiliates returns, declarations, reports, claims for refund,
information statements and the other documents relating to Taxes and VAT, including any schedule or
attachment thereto and including any amendment thereof (the “Tax Information”);




          (f) all assets of any Benefit Arrangement or Employee Plan;




          (g) Seller’s rights under this Agreement and any other agreement, document or instrument
entered into pursuant to this Agreement;




          (h) All intellectual property owned by Seller or Seller’s Affiliates or which Seller or any of
Seller’s Affiliates have rights to, other than the Seller Intellectual Property; and




          (i) any of the Contracts and assets identified on Schedule 2.02(i).




     2.03. Assumption of Liabilities. Upon and subject to the terms, conditions,
representations and warranties of Seller contained herein, and subject to Section 2.04, Buyer
agrees, effective at the time of Closing, to assume only the following liabilities and no others
(collectively, the “Assumed Liabilities”):



          (a) liabilities arising in connection with or related to the operation of the Business by
Buyer subsequent to the Closing, including without limitation any liability or obligation to
Transferred Employees arising or accruing after the Closing under any of Buyer’s contracts with, or
Buyer Benefit Arrangements and Plans covering, such Transferred Employees, or, unless constituting
an Excluded Liability under Section 2.04 hereof, under applicable federal, state, local, foreign or
other laws (including the Directive) and regulations relating to wages, benefits, hours, collective
bargaining, unemployment insurance, leaves of absence, workers’ compensation, military service,
immigration control, the payment and withholding of employment Taxes, and equal employment
opportunity, but only to the extent that such liabilities relate to the period subsequent to the
Closing; provided, however, that for avoidance of doubt, (i) subject to the provisions of clause
(ii) of this Section 2.03(a), liabilities which either are not asserted or matured until after the
Closing but which arise or relate to facts or circumstances prior to or on the Closing Date are not
Assumed Liabilities hereunder, and (ii) liabilities arising under applicable foreign laws and
regulations (including the Directive) on account of Buyer’s failure to provide benefits and
compensation to EU Transferred Employees following the Closing as required by applicable law shall
be Assumed Liabilities (collectively, “EU Employment Liabilities”);




          (b) all liabilities or obligations of Seller arising under either (i) the Assigned Contracts
set forth on Schedule 2.01(b), or (ii) any other Contract for which Buyer assumes the
benefit after Closing, which liabilities or obligations either accrue following the Closing or are
expressly included within the reserves reflected on the Reference Statement as a separate line item
(but only to the extent of such reserves);




13









 








          (c) all liabilities or obligations of Seller arising in connection with or relating to the
operation of the Business (except for the liabilities or obligations owed to Seller or any
Affiliate of any Seller that do not relate to bona fide products delivered or services rendered on
arms-length terms), including liabilities in respect of trade creditors, but only to the extent
that such liabilities are (i) set forth on the Reference Statement or (ii) incurred after the date
of the Reference Statement, to the extent the liabilities and obligations were incurred in the
ordinary course of business consistent with past practice of the Business and are included in the
calculation of Closing Net Asset Value;




          (d) all product warranty liabilities of Seller incurred prior to and after the Closing in the
operation of the Business and incurred in the ordinary course of business but only to the extent of
the Warranty Limitation Amount;




          (e) Environmental Liabilities that first arise and are created after the Closing related to
the operation of the Business after the Closing;




          (f) the disposal of Hazardous Materials (the release of which first occurs after the Closing)
by Buyer after the Closing;




          (g) all utilities being furnished to the Business after the Closing;




          (h) all German Pension Plan Liabilities, but only to the extent associated with any German
Pension Plan Employee who becomes an EU Transferred Employee;




          (i) all liabilities or obligations arising under the Real Property Leases pursuant to the
Lease Assignments, Sublease Agreement and Deerfield Letter Agreement; and




          (j) other liabilities listed or described on Schedule 2.03(j).




     2.04. Excluded Liabilities. Notwithstanding any provision in this Agreement or any
other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming
any other liability or obligation of Seller or any Affiliate of Seller (or any predecessor owner of
all or part of its business and assets) of whatever nature whether presently in existence or
arising or asserted hereafter. All such other liabilities and obligations shall be retained by and
remain obligations and liabilities of Seller or its Affiliates (all such liabilities and
obligations not being assumed being herein referred to as the “Excluded Liabilities”).
Without limiting the generality of the foregoing, Buyer shall not assume any of the following
liabilities and obligations of Seller:



          (a) all liabilities and obligations of Seller or its Affiliates relating to its operations
other than the Business;




          (b) all liabilities and obligations of Seller relating to its operation of the Business for
periods on or prior to the Closing Date (unless such liabilities are expressly identified as
Assumed Liabilities hereunder) regardless of when such liabilities or obligations arise;




14









 








          (c) all liabilities and obligations under contracts, agreements, arrangements and
understandings of Seller or its Affiliates other than the Assigned Contracts;




          (d) subject to Section 2.03(d), all liabilities and obligations under any Assigned Contract
which arises after the Closing but which arises out of or relates to a breach of such Assigned
Contract occurring on or prior to the Closing;




          (e) all intercompany debts or other liabilities between the Business and Seller or any
shareholder or Affiliate of Seller;




          (f) all litigation (regardless of when filed), liabilities and obligations of any type
whatsoever (whether in tort, contract or otherwise) not included in the Assumed Liabilities and
arising out of or relating to actions, omissions or occurrences taking place in connection with the
Business on or prior to the Closing, whether or not Seller or any or its Affiliate has received
notice of any such litigation or obligations;




          (g) all liabilities and obligations relating to Seller’s or any of its Affiliates’ current or
former employees, agents, consultants or contractors including any liability or obligation related
to any Benefit Arrangement or Employee Plan, including without limitation the German Pension Plan
(other than the German Pension Plan Liabilities associated with any German Pension Plan Employee
who becomes an EU Transferred Employee) and any liability or obligation for wages, bonuses,
insurance, benefits, pension funds, stock options, employment agreements, or other amounts owed to
or payable on behalf of any such employees, agents, consultants or contractors accrued against
Seller or any Affiliate of Seller on or before the Closing or as a result of the consummation of
the transactions contemplated hereby, except (i) liabilities or obligations to Transferred
Employees for employment or services provided to Buyer after Closing and (ii) EU Employment
Liabilities;




          (h) subject to the provisions of Article VII, all liabilities for Taxes;




          (i) all liabilities and obligations to any broker, finder, investment banker or any other
Person for any brokerage, finder’s fee, transaction costs, expenses or other fee or commission in
connection with this Agreement or the transactions contemplated hereby owed or alleged to be owed
by Seller or its Affiliates;




          (j) all claims, actions, proceedings and obligations arising on or prior to the Closing under
Seller’s or any of its Affiliates’ insurance and self-insurance programs, including workmen’s
compensation, automobile or general liabilities;




          (k) all liabilities and obligations with respect to the Excluded Assets;




          (l) all liabilities and obligations with respect to the presence or former presence of any
Hazardous Materials on, under, about, in, or migrating to or from any real property subject to the
Real Property Leases or any other location currently or formerly owned or occupied by Seller or any
of its Affiliates or any former owner or operator of the Business, the Release of which commenced
prior to or as of the Closing Date and all associated environmental response actions of any kind
(including, but not limited to, investigation, remediation, removal,

15









 








abatement or encapsulation) arising from or relating in any way to said presence or former
presence of Hazardous Materials; and




          (m) Environmental Liabilities arising from or relating to the ownership or operation of the
Business or the Purchased Assets on or prior to the Closing.




     2.05. Assignment of Contracts and Rights. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any Assigned Contract
which would be included in the Purchased Assets but for the failure to obtain the applicable
Consent. Seller agrees that prior to and after the Closing Date, Seller shall use commercially
reasonable efforts (but without any payment of money by Seller or Buyer) and shall cooperate with
Buyer to obtain all Consents, including such Consents as are listed on Schedule 3.07. If
any Consent is not obtained, or if an attempted assignment would be ineffective or would adversely
affect the rights of Seller under any such Purchased Asset, contract, claim or right or any benefit
arising thereunder so that Buyer would not in fact receive all such rights, Seller shall reasonably
cooperate with Buyer in a mutually agreeable arrangement under which Buyer would obtain the
benefits and assume the post-Closing obligations thereunder in accordance with this Agreement,
including subcontracting, sub-licensing, or subleasing to Buyer, or under which Seller would
enforce for the benefit of Buyer, with Buyer assuming Seller’s obligations, any and all rights of
Seller against a third party thereto. Seller will promptly pay (or cause to be paid) to Buyer when
received all amounts received by Seller under any such Purchased Asset, contract or any claim or
right or any benefit arising thereunder, except to the extent the same represents an Excluded
Asset.



     2.06. Licensed Intellectual Property. At the Closing, Buyer and Seller shall enter
into the Intellectual Property License Agreement in the form attached hereto as Exhibit E.



     2.07. Purchase Price; Closing.



          (a) Subject to Section 2.08 hereof, the purchase price for the Purchased Assets shall be the
sum of (i) $12,000,000 less (ii) the sum of the applicable German Pension Plan Reduction
Amounts (the “Closing Purchase Price”) plus the Assumed Liabilities.




          (b) Subject to the terms and conditions of this Agreement, the closing (the “Closing”)
of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities
hereunder shall take place at the offices of Choate, Hall & Stewart LLP in Boston, Massachusetts as
soon as possible, but in no event later than three (3) Business Days after satisfaction of the
conditions set forth in Article IX (Conditions to Closing); provided, however, that to facilitate
an orderly transition for accounting purposes, such Closing may be delayed by Seller up until the
last day of the calendar month in which such conditions are satisfied.




          (c) At the Closing, Seller shall deliver to Buyer a duly executed Bill of Sale covering the
Purchased Assets and any other transfer document to be executed by Seller to the extent required to
be filed with any Governmental Authority upon the Closing, together with the following instruments
and agreements, each in form reasonably satisfactory to counsel for Buyer:




16









 








               (i) one or more duly executed Assignment and Assumption Agreements relating to the Assumed
Liabilities;



               (ii) one or more duly executed Trademark Assignments;



               (iii) one or more duly executed Intellectual Property License Agreements;



               (iv) one or more duly executed Lease Assignments;



               (v) one or more duly executed Sublease Agreements (Buyer and Seller acknowledge and agree that
“Landlord” (as defined in the License to Sublet Part) may require some changes to the form of
License to Sublet Part that is attached as part of Exhibit H to this Agreement and each
party agrees that it will accept any such required changes by Landlord as long as such change does
not materially alter the substantive business terms of this Agreement);



               (vi) one or more duly executed Transition Services Agreements;



               (vii) a duly executed Deerfield Letter Agreement;



               (viii) releases, satisfactions or terminations of all mortgages, financing statements or other
evidences of any Lien with respect to the Purchased Assets (except for Permitted Liens);



               (ix) certificates of the appropriate officers of the State of Illinois, dated no earlier than
the date of this Agreement, certifying that Seller is qualified to do business and is in good
standing as a foreign corporation in such state;



               (x) the certificate referred to in Section 9.02(c);



               (xi) one or more duly executed Patent Assignments;



               (xii) one or more duly executed Copyright Assignments;



               (xiii) all records referred to in section 49 of VATA 1994; and



               (xiv) such other documents and instruments as shall be required to consummate the transaction
contemplated hereunder.



          (d) At the Closing, Buyer shall deliver to Seller, each in form reasonably satisfactory to
counsel for Seller:




               (i) a certified or official bank check payable to the order of Seller, or make a wire transfer
to an account designated by Seller, in the amount of the Closing Purchase Price in immediately
available funds;



               (ii) duly executed counterparts of those documents referred to in Sections 2.07(c)(i), (ii),
(iii), (iv), (v), (vi), (vii), (xi) and (xii) and the documents referred to in Section 2.07(xiii);



17









 





               (iii) the certificate referred to in Section 9.03(c); and



               (iv) such other documents and instruments as shall be required to consummate the transaction
contemplated hereunder.



     2.08. Post-Closing Purchase Price Adjustment.



          (a) General. As an adjustment to the Purchase Price, Seller shall pay Buyer the
amount, if any, by which Reference Net Asset Value exceeds the Closing Net Asset Value.




          (b) Definitions. The following terms, as used herein, have the following meanings:




          “Closing Balance Sheet” means a balance sheet for the Business, prepared in a manner
consistent with the audited financial statements referenced in Section 5.06 and in accordance with
GAAP (except as otherwise stated therein and except for the omission of other financial statements
and footnotes), excluding Excluded Assets and Excluded Liabilities, as of the close of business on
the day immediately preceding the Closing Date. The Closing Balance Sheet will present fairly, in
all material respects, the financial condition of the Business as of such date, and will be
prepared from the books and records of the Seller on a basis consistent with the method by which
the Reference Statement was prepared. The Closing Balance Sheet will contain those line items set
forth on Schedule 2.08(b).




          “Closing Net Asset Value” means that dollar amount as is equal to the dollar amount of
the Purchased Assets (and excluding Excluded Assets), as reflected on the Closing Balance Sheet,
less the dollar amount of the Assumed Liabilities (and excluding Excluded Liabilities), as
reflected on the Closing Balance Sheet.




          “Reference Net Asset Value” means $0.




          (c) Preparation of Closing Balance Sheet. As promptly as practicable after the
Closing Date, but not later than seventy-one (71) days after the Closing Date, Seller will provide
to the Buyer the Closing Balance Sheet and the calculation of Closing Net Asset Value.




          (d) Disagreement by Buyer. If Buyer disagrees with Seller’s calculation of Closing
Net Asset Value, Buyer may, within thirty (30) days after receipt of the documents referred to in
Section 2.08(c), deliver a notice to Seller disagreeing with such calculation, a reasonably
detailed explanation of the reasons for such disagreement and setting forth Buyer’s calculation of
the Closing Balance Sheet and Closing Net Asset Value. Any such notice of disagreement shall
specify those items or amounts as to which Buyer disagrees and Buyer shall be deemed to have agreed
with all other items and amounts contained in the Closing Balance Sheet.




          (e) Dispute Resolution. If a notice of disagreement shall have been delivered by
Buyer pursuant to Section 2.08(d), the Parties shall, during the thirty (30) days following said
delivery, use their best efforts to reach agreement on the disputed items or amounts in order to
determine the Closing Net Asset Value. If, during such period, the Parties are unable to reach
agreement, they shall promptly thereafter cause the Accounting Referee promptly to review this




18









 







Agreement and the disputed items or amounts for the purpose of calculating Closing Net Asset
Value. In making such calculation, the Accounting Referee shall consider only those items or
amounts in the Closing Balance Sheet as to which Buyer has disagreed. The Accounting Referee shall
deliver to Seller and Buyer, as promptly as practicable, a report setting forth such calculation.
Such report shall be final and binding upon the Parties hereto. The cost of such review and report
shall be borne (i) by Buyer if Seller’s calculation of Closing Net Asset Value is closer to the
final calculation of Closing Net Asset Value determined by the Accounting Referee than Buyer’s
calculation thereof, (ii) by Seller if the reverse is true and (iii) otherwise equally by Buyer and
Seller.




          (f) Cooperation. The Parties hereto agree that they will, cooperate and assist in the
preparation of the Closing Balance Sheet and the calculation of Closing Net Asset Value.




          (g) Time of Payment. Any payment pursuant to this Section 2.08 shall be made at a
mutually convenient time and place (i) within thirty (30) days after delivery by Seller of the
documents referred to in Section 2.08(c) if no notice of disagreement with respect to Closing Net
Asset Value is delivered by Buyer within the thirty (30) day period described above in Section
2.08(d) or (ii) if a notice of disagreement with respect to Closing Net Asset Value is so delivered
then within ten (10) days after the earlier of (A) agreement between the parties pursuant to
Section 2.08(e) with respect to Closing Net Asset Value and (B) delivery of the calculation of
Closing Net Asset Value by the Accounting Referee pursuant to Section 2.08(e).




          (h) Method of Payment. Any payments pursuant to this Section 2.08 shall be made by
delivery by Seller, or Buyer, as the case may be, of a certified or official bank check payable in
funds to Buyer or Seller, as the case may be, or by causing such payments to be credited to such
account of Seller or Buyer as may be designated by Seller or Buyer. The amount of any payment to
be made pursuant to this Section 2.08 shall bear interest from and including the Closing Date to
but excluding the date of payment at a rate per annum equal to the rate publicly announced from
time to time by Citibank N.A. as its base or prime rate in New York City in effect from time to
time during the period from the Closing Date to the date of payment. Such interest shall be
payable at the same time as the payment to which it relates and shall be calculated daily on the
basis of a year of 365 days and the actual number of days for which due.




2.09. British Telecom Adjustment.




          (a) Determination of British Telecom Adjustment.




               (i) Within one hundred twenty (120) days after the first anniversary of the Closing Date, the
Buyer will deliver to Seller a certificate (the “BT Certificate”) executed by the Buyer
setting forth the First Year BT Contract Revenue.



               (ii) If the Seller objects in good faith to any one or more matters set forth in the BT
Certificate, Seller shall deliver written notice (the “Disputed Items Notice”) to the Buyer
within thirty (30) days after receipt by the Seller of the BT Certificate, stating that the Seller
objects to any items in the BT Certificate, specifying in reasonable detail the basis for such
objection and setting forth the Seller’s proposed modification to the BT Certificate. Thereafter,



19









 




the Buyer and Seller will attempt to resolve and finally determine and agree upon the
First Year BT Contract Revenue as promptly as practicable.




               (iii) If the Buyer and the Seller are unable to agree upon the First Year BT Contract Revenue
within thirty (30) days after delivery of the Disputed Items Notice, they shall refer the matter to
the Accounting Referee to resolve the items set forth in the Disputed Items Notice (the
“Disputed Items”). The Accounting Referee will (i) resolve the Disputed Items and (ii)
make a determination of the First Year BT Contract Revenue using the calculations set forth in the
BT Certificate, as modified only by the Accounting Referee’s resolution of the Disputed Items. The
determination of the Accounting Referee will be made within sixty (60) days after being selected
and will be final and binding on the Parties. The fees, costs and expenses of the Accounting
Referee will be borne by the Party whose positions generally did not prevail in such determination,
as determined by such Accounting Referee, or if the Accounting Referee determines that neither
party could be fairly found to be the prevailing party, then such fees, costs and expenses will be
borne 50% by the Buyer and 50% by the Seller.



               (iv) If the Seller does not deliver the Disputed Item Notice to the Buyer within thirty (30)
days after receipt by the Seller of the BT Certificate, the First Year BT Contract Revenue
specified in the BT Certificate will be conclusively presumed to be true and correct in all
respects and will be final and binding upon the parties.



               (v) At such time as the First Year BT Contract Revenue is finally determined, the Seller shall
pay the Buyer an aggregate amount equal to the excess, if any, of the Target First Year BT Contract
Revenue over the First Year BT Contract Revenue.



          (b) Renewal of BT Contract. In the event that Seller has not finalized a renewal of
the BT Contract on or prior to the Closing Date, Buyer shall use its reasonable best efforts,
consistent with Seller’s past practices, to negotiate and execute an amendment, modification,
supplement, renewal, extension, restatement or replacement (a “BT Amendment”) of the BT
Contract on terms that provide for the receipt of BT Revenues in the Measurement Period at least
equal to the Target First Year BT Contract Revenue; provided, however, that in the event that Buyer
uses such reasonable best efforts, and British Telecommunications plc or one or more of its
Affiliates declines to execute a BT Amendment, Buyer shall be entitled to receive the amount
provided in Section 2.09(a)(v) in accordance with the terms hereof; and provided,
further, that in the event Buyer fails to use such reasonable best efforts, Seller shall
have no obligation to make any payment to Buyer under Section 2.09(a)(v).




          (c) Operation of Buyer under BT Contract. Following the Closing, Buyer shall use its
reasonable best efforts, consistent with Seller’s past practices, to (a) maintain the BT Contract
in full force and effect and (b) provide services under the BT Contract in a manner that (i) is
consistent with the requirements of the BT Contract and (ii) is designed to maximize the receipt by
Buyer of revenues under the BT Contract during the BT Measurement Period. Buyer shall not breach
or fail to perform any of its material obligations under the BT Contract.




          (d) Information. Buyer will furnish monthly and quarterly reports, within twenty (20)
days after each month and three-month period during the Measurement Period, containing the
calculation of BT Revenues for each such monthly and three-month period.





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Buyer will also furnish other information relating to the Buyer’s relationship with
British Telecom and Buyer’s operations under the BT Contract, as Seller may from time to time
reasonably request.




          (e) Inspection. Buyer will permit the Seller and its advisors, on reasonable notice
and during normal business hours, and in a manner not unduly disruptive to the operations of the
Buyer, to visit and inspect any of the properties of the Buyer, to examine its books, records and
other materials relating thereto (and to make copies thereof and take extracts therefrom) and to
discuss its affairs, finances and accounts with Buyer’s personnel, in each case only as the same
pertains to the BT Contract.




          (f) Breach. If Buyer breaches any of its material obligations under the BT Contract
during the first year thereof, the Target First Year BT Contract Revenue shall be deemed to be
reduced by the amount of recognizable revenue Buyer does not receive as a result of such breach.




          (g) Exclusive Remedy. This Section 2.09 shall be the exclusive remedy of Buyer for
monetary damages relating to any failure by Buyer or Seller to enter into a BT Amendment or any
claim relating to a loss of revenue under the BT Contract or the failure of Buyer to realize
revenue following the Closing under the BT Contract.




     2.10. Allocation of Purchase Price.



          (a) Schedule 2.10 sets forth the methodology for allocating the purchase price among
the Purchased Assets and the Assumed Liabilities (for purposes of this Section 2.10, the
“Purchase Price”). The Parties shall mutually agree upon an allocation of the Purchase
Price within thirty (30) days after Closing to reflect the agreed value of the Purchased Assets and
the book value of the Assumed Liabilities as of the Closing Date (the “Allocation
Statement”).




          (b) Seller and Buyer agree to report the purchase of the Purchased Assets and the assumption
of the book value of the Assumed Liabilities in a manner entirely consistent with the Allocation
Statement, and agree to act in accordance with such Allocation Statement in the preparation of
financial statements and filing of all tax returns (including filing Form 8594 with its Federal
income tax return for the taxable year that includes the date of the Closing) and in the course of
any tax audit, tax review or tax litigation relating thereto.




          (c) No later than (10) days prior to the filing of their respective Forms 8594 relating to
this transaction, each Party shall deliver to the other Party a copy of its Form 8594.




     2.11. Accounts Receivable. Seller shall promptly transfer and deliver to Buyer any
cash or other property which it may receive on or after the Closing Date in respect of the Accounts
Receivable, from customers of the Business, prior to applying any such cash or other property to
accounts receivable of any division or business of Seller.



     2.12. Transfer of IP Assets. Seller shall deliver the tangible, including
electronic, embodiments of all elements of intellectual property rights, materials and Technology
that are Seller Intellectual Property (such tangible, including electronic, embodiments
collectively, the “Intellectual Property Assets”) through the transfer of facilities,
personal property contained



21









 







therein, and Transferred Employees prior to or at Closing. Without limiting the generality of
the foregoing, with respect to any Intellectual Property Assets that, through inadvertence or for
any other reason, are not delivered via the transfer of facilities, personal property contained
therein, and Transferred Employees, Seller shall promptly deliver, at no charge, such assets
following the Closing to those locations reasonably designated by Buyer. If Seller discovers
Intellectual Property Assets that were required to be, but were not, delivered to Buyer prior to or
at Closing, Seller shall promptly inform Buyer of any such error and promptly deliver, at no
charge, all such Intellectual Property Assets to those locations reasonably designated by Buyer.
If Buyer discovers that it did not receive any of the Intellectual Property Assets that were
required to be delivered, Seller shall promptly deliver, at no charge, such Intellectual Property
Assets to the locations reasonably designated by Buyer upon receiving written notice thereof from
Buyer.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF SELLER




     Except as disclosed by Seller to Buyer in the disclosure schedule attached hereto as
Exhibit K (the “Disclosure Schedule”), (it being understood that the disclosures in
any section of the Disclosure Schedule shall, to the extent reasonably apparent from the context,
qualify all other sections in this Agreement), Seller hereby represents and warrants to Buyer that
each of the statements contained in this Article III is true and correct as of the date hereof and
will be true and correct as of the Closing Date. Except for the representations and warranties set
forth in this Article III, Seller makes no other representation or warranty (either express or
implied) herein or with respect to the transactions contemplated hereby.



     3.01. Corporate Existence and Power; Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to own, lease and operate the properties used in, and to carry on
the operation of, the Business as now conducted. Seller is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of the Business makes such qualification or licensing
necessary except where a failure so to qualify or be licensed is not reasonably likely to have a
Material Adverse Effect.



     3.02. Corporate Authorization. The execution, delivery and performance by Seller of
this Agreement and the Ancillary Documents, and the consummation by Seller of the transactions
contemplated hereby and thereby are within Seller’s corporate powers and have been duly authorized
by all necessary corporate action on the part of Seller, and no other corporate proceedings are
necessary to authorize such execution, delivery and performance. This Agreement and the Ancillary
Documents have been or will be duly executed and delivered by Seller and each such agreement
constitutes or will constitute a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting the enforceability of
creditors’ rights generally and to the effect of general principles of equity which may limit the
availability of remedies (whether in a proceeding at law or in equity).



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     3.03. Governmental Authorization. The execution, delivery and performance by Seller
of this Agreement and each of the Ancillary Documents to which Seller is or will be party require
no action, consent, approval, waiver, authorization, permit by or in respect of, or filing with,
any Governmental Authority other than those set forth on Schedule 3.03.



     3.04. Non-Contravention. Except as set forth in Schedule 3.04, the
execution, delivery and performance by Seller of this Agreement and the Ancillary Documents do not
and will not (i) contravene or conflict with the corporate charter or bylaws of Seller, or any
resolutions adopted by the board of directors or stockholders of Seller; (ii) contravene or
conflict with or constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to ownership of the Purchased Assets or the
operation of the Business, except in those cases where such contravention or conflict is not
reasonably likely to have a Material Adverse Effect; (iii) assuming the receipt of the Consents set
forth on Schedule 3.07, constitute a default under or give rise to any right of
termination, amendment, cancellation or acceleration of any right or obligation of Seller relating
to the Purchased Assets or Assumed Liabilities or to a loss of any benefit relating to the
Purchased Assets or Assumed Liabilities to which Seller is entitled under any provision of any
agreement, contract or other instrument or by which any of the Purchased Assets is or may be bound;
or (iv) result in the creation or imposition of any Lien on any Purchased Asset other than
Permitted Liens.



     3.05. Financial Statements. Seller has delivered to Buyer its unaudited (a)
statement of net assets for the Business as at December 31, 2006, and a statement of operations for
the Business for the twelve (12) month period ended December 31, 2006, and (b) a statement of net
assets for the Business as at April 1, 2007 (the “Reference Statement,” which is attached
hereto as Schedule 3.05) (the Reference Statement and financial statements described in
clause (a) are collectively referred to herein as the “Financials”). The Financials: (i)
were prepared in accordance with the books, records and accounts of Seller and on the same basis,
and consistent with the principles utilized, by Seller in the preparation of such accounts for
inclusion in Seller’s consolidated financial statements for such periods; and (ii) present fairly
in all material respects the financial condition and results of operations for the Business as of
and for the periods referred to in such Financials. Seller makes no representations or warranties
with respect to any projections or future financial results of the Business.



     3.06. Absence of Certain Changes or Events. Except as set forth in Schedule
3.06, since the date of the Reference Statement:



          (a) the Purchased Assets have not been mortgaged, pledged or subjected to any Lien other than
Permitted Liens;




          (b) the Purchased Assets have not been sold, leased or transferred other than sales of
Inventory and disposal of obsolete, damaged or defective Inventory or other Purchased Assets, in
each case in the ordinary course of business;




          (c) there has not been any payment by Seller of any bonuses, or increase by Seller of any
salaries, or other compensation to any employee, contractor or consultant involved in the Business
other than in the ordinary course of business, consistent with past practice, or

23









 








entry into any employment, severance, or similar contract or agreement with any employee
involved in the Business;




          (d) the Business has been operated in the ordinary course of business and there has not been a
material change in the relationship of the Business with its customers and suppliers (including its
marketing, selling and pricing practices and policies);




          (e) there has not been any transaction, contract, commitment, or obligation by Seller relating
to the Purchased Assets or the Business (including the acquisition or disposition of any assets),
other than in the ordinary course of business or as contemplated by this Agreement;




          (f) there has not been any oral or written amendment of any of the Assigned Contracts or
Licenses and Approvals or entering into of any new contracts or agreements or Licenses and
Approvals, except in the ordinary course of business;




          (g) there has not been any waiver of any material right or claim of Seller or cancellation of
any material debt or claim held by Seller with respect to the Business;




          (h) there has not been any loan by Seller in any material amount to any employee of Seller
involved in the Business;




          (i) there has not been any material change to any Benefit Arrangement;




          (j) there has not been any material deviation in the levels of raw materials, supplies or
other materials included in the Inventories from the levels maintained in the ordinary course of
business;




          (k) no commitments or agreements have been entered into by Seller whether in writing or
otherwise to take any of the actions set forth in this Section 3.06; and




          (l) there has been no change, event, circumstance or development related to the Business which
has had or could be reasonably expected to have a Material Adverse Effect.




     3.07. Consents. Schedule 3.07 sets forth a true, correct and complete list
of each Assigned Contract requiring a consent (each a “Consent”) as a result of the
execution, delivery and performance of this Agreement or any Ancillary Document, or the
consummation of the transactions contemplated hereby and thereby. Except as set forth on
Schedule 3.07, no consent, approval, waiver, authorization, notice or filing with any
Governmental Authority is required to be made by Seller in connection with the (a) the execution
and delivery of this Agreement, (b) the consummation of the transactions contemplated hereby, (c)
the ownership by Buyer of the Purchased Assets, or (d) the conduct by Buyer of the Business after
the Closing as currently conducted by Seller.



     3.08. Purchased Assets.



          (a) Seller owns good, valid and marketable title, or a valid leasehold interest in, all of the
Purchased Assets; and, subject to obtainment of the Consents, Seller has the complete and
unrestricted power, right and authority to transfer, sell, assign, convey and deliver

24









 








the Purchased Assets to Buyer in accordance with the terms hereof. Upon Closing, Buyer will
acquire, good and marketable title or license to or a valid leasehold interest in (as the case may
be) the Purchased Assets.




          (b) The Purchased Assets, together with the Licensed Intellectual Property and the services
provided by Seller pursuant to the Transition Services Agreement, constitute all of the assets
necessary to permit Buyer to conduct the Business immediately after the Closing without material
interruption and in a manner substantially equivalent to the manner in which the Business was being
conducted on the date of this Agreement and during the twelve (12) months preceding such date in
material compliance with all applicable laws and to perform all Assumed Liabilities.




          (c) The tangible property included in the Purchased Assets is in good operating condition and
repair and has been reasonably maintained consistent with standards generally followed in the
industry (giving due account to the age and length of use of same and ordinary wear and tear
excepted). All of the Purchased Assets are suitable and adequate for continued use in the manner
in which they are presently being used.




          (d) No Purchased Asset is subject to any Lien, except for Liens disclosed on Schedule
3.08(d) (collectively, the “Permitted Liens”).




          (e) Schedule 3.08(e) sets forth a true, correct and complete list of all of the
locations where any of the Purchased Assets that are tangible property are located.




          (f) Seller is not in violation of any zoning, building, health or safety ordinance, regulation
or requirement or other law or regulation applicable to the Purchased Assets (including
Environmental Laws), other than any violation which could not reasonably be expected to have a
Material Adverse Effect, nor has it received any notice of violation with which it has not
complied.




     3.09. Litigation. Except as set forth in Schedule 3.09, (a) there is no
claim, action, suit, investigation, arbitration, proceeding or inquiry pending by, against or
affecting, or to the Knowledge of Seller, threatened by, against or affecting, Seller that is
related to the Business (i) that questions the validity of this Agreement, any Ancillary Document
or any action taken or to be taken by Seller in connection with this Agreement and the Ancillary
Documents, (ii) which materially affects or which is reasonably likely to materially affect the
Business or any of the Purchased Assets or the transactions contemplated hereby, in each case at
law or in equity or before or by any federal, state, local, foreign or other Governmental
Authority; nor, to Seller’s Knowledge, is there any valid basis for any such claim, action, suit,
proceeding, inquiry or investigation, (iii) relating to any of the products alleged to have been
sold by the Business, or (iv) challenging Seller’s rights to the Seller Intellectual Property or
alleging infringement, misappropriation or misuse of third party intellectual property rights; and
(b) Seller is not subject to any outstanding judgment, arbitration award, order or decree relating
to the Business or the Purchased Assets.



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     3.10. Contracts.



          (a) Schedule 3.10(a) sets forth a complete and accurate list of each Assigned Contract
(or series of related Assigned Contracts) to which Seller and any of Seller’s Affiliates is a party
or by which any of Seller’s respective assets or properties are bound, in each case which relate to
the Business and:




               (i) is a lease or sublease under which Seller is a lessor or lessee of any real property or
equipment or other tangible property with respect to obligations in excess of $40,000;



               (ii) relates to any Personal Property owned or leased by Seller and used in the Business as
currently operated and involves a remaining obligation in excess of $40,000;



               (iii) relates to a distribution, reseller or similar arrangement and involves a remaining
obligation or receipt in excess of $40,000;



               (iv) relates to the purchase of goods or provision of services and involves a remaining
obligation or receipt in excess of $40,000;



               (v) relates to any fixed price consulting or service agreement or similar arrangement and
involves a remaining obligation or receipt in excess of $40,000;



               (vi) relates to or evidences outstanding indebtedness for borrowed money, including any note,
bond, debenture or other evidence of indebtedness issued to any Person, that has an aggregate
future liability in excess of $40,000;



               (vii) grants or evidences a Lien on any of the Purchased Assets;



               (viii) provides for any joint venture, partnership, strategic alliance, shareholders’
contract, co-marketing, co-promotion, co-packaging, joint development or similar arrangement;



               (ix) provides for the resolution or settlement of any actual or threatened action, suit,
claim, proceeding or other dispute and involves an amount in controversy in excess of $100,000; and



               (x) relates to any Seller Intellectual Property or Licensed Intellectual Property;



               (xi) requires in the aggregate payments after the date hereof by or to Seller of more than
$40,000;



               (xii) provides for the benefit of, or is entered into with, any current or former officer,
director, stockholder, employee or consultant of Seller or, to Seller’s Knowledge, a relative of
any of the foregoing;



26









 





               (xiii) provides for sale of any of the assets or properties of Seller other than in the
ordinary course of business or for the grant to any Person of any options, rights of first refusal,
or preferential or similar rights to purchase any such assets or properties;



               (xiv) is an agreement of surety, guarantee or indemnification, other than agreements in the
ordinary course of business with respect to obligations in an aggregate amount not in excess of
$40,000 and other than indemnification provisions in agreements with customers in the ordinary
course of business;



               (xv) contains covenants of Seller or any Transferred Employee not to compete in the Business,
in any geographic area or with any Person or covenants of any other Person not to compete with
Seller or in any line of business of Seller;



               (xvi) requires the payment to any Person of a brokerage or sales commission or a finder’s or
referral fee (other than arrangements to pay commissions or fees to employees in the ordinary
course of business); and



               (xvii) any other material Assigned Contract whether or not made in the ordinary course of
business;



          (b) Except as set forth on Schedule 3.10(b), each Assigned Contract is a valid and
binding agreement of Seller and is in full force and effect. Except as set forth in Schedule
3.10(b): (i) the enforceability and material terms of the Assigned Contracts will not be
affected in any manner by, and no right of termination, amendment, acceleration or cancellation of
any Assigned Contract will arise as a result of, the execution and delivery of this Agreement or
any Ancillary Document, the performance by Seller of its obligations hereunder or the consummation
of the transactions contemplated hereby; (ii) Seller is not in default of a material provision of
any Assigned Contract, nor, to Seller’s Knowledge, does there exist any event that, with notice or
lapse of time or both, would constitute a default of material provision of any Assigned Contract by
Seller under any Assigned Contract; (iii) to the Knowledge of Seller, no other party to any
Assigned Contract is in default in any material respect under the terms of any such Assigned
Contract; and (iv) no other party to any Assigned Contract has notified Seller in writing of its
intention to cease to perform any services required to be performed by it or withhold any payment
required to be made to it thereunder or terminate or alter the provisions thereof by reason of the
transactions contemplated herein or otherwise. Except as set forth on Schedule 3.10(b),
Seller has not waived any right under any Assigned Contract, amended or extended any Assigned
Contract or failed to renew (or received notice of termination or failure to renew with respect to)
any Assigned Contract. True, complete and accurate copies of all of the Assigned Contracts have
been provided to the Buyer by Seller.




          (c) Except as set forth in Schedule 3.10(c), to Seller’s Knowledge: (i) none of
Seller’s or its Affiliates’ employees or independent contractors engaged in the Business is a party
to any oral or written contract or agreement prohibiting it or them from freely competing or
engaging in the Business except for any such agreements between Seller and such Persons; (ii) no
employee of Seller or its Affiliates employed in the Business is a party to any outstanding
contract, obligation or commitment with any prior employer; (iii) no employee of Seller or its
Affiliates employed in the Business is a party to an employment or consulting agreement with

27









 








Seller that imposes an obligation on Buyer or its Affiliates to assume or adopt such
employment or consulting agreement; and (iv) no employee of Seller or its Affiliates employed in
the Business is in default under any contract, obligation or commitment with any of his or her
former employers, in all cases, the effect of which default has or may have a Material Adverse
Effect, and there is no state of facts that upon notice or lapse of time or both would constitute
such a default.




     3.11. Compliance with Laws. Seller is not and has not been in violation in any
material respect of, and to Seller’s Knowledge is not under investigation with respect to, and has
not been threatened to be charged with or given notice of any violation of, any law, rule,
ordinance or regulation, or judgment, order or decree entered by any Governmental Authority,
applicable to the Purchased Assets or the operation of the Business.



     3.12. Seller’s Proprietary Rights.



          (a) Schedules 2.01(g) and 2.01(h) together with Schedules A and C of the
Intellectual Property License Agreement contain a true and complete list of all patents, patent
applications, registered trademarks, trademark applications, registered Copyrights, copyright
applications and domain names owned by Seller and used exclusively in the Business. Except as set
forth on Schedules 2.01(g) and 2.01(h), to Seller’s Knowledge, all of the foregoing
are and remain valid and subsisting, with all fees, payments and filings due as of the Closing duly
made. All of the foregoing are, to Seller’s Knowledge, enforceable in all material respects.
Seller has not received written notice (and otherwise has no knowledge) that any interference,
opposition, reissue, reexamination, or other similar proceeding is pending before any Governmental
Authority in which the ownership of any such intellectual property right by the Company, or the
scope, validity, or enforceability of any such intellectual property right, is being or has been
contested or challenged.




          (b) Schedule 3.12(b) contains a list of all of Seller’s computer software programs,
products and services which are material to the normal course operation of the Business, other than
(i) so called “off-the-shelf” shrink-wrap computer software programs, or (ii) any third party
software that is generally available to the public and does not cost, under standard terms, more
than $10,000 (the “Software Programs”).




          (c) Schedule 3.12(c) sets forth a true and complete list of material license
agreements between Seller and third parties with respect to (i) Seller’s use or other exploitation
of the Seller Intellectual Property and the Licensed Intellectual Property, other than with respect
to so called “off-the-shelf” shrink-wrap computer software programs, and (ii) the use or other
exploitation by such third parties of the Seller Intellectual Property and the Licensed
Intellectual Property (“Business Licenses”). Seller has paid all license or royalty fees
required to be paid by Seller pursuant to the terms of such Business Licenses. Such licenses are
valid and in full force and effect and neither Seller, nor, to Seller’s Knowledge, any other party
thereto, is in default or breach thereunder, except where the default or breach would not
reasonably be expected to result in a Material Adverse Effect. The execution, delivery, and
performance of this Agreement, and the consummation of the transactions contemplated hereby, will
not breach, violate, or conflict with any license included in the Purchased Assets, and will not
cause the forfeiture or

28









 








termination or acceleration of payments due thereunder or give rise to a right of forfeiture
or termination of any such license or acceleration of payments due thereunder.




          (d) The Seller has taken reasonable steps in accordance with normal industry practice to
protect the confidentiality of the trade secrets and other confidential information and
intellectual property rights used in connection with the operation of the Business. Without
limiting the generality of the foregoing, in the normal course of its business practice, Seller
obtains confidentiality and invention assignment agreements from its employees and independent
contractors involved in the creation or development of Seller Intellectual Property.




          (e) Except as set forth on Schedule 3.12(e), Seller owns, or has the right to use, all
Seller Intellectual Property and Licensed Intellectual Property, free and clear of any Liens, and,
at Closing will assign and transfer, or license in accordance with the terms of the Intellectual
Property License Agreement, as the case may be, to Buyer to the full extent of such ownership or
use interest, all Seller Intellectual Property and Licensed Intellectual Property (collectively,
“Transferred IP Assets”); provided, however, that notwithstanding the foregoing, Seller
makes no representation pursuant to this Section 3.12(e) as to whether or not there exists any
third party patent or trademark rights, of which Seller is unaware, which would restrict Buyer’s
right to use any Seller Intellectual Property or Licensed Intellectual Property after the Closing.
Upon Closing, except as expressly set forth in Schedule 3.12(e) or where recordation of an
assignment is required by local laws, each Transferred IP Asset will be owned by Buyer or will be
immediately available for use in the Business by Buyer on terms and conditions substantially
identical to those under which Seller presently uses such Transferred IP Assets in the Business
without any affirmative act by Buyer or any other Person. Such ownership is (and upon the Closing,
will be) free and clear of, and without liability under, all Liens.




          (f) No proceedings have been instituted or are pending against Seller or, to the Seller’s
Knowledge, threatened, which challenge the rights of Seller with respect to the Seller Intellectual
Property or Licensed Intellectual Property.




          (g) To Seller’s Knowledge, neither the operation of the Business as currently conducted, nor
Seller’s use, exploitation, or disposal of any products or services of the Business, infringes or
violates the Copyright or trade secret rights of any third party. To Seller’s Knowledge, neither
the operation of the Business as currently conducted, nor Seller’s use, exploitation, or disposal
of any products or services of the Business, infringes or violates the patent or trademark rights
of any third party. Except as set forth on Schedule 3.12(g), Seller has not received any
oral or written notice alleging that Seller’s manufacture, sale, use or other exploitation of any
products or services of the Business, or the operation of the Business violates any intellectual
property right of any third party.




          (h) None of the Seller Intellectual Property or Licensed Intellectual Property is subject to
any outstanding order, judgment, stipulation or other decision affecting the rights of Seller with
respect thereto. To the Seller’s Knowledge, except as set forth on Schedule 3.12(h), there
are (and upon Closing, will be) no royalties, fees or other payments payable by Buyer to any Person
for Buyer’s manufacture, sale, use or other exploitation of any products or services of the
Business.




29









 








          (i) Seller has not granted any party any exclusive rights in or to any Seller Intellectual
Property or Licensed Intellectual Property.




          (j) Except as set forth on Schedule 3.12(j), to the Seller’s Knowledge, there is no
unauthorized use or infringement of any Seller Intellectual Property by any third party, including
by any employee or former employee of Seller.




          (k) Except as set forth in Schedule 3.12(k), to Seller’s knowledge, no portion of the
source or object code comprising any software owned by the Seller and constituting part of the
Purchased Assets (i) is contained in the source or object code of any of the Excluded Assets, or
(ii) is distributed by Seller and is derivative of any source code developed by a third party which
requires, as a condition of distribution, that the Seller disclose any portion of its own
proprietary source code.




     3.13. Employees; Employee Benefits.



          (a) Seller has furnished to Buyer a true and complete list (the “Employee List”) of
the names, titles, annualized salary and other compensation of all employees, consultants and
independent contractors of Seller or Seller’s Affiliates engaged in the Business (listing
separately base compensation, long-term or other incentive compensation and bonuses) and indicated
which of such individuals were, as of the date set forth therein, on disability leave, authorized
leave of absence, military service, or any other type of leave of absence, authorized or otherwise.
With respect to the Business, Seller has complied in all material respects with all pertinent
applicable laws relating to the employment of labor prior to the Closing, including, but not
limited to, the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et seq.
(“WARN Act”), the Directive, ERISA, continuation coverage requirements with respect to
group health plans as required by Code Section 4980B or ERISA Sections 601 through 608
(“COBRA”), and related applicable state laws, the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996, and, to Seller’s Knowledge, any applicable
federal, state, local, foreign or other laws relating to wages, hours, collective bargaining,
unemployment insurance, leaves of absence, workers’ compensation, military service, immigration
control, the payment and withholding of employment Taxes, and equal employment opportunity. With
respect to the Business, Seller has, or is obligated by, no employment contracts, either written or
oral, with any Person, except as set forth on the Employee List, true and complete copies of which
have been provided to Buyer.




          (b) Except as set forth on Schedule 3.13(b), neither Seller nor any Affiliates of
Seller engaged in the Business are party to any collective bargaining agreement or any other
agreement with any labor organization applicable to the employees of the Business, and neither
Seller nor any Affiliates of Seller engaged in the Business have a duty to bargain with any labor
organization with respect to any such employees. There are no unfair labor practice complaints
pending, or to Seller’s Knowledge threatened, against Seller and related to the Business before the
National Labor Relations Board or any other Governmental Authority, and no demands for recognition,
whether by way of petition filed with the National Labor Relations Board or otherwise, and to
Seller’s Knowledge, no other effort of or request or demand from a labor organization for
representative status with respect to any employee of Seller or any Affiliates of Seller engaged in
the Business.




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          (c) Schedule 3.13(c) sets forth a true, correct and complete list of each Employee
Plan and each Benefit Arrangement, copies or descriptions of all of which have previously been
furnished to Buyer.




          (d) Each Employee Plan and Benefit Arrangement has been administered and enforced in
accordance with its terms and applicable legal requirements in all material respects. As of the
date hereof, there is no litigation or claim pending, or to the knowledge of the Seller,
threatened, relating to any Employee Plan or Benefit Arrangement, other than routine benefit
claims.




          (e) EU Employees. For the purposes of this Agreement, the term “EU Employees”
means all employees listed by name and country of employment in Schedule 3.13(e). Except
as set forth on Schedule 3.13(e),




               (i) The EU Employees are all employed by Affiliates of Seller and are engaged in the Business
and are the only employees engaged in the Business.



               (ii) A full copy of the standard terms and conditions of employment of the EU Employees
(including without limitation any staff handbook) and a copy of the current terms and conditions of
employment of each EU Employee employed on terms other than the standard terms have been made
available to the Buyer.



               (iii) Neither Seller nor any Affiliate of Seller engaged in the Business have in existence nor
is Seller or any Affiliate of Seller engaged in the Business proposing to introduce any share
incentive, share option, profit sharing, commission, bonus or other incentive scheme for any of the
EU Employees.



               (iv) There is no contractual or other obligation including without limitation any established
practice to increase in any material respect any remuneration payable to the EU Employees nor has
Seller made any provision to increase the aggregate annual remuneration payable by more than five
percent (5%).



               (v) There is not in existence any service agreement with any of the EU Employees which cannot
be terminated by three (3) months’ notice or less without giving rise to any claim for damages or
compensation other than a statutory redundancy payment or statutory compensation for unfair
dismissal.



               (vi) Neither Seller nor any Affiliate of Seller engaged in the Business has made or agreed to
make any payment or provided or agreed to provide any benefit to any of the EU Employees in
connection with the actual or proposed termination or suspension of employment or variation of any
service agreement of any of the EU Employees or former employees, including without limitation any
redundancy payment other than a statutory redundancy payment , and the consummation of the
transactions contemplated by this Agreement shall not entitle any of the EU Employees to terminate
his or her employment and trigger any contractual entitlement to liquidated damages.



               (vii) There is no written agreement or arrangement between the Seller or any Affiliate of the
Seller and any of the EU Employees engaged in the Business with respect



31









 







to his or her employment, his or her ceasing to be employed, his or her retirement, the
payment of any monies or granting of any benefit which is not included in the terms of his or her
employment supplied to Buyer. Neither Seller nor any Affiliate of the Seller has provided or
agreed to provide any gratuitous benefits to an EU Employee or to any of their dependants, having a
value in the aggregate exceeding $10,000.



               (viii) Seller has maintained current, adequate and suitable records regarding the service of
each of the EU Employees (including, without limitation, details of terms of employment, payments
of statutory sick pay, statutory maternity pay, disciplinary and grievance matters, health and
safety matters, income tax and social security contributions and termination of employment.



               (ix) None of the EU Employees has given or received written notice of termination of
employment and no other Person has been offered employment as an employee of Seller or any
Affiliate of Seller with respect to the Business.



               (x) None of the EU Employees is the subject of a material disciplinary action or investigation
nor is any EU Employee engaged in any grievance procedure.



               (xi) No EU Employee currently absent from work has notified the Seller that such EU Employee
expects to be absent from work for a continuous period in excess of one (1) month or an aggregate
period of three (3) months or more. None of the EU Employees is receiving or is due to receive
payments under any disability or permanent health or insurance scheme and there are no claims
pending or, to the Seller’s Knowledge, threatened in respect of any accident, injury, disability or
ill-health.



               (xii) No EU Employee is currently on maternity leave, secondment, absent on the grounds of
disability (other than short term sickness) or other statutory leave.



               (xiii) There are no amounts accrued or owing to any of the EU Employees other than one (1)
month’s accrued remuneration or for reimbursement of business expenses.



               (xiv) Seller has complied in all material respects with all obligations imposed on it by, and
all orders and awards made under, all statutes, regulations, codes of conduct and practice,
collective agreements, customs and practices relevant between it and the EU Employees or any trade
union or the terms of employment of the EU Employees.



               (xv) None of the EU Employees is engaged in any material industrial dispute, nor, to Seller’s
knowledge, are any such industrial disputes threatened.



               (xvi) Seller complies in all material respects and has at all times during the past three
years complied in all material respects with any equal treatment or other anti-discrimination
requirements relevant to the provision of retirement or death benefits in respect of the EU
Employees.



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               (xvii) The Employee Plans and Benefit Arrangements are the only material arrangements to which
Seller has or could have any liability for the purpose of providing benefits on retirement or death
in respect of the EU Employees.



     3.14. Finders’ Fees. Except as set forth in Schedule 3.14, there is no
investment banker, broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Seller that might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or any Ancillary Document.



     3.15. Absence of Undisclosed Liabilities. Except as set forth on Schedule
3.15 hereto, Seller has not incurred any liability related to the Business (whether accrued,
absolute, contingent or unliquidated, or whether due or to become due), that is required to be
reflected on a balance sheet prepared in accordance with GAAP, other than (a) liabilities set forth
on or disclosed in the Reference Statement, (b) liabilities for trade or Business obligations
incurred since the date of the Reference Statement in connection with the purchase of goods or
services in the ordinary course of business and consistent with past practice, (c) obligations to
perform the executory portions under the Assigned Contracts and (d) liabilities that are not
reasonably likely to have a Material Adverse Effect.



     3.16. Affiliate Transactions. Except as identified on Schedule 3.16, no
officer, director, or Affiliate of Seller is a party to any material agreement, contract,
commitment or transaction related to the Business or has any interest in any material property used
in the Business or has any claim or cause of action directly related to or against the Business.



     3.17. Accounts Receivable. Schedule 2.01(j) sets forth a true, correct and
complete list of each Account Receivable existing as of April 1, 2007. Except as set forth on
Schedule 3.17, all of the Accounts Receivable are reflected properly on Seller’s Books and
Records, are valid obligations of each party thereto subject to no setoffs or counterclaims,
constitute bona fide Accounts Receivable resulting from the sale of goods and services in the
ordinary course of business, and, in the aggregate and subject to reserves reflected in the
Reference Statement, are timely and fully collectible in the ordinary course of business
consistent, where applicable, with past practice. Seller has not received any written notice of,
nor to Seller’s Knowledge, is there any contest, claim, defense or right of set-off related to any
Accounts Receivable other than returns in the ordinary course of business.



     3.18. Inventory. The Inventory is in good and merchantable condition, is suitable
and usable for the purposes for which it is intended and is in a condition such that it can be sold
as new in the ordinary course of business. The Inventory is reflected on Seller’s Books and
Records consistent with GAAP and Seller’s past practices and is not subject to any counterclaim, or
a claim for a charge back, deduction, credit, set-off or other offset, other than as reflected by
appropriate Inventory reserves for excess and obsolete inventory on the Reference Statement.



     3.19. Taxes. With respect to any Taxes, the nonpayment of which (A) would result in
a Lien on any Purchased Asset, (B) would otherwise adversely affect the operation of the Business,
or (C) would result in Buyer becoming liable therefor:



33









 





          (a) Seller and its Affiliates have timely filed all Tax Returns relating to the Business or
any Purchased Asset, and such Tax Returns are true, complete and correct in all material respects.




          (b) Seller and its Affiliates have timely paid all Taxes required to be paid with respect to
the Business or any Purchased Asset, whether or not shown due on a Tax Return.




          (c) Seller and its Affiliates have withheld and paid over all material Taxes required to have
been withheld and paid over, and complied with all material information reporting and backup
withholding requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent contractor or other
third party.




               (i) There is no claim, audit, action, suit, proceeding or investigation now pending or
threatened in writing, or, to Seller’s Knowledge, orally, against or with respect to Seller or any
of its Affiliates in respect of any Taxes, nor, to Seller’s Knowledge, is there a basis for any
actions or proceedings. No waiver or extension of any statute of limitations is in effect with
respect to Taxes or Tax Returns of Seller or any of its Affiliates.



     3.20. Labor Matters. Seller has complied in all material respects with all
applicable federal, state and foreign laws relating to the employment of labor in the Business
including the provisions thereof relating to wages, hours, collective bargaining and the payment of
social security and taxes and is not liable for any arrears of wages or any tax or any penalty for
failure to comply with any of the foregoing. There is no labor strike, dispute, slowdown, or
stoppage actually pending or threatened against or affecting the Business. No representation
question exists respecting the employees of Seller engaged in the Business and there is no strike,
work stoppage or other labor difficulty involving the employees of Seller engaged in the Business,
and no collective bargaining agreement with employees of Seller engaged in the Business is in
effect or is currently being negotiated. Seller is not aware of any ongoing efforts to organize
(or seek union representation for) the workforce engaged in the Business, or any subset thereof.
For purposes of clarity, the Parties acknowledge that the term “collective bargaining agreement”
does not include shop agreements with the German works council.



     3.21. Insurance. Seller has maintained a commercially reasonable program of
insurance (which may include self-insurance) with respect to the Purchased Assets, the Business and
the Transferred Employees, in amounts and against risks usually insured against by Persons
operating businesses similar to the Business. Schedule 3.21 sets forth a true, correct and
complete list of all current insurance policies, fidelity and surety bonds and fiduciary liability
policies covering the Purchased Assets, the Business or the Transferred Employees (the
“Insurance Policies”). Except as set forth on Schedule 3.21, there is no claim
pending under any of such Insurance Policies as to which coverage has been questioned or denied.
All premiums due under all Insurance Policies have been paid and Seller is in compliance with the
terms and conditions of all such Insurance Policies, in all material respects. All Insurance
Policies are in full force and effect. To Seller’s Knowledge, there is no threatened termination
of, premium increase (other than general premium increases in the ordinary course of business) with
respect to, or uncompleted requirements under, any Insurance Policy. No premiums are or will be



34









 







payable by Buyer under the Insurance Policies after the Closing in respect of insurance
provided for periods prior to the Closing Date.



     3.22. Licenses and Approvals. Seller has provided Buyer with true and complete
copies of all Licenses and Approvals. All of the Licenses and Approvals are in full force and
effect and Seller is not in material violation with respect to any of them. No proceedings are
pending nor, to Seller’s Knowledge, threatened by any applicable authority to revoke or limit the
scope of any of the Licenses and Approvals. There are no other licenses or approvals necessary for
the conduct of the Business as it is currently being conducted, except such licenses and approvals
the failure to obtain which is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Except as described in Schedule 3.22, none of the Licenses and
Approvals would be rendered ineffective or be required to be reissued as a result of the
consummation of the transactions contemplated hereby.



     3.23. Environmental.



          (a) Except as set forth in Schedule 3.23 with respect to the Business, Seller has not
received any written notice, letter, citation, order, warning, complaint, inquiry, information
request, demand or suit concerning (A) any violation of any Environmental Law, (B) any Release of
the Hazardous Materials at or from Seller’s Premises or any real property subject to the Real
Property Leases, (C) any Release of Hazardous Materials at or from any property where Seller’s
wastes or other materials have been or are alleged to have been sent for treatment, storage,
recycling or disposal, or (D) Seller’s potential liability, in whole or in part, for the costs of
cleaning up, remediating, removing or responding to a Release of Hazardous Materials.




          (b) Seller is in material compliance with all Environmental Laws with respect to any
operations conducted by Seller in connection with the Business; (ii) Seller is not subject to any
Environmental Liabilities with respect to the Business; and (iii) Seller has obtained all Licenses
and Approvals required by Environmental Laws for the operation of the Business and Seller is in
material compliance with all such Licenses and Approvals. All such Licenses and Approvals are in
full force and effect and each such License and Approval will remain in full force and effect after
the execution, delivery and performance of this Agreement.




     3.24. Customers and Suppliers. Schedule 3.24 sets forth a true, correct and
complete list, by dollar volume paid for the twelve-month period ended December 31, 2006, of the
ten (10) largest customers of the Business (collectively, the “Major Customers”) and the
twenty (20) largest suppliers of the Business (collectively, the “Major Suppliers”).
Except as set forth on Schedule 3.24, (i) none of the Major Customers or the Major
Suppliers within the last twelve (12) months has threatened in writing to cancel, or otherwise
terminate, the relationship of such Major Customer or Major Supplier with Seller; and (ii) none of
the Major Customers or the Major Suppliers during the last twelve (12) months has decreased
materially or to Seller’s Knowledge, threatened to decrease or limit materially its purchases from,
or sales to, Seller.



     3.25. Trade Compliance. The Business does not sell or solicit, directly or
indirectly, any products to any entity or enterprise located in those countries which are
identified in Part 746 (Embargoes and Other Special Controls) of the U.S. Export Administration
Regulations, in the Sanctions Program of the U.S. Department of Commerce, by the U.S. Foreign
Assets Control



35









 







Regulations, or on the U.S. Department of State Defense Trade Controls Embargo Reference
Chart. Except as set forth in Schedule 3.25, none of the Business products are controlled
under or subject to the International Traffic in Arms Regulations. Without limiting Section 3.11,
the Business has at all times within the past two (2) years been, and is currently, in material
compliance with all U.S. and foreign customs and import laws and regulations, and has paid all
fees, duties, levies and other amounts required to be paid pursuant thereto.



     3.26. Products. Each of the products related to the Business produced, developed or
sold by the Seller is, and at all times up to and including the sale thereof by the Seller has been
(a) in compliance in all material respects with all applicable federal, state, and local laws and
regulations and the laws and regulations of the European Union and its member states and (b)
conforms in all material respects to any promises or affirmations of fact made on the container or
label for such product or in connection with its sale, subject to returns, repairs, defects and
allowances consistent with past practice. To the Seller’s Knowledge there is no defect materially
adverse to the functionality of any of such products and each of such products contains adequate
warnings, presented in a reasonably prominent manner, in material compliance with applicable laws,
rules and regulations and current industry practice with respect to its contents and use.



     3.27. Product Liabilities. Seller has not had nor does Seller have any material
liability (and, to Seller’s Knowledge, there is no reasonable basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against it
giving rise to any material liability) arising out of any injury to individuals or property as a
result of the ownership, possession or use of any of the products related to the Business
manufactured, sold or delivered by Seller.



     3.28. Books and Records. All of the Books and Records are true, correct and complete
in all material respects and have been made available to Buyer. All of the Books and Records have
been prepared and maintained in accordance with good business practices and in compliance with all
applicable laws. All books, accounts and records required by law to be maintained in connection
with the Business are in the possession of Seller and have at all times been fully, properly and
accurately maintained in all material respects.



     3.29. Competition/Antitrust Law.



          (a) Seller has not during the one (1) year period prior to the date of this Agreement, been
the subject of any proceedings by the European Commission or the United Kingdom competition
authorities (the Office of Fair Trading or the Competition Commission) in connection with any
actual or alleged infringement of the applicable EC or United Kingdom competition/antitrust law
provisions in respect of the Purchased Assets.




          (b) Seller has not during the one (1) year period prior to the date of this Agreement, been
engaged in any horizontal agreement or arrangement (that is any agreement between competitors) in
respect of the Purchased Assets which would amount to an infringement of the applicable EC or
United Kingdom competition/antitrust law provisions.




36









 








          (c) To the Seller’s Knowledge, during the one year period prior to the date of this Agreement,
Seller has not been engaged in any vertical agreement or arrangement (that is any agreement between
non-competitors) in respect of the Purchased Assets providing for any territorial restriction which
would amount to an infringement of the applicable EC or United Kingdom competition/antitrust law
provisions.




     3.30. Compliance.



          (a) To the best of Seller’s Knowledge the Business is currently not the subject of any
investigation (whether informal or formal) by any applicable data protection authority and Seller
is not aware of any circumstances which may give rise to any such complaint or investigation.




          (b) To the Seller’s Knowledge (i) there are no outstanding claims for compensation for
inaccuracy, loss or unauthorized disclosure of Personal Data with respect to the Business, nor (ii)
has the Business lost or made any unauthorized disclosure of any such data.




          (c) Seller has obtained all material licenses, consents, approvals and permissions necessary
for the use of Personal Data by the Business for purposes of carrying out the Business prior to the
Closing.




          (d) To the Seller’s Knowledge, Seller has complied in all material respects with the
requirements of the applicable data protection legislation with respect to the Business.




     3.31. No Fraudulent Intent. Neither the execution and delivery of this Agreement nor
the performance of any actions required hereunder or described herein is being consummated by
Seller with or as a result of any actual intent to defraud any entity to which Seller is now or
will hereafter become indebted.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF BUYER




     Except as disclosed by Buyer to Seller in the Disclosure Schedule, Buyer hereby represents and
warrants to Seller that each of the statements contained in this Article IV is true and correct as
of the date hereof and will be true and correct as of the Closing Date.



     4.01. Corporate Existence. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of Pennsylvania.



     4.02. Corporate Authorization. The execution, delivery and performance by Buyer of
this Agreement and the Ancillary Documents and the consummation by Buyer of the transactions
contemplated hereby and thereby are within the corporate powers of Buyer and have been duly
authorized by all necessary corporate action on the part of Buyer. This Agreement and the
Ancillary Documents to which Buyer is a party have been or will be duly executed and delivered by
Buyer and each such agreement constitutes or will constitute a legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other similar law



37









 







affecting the enforceability of creditors’ rights generally and to the effect of general
principles of equity which may limit the availability of remedies (whether in a proceeding at law
or in equity).



     4.03. Governmental Authorization. The execution, delivery and performance by Buyer
of this Agreement and each of the Ancillary Documents to which Buyer is or will be a party require
no action by or in respect of, or filing with, any Governmental Authority other than those set
forth on Schedule 4.03.



     4.04. Non-Contravention. The execution, delivery and performance by Buyer of this
Agreement and each of the Ancillary Documents do not and will not (i) contravene or conflict with
the corporate charter or bylaws of Buyer, (ii) contravene or conflict with, or constitute a
violation of, any provision of any law, regulation, judgment, injunction, order or decree binding
upon Buyer or (iii) require the consent or approval of any other party.



     4.05. Finders’ Fees. Except as set forth on Schedule 4.05, there is no
investment banker, broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Buyer who might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or any Ancillary Document.



     4.06. Litigation. There is no action, suit, investigation or proceeding pending
against, or to the knowledge of Buyer threatened against or affecting, Buyer before any court or
arbitrator or any governmental body, agency or official which in any matter challenges or seeks to
prevent enjoin, alter or materially delay the transactions contemplated hereby.



     4.07. Financial Ability. Buyer has the financial capability to consummate the
transactions contemplated by this Agreement and Buyer understands that under the terms of this
Agreement its obligations hereunder are not in any way contingent or otherwise subject to (a)
Buyer’s consummation of any financing arrangements or Buyer’s obtaining any financing or (b) the
availability of any financing to Buyer.



     4.08. No Other Representations or Warranties of Seller. Buyer acknowledges that none
of the Seller or any of its directors, officers, Affiliates, members, employees, consultants,
agents, counsel or advisors makes or has made any representation or warranty to the Buyer or its
Affiliates, except for the representations and warranties of Seller expressly set forth in Article
III. In particular, and without limiting the generality of the foregoing, Buyer acknowledges that
no representation or warranty is made with respect to any financial projections delivered to Buyer
or in any management presentation and accompanying materials.



ARTICLE V




COVENANTS OF SELLER




     Seller agrees that:



     5.01. Conduct of the Business. From the date hereof until the Closing Date, Seller
shall conduct the operation of the Business in the ordinary course consistent with past practice
and use its commercially reasonable efforts to preserve intact the business organization and
relationships with third parties relating to the Business and to keep available the services of its
employees or



38









 







independent contractors, except those Persons who voluntarily resign in the normal course of
business or as otherwise agreed to in writing by Buyer. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, except as set forth in Schedule
5.01, without the prior written consent of Buyer, Seller shall not:



          (a) Take action to accelerate the payment of any account receivable of the Business so as to
cause such account receivable to be paid prior to the date the applicable accounts receivable
debtor has generally caused equivalent accounts receivable to be paid in the ordinary cause of the
Business for periods prior to the date hereof;




          (b) delay payment of any account payable of the Business beyond the date Seller has generally
caused equivalent accounts payable to be paid in the ordinary cause of the Business for periods
prior to the date hereof;




          (c) conduct the Business other than in the ordinary course of business;




          (d) make any sale, transfer, lease or other disposition of any Purchased Assets having an
aggregate value exceeding $50,000 or mortgage, pledge or otherwise create a security interest in
any of the Purchased Assets other than Permitted Liens and other than in the ordinary course of
business;




          (e) increase the cash compensation of any Transferred Employee in any material respect other
than (i) as required by any agreement or employee benefit plan in effect as of the date hereof,
(ii) as required by any applicable law, regulation, judgment, injunction, order or decree or (iii)
in connection with regularly scheduled salary increases consistent with past practice;




          (f) cease the sale and distribution of any products related to the Business other than in the
ordinary course of business;




          (g) fail to maintain the books, accounts and records of the Business on a basis consistent
with past practice;




          (h) create, incur or assume any indebtedness (except for accounts payable in the ordinary
course of business) in excess of $50,000 in the aggregate for money borrowed in connection with the
Business or secured by any Purchased Assets;




          (i) modify or change in any material respect any Assigned Contract except (i) renewals of
Contracts on substantially similar or better terms and conditions, (ii) any Assigned Contract
relating exclusively to Excluded Assets or Excluded Liabilities, (iii) as required by any
agreement or benefit plan in effect as of the date hereof, (iv) as required by any applicable law,
regulation, judgment, injunction, order or decree or (v) in the ordinary course of business
consistent with past practice;




          (j) take any action that would cause any of the representations and warranties made by Seller
in this Agreement not to remain true and correct in all material respects;




39









 








          (k) undertake any action or engage in any omission which shall impair or jeopardize in any
material respect Seller’s rights to the Seller Intellectual Property;




          (l) change in any material respect the methods or procedures for billing, collecting, or
recording customer accounts receivable or reserves for doubtful accounts, or change in any material
respect the methods, procedures or timing for paying or recording accounts payable in each case, as
it relates to the Business;




          (m) fail to use commercially reasonable efforts to (i) keep available the services of the
Transferred Employees engaged in the Business, subject to Seller’s personnel termination decisions
approved in writing by Buyer (such approval not to be unreasonably withheld), and (ii) preserve
present relationships and goodwill with entities or persons having material business dealings with
Seller in connection with the Business, including existing material customers, suppliers,
subcontractors and distributors of Seller;




          (n) fail to comply in all material respects with all statutes, ordinances, regulations,
orders, judgments and decrees of every Governmental Authority applicable to the Business and to the
conduct of the Business and perform all of its or its Affiliates’ obligations with respect thereto
without default;




          (o) enter into any contract, contractual obligation, bank debt, lease, loan or other
commitment, written or oral, or agreement for amounts to be due to third parties having an
aggregate value exceeding $40,000 in each case in connection with the Business, other than in the
ordinary course of business, or except as provided herein; or




          (p) fail to keep in full force and effect all of Seller’s insurance policies related to the
Business or the Purchased Assets or allow any breach, default, termination or cancellation of such
insurance policies to occur or exist.




     In addition, from the date hereof until the Closing Date, Seller shall use commercially
reasonable efforts to preserve the business and prospects of the Business, including the goodwill
of its customers and employees.



     5.02. No Negotiation with Third Parties. In consideration of the substantial
expenditure of time, effort and expense undertaken by Buyer in connection with its due diligence
review and the preparation and execution of this Agreement, Seller agrees that neither it nor any
of its Affiliates, officers, directors, employees, agents or representatives (including any
investment banker, attorney or accountant retained by any of them) will, directly or indirectly:
(a) initiate, solicit, encourage, entertain or engage in any discussion, negotiation, agreement or
understanding, or approve or enter into any agreement, with respect to any acquisition, merger,
consolidation, recapitalization, restructuring or similar transaction involving the Business or the
Purchased Assets during the period commencing the date hereof and ending on the earlier of the
Closing Date or the date this Agreement is terminated pursuant to Article XI; or (b) disclose any
information relating to Buyer, the Business or the Purchased Assets, or afford access to the
properties, books or records of the Business, to any Person (other than Buyer), in each case except
as contemplated by this Agreement. Seller shall immediately notify Buyer in writing



40









 







upon receipt of any indication of interest in writing by any third party with respect to any
of the transactions described in this paragraph.



     5.03. Access to Information. Commencing on the date hereof through the earlier of
the Closing Date or the termination of this Agreement as provided herein (the “Access
Period”), Seller agrees to: (a) make available to the representatives of Buyer information and
copies of such documents and records concerning the Business as such representatives may reasonably
require in connection with the consummation of the transactions contemplated hereby; (b) permit
reasonable access by the representatives of Buyer to the Purchased Assets and to Seller’s and its
Affiliates’ representatives and employees; and (c) cause its representatives to cooperate in
connection with such matters; provided in each case, however, that such access shall be managed by
and conducted through Seller, shall be subject to receipt by Seller of reasonable advance notice
from Buyer and subject to such additional limitations as Seller may reasonably require to ensure
compliance with law, confidentiality and as otherwise required to prevent unreasonable disruption
of the Business. No investigation by Buyer during the Access Period shall diminish or obviate or
otherwise affect any of the representations, warranties, covenants or agreements of Seller
contained in this Agreement.



     5.04. Supplemental Disclosure. Seller shall prior to Closing have the continuing
obligation to promptly supplement or amend the Disclosure Schedule with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in the Disclosure Schedule; provided, however, that
for the purpose of the rights and obligations of the Parties hereunder, any such supplemental or
amended disclosure shall not without the express written consent of Buyer (which consent may be
withheld in its sole discretion) be deemed to: (i) modify the representations, warranties,
covenants or agreements hereunder of Seller, or the Disclosure Schedule; (ii) modify any of the
conditions set forth in Article IX; (iii) cure or prevent any such inaccuracy or failure; or (iv)
limit or otherwise affect the remedies available hereunder or otherwise to Buyer, except, in each
case, to the extent Buyer elects to consummate the Closing.



     5.05. Non-Interference, Non-Solicitation and Non-Competition Agreement.



          (a) Seller covenants and agrees that it will not, for a period of three (3) years after the
Closing, directly or indirectly, for whatever reason, whether for its own account or for the
account of any other Person: (i) solicit, or otherwise interfere with any of the Business’ existing
or potential contracts or relationships with, any Transferred Employee who is, or has been at any
time within the twelve (12) months immediately prior thereto, an employee, officer, or director
employed by or associated with the Business; (ii) interfere with the continuance of supplies to the
Business (or the terms relating to such supplies), from any suppliers who have been supplying
goods, materials or services for use in the Business at any time within the twelve (12) months
immediately prior thereto; (iii) interfere with any of the Business’ existing or potential
contracts or relationships with any Person who is, or has been at any time within the twelve (12)
months immediately prior thereto, customer, client, consultant or supplier of the Business; (iv)
interfere with any contract between the Business and any other party whatsoever existing or
proposed at any time within the twelve (12) months immediately prior thereto; or (v) induce or
attempt to induce any Transferred Employee to leave the employ of Buyer.




41









 








          (b) In light of the extensive knowledge of the Business possessed by Seller, it is mutually
agreed that, from and after the Closing until the expiration of the period ending on the third
(3rd) anniversary of the Closing Date, neither Seller, nor any of its subsidiaries, shall, directly
or indirectly, (i) engage or aid any person or entity to engage including through the provision of
management, advisory or technical formulation services or through a joint venture, partnership or
licensing relationship in Buyer’s Field anywhere in the world, or (ii) own an interest in, manage,
operate, join, control or participate in or be associated with as a partner, member, shareholder,
co-venturer, consultant, lender or otherwise, any other person or entity that engages in Buyer’s
Field anywhere in the world.




          (c) Without limiting the remedies available, the Parties to this Agreement agree that damages
at law may be an insufficient remedy in the event of breach of this Section 5.05 and that Buyer
will be entitled to seek injunctive relief or other equitable remedies in the event of any such
breach.




          (d) Notwithstanding the foregoing, this Section 5.05 shall not (i) prohibit the Seller from
hiring any Transferred Employee who initiates contact with the Seller as a result of general
solicitation, general recruitment activities or general advertising by Seller that in all cases are
not directed at the Transferred Employees generally nor at any specific Transferred Employee, (ii)
prohibit Seller from maintaining its current interest and arrangements with any entity set forth on
Schedule 5.05 or (iii) prohibit an acquirer of the stock or assets of Seller, whether by
purchase, merger, consolidation or otherwise, from conducting such acquirer’s business in
competition with Buyer’s Field anywhere in the world.




          (e) If any of the provisions of this Section 5.05 are held to be unenforceable in any
jurisdiction, then, as to such jurisdiction, such provision shall be ineffective to the extent of
its unenforceability in such jurisdiction, without affecting the remaining provisions of this
Section in such jurisdiction, or affecting in any other jurisdiction the validity or enforceability
of such provision or of this Section 5.05. In the event of any such unenforceability, the court of
competent jurisdiction making such determination shall have the power to, and shall, reform the
unenforceability provisions of this Section 5.05 so as to make them enforceable to the maximum
extent permitted by law.




     5.06. Audited Financial Statements. Seller shall cause PricewaterhouseCoopers LLP
(“PwC”), Seller’s independent auditors to complete and deliver to Buyer on or before the
seventy-first (71st) day following the Closing Date (i) an audit opinion for the consolidated
financial statements of the Business as of and for the fiscal years ended December 31, 2005, and
December 31, 2006, (ii) a review of the unaudited consolidated interim financial statements of the
Business as of and for the six (6) months ended July 1, 2007, and the corresponding period for the
preceding year, in accordance with Statement on Auditing Standards No. 100 “Interim Financial
Information” and (iii) a consent to the inclusion of their report issued in connection with their
audit of the Business’ consolidated financial statements for the fiscal years ended December 31,
2005, and December 31, 2006, in a periodic report on Form 8-K or Form 8-KA to be filed by Buyer
with the Securities and Exchange Commission (the “SEC”). Seller shall provide to PwC all
reasonable assistance and materials to ensure that PwC completes and delivers to Buyer the
documents referred to in subsections (i), (ii) and (iii) above on or before the seventy-first
(71st) day following the Closing Date. Seller shall deliver to Buyer, simultaneously




42










 




with the delivery by PwC of the items set forth in clauses (i), (ii) and (iii) of this Section
5.06, (a) the consolidated financial statements of the Business as of and for the fiscal years
ended December 31, 2005 and 2006, and (b) the unaudited interim financial statements of the
Business as of and for the six (6) months ended July 1, 2007, and the corresponding period for the
preceding year. Buyer shall contribute and bear 50% of the fees, costs and expenses relating to
the audit and review of the financial statements required by this Section 5.06 (the “Financial
Statement Expense”), subject to a maximum contribution by Buyer for the aggregate Financial
Statement Expense of $100,000. For the avoidance of doubt, the Financial Statement Expense shall
not be deemed a liability or expense for the purpose of calculating Closing Net Asset Value.




     5.07. Excess Warranty Claims. To the extent that any Assumed Liability for warranty
obligations of Seller, excluding warranty repair under extended service agreements with customers,
exceeds $100,000 during the twelve (12) month period following Closing (the “Warranty
Limitation Amount”), Seller agrees to promptly reimburse Buyer for such warranty work in excess
of the Warranty Limitation Amount.



     5.08. Inventory Schedule. Seller shall provide Buyer with a schedule of Inventory
used exclusively in connection with the Business dated as of a recent date on or before the Closing
Date.



ARTICLE VI




COVENANTS OF PARTIES




     The Parties agree that:



     6.01. Notices of Certain Events. Prior to the Closing Date, Seller, on the one hand,
and Buyer, on the other hand, shall promptly notify the other of:



          (a) any notice or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the transactions contemplated hereby;




          (b) any notice or other oral or written communication from any Governmental Authority in
connection with the transactions contemplated hereby or relating to the Business;




          (c) the occurrence or non-occurrence of any event, condition or circumstance the occurrence
or non-occurrence of which would be reasonably likely to cause any representation or warranty
contained herein, whether made as of the date hereof or as of the Closing Date, to be untrue or
inaccurate in any material respect at or prior to the Closing;




          (d) any failure of Seller or Buyer, as the case may be, to comply with or satisfy in any
material respect, in a timely manner, any covenant, condition or agreement to be complied with or
satisfied by it hereunder;




43









 








          (e) any material development affecting the Purchased Assets, the Assumed Liabilities,
financial condition, operations, results of operations or customer, supplier or employee relations
of the Seller and related to the Business; and




          (f) any change, circumstance or event that has had or could reasonably be expected to have a
Material Adverse Effect, or could delay or impede the ability of Seller or Buyer to perform its
obligations pursuant to this Agreement and to consummate the transactions contemplated hereby;



provided, that, the delivery of any notice pursuant to this Section 6.01 shall not, without the
express written consent of each of the other Parties (which consent may be withheld in their
respective sole discretion) be deemed to (i) modify the representations, warranties, covenants or
agreements hereunder of the Party delivering such notice, or the Disclosure Schedule, (ii) modify
any of the conditions set forth in Article IX, (iii) cure or prevent any such inaccuracy or
failure, or (iv) limit or otherwise affect the remedies available hereunder or otherwise to the
Party receiving such notice, except to the extent the Parties elect to consummate the Closing.




     6.02. Further Assurances. Subject to the terms and conditions of this Agreement,
each of the Parties will use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. Seller and Buyer, each
agree to execute and deliver, and to cause each applicable Affiliate to execute and deliver, such
other documents, certificates, agreements and other writings and to take such other actions as may
be necessary or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer good and marketable title to all of the
Purchased Assets. Any asset or any liability, all other payments, funds, remittances and all other
mail and other communications that are determined by this Agreement or the Parties’ agreement to be
or otherwise relate to an Excluded Asset or an Excluded Liability and that is or comes into the
possession, custody or control of Buyer (or its successors-in-interest or assigns, or its
respective Affiliates) shall forthwith be transferred, assigned or conveyed by Buyer (or its
successors-in-interest or assigns, or its respective Affiliates) to Seller. Until such transfer,
assignment and conveyance, Buyer (and its respective successors-in-interest and assigns and its
respective Affiliates) shall not have any right, title or interest in or obligation or
responsibility with respect to such asset or liability except that Buyer shall hold such asset in
trust for the benefit of Seller. Any asset or any liability, all other payments, funds,
remittances and all other mail and other communications that are determined by this Agreement or
the Parties’ agreement to be or otherwise relate to a Purchased Asset or an Assumed Liability and
that is or comes into the possession, custody or control of Seller (or its successors-in-interest
or assigns, or its respective Affiliates) shall forthwith be transferred, assigned or conveyed by
Seller (or its successors-in-interest or assigns, or its respective Affiliates) to Buyer. Until
such transfer, assignment and conveyance, Seller (and its respective successors-in-interest and
assigns and its respective Affiliates) shall not have any right, title or interest in or obligation
or responsibility with respect to such Purchased Asset or Assumed Liability except that Seller
shall hold such asset in trust for the benefit of Buyer.



     6.03. Certain Filings. Seller and Buyer shall cooperate (a) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is required, or any
actions,



44









 







consents, approvals or waivers are required to be obtained from parties to any Assigned
Contracts, in connection with the consummation of the transactions contemplated by this Agreement
and (b) in taking such actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.



     6.04. Public Announcements. The Parties agree to consult with each other before
issuing any press release or making any public statement with respect to this Agreement or the
transactions contemplated hereby. Neither Buyer nor Seller shall issue or make, or allow to have
issued or made, any press release or public announcement concerning the transactions contemplated
by this Agreement without the advance approval in writing of the form and substance thereof by the
other Parties, unless otherwise advisable or required by applicable law or any listing agreement
with or rule and regulations of a securities exchange.



     6.05. Confidentiality Agreement.




          (a) Seller and Buyer shall be bound by the Confidentiality Agreement in accordance with the
terms thereto.




          (b) Following the Closing, Seller shall maintain, and shall cause its Affiliates to maintain,
in confidence any information it or they may have or it may obtain from Buyer in relation to the
Business, other than with respect to the Excluded Assets and the Excluded Liabilities, and such
information shall not be disclosed or used by Seller or its Affiliates without the Buyer’s prior
written consent, unless such information is (i) otherwise publicly available, (ii) required to be
disclosed pursuant to judicial order, regulation or law or (iii) required to be disclosed by the
rules of the New York Stock Exchange or any other applicable exchange or quotation system. In the
event that Seller or any of its Affiliates or representatives becomes legally compelled to disclose
any such information or documents as referred to in this paragraph, Seller shall provide the Buyer
with prompt written notice before such disclosure, sufficient to enable the Buyer either to seek a
protective order, at its expense, or other appropriate remedy preventing or prohibiting such
disclosure or to waive compliance with the provisions of this Section 6.05(b).




ARTICLE VII




TAX MATTERS




     7.01. Tax Definitions. The following terms, as used herein, have the following
meanings:



          “Post-Closing Tax Period” means any Tax period (or portion thereof) beginning after
the Closing Date.




          “Pre-Closing Tax Period” means any Tax period (or portion thereof) ending on or before
the Closing Date.




          “Tax” means any U.S. federal, foreign, state, local or other net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, franchise, capital,


45









 







paid-up capital, profits, greenmail, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together
with any interest or any penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax, but excluding any
VAT.




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




          “Tax Returns” means all reports, estimates, declarations of estimated tax, information
statements and returns (whether original or amended) relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties.




          “VAT” means any value added tax.




     7.02. Tax Cooperation; Allocation of Taxes.



          (a) Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the Purchased Assets and the
operation of the Business as is reasonably necessary for the filing of all Tax returns, and making
of any election related to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax return. Seller and
Buyer shall cooperate with each other in the conduct of any audit or other proceeding related to
Taxes (including any such proceeding ongoing as of the Closing Date) involving the operation of the
Business and each shall execute and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this Section 7.02(a).




          (b) All real property taxes, personal property taxes and similar ad valorem obligations levied
with respect to the Purchased Assets for a taxable period which includes (but does not end on) the
Closing Date (collectively, the “Apportioned Obligations”) shall be apportioned between
Seller and Buyer as of the Closing Date based on the number of days of such taxable period included
in the Pre-Closing Tax Period and the number of days of such taxable period included in the
Post-Closing Tax Period. Seller shall be liable for the proportionate amount of such taxes that is
attributable to the Pre-Closing Tax Period. At the Closing, Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which each is entitled under
this Section 7.02(b) together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the Party owing it to the other within
ten (10) days after delivery of such statement. Thereafter, Seller and Buyer shall notify each
other upon receipt of any bill for real or personal property taxes relating to the Purchased
Assets, and which is attributable to both the Pre-Closing Tax Period and the Post-Closing Tax
Period, and Buyer shall pay the same to the appropriate taxing authority, provided that Seller
shall remit prior to the due date of assessment to Buyer payment for the proportionate amount of
such bill that is attributable to the Pre-Closing Tax Period. If either Seller or Buyer shall
thereafter make a payment for which it is entitled to reimbursement under this Section 7.02(b), the
other Party shall make such reimbursement promptly but in no event later than thirty (30) days
after the presentation of a statement setting



46









 








forth the amount of reimbursement to which the presenting Party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of reimbursement. Any
payment required under this Section 7.02 and not made within ten (10) days of delivery of the
statement shall bear interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a)(2) of the Tax Code for each day until paid.




          (c) Each of Buyer and Seller shall bear 50% of any transfer, documentary, sales, use or other
Taxes assessed upon or with respect to the transfer of the Purchased Assets to Buyer and any
recording or filing fees with respect thereto, but excluding VAT which is addressed in Section
7.03.




     7.03. Value Added Tax.




          (a) Seller and Buyer are registered for VAT as at Closing and assume that the transaction
envisaged under this Agreement constitutes a non-taxable business transfer (transfer of going
concern) such that no VAT becomes due on that transfer. Seller and Buyer shall use all reasonable
efforts to secure such treatment as regards the sale of the Business under this Agreement. Buyer
will use and maintain the business for the same entrepreneurial activities as Seller.




          (b) Seller undertakes to retain and preserve any VAT records and documentation relating to its
period of ownership of the Business respectively in such a manner and for such period as may be
required by applicable law and will allow Buyer, upon Buyer giving adequate notice, sufficient
access and copies of such records and documents for Buyer’s taxation purposes.




          (c) If it turns out that the tax authorities treat such transfer either entirely or partly as
taxable for VAT purposes and impose VAT, Seller shall give written notice to Buyer thereof without
undue delay. In such case, Seller shall procure that Buyer is furnished with a valid VAT invoice in
accordance with the relevant VAT provisions. If so, the purchase price is increased by the relevant
amount of VAT. The Seller shall pay such amounts to the relevant tax office. Any penalties and
interest, other than the penalties or interest arising solely from the failure of Seller to account
promptly for VAT to the relevant tax office after receiving the appropriate amount for the VAT
payment by Buyer, shall be equally born by Buyer and Seller.




ARTICLE VIII




EMPLOYEE MATTERS




     8.01. Employment Matters Relating to United States Employees.



          (a) Termination. Subject to applicable laws, and no later than immediately prior to
the Closing Date, Seller shall terminate the employment of all of the employees engaged in the
Business in the United States (collectively, the “US Terminated Employees”). Seller shall
provide the US Terminated Employees with any wages, vacation pay, severance, and other compensation
or benefits that are due and owing, including those that are due and owing under any applicable
Employee Plans and Benefit Arrangements. Seller also shall maintain a welfare plan that will offer
to provide continuation health benefits coverage to the US Terminated

47









 








Employees who are not hired by Buyer, as required by COBRA, Section 601 et seq. of ERISA, and
Section 4908B of the Tax Code.




          (b) US Transferred Employees. Immediately following the Closing, Buyer or one of
Buyers’ Affiliates shall offer to employ certain of the US Terminated Employees as listed on
Schedule 8.01(b), on an at will basis, meaning they can quit or be discharged at any time
and for any reason. Except as otherwise required by law, any such offers to each such individual
shall be at such salary and benefit levels that are in the aggregate at least reasonably equivalent
to the salary and benefit levels applicable to employees of Buyer with similar responsibilities and
tenure. The US Terminated Employees who are hired by Buyer or one of its Affiliates shall be
referred to herein as the “US Transferred Employees.”




          (c) Buyer Benefit Plans. Buyer or one of its Affiliates shall provide the US
Transferred Employees with the opportunity to participate in all Buyer Benefit Arrangements and
Plans. To the extent that the US Transferred Employees become participants in any Buyer Benefit
Arrangement and Plan, such Buyer Benefit Arrangement and Plan shall take into account for all
purposes, the service of such US Transferred Employees with Seller as if such service were with
Buyer, to the same extent that such service was credited under a comparable benefit plan; provided,
however, that such service need not be recognized to the extent that such recognition would result
in any duplication of benefits or to the extent the service is beyond (i) the number of years of
service that a Buyer Benefit Arrangement and Plan will credit for employment with another employer
or (ii) the number of years of service of the employee of Buyer with the greatest number of years
of service at such time. In addition, Seller shall, at Buyer’s request, use commercially
reasonable efforts to provide or secure any claims or other data Buyer or its Affiliates reasonably
need to establish or administer the Buyer Benefit Arrangements and Plans.




          (d) Rollovers. Subject to applicable laws and the terms of the Buyer Benefit
Arrangements and Plans and Seller’s Benefit Arrangements and Employee Plans, US Transferred
Employees shall be entitled to rollover or transfer their account balances in a tax-qualified
defined contribution plan maintained by Seller to a tax-qualified defined contribution Buyer
Benefit Arrangement and Plan; provided, however, that such transfer or rollover shall be in cash or
cash and the promissory note evidencing the US Transferred Employees obligation under an
outstanding participant loan.




          (e) The Buyer’s workers’ compensation program shall be responsible for all claims for benefits
for the US Transferred Employees with respect to claims where the date of injury occurs after the
Closing Date, and in the case of an occupational disease, the US Transferred Employee was exposed
to the occupational hazard after the Closing Date for a period at least equal to the minimum period
needed to impose liability for the occupational disease on a new employer.




          (f) Each US Transferred Employee shall be immediately eligible to participate, without any
waiting time, in each Buyer Benefit Arrangement and Plan (to the extent that coverage replaces
coverage under a comparable welfare benefit plan of Seller, in which such US Transferred Employee
participated immediately prior to the Closing). For purposes of each Buyer Benefit Arrangement and
Plan providing medical, dental, pharmaceutical and/or vision

48









 






benefits to any US Transferred Employee, the Buyer shall cause all pre-existing condition
exclusions and actively-at-work requirements of such plans to be waived for such US Transferred
Employees and their covered dependents (other than limitations or waiting periods that are already
in effect with respect to such US Transferred Employees and dependents and that have not been
satisfied as of the Closing Date).




          (g) Any subsequent termination by Buyer of the employment of any US Transferred Employee shall
be subject to Buyer’s then existing severance policies as applied to Buyer’s other employees of
equivalent seniority.




     8.02. Employment Matters Relating to EU Employees.



          (a) Buyer and Seller agree that the Closing of the transactions contemplated by this Agreement
will constitute a relevant transfer for the purposes of the Directive and that such transfer will
take place in its entirety on the Closing Date.




          (b) Buyer and Seller agree, that, as a consequence of the Directive, Buyer shall, on the
Closing Date, by operation of law enter into the rights and obligations arising from the employment
relationships of the EU Employees, to the extent such EU Employees do not validly object to such
transfer of their employment relationship under applicable law. Schedule 8.02(b) sets forth a list
of EU Employees. All EU Employees who do not make such an objection are referred to herein as the
“EU Transferred Employees.”




          (c) Seller agrees that it will not on or before the Closing Date without Buyer’s express
written permission:




               (i) make any change to or agree to make any change to the terms and conditions of the EU
Employees;



               (ii) provide or agree to provide any non-contractual benefit to any EU Employee or his or her
dependants;



               (iii) terminate or take any steps to terminate (constructively or otherwise) the employment of
any of the EU Employees, except for cause;



               (iv) offer employment in the Business or assign to the Business any person who is not an EU
Employee;



               (v) do anything which may result in the Directive not operating in relation to any of the EU
Employees including, for the avoidance of doubt, offering alternative employment or redeployment to
or offering to reassign any of the EU Employees outside the Business.



          (d) Seller agrees to notify Buyer within twenty-four (24) hours if any of the EU Employees
gives notice to terminate or terminates his or her contract of employment.




          (e) Seller shall, within the restrictions imposed by applicable law:




49









 








               (i) procure that in the period up to and including the Closing Date Buyer and its advisors
shall be given promptly on request reasonable access to the EU Employees and the Representatives at
reasonable times;



               (ii) give Buyer and its advisors reasonable notice of and the opportunity to attend any
consultation meeting with the EU Employees and or the Representatives held pursuant to the
Directive; and



          (f) As soon as practicable subsequent to the signing of this Agreement, Buyer and Seller shall
cooperate in notifying the EU Employees in text format and according to the Directive of the
planned transfer of their employment to Buyer. If any claim is raised by an EU Employee based on
the notification being incorrect, the party responsible for providing the incorrect information
shall indemnify and hold the other party harmless from and against all payments, costs and
liabilities arising from such claim.




          (g) Buyer and Seller agree to fully and timely cooperate in transitioning the employments of
the EU Employees subject always to compliance with applicable law. Without limiting the generality
of the foregoing, Seller shall provide Buyer, as soon as possible after signing of this Agreement
and in observation of applicable data protection laws, all data of the EU Employees being necessary
for the proper and uninterrupted continuation and administration of their employment subsequent to
the Closing Date.




          (h) If following the Closing Date the employment of any employee who is not an EU Employee is
found to have transferred to Buyer as a result of the Directive (“Unidentified Employee”),
Seller shall indemnify Buyer against each and every liability claim demand expense or cost
(including without limitation legal costs and expenses incurred by Buyer in settling, contesting or
dealing with any such claim or demand) that Buyer may suffer, incur, sustain, or pay arising from
the termination or variation of the contract of employment of any such Unidentified Employee,
provided, however, that:




               (i) Seller shall not be liable to indemnify Buyer for the cost of labor if and to the extent
that Unidentified Employees are performing work for Buyer;



               (ii) Seller shall choose the legal counsel to conduct any labor litigation with Unidentified
Employees and such litigation shall be conducted at Seller’s direction;



               (iii) Buyer shall not offer or pay any severance to Unidentified Employees without prior
written approval by Seller.



          (i) Seller shall indemnify Buyer against all losses which may be suffered or incurred by Buyer
in connection with the EU Employees which relates to or arises out of any act or omission by Seller
or obligation or liability of Seller or any other event or circumstance on or prior to the Closing
Date.




          (j) Buyer shall indemnify Seller against all losses which may be suffered or incurred by
Seller in connection with the EU Employees which relates to or arises out of any act or omission by
Buyer or obligation or liability of Buyer or any other event or circumstance after the Closing
Date.




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     8.03. Pensions.



     If and to the extent required by the applicable law or the Directive, all company pension
entitlements of the EU Employees will transfer to Buyer by operation of law and will be continued
by Buyer according to the applicable legal requirements.



     8.04. No Third Party Beneficiaries. No provision of this Article shall create any
third party beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Seller or of any of its subsidiaries in respect of continued
employment (or resumed employment) with either Buyer or the Business or any of their Affiliates and
no provision of this Article VIII shall create any such rights in any such Persons in respect of
any benefits that may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement or any plan or arrangement that may be established by Buyer or any of its Affiliates.



ARTICLE IX




CONDITIONS TO CLOSING




     9.01. Conditions to the Obligations of Each Party. The obligations of the Parties to
consummate the Closing are subject to the satisfaction or waiver of the following conditions:



          (a) (i) No preliminary or permanent injunction or other order shall have been issued by any
court of competent jurisdiction, whether federal, state or foreign, or by any governmental or
regulatory body, whether federal, state or foreign, nor shall any statute, rule, regulation or
executive order be promulgated or enacted by any governmental authority, whether federal, state or
foreign, which prevents the consummation of the transactions contemplated in this Agreement; and
(ii) no suit, action, claim, proceeding or investigation before any court, arbitrator or
administrative, governmental or regulatory body, whether federal, state or foreign, shall have been
commenced and be pending against Seller or Buyer or any of their respective Affiliates, associates,
officers or directors seeking to prevent the sale of the Purchased Assets or the Business or
asserting that the sale of the Purchased Assets or the Business would be illegal.




          (b) All actions by or in respect of or filings with any Governmental Authority required to
permit the consummation of the Closing shall have been obtained.




     9.02. Conditions to Obligation of Buyer. The obligation of Buyer to consummate the
Closing is subject to the satisfaction or waiver of the following further conditions:



          (a) (A) each of the representations and warranties contained in Article III (other than those
that address matters as of particular dates) shall be true and correct at and as of the Closing as
though then made (disregarding any qualification as to materiality, Material Adverse Effect, or a
similar concept) and (B) each of the representations and warranties set forth in Article III that
address matters as of particular dates shall be true and correct as of such dates (disregarding any
qualification as to materiality, Material Adverse Effect or similar concept), unless in the case of
(A) and (B) the failure to be true and correct does not, individually or in the aggregate, have a
Material Adverse Effect.




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          (b) Seller shall have performed or complied with all obligations, covenants and conditions
required by this Agreement to be performed or complied with at or prior to the Closing Date, except
for such failures to perform or comply that would not reasonably be expected to have a Material
Adverse Effect.




          (c) Buyer shall have received a certificate signed by an executive officer of Seller to the
effect that the conditions set forth in Sections 9.02(a) and 9.02(b) have been satisfied.




          (d) Without prejudice to Buyer’s rights under Section 9.02(a), Seller shall have delivered to
Buyer a revised Disclosure Schedule in accordance with Section 5.04.




          (e) Buyer shall have received the items specified in Section 2.07(c).




          (f) Each of the Consents specified on Schedule 9.02(f) (the “Closing
Consents”) shall have been properly executed and delivered by Seller and any required
third-parties, and copies thereof shall have been delivered to Buyer.




     9.03. Condition to Obligations of Seller. The obligation of Seller to consummate the
Closing is subject to the satisfaction or waiver of the following further condition:



          (a) Buyer shall have performed or complied with all obligations, covenants and conditions
required by this Agreement to be performed or complied with at or prior to the Closing Date, except
for such failures to perform or comply that would not reasonably be expected to have a Material
Adverse Effect.




          (b) (A) each of the representations and warranties contained in Article IV (other than those
that address matters as of particular dates) shall be true and correct at and as of the Closing as
though then made (disregarding any qualification as to materiality, Material Adverse Effect, or a
similar concept) and (B) each of the representations and warranties set forth in Article IV that
address matters as of particular dates shall be true and correct as of such dates (disregarding any
qualification as to materiality, Material Adverse Effect or similar concept), unless in the case of
(A) and (B) the failure to be true and correct does not, individually or in the aggregate, have a
Material Adverse Effect.




          (c) Seller shall have received a certificate signed by an executive officer of Buyer to the
effect that the conditions set forth in Sections 9.03(a) and 9.03(b) have been satisfied.




          (d) Seller shall have received the items specified in Section 2.07(d).




ARTICLE X




SURVIVAL; INDEMNIFICATION




     10.01. Survival. The right to bring claims or assert causes of action for breach of
any covenants, agreements, representations and warranties of the Parties contained in this
Agreement



52









 







or in any certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing until eighteen (18) months after the Closing Date; provided, however,
that:



          (a) the covenants and agreements which by their terms do not contemplate performance after the
Closing shall terminate as of the Closing;




          (b) the covenants and agreements which by their terms contemplate performance after the
Closing shall survive until the date specified in this Agreement or the Ancillary Transfer
Documents as the termination date for such covenants and agreements, or if no such date is
specified, then such covenants and agreements shall survive until the expiration of any statute of
limitations; and




          (c) the representations and warranties contained in Section 3.01, Section 3.02, Section
3.08(a), Section 3.19, Section 3.23, Section 4.01, Section 4.02 and Section 4.07 and any
indemnification obligations of any Party in connection therewith shall continue in full force and
effect until sixty (60) days after the expiration of the statute of limitations applicable to the
matters to which such representations relate (collectively, the “Special Representations”).




     Notwithstanding the foregoing provisions of this Section 10.01, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought under Section 10.02
(Indemnification) shall survive the time at which it would otherwise terminate, if notice with
reasonable specificity of the inaccuracy or breach thereof giving rise to such right to indemnity
shall have been given to the Party against whom such indemnity may be sought prior to such time.



     10.02. Indemnification.



          (a) Subject to the limitations set forth in this Article X, Seller shall indemnify, defend and
hold harmless Buyer from and against any and all damage, loss, liability, claim, cost, fine,
penalty or expense (including expenses of investigation, preparation and defense, reasonable
attorneys’ fees and expenses and all other fees and expenses incurred by Buyer in connection with
any action, suit or proceeding), Lien or other obligation of any nature whatsoever (collectively,
“Loss”) to which Buyer becomes subject as a result of, arising out of or based on, directly
or indirectly, any of the following, or any claim alleging any of the following:




               (i) any breach of, any representation or warranty made by Seller pursuant to this Agreement,
any Ancillary Transfer Document;



               (ii) any breach of a covenant or agreement made or to be performed by Seller pursuant to this
Agreement or any Ancillary Transfer Document;



               (iii) any Excluded Liability or any obligation or liability relating to the Excluded Assets;
or



               (iv) any liabilities relating to Beckmann Claims to the extent such liabilities relate to
service of the EU Employees with Seller prior to Closing.



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          (b) Subject to the limitations set forth in this Article X, Buyer shall indemnify, defend and
hold harmless Seller from and against any Loss to which Seller becomes subject as a result of,
arising out of or based on, directly or indirectly, any of the following, or any claim alleging any
of the following:




               (i) any breach of any representation or warranty made by Buyer pursuant to this Agreement or
any Ancillary Transfer Document;



               (ii) any breach of a covenant or agreement made or to be performed by Buyer pursuant to this
Agreement, any Ancillary Transfer Document; or



               (iii) any Assumed Liability.



          (c) Payments made pursuant to this Article X are adjustments to the Purchase Price.




     10.03. Certain Limitations.



          (a) Seller shall have no obligation to indemnify or hold harmless Buyer under Section
10.02(a)(i) above, and Buyer shall have no obligation to indemnify or hold harmless Seller under
Section 10.02(b)(i) above, in each case except to the extent that the aggregate amount of Losses
incurred by such Indemnified Party exceeds $250,000, in which case the Indemnifying Party shall be
responsible for the entire amount of such claims, subject to the other limitations in this Article
X.




          (b) Seller shall have no obligation to indemnify Buyer with respect to the German Pension Plan
Liabilities or any claims arising under or relating to the German Pension Plan.




          (c) EXCEPT IN THE CASE OF FRAUD, IN NO EVENT SHALL SELLER’S CUMULATIVE LIABILITY FOR
INDEMNIFICATION PAYMENTS PURSUANT TO SECTION 10.02(a)(i) OR IN RESPECT OF THE BREACH BY SELLER OF
ANY COVENANT OR AGREEMENT MADE OR TO BE PERFORMED BY SELLER PURSUANT TO THIS AGREEMENT PRIOR TO
CLOSING EXCEED, IN THE AGGREGATE, $1,750,000.




          (d) The limitations provided for in clauses (a) and (c) of this Section 10.03 shall not apply
to any Loss arising out of any breach of the Special Representations.




          (e) Seller shall not be obligated to indemnify or hold harmless Buyer with respect to any Loss
that is stated as a liability on the Closing Balance Sheet to the extent of such stated liability,
or for which a reserve was made on the Closing Balance Sheet to the extent of such reserve, other
than those liabilities and reserves indentified in the calculation of the Closing Net Asset Value
as an Excluded Liability.




          (f) Seller shall have no obligation to indemnify Buyer for consequential damages, special
damages, incidental damages, indirect damages, lost profits, unrealized

54









 








expectations or other similar items, nor shall any damages be calculated using a “multiplier”
or any other similar method having a similar effect.




          (g) In determining the foregoing thresholds and in otherwise determining the amount of any
Loss for which the Buyer is entitled to assert a claim for indemnification hereunder, the amount of
any such Loss shall be determined after deducting therefrom the amount of any insurance proceeds
(after giving effect to any applicable deductible or retention and resulting retrospective premium
adjustment) or other third party recoveries actually received by the Buyer or any subsidiary of the
Buyer in respect of such Loss (which insurance proceeds the Buyer agrees to use, or to cause any
subsidiary of the Buyer to use, commercially reasonable efforts to obtain) and the amount of any
Tax benefit related thereto. If an indemnification payment is received by the Buyer, and the Buyer
or any subsidiary of the Buyer later receives insurance proceeds, other third party recoveries or
tax benefits in respect of the related Loss, the Buyer shall promptly pay to the Seller a sum equal
to the lesser of (y) the actual amount of such insurance proceeds, other third party recoveries and
Tax benefits or (z) the actual amount by which the indemnification payment previously paid by the
Seller with respect to such Loss would have been reduced had such proceeds been collected prior to
the determination thereof.




     10.04. Procedure for Indemnification.



          (a) Any Party making a claim for indemnification hereunder (an “Indemnified Party”)
shall promptly notify the indemnifying Party (an “Indemnifying Party”) of the claim in
writing, describing the claim in reasonable detail, the estimated amount thereof (to the extent
known and quantifiable) , and the basis therefor; provided, that the failure to provide prompt
notice shall not relieve the Indemnifying Party of its indemnification obligations hereunder,
except to the extent that the Indemnifying Party is actually prejudiced by the failure to give such
prompt notice.




          (b) If a claim for indemnification hereunder is based on a claim by a third party, the
Indemnifying Party shall have the right to assume the entire control of the defense thereof,
including at its own expense, employment of counsel reasonably satisfactory to the Indemnified
Party, and, in connection therewith, the Indemnified Party shall cooperate fully with the
reasonable requests of the Indemnifying Party and make available to the Indemnifying Party all
pertinent information under its control reasonably requested by the Indemnifying Party; provided,
that the Indemnified Party may participate in any proceeding with counsel of its choice at its
expense. Notwithstanding the foregoing, the Indemnifying Party shall not have the right to assume
or continue to control the defense if the Indemnifying Party fails to defend the proceeding in good
faith. If the Indemnifying Party assumes the defense of a proceeding, no compromise or settlement
of any such claim may be effected by the Indemnifying Party without the Indemnified Party’s
consent, which consent shall not be unreasonably withheld, conditioned or delayed.




     10.05. Remedies Exclusive. The remedies provided in this Article X, together with
the remedies provided for in the Letter Agreement, shall be the exclusive remedies of the Parties
hereto after the Closing for monetary damages in connection with the transactions contemplated by
this Agreement (other than for fraud), including, without limitation, any breach or non-performance
of any representation, warranty, covenant or agreement contained herein. No Party



55









 







may commence any suit, action or proceeding against any other Party hereto or any of their
respective Affiliates with respect to the subject matter of this Agreement, whether in contract,
tort or otherwise, except to enforce such Party’s express rights under this Article X and under the
Letter Agreement.



ARTICLE XI




TERMINATION




     11.01. Grounds for Termination. This Agreement may be terminated at any time prior
to the Closing:



          (a) by mutual written agreement of Seller and Buyer;




          (b) by either Party if consummation of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or governmental body having competent
jurisdiction;




          (c) by either Party if the Closing does not occur on or prior to October 31, 2007; provided
that such termination right shall not be available to a Party that has failed to fulfill its
obligations under this Agreement or whose acts or omissions have been a significant cause of the
Closing not occurring on or before such date;




          (d) by Seller, if: (A) there has been a misrepresentation or breach by Buyer of a
representation or warranty contained herein such that Buyer could not deliver to Seller at Closing
an accurate certificate as contemplated by Section 9.03(c), (B) Buyer has committed a material
breach of any covenant imposed upon it hereunder and, if curable, fails to cure such breach within
ten (10) Business Days after written notice thereof from Seller; or (C) any condition to Seller’s
obligations hereunder becomes incapable of fulfillment through no fault of Seller and is not waived
by Buyer; or




          (e) by Buyer, if: (A) there has been a misrepresentation or breach by Seller of a
representation or warranty contained herein such that Seller could not deliver to Buyer at Closing
an accurate certificate as contemplated by Section 9.02(c); (B) Seller has committed a breach of
any covenant imposed upon it hereunder and, if curable, fails to cure such breach within ten (10)
Business Days after written notice thereof from Buyer; or (C) any condition to Buyer’s obligations
hereunder becomes incapable of fulfillment through no fault of Buyer and is not waived by Seller.




          The Party desiring to terminate this Agreement under clause (b), (c), (d) or (e) shall give
notice of such termination to the other Parties.




     11.02. Effect of Termination. If this Agreement is terminated as permitted by
Section 11.01, such termination shall be without liability of any Party (or any shareholder,
director, officer, employee, agent, consultant or representative of such Party) to the other Party
to this Agreement; provided that if such termination shall result from the willful failure of a
Party to fulfill a condition to the performance of the obligations of the other Parties or to
perform a covenant of this Agreement or from a willful breach by a Party to this Agreement, such
Party



56









 







shall be fully liable for any Loss incurred or suffered by the other Party as a result of such
failure or breach. The provisions of Section 11.02, as well as Sections 6.04 (Public
Announcements), 6.05 (Confidentiality Agreement), and Article XII shall survive any termination
hereof pursuant to Section 11.01.



ARTICLE XII




MISCELLANEOUS




     12.01. Notices. All notices, requests and other communications to either Party
hereunder shall be in writing (including telex, telecopy or similar writing) and shall be sent by
nationally-recognized, next-day delivery service or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed as set forth below; receipt shall be deemed to occur
on the date of actual receipt or, if sent by a nationally recognized, next-day delivery service, on
the first Business Day after deposit with such service. All such communications shall be addressed
as follows:


if to Buyer, to:



Tollgrade Communications, Inc.

493 Nixon Road

Cheswick, PA 15024

Attn: Sara M. Antol, Esq.

Telecopy: 412-820-1539



with a copy to:



Babst, Calland, Clements and Zomnir, P.C.

Two Gateway Center, 7th Floor

Pittsburgh, PA 15222

Attn: Christian A. Farmakis, Esq.

Telecopy: 412-394-6576



if to Seller:



Teradyne, Inc.

700 Riverpark Drive MS-NR700-2-3

North Reading, MA 01864

Attn: General Counsel



with a copy to:



Choate, Hall & Stewart LLP

Two International Place

Boston, MA 02110

Attn: William B. Asher, Jr., Esq.

Telecopy: (617) 248-4000




57









 







or such other address or Persons as the Parties may from time to time designate in writing in the
manner provided in this Section 12.01.




     12.02. Amendments; Waivers.



          (a) Any provisions of this Agreement may be amended or waived prior to the Closing Date if,
and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by
Buyer and Seller, or in the case of a waiver, by the Party against whom the waiver is to be
effective.




          (b) No failure or delay by either Party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.




     12.03. Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the Party incurring such cost or
expense.



     12.04. Successors and Assigns. This Agreement may not be assigned by either party
hereto without the prior written consent of the other party; provided that, without such consent,
(a) the Buyer may transfer or assign, in whole or in part or from time to time, to one or more of
its Affiliates, the right to purchase all or a portion of the Purchased Assets and assume all or a
portion of the Assumed Liabilities, but no such transfer or assignment will relieve the Buyer of
its obligations hereunder and (b) this Agreement may be assigned by the Buyer or the Seller to any
Person acquiring a material portion of the assets, business or securities of the Buyer or Seller,
as the case may be, whether by merger, consolidation, sale of assets or securities or otherwise.
Subject to the foregoing, all of the terms and provisions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and assigns.



     12.05. Governing Law; Jurisdiction and Venue. This Agreement shall be construed in
accordance with and governed by the laws of The Commonwealth of Massachusetts, without regard to
the conflicts of law rules of such state. Each Party hereby agrees that, any proceeding relating to
this Agreement and the transactions contemplated hereby shall be brought in a state or federal
court located in The Commonwealth of Massachusetts. Each Party hereby consents to personal
jurisdiction in any such action brought in any such Massachusetts state or federal court, consents
to service of process by registered mail made upon such Party and such Party’s agent and waives any
objection to venue in any such Massachusetts state or federal court and any claim that any such
Massachusetts state or federal court is an inconvenient forum.



     12.06. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
ANCILLARY DOCUMENTS. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS



58









 







REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE ANCILLARY DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.06.



     12.07. Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective when each Party
hereto shall have received a counterpart hereof signed by the other Party hereto. Any signature
page delivered by a facsimile machine or electronic mail is binding to the same extent as an
original signature page with regard to this Agreement, any Ancillary Document or any amendment
hereto or thereto.



     12.08. Entire Agreement. This Agreement, together with the Disclosure Schedule and
Exhibits attached hereto, the Ancillary Documents, the Letter Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein has been made or
relied upon by either Party hereto.



     12.09. Bulk Sales Laws. Buyer and Seller each hereby waive compliance by Seller with
the provisions of the “bulk sales”, “bulk transfer” or similar laws of any state.



     12.10. Severability. This Agreement shall be deemed severable and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof.



     12.11. Headings. The article and section headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or interpretation of this
Agreement or of any term or provision hereof.



     12.12. Terms. All references herein to Articles, Sections, Disclosure Schedules and
Exhibits shall be deemed references to such parts of this Agreement, unless the context shall
otherwise require. All references to singular or plural shall include the other as the context may
require. Unless otherwise expressly stated, the words “herein,” “hereof,” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any particular Section,
Subsection or other subdivision. The words “include” and “including” shall not be construed as
terms of limitation.



     12.13. No Third Party Beneficiaries. Except as expressly contemplated in this
Agreement, this Agreement shall be binding upon and inure solely to the benefit of each Party
hereto and nothing in this Agreement is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.



59









 





     12.14. Captions. The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof.



[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]




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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	TOLLGRADE COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Sara M. Antol
 	 
	 	 	Name:  	Sara M. Antol 	 
	 	 	Title:  	General Counsel & Secretary 	 
	 
	 	TERADYNE, INC.

 	 
	 	By:  	/s/ Gregory R. Beecher
 	 
	 	 	Name:  	Gregory R. Beecher 	 
	 	 	Title:  	VP, CFO & Treasurer