**Exhibit4.2**

 

**ExecutionCopy**

** **

**PURCHASE AND SALE AGREEMENT**

** **

**among**

** **

**UNOVA, INC.**

** **

**UNOVA INDUSTRIALAUTOMATION SYSTEMS, INC.**

** **

**UNOVA IP CORP.**

** **

**UNOVA UK LIMITED**

** **

**and**

** **

**COMPAGNIE DE FIVES-LILLE**

** **

**CINETIC LANDIS GRINDING CORP.**

** **

**CINETIC LANDIS GRINDING LIMITED**

 

Dated:  October 27,2005

 

----

 

***INDEX OF DEFINEDTERMS***

*** ***
| ***A***                                | *** *** |
|----------------------------------------|--------------|
| *** ***                           | *** *** |
| Accounts                               |         |
| Accounts Date                          |         |
| Acquisition Proposal                   |         |
| Acquisition Proposals                  |         |
| Actual Completion Date                 |         |
| Affiliate                              |         |
| Affiliated Group                       |         |
| Agreement                              |         |
| Agreement Adjustments                  |         |
| Agreement Date                         |         |
| Approved                               |         |
| Assets Held for Sale                   |         |
| Assumed Liabilities                    |         |
| Assurances                             |         |
|                                   |         |
| ***B***                                | *** *** |
| *** ***                           | *** *** |
| Business                               |         |
| Buyer UK                               |         |
| Buyer US                               |         |
| Buyer US’s 401(k) Plan       |         |
| Buying Indemnified Parties             |         |
|                                   |         |
| ***C***                                | *** *** |
| *** ***                           | *** *** |
| Cap                                    |         |
| CFL                                    |         |
| Claim Threshold                        |         |
| Closing                                |         |
| Closing Balance Sheet                  |         |
| COBRA                                  |         |
| Code                                   |         |
| Company                                |         |
| Competitive Business                   |         |
| Confidentiality Agreement              |         |
| consultants                            |         |
| Contaminants                           |         |
| Continuing Employees                   |         |
| Contracts                              |         |
| Contribution Rate                      |         |
|                                   |         |
| ***D***                                | *** *** |
| *** ***                           | *** *** |
| De Minimis Settlement                  |         |
| Deadline Date                          |         |
| December Balance Sheet            |         |
| December Financials               |         |
| Direct Litigation Option               |         |
| DOJ                                    |         |
| Downward Net Working Asset Adjustment  |         |
|                                   |         |
| ***E***                                | *** *** |
| *** ***                           | *** *** |
| Election                               |         |
| employee benefit plan                  |         |
| Employee Benefit Plans                 |         |
| Employees                              |         |
| Employment Liabilities                 |         |
| Environmental Laws                     |         |
| Environmental Liabilities              |         |
| Environmental Permits                  |         |
| ERISA                                  |         |
| ERISA Plan                             |         |
| Estimated Net Working Asset Adjustment |         |
| Excluded Assets                        |         |
| Excluded Contracts                     |         |
| Excluded Liabilities                   |         |
| Extended Deadline Date                 |         |
|                                   |         |
| ***F***                                | *** *** |
| *** ***                           | *** *** |
| Financial Statements                   |         |
| Freehold Property                      |         |
| FSSP                                   |         |
| FSSP/UPP Transition Period             |         |
| FTC                                    |         |
|                                   |         |
| ***G***                                | *** *** |
| *** ***                           | *** *** |
| GAAP                                   |         |
| Governmental Body                      |         |
|                                   |         |
| ***H***                                | *** *** |
| *** ***                           | *** *** |
| Hazardous Substance                    |         |
| HSR Act                                |         |
| HSR Filing                             |         |
|                                   |         |
| ***I***                                | *** *** |
| *** ***                           | *** *** |
| ICC                                    |         |
| Indebtedness                           |         |
| Indemnified Party                      |         |
| Indemnifying Party                     |         |
| Indemnifying Purchasing Entities       |         |
| Indemnifying Selling Entities          |         |
| independent contractors                |         |
| Independent Firm                       |         |
| Intellectual Property                  |         |
| Interested Person                      |         |

 

i

----

 
| Investigation Period              |         |
|-----------------------------------|--------------|
| IRS                               |         |
| IT System                         |         |
|                              |         |
| ***J***                           | *** *** |
| *** ***                      | *** *** |
| June Balance Sheet           |         |
| June Balance Sheet Date      |         |
| June Financials              |         |
|                              |         |
| ***K***                           | *** *** |
| *** ***                      | *** *** |
| knowledge                         |         |
|                              |         |
| ***L***                           | *** *** |
| *** ***                      | *** *** |
| Landis Group                      |         |
| Landis Pension Plan               |         |
| Landlord’s Consent           |         |
| Law                               |         |
| Leased Personal Property          |         |
| Leased Real Property              |         |
| Leasehold Property                |         |
| Legally Required Statement        |         |
| LIBOR                             |         |
| Lien                              |         |
| Liens                             |         |
| Loss                              |         |
| Losses                            |         |
|                              |         |
| ***M***                           | *** *** |
| *** ***                      | *** *** |
| MAG                               |         |
| material adverse change           |         |
| material adverse effect           |         |
| multiemployer plan                |         |
|                              |         |
| ***N***                           | *** *** |
| *** ***                      | *** *** |
| Net Working Asset Target          |         |
| Net Working Assets                |         |
| Non-Compete Term                  |         |
| Note                              |         |
| Note Claim                        |         |
| NPL                               |         |
|                              |         |
| ***O***                           | *** *** |
| *** ***                      | *** *** |
| operating lease                   |         |
| Owned Real Property               |         |
|                              |         |
| ***P***                           | *** *** |
| *** ***                      | *** *** |
| Parties                           |         |
| Party                             |         |
| Performance Bonds                 |         |
| Permit                            |         |
| Permitted Lien                    |         |
| Permitted Liens                   |         |
| Person                            |         |
| Phase 1 Report               |         |
| Preliminary Closing Balance Sheet |         |
| Product Liability                 |         |
| Purchase Orders                   |         |
| Purchase Price                    |         |
| Purchased Assets                  |         |
| Purchased Contracts               |         |
| Purchasing Entities               |         |
|                              |         |
| ***R***                           | *** *** |
| *** ***                      | *** *** |
| Real Property                     |         |
| reasonable endeavors              |         |
| Registered Properties             |         |
| Related Agreements                |         |
| Required Consents                 |         |
| Retiree Medical Plan              |         |
|                              |         |
| Review Period                     |         |
|                              |         |
| ***S***                           | *** *** |
| *** ***                      | *** *** |
| Sales Order                       |         |
| Sales Orders                      |         |
| Schedule of Contributions    |         |
| Section 1060 Allocation      |         |
| Securities Act                    |         |
| Seller Names                      |         |
| Selling Entities                  |         |
| Selling Indemnified Parties       |         |
| South Beloit Facility             |         |
| Statement of Objections           |         |
|                              |         |
| ***T***                           | *** *** |
| *** ***                      | *** *** |
| Tax Returns                       |         |
| Taxes                             |         |
| Third Party Claim                 |         |
| Threshold                         |         |
| transaction                       |         |
| Transactions                      |         |
| Transfer Date                     |         |
| Transfer Regulations              |         |
| Transferring Members              |         |
| Transition Services Agreement     |         |
| TUPE Transfer                     |         |
|                              |         |
| ***U***                           | *** *** |
| *** ***                      | *** *** |
| U.K. Properties                   |         |
| UIASI                             |         |
| UK Asset Sale                     |         |
| UK Employee                       |         |
| UK Landis Group                   |         |
| UK Pension Plan                   |         |
| UK Purchased Assets               |         |
| UNOVA                             |         |
| UNOVA IP                          |         |

 

ii

----

 
| UNOVA UK                            |         |
|-------------------------------------|--------------|
| UNOVA’s Broker                 |         |
| UPP                                 |         |
| Upward Net Working Asset Adjustment |         |
| US Asset Sale                       |         |
| US Employees                   |         |
| US Landis Group                     |         |
| US Purchased Assets                 |         |
|                                |         |
| ***V***                             | *** *** |
| *** ***                        | *** *** |
| Valuation                           |         |
| VAT                                 |         |
| VATA                                |         |
|                                |         |
| ***W***                             | *** *** |
| *** ***                        | *** *** |
| WARN Act                            |         |
| Waynesboro Facility                 |         |
| WSJ RATE                            |         |

 

iii

----

 

***CONTENTS***

 
| ARTICLE 1.  The Transactions                                       |   |
|-------------------------------------------------------------------------|--------|
|                                                                    | 1.1    | Transfer of  Assets |   |
|                                                                    | 1.2    | Excluded Assets |   |
|                                                                    | 1.3    | [Reserved] |   |
|                                                                    | 1.4    | Consideration |   |
|                                                                    | 1.5    | Purchase  Price and Payment; Deliveries at the Closing |   |
|                                                                    |   | (a) | Purchase Price |   |
|                                                                    |   | (b) | Payment of  Purchase Price |   |
|                                                                    |   | (c) | Deliveries  at the Closing |   |
|                                                                    |   | (d) | Purchase  Price Allocation |   |
|                                                                    | 1.6    | Assumed  Liabilities |   |
|                                                                    | 1.7    | Excluded  Liabilities |   |
|                                                                    | 1.8    | Transfer  of English Owned Real Property and Obtaining English Reversioner’s Consent |   |
|                                                                    |   | (a) | Matters  Affecting the U.K. Properties |   |
|                                                                    |   | (b) | Landlord’s  Consents |   |
|                                                                    |   | (c) | Completion |   |
|                                                                    |   | (d) | Further  Completion |   |
|                                                                    |   | (e) | Assurances |   |
|                                                                    | 1.9    | Closing  Balance Sheet |   |
|                                                                    |   | (a) | Definition  of Closing Balance Sheets |   |
|                                                                    |   | (b) | Preliminary  Closing Balance Sheets |   |
|                                                                    |   | (c) | Review  of Preliminary Closing Balance Sheet |   |
|                                                                    |   | (d) | Finalization  of Closing Balance Sheet |   |
|                                                                    |   | (e) | Net  Working Asset Payment |   |
|                                                                    |   | (f) | Limitations  on Certain Claims |   |
|                                                                    | 1.10   | Right to  Contest |   |
|                                                                    | 1.11   | Nonassignable  Contracts and Rights |   |
|                                                                    | 1.12   | Value Added Tax |   |
|                                                                    | 1.13   | UK Employees |   |
|                                                                    |   |   |   |   |
| ARTICLE 2.  Closing and Transfer Date                              |   |
|                                                                    | 2.1    | Closing |   |
|                                                                    | 2.2    | Notice  and Right to Cure |   |
|                                                                    |   |   |   |   |
| ARTICLE 3.  Representations and Warranties of the Selling Entities |   |
|                                                                    | 3.1    | Corporate Matters |   |
|                                                                    |   | (a) | Due  Organization, Good Standing and Qualification |   |
|                                                                    |   | (b) | Corporate  Authority to Conduct Business |   |
|                                                                    |   | (c) | Corporate  Power and Authority to Enter Into Agreements |   |
|                                                                    |   | (d) | Due Execution  and Enforceability |   |
|                                                                    |   | (e) | No  Conflict |   |
|                                                                    |   | (f) | Subsidiaries  and Other Equity Investments |   |
|                                                                    |   | (g) | Certain Additional  Matters |   |

 

i

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|   |   | (h)                                                                                           | UNOVA UK Insolvency  Matters                                       |   |
|--------|--------|-----------------------------------------------------------------------------------------------|--------------------------------------------------------------------|--------|
|   | 3.2    | Financial  Statements; Undisclosed Liabilities                                                |                                                               |
|   |   | (a)                                                                                           | December Financials                                           |   |
|   |   | (b)                                                                                           | June Financials                                               |   |
|   |   | (c)                                                                                           | UNOVA  UK’s Accounts                                          |   |
|   |   | (d)                                                                                           | Undisclosed  Liabilities                                           |   |
|   |   | (e)                                                                                           | Events  Subsequent to June Balance Sheet                      |   |
|   | 3.3    | Accounts Receivable                                                                           |                                                               |
|   | 3.4    | Inventories and  Assets                                                                       |                                                               |
|   | 3.5    | Absence of  Liens and Encumbrances                                                            |                                                               |
|   | 3.6    | Real  Property                                                                                |                                                               |
|   |   | (a)                                                                                           | Real  Property                                                     |   |
|   |   | (b)                                                                                           | Realty Leases (as  Lessor)                                         |   |
|   |   | (c)                                                                                           | Realty Leases (as  Lessee)                                         |   |
|   |   | (d)                                                                                           | [Reserved]                                                         |   |
|   |   | (e)                                                                                           | Violation  of Laws or Restrictive Covenants                        |   |
|   |   | (f)                                                                                           | Environmental Matters                                              |   |
|   |   | (g)                                                                                           | Real Estate  Liens or Encumbrances                                 |   |
|   | 3.7    | Right to  Use Properties and Assets                                                           |                                                               |
|   | 3.8    | Contracts and  Commitments                                                                    |                                                               |
|   |   | (a)                                                                                           | Sales Orders,  Bids and Proposals                                  |   |
|   |   | (b)                                                                                           | Purchase  Orders                                                   |   |
|   |   | (c)                                                                                           | Sales  Representative, Distributor and Dealer Agreements           |   |
|   |   | (d)                                                                                           | Personal  Property Leases (As Lessee)                              |   |
|   |   | (e)                                                                                           | Noncompetition  Agreements or Covenants                            |   |
|   |   | (f)                                                                                           | Confidential  Nondisclosure Agreements                             |   |
|   |   | (g)                                                                                           | Consultants  and Consultant Agreements                             |   |
|   |   | (h)                                                                                           | Indebtedness;  Guarantees                                          |   |
|   |   | (i)                                                                                           | Powers of Attorney,  Proxies                                       |   |
|   |   | (j)                                                                                           | Letters of  Credit, Surety, Bid and Performance Bonds              |   |
|   |   | (k)                                                                                           | Joint Venture  Agreements                                          |   |
|   |   | (l)                                                                                           | Other Material  Contracts                                          |   |
|   |   | (m)                                                                                           | [Reserved]                                                         |   |
|   |   | (n)                                                                                           | Restrictive Contracts                                              |   |
|   | 3.9    | Patents,  Trade Names, Trademarks, Service Marks, Copyrights and Chip Registrations           |                                                               |
|   |   | (a)                                                                                           | Intellectual  Property Rights                                      |   |
|   |   | (b)                                                                                           | Licenses of  Intellectual Property Rights To or From Third Parties |   |
|   |   | (c)                                                                                           | No  Infringement                                                   |   |
|   | 3.10   | Patent,  Trade Name, Trademark, Service Mark, Copyright or Chip Registration  Indemnification |                                                               |
|   | 3.11   | Confidential  Information or Trade Secrets                                                    |                                                               |
|   | 3.12   | Products  and Service Warranties                                                              |                                                               |
|   |   | (a)                                                                                           | Products                                                           |   |
|   |   | (b)                                                                                           | Service  Warranties                                                |   |

 

ii

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|                                                                   | 3.13   | Employees;  Employee Benefits                                          |                                                   |
|------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------------------------------------------------------|
|                                                                   |   | (a)                                                                    | Employees                                              |   |
|                                                                   |   | (b)                                                                    | Employment Contracts                                   |   |
|                                                                   |   | (c)                                                                    | Severance                                              |   |
|                                                                   |   | (d)                                                                    | Indebtedness to  Employees                             |   |
|                                                                   |   | (e)                                                                    | Loans or Advances  to Employees                        |   |
|                                                                   |   | (f)                                                                    | Collective  Bargaining Agreements                      |   |
|                                                                   |   | (g)                                                                    | Independent  Contractors                               |   |
|                                                                   |   | (h)                                                                    | Commitments                                            |   |
|                                                                   |   | (i)                                                                    | Employment  history                                    |   |
|                                                                   |   | (j)                                                                    | Other  Labor Matters                                   |   |
|                                                                   |   | (k)                                                                    | Employee Benefit Plans                                 |   |
|                                                                   |   | (l)                                                                    | ERISA  Plans                                           |   |
|                                                                   |   | (m)                                                                    | UK  Pension Plans                                      |   |
|                                                                   | 3.14   | Pending or  Threatened Claims, Litigation and Governmental Proceedings |                                                   |
|                                                                   | 3.15   | Judgments,  Orders and Consent Decrees                                 |                                                   |
|                                                                   | 3.16   | Compliance With Laws                                                   |                                                   |
|                                                                   | 3.17   | Franchises,  Permits, Etc.                                             |                                                   |
|                                                                   | 3.18   | Taxes                                                                  |                                                   |
|                                                                   | 3.19   | Governmental  Authorizations; Consents                                 |                                                   |
|                                                                   | 3.20   | No Breach of  Statute or Contract                                      |                                                   |
|                                                                   | 3.21   | Insurance                                                              |                                                   |
|                                                                   | 3.22   | Customers and  Suppliers                                               |                                                   |
|                                                                   | 3.23   | Transactions  with Affiliates; Intercompany Arrangements               |                                                   |
|                                                                   | 3.24   | Broker’s or  Finder’s Fees                                   |                                                   |
|                                                                   | 3.25   | Grants and  Allowances                                                 |                                                   |
|                                                                   | 3.26   | Sufficiency  of Purchased Assets                                       |                                                   |
|                                                                   | 3.27   | No Other  Representations                                              |                                                   |
|                                                                   | 3.28   | Disclosure                                                             |                                                   |
|                                                                   |   |                                                                   |                                                   |   |
| ARTICLE 4.  Representations and Warranties of Purchasing Entities |   |
|                                                                   | 4.1    | Corporate Matters                                                      |                                                   |
|                                                                   |   | (a)                                                                    | Due  Organization                                      |   |
|                                                                   |   | (b)                                                                    | Corporate  Power and Authority to Enter Into Agreement |   |
|                                                                   |   | (c)                                                                    | Due Execution  and Enforceability                      |   |
|                                                                   |   | (d)                                                                    | No  Conflict                                           |   |
|                                                                   | 4.2    | Required Consents                                                      |                                                   |
|                                                                   | 4.3    | Claims,  Litigation and Governmental Proceedings                       |                                                   |
|                                                                   | 4.4    | Broker’s or Finder’s  Fees                                   |                                                   |
|                                                                   | 4.5    | Available  Funds                                                       |                                                   |
|                                                                   |   |                                                                   |                                                   |   |
| ARTICLE 5.  Certain Covenants Pending the Closing                 |   |
|                                                                   | 5.1    | Full  Access                                                           |                                                   |
|                                                                   | 5.2    | Carry On In  Regular Course                                            |                                                   |
|                                                                   | 5.3    | Consents;  HSR                                                         |                                                   |

 

iii

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|                                                                                         | 5.4    | Notices of  Certain Events; Continuing Disclosure |   |
|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                                         | 5.5    | Supplements to  Disclosure                        |   |
|                                                                                         | 5.6    | Conditions Precedent                              |   |
|                                                                                         | 5.7    | Nondisclosure                                     |   |
|                                                                                         | 5.8    | Reorganization  of U.K. Pension Plans             |   |
|                                                                                         | 5.9    | Assumption  of Retiree Medical Plan               |   |
|                                                                                         |   |                                              |   |   |
| ARTICLE 6.  Conditions Precedent to the Obligations of the Purchasing Entities to Close |   |
|                                                                                         | 6.1    | Representations  and Warranties True              |   |
|                                                                                         | 6.2    | Compliance With  Agreement                        |   |
|                                                                                         | 6.3    | No Material  Adverse Change                       |   |
|                                                                                         | 6.4    | No  Litigation                                    |   |
|                                                                                         | 6.5    | [Reserved]                                        |   |
|                                                                                         | 6.6    | Consents and  Approvals                           |   |
|                                                                                         | 6.7    | Instruments of  Transfer                          |   |
|                                                                                         | 6.8    | [Reserved]                                        |   |
|                                                                                         | 6.9    | Opinion of Counsel                                |   |
|                                                                                         | 6.10   | Amendment  to MAG Transition Services Agreement   |   |
|                                                                                         | 6.11   | Transition  Services Agreement                    |   |
|                                                                                         | 6.12   | Title                                             |   |
|                                                                                         | 6.13   | Leases                                            |   |
|                                                                                         | 6.14   | Discharge  of Indebtedness; Release of Liens      |   |
|                                                                                         | 6.15   | [Reserved]                                        |   |
|                                                                                         | 6.16   | [Reserved]                                        |   |
|                                                                                         | 6.17   | UK Pension Plans                                  |   |
|                                                                                         | 6.18   | Other                                             |   |
|                                                                                         | 6.19   | Closing  Conditions for UNOVA UK                  |   |
|                                                                                         | 6.20   | Benefit of  Letters of Credit                     |   |
|                                                                                         |   |                                              |   |   |
| ARTICLE 7.  Conditions Precedent to the Obligations of the Selling Entities to Close    |   |
|                                                                                         | 7.1    | Representations  and Warranties True              |   |
|                                                                                         | 7.2    | Compliance With  Agreement                        |   |
|                                                                                         | 7.3    | No  Litigation                                    |   |
|                                                                                         | 7.4    | [Reserved]                                        |   |
|                                                                                         | 7.5    | Consents and  Approvals                           |   |
|                                                                                         | 7.6    | Purchase  Price                                   |   |
|                                                                                         | 7.7    | Note                                              |   |
|                                                                                         | 7.8    | Instruments of  Assumption                        |   |
|                                                                                         | 7.9    | Performance Bonds                                 |   |
|                                                                                         | 7.10   | Leases                                            |   |
|                                                                                         | 7.11   | Other                                             |   |
|                                                                                         | 7.12   | Transition Services Agreement                     |   |
|                                                                                         |   |                                              |   |   |
| ARTICLE 8.  Further Requirements                                                        |   |
|                                                                                         | 8.1    | Access to Books  and Records                      |   |

 

iv

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|                                      | 8.2    | Further  Instruments and Assurances      |                                         |
|-------------------------------------------|--------|------------------------------------------|----------------------------------------------|
|                                      | 8.3    | Litigation  Cooperation                  |                                         |
|                                      | 8.4    | Certain Employee  Matters                |                                         |
|                                      |   | (a)                                      | Employment                                   |   |
|                                      |   | (b)                                      | Certain Employee Benefits                    |   |
|                                      |   |                                     | (i)                                          | Past  Service Credit |   |
|                                      |   |                                     | (ii)                                         | Benefits  under the Selling Entities’ Plans |   |
|                                      |   |                                     | (iii)                                        | U.S. Medical and  Health Plan |   |
|                                      |   |                                     | (iv)                                         | Buyer  US’s 401(k) Plan |   |
|                                      |   | (c)                                      | WARN Act                                     |   |
|                                      | 8.5    | Use of UNOVA Name  and Mark              |                                         |
|                                      | 8.6    | Exclusivity                              |                                         |
|                                      | 8.7    | Taxes                                    |                                         |
|                                      |   | (a)                                      | Taxes  Relating to the Business and UNOVA UK |   |
|                                      |   | (b)                                      | Transfer  Taxes                              |   |
|                                      |   | (c)                                      | Employment  Taxes                            |   |
|                                      |   | (d)                                      | Stock  Options                               |   |
|                                      |   | (e)                                      | Tax  Treatment                               |   |
|                                      |   | (f)                                      | Interpretation                               |   |
|                                      | 8.8    | Settlement  of Intercompany Accounts     |                                         |
|                                      | 8.9    | Intellectual Property Registrations      |                                         |
|                                      | 8.10   | Authorization; Mail                      |                                         |
|                                      | 8.11   | Post-Closing  Cooperation                |                                         |
|                                      | 8.12   | Purchased  Assets Not Transferred        |                                         |
|                                      | 8.13   | Confidentiality                          |                                         |
|                                      | 8.14   | Performance Bonds                        |                                         |
|                                      | 8.15   | Claim Cooperation                        |                                         |
|                                      |   |                                     |                                         |   |
| ARTICLE 9.  Noncompetition Agreement |   |
|                                      | 9.1    | Noncompetition  Agreement                |                                         |
|                                      | 9.2    | Limitations  on Noncompetition Agreement |                                         |
|                                      | 9.3    | Definition  of Competitive Business      |                                         |
|                                      | 9.4    | Nonsolicitation                          |                                         |
|                                      | 9.5    | Injunctive  and Equitable Relief         |                                         |
|                                      |   |                                     |                                         |   |
| ARTICLE 10.  Termination             |   |
|                                      | 10.1   | Termination                              |                                         |
|                                      | 10.2   | Notice of  Termination                   |                                         |
|                                      | 10.3   | Effect of  Termination                   |                                         |
|                                      |   |                                     |                                         |   |
| ARTICLE 11.  Indemnification         |   |
|                                      | 11.1   | Indemnification  by the Selling Entities |                                         |
|                                      |   | (a)                                      | Misrepresentation  or Breach of Warranty     |   |
|                                      |   | (b)                                      | Breach of  Covenant or Agreement             |   |
|                                      |   | (c)                                      | Excluded Liabilities                         |   |
|                                      |   | (d)                                      | Pension Liabilities                          |   |
|                                      |   | (e)                                      | Bulk  Sales                                  |   |

 

v

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|                                       |   | (f)                                           | UK  Employees                            |                             |
|--------------------------------------------|--------|-----------------------------------------------|------------------------------------------|----------------------------------|
|                                       | 11.2   | Indemnification  by Purchasing Entities       |                                     |
|                                       |   | (a)                                           | Misrepresentation  or Breach of Warranty |                             |
|                                       |   | (b)                                           | Breach of  Covenant or Agreement         |                             |
|                                       |   | (c)                                           | Assumed Liabilities                      |                             |
|                                       |   | (d)                                           | Operations of the  Business              |                             |
|                                       |   | (e)                                           | Performance  Bonds; Letters of Credit    |                             |
|                                       |   | (f)                                           | UK  Employees                            |                             |
|                                       |   | (g)                                           | Pension Liabilities                      |                             |
|                                       | 11.3   | Claims for  Reimbursement                     |                                     |
|                                       | 11.4   | Defense and  Settlement of Third Party Claims |                                     |
|                                       | 11.5   | [Reserved]                                    |                                     |
|                                       | 11.6   | Limitations  on Indemnification               |                                     |
|                                       |   | (a)                                           | Duration                                 |                             |
|                                       |   | (b)                                           | Amount                                   |                             |
|                                       |   |                                          | (i)                                      | Basket                           |   |
|                                       |   |                                          | (ii)                                     | Cap                              |   |
|                                       |   |                                          | (iii)                                    | No Limitation  on Certain Claims |   |
|                                       |   | (c)                                           | Other  Limitations                       |                             |
|                                       |   | (d)                                           | Duty to Mitigate  Damages                |                             |
|                                       |   | (e)                                           | No  Double Recovery                      |                             |
|                                       |   | (f)                                           | No  Waiver                               |                             |
|                                       |   | (g)                                           | Set-Off  Against Note                    |                             |
|                                       | 11.7   | Exclusive Remedy                              |                                     |
|                                       |   |                                          |                                     |                             |
| ARTICLE 12.  Miscellaneous Provisions |   |
|                                       | 12.1   | Public  Statements and Press Releases         |                                     |
|                                       | 12.2   | Costs and Expenses                            |                                     |
|                                       | 12.3   | Amendment and  Modification                   |                                     |
|                                       | 12.4   | No  Assignment                                |                                     |
|                                       | 12.5   | Notices                                       |                                     |
|                                       |   | (a)                                           | The Selling Entities                     |                             |
|                                       |   | (b)                                           | A  Purchasing Entity                     |                             |
|                                       | 12.6   | Counterparts  and Facsimile                   |                                     |
|                                       | 12.7   | Captions                                      |                                     |
|                                       | 12.8   | Schedules and  Exhibits                       |                                     |
|                                       | 12.9   | Waiver; Remedies                              |                                     |
|                                       | 12.10  | Governing  Law and Jurisdiction               |                                     |
|                                       | 12.11  | Resolution of  Disputes                       |                                     |
|                                       | 12.12  | Severability                                  |                                     |
|                                       | 12.13  | No Third  Party Beneficiaries                 |                                     |
|                                       | 12.14  | Construction                                  |                                     |
|                                       | 12.15  | Entire Agreement                              |                                     |
|                                       | 12.16  | Currency                                      |                                     |

 

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**PURCHASE AND SALE AGREEMENT**

 

This Purchase and Sale Agreement (this “***Agreement***“) is made and entered intoon and as of the 27th day of October, 2005 (the “***AgreementDate***“), among UNOVA, Inc. (“***UNOVA***“),a Delaware corporation; UNOVA Industrial Automation Systems, Inc. (“***UIASI***“), a Delaware corporation anda wholly-owned subsidiary of UNOVA; UNOVA IP Corp. (“***UNOVAIP***“), a Delaware corporation and a wholly-owned subsidiary ofUIASI; UNOVA UK Limited (“***UNOVA UK***“)a company registered in England under Registration Number 1218921 and a wholly-ownedsubsidiary of UNOVA, (UNOVA, UIASI, UNOVA IP and UNOVA UK are sometimesreferred to collectively as the “***Selling Entities***“);and Compagnie de Fives-Lille, a French corporation (“***CFL***“), Cinetic Landis Grinding Corp. (“***Buyer US***“),a Delaware corporation and Cinetic Landis Grinding Limited (“***Buyer UK***“), a United Kingdomcorporation.  CFL, Buyer US and Buyer UKare sometimes referred to collectively as the “***PurchasingEntities***“.  Each of theSelling Entities and each of the Purchasing Entities are sometimes referred tocollectively as the “***Parties***“and individually as a “***Party***.”

 

**W I TN E S S E T H:**

 

WHEREAS, the “***Landis Group***“is comprised of the following operating divisions of UNOVA:  the Landis Grinding Systems, GardnerAbrasives, and CITCO divisions of UIASI (the “***USLandis Group***“); and the Landis Lund and Cranfield Precisiondivisions of UNOVA UK (the “***UK Landis Group***“);

 

WHEREAS, the Landis Group is engaged in the design,manufacture, sale and service of grinding and abrasives systems for camshaft,crankshaft, centerless and disc grinder machines and other special highprecision machine tools, including high speed grinding spindles, highlyengineered diamond and cBN® cutting tools, superabrasive wheels and dressingproducts (such activity as carried on by the Landis Group is referred to as the“***Business***“);

 

WHEREAS, Buyer US desires to purchase from the SellingEntities, and the Selling Entities desire to sell to Buyer US, substantiallyall of the assets, subject to the assumption of specified liabilities, of theUS Landis Group (the “***US Purchased Assets***“)upon the terms and conditions set forth in this Agreement (the “***US Asset Sale***“);

 

WHEREAS, Buyer UK desires to purchase from UNOVA UK,and UNOVA UK desires to sell to Buyer UK, substantially all of the assets,subject to the assumption of specified liabilities of the UK Landis Group (the “***UK Purchased Assets***“), as a goingconcern, upon the terms and conditions set forth in this Agreement (the “***UK Asset Sale***“);

 

WHEREAS, the US Asset Sale and the UK Asset Sale aresometimes referred to collectively herein as the “***Transactions***“;

 

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NOW, THEREFORE, in consideration of the premises andthe mutual benefits to be derived from this Agreement and the Transactionsprovided for in this Agreement, the Parties agree as follows:

 

**ARTICLE 1.The Transactions**

 

**1.1****                               Transferof Assets**

 

Except as otherwise provided in Section 1.2,effective as of the “***Transfer Date***“(as defined in Article 2), the Selling Entities shall sell, transfer,assign, grant, convey and deliver as legal and beneficial owner to Buyer US inrespect of the US Purchased Assets and to Buyer UK in respect of the UKPurchased Assets, free and clear of all “***Liens***“other than “***Permitted Liens***“ (as suchterms are defined in Section 3.5), all of their right, title and interestin and to their properties, rights and assets of every kind, nature anddescription, whether real or personal, tangible or intangible, and whereversituated, to the extent the same are used or held for use primarily orexclusively in the operation of the Business, including all assets shown on theJune Balance Sheet (as defined in Section 3.2(b)) and not disposed ofin the ordinary course of business since June 30, 2005 (the “***June Balance Sheet Date***“), andall assets of the Business acquired by the Selling Entities between the June BalanceSheet Date and the Transfer Date, (such properties, rights and assets arereferred to as the “***Purchased Assets***“).  In the case of any of the Purchased Assetswhich are capable of transfer by delivery, title to that Purchased Asset shallpass to the relevant Purchasing Entity by delivery.  Except as otherwise provided in Section 1.2,the Purchased Assets shall include, without limitation, all of the followingproperty, rights and assets of the Selling Entities used primarily orexclusively in the Business:

 

(a)                                  Allbilled and unbilled accounts receivable, including without limitation, alltrade accounts receivable, notes receivable from customers, supplier creditsand all other obligations from customers with respect to sale of goods orservices, together with any unpaid interest or fees accrued thereon or otheramounts due with respect thereto, and any security or collateral therefor,including recoverable advances and deposits;

 

(b)                                 Allland, buildings, leaseholds, leasehold improvements and other interests inrealty, including without limitation the “***Owned Real Property***“(as defined in Section 3.6(a)) other than the South Beloit Facility (asdefined in Section 1.2(m)) and the Waynesboro Facility (as defined in Section 1.2(n)),and all improvements, fixtures and fittings thereon, and easements, servitudes,rights-of-way and other appurtenances thereto (such as appurtenant rights inand to public streets);

 

(c)                                  Allmachinery and equipment, including test equipment and fully depreciatedequipment;

 

(d)                                 Alltools, dies, molds and other tooling, including any rights in respect of tools,dies, molds and other tooling in the possession of others;

 

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(e)                                  Allsupplies and other consumables on hand;

 

(f)                                    Allinventory, including raw materials, work-in-process, finished goods, spareparts, replacement and component parts, and samples;

 

(g)                                 Allrights, if any, in any customer furnished materials;

 

(h)                                 Allmotor vehicles;

 

(i)                                     Alltransportation and packing and delivery equipment, materials and supplies;

 

(j)                                     Alloffice equipment and supplies;

 

(k)                                  Alloffice furniture and furnishings;

 

(l)                                     Allindemnity, fidelity and contract bonds issued by third parties in favor of the SellingEntities, and which are set forth on **Schedule 1.1(l)**;

 

(m)                               Allcauses of action, suits, judgments, claims and demands of any nature;

 

(n)                                 Alltransferable franchises, licenses, approvals, permits and other authorizationsissued or granted by any “***Governmental Body***“(as defined in Section 3.1(e));

 

(o)                                 Allcomputer equipment, including all hardware and software, and communicationsequipment (including, without limitation, the transfer of Autocad without costto the Purchasing Entities);

 

(p)                                 Allresearch, engineering and technical designs, specifications, drawings,databases, know-how, research and development files, laboratory books andinformation;

 

(q)                                 Alllists and information pertaining to customers, suppliers, distributors, salesand purchasing agents and personnel;

 

(r)                                    Allpatents, registered designs, utility models, patent applications, trademarks,trademark applications, trade names, domain names, service marks, logos,copyrights, chip registrations, licenses, processes, inventions, formulae,trade secrets and royalties, including all registrations, applications andrelated international priority rights and all rights to sue for pastinfringement, including, without limitation, the names or brands “Landis”, “LandisCincinnati”, “Landis Gardner”, “Gardner Abrasives”, “CITCO”, “Goldcrown”, “LandisLund” and “CRANFIELD PRECISION”;

 

(s)                                  Allmanufacturer and seller warranties on any goods, fixtures, or services providedto the Selling Entities;

 

(t)                                    Allprepaid items and expenses, rights of offset and credits of all kinds,including any such items and expenses with respect to leases and rentals;

 

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(u)                                 Allbooks, records, files and papers, whether in hard copy or computer format,including but not limited to invoices, advertising materials, catalogs, pricelists, mailing lists, photographs, production data, sale and promotionalmaterials and records, purchasing materials and records and documentationdeveloped or used for accounting, marketing, engineering, manufacturing or anyother purpose;

 

(v)                                 Allbids and sales and service proposals, including any rights to revoke orwithdraw the same;

 

(w)                               [Reserved];

 

(x)                                   Allutility, lease and similar deposits;

 

(y)                                 Allmedical, safety and health supplies;

 

(z)                                   Exceptfor any Excluded Contracts (as defined in Section 1.2(o)), all rightsunder all contracts, agreements, leases, licenses, commitments, sales andpurchase orders used by the Selling Entities or held by the Selling Entitiesfor use in connection with the Business, including, without limitation, thecontracts listed on **Schedules 3.8(a) **through**3.8(g) **and **Schedules3.8(i) **through** 3.8(l)**and including, for the avoidance of doubt, any contracts or agreements enteredby UNOVA UK under the name “Landis Lund” (the “***PurchasedContracts***“); and

 

(aa)                            Allgoodwill associated with the Business or the Purchased Assets together with theright to represent to third parties that the Purchasing Entities are thesuccessors to the Business.

 

**1.2****                               ExcludedAssets**

 

Notwithstanding anything in this Agreement to thecontrary, the Purchased Assets shall not include any right, title or interestin or to any of the following properties, rights or assets of the SellingEntities (collectively, the “***Excluded Assets***“):

 

(a)                                  Cash,cash equivalents and short-term securities;

 

(b)                                 Anyand all claims for refunds, carry backs or carry forwards of the SellingEntities in connection with “***Taxes***“ (asdefined in Section 3.18) and all Tax Returns and other documents filed bythe Selling Entities with any taxing authority;

 

(c)                                  Anyintercompany receivable balance due from UNOVA or any of its subsidiaries(other than intercompany trade receivables between the Landis Group);

 

(d)                                 Allinsurance policies and self-insurance programs and any coverage or other rightsunder such policies and self-insurance programs;

 

4

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(e)                                  Anyproperty or asset designated as “assets held for sale” on the books and recordsof the Selling Entities and which are set forth on **Schedule 1.2(e) **(collectively,the “***Assets Held for Sale***“);

 

(f)                                    Anyproperty, right or asset to the extent exclusively relating to any otherExcluded Asset or any of the “***Excluded Liabilities***“(as defined in Section 1.7);

 

(g)                                 Allassets of all “***Employee Benefit Plans***“ (asdefined in Section 3.13(k)), including assets held in trust, includingassets held in medical trusts, or insurance contracts for the benefit ofEmployee Benefit Plan participants or beneficiaries;

 

(h)                                 Allbooks, records, files and data pertaining to any of the Excluded Assets or anyof the Excluded Liabilities;

 

(i)                                     Subjectto Section 8.5, all rights in, to and under the name “UNOVA” and the logosof the Selling Entities other than those logos that are primarily orexclusively related to the Business (including, without limitation, any logoswith the names or brands listed in Section 1.1(r));

 

(j)                                     Anyrights of any of the Selling Entities under this Agreement;

 

(k)                                  Thefranchise of each of the Selling Entities to be a corporation and its articlesor certificate of incorporation, bylaws and other records pertaining to itscorporate existence, and all books and records of a nature required by “***Law***“ (as defined in Section 3.1(e))to be maintained by the Selling Entities, including all financial and taxrecords relating to the Business that form part of the Selling Entities’general ledger, provided that the Selling Entities shall make available forduplication at the Purchasing Entities’ expense copies of such financial andtax records as such documents exist as of the December Balance Sheet Date,the June Balance Sheet Date and the Transfer Date to the extent suchrecords are related to the Business and as reasonably requested by thePurchasing Entities;

 

(l)                                     Allshares of capital stock or other equity interests in any other Person (asdefined below) owned by the Selling Entities, including Honsberg LambSonderwekzeugmaschinen GmbH;

 

(m)                               Thereal property located at 481 Gardner Street, South Beloit, Illinois (the “***South Beloit Facility***“);

 

(n)                                 Thereal property located at 20 East Sixth Street, Waynesboro, Pennsylvania(the “***Waynesboro Facility***“); and

 

(o)                                 Allrights existing under each contract set forth on **Schedule 1.2(o)**(the “***Excluded Contracts***“).

 

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For purposes of this Agreement, “***Person***“shall mean and include an individual, a partnership, a corporation, a limitedliability company, a trust, a joint venture, an unincorporated organization andany “***Governmental Body***“ (as defined in Section 3.1(e)).

 

**1.3****                               [Reserved]**

 

**1.4****                               Consideration**

 

For and in consideration of the sale to the PurchasingEntities of the Purchased Assets, the Purchasing Entities shall (i) atClosing pay to UNOVA (as agent for the Selling Entities) the “***Purchase Price***“ (as defined in Section 1.5(a))in accordance with and to the extent provided in Section 1.5 and (ii) thePurchasing Entities shall, effective as of the Transfer Date, assume the “***Assumed Liabilities***“ (as defined in Section 1.6and as limited by Section 1.7).

 

**1.5****                               PurchasePrice and Payment; Deliveries at the Closing**

 

**(a)****                                  PurchasePrice**

 

The purchase price for the Purchased Assets is$79,000,000 plus the assumption of the Assumed Liabilities (the “***Purchase Price***“).  The Purchase Price is subject to furtheradjustment following the Closing in accordance with Section 1.9.  To the extent any Indebtedness (as defined inSection 3.8(h)) is assumed by the Purchasing Entities at the TransferDate, the amount of such Indebtedness shall be deducted from the PurchasePrice.  For purposes of this Section 1.5“***Indebtedness***“ means any contract,agreement or instrument under which any of the Selling Entities guarantees,endorses, or otherwise is, will or may become responsible for the obligationsor liabilities of any third party in respect of the Business for moneyborrowed, advances made or goods or services purchased (other than endorsementsfor collection of negotiable instruments).

 

**(b)****                                  Paymentof Purchase Price**

 

At the “***Closing***“(as defined in Section 2.1), the Purchasing Entities shall (i) payand remit to UNOVA (as agent for the Selling Entities) $69,000,000 in cash(less any Indebtedness to be deducted pursuant to Section 1.5(a)) via wiretransfers of immediately available funds to UNOVA’s bank accounts as indicatedin **Schedule 1.5(b)**, (ii) deliverto UNOVA a promissory note in the principal amount of $10,000,000 (the “***Note***“) substantially in the formattached hereto as **Exhibit A**and (iii) assume the Assumed Liabilities.

 

**(c)****                                  Deliveriesat the Closing**

 

At the Closing,

 

(i)                                     theSelling Entities will deliver to the Purchasing Entities the variouscertificates, instruments, and documents referred to in Article 6; and

 

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(ii)                                  thePurchasing Entities will deliver to the Selling Entities the variouscertificates, instruments, and documents referred to in Article 7.

 

**(d)****                                  PurchasePrice Allocation**

 

(i)                                     Allocationto UK and US Assets

 

The parties agree that the Purchase Price shall beallocated as follows:  $53,333,333 plusthe amount of the Assumed Liabilities of or relating to the US Landis Groupshall be allocated to the US Purchased Assets, and $25,666,667 plus the amountof the Assumed Liabilities of or relating to the UK Landis Group shall beallocated to the UK Purchased Assets.

 

(ii)                                  Section 1060Allocation

 

Within six (6) months after the Transfer Date,Buyer US (on behalf of itself and the other Purchasing Entities) shall prepareand deliver to UNOVA an allocation of the Purchase Price and the AssumedLiabilities among the US Purchased Assets and the UK Purchased Assets sold tothe Purchasing Entities in accordance with Section 1060 of the InternalRevenue Code of 1986, as amended (the “***Code***“), andthe regulations thereunder (the “***Section 1060Allocation***“).  If UNOVAdoes not object to the Section 1060 Allocation prepared by Buyer US within30 days after receipt thereof, such allocations shall be final forpurposes of this Agreement.  If UNOVAobjects to the Section 1060 Allocation within 30 days after receiptthereof, Buyer US and UNOVA shall meet promptly and in a good faith attempt toresolve any objections of UNOVA and to use their best efforts to agree upon theallocation.  In the event Buyer US andUNOVA are unable to resolve their differences over the Section 1060Allocation, such differences shall be resolved by the Independent Firm (asdefined in Section 1.9(d) in accordance with Section 1.9(d).  The Parties shall cooperate fully with eachother and make available to each other such Tax data and other information asmay be reasonably required in order to timely complete the Section 1060Allocation and any other required statements or schedules.  Except as required pursuant to applicable Lawor a determination (as defined in Section 1313 of the Code or any similarprovision of Law), the Parties and their Affiliates (as defined below) shallreport the Transactions for all Tax purposes consistently with the Section 1060Allocation.  For purposes of thisAgreement, “***Affiliate***“ means a Personthat, directly or indirectly, through one or more intermediaries, controls, iscontrolled by or is under common control with the first mentioned Person.  To the extent that the parties requireallocations of the Purchase Price and the Assumed Liabilities at or prior toClosing, including for United Kingdom Law purposes, then the parties shallendeavor to cooperate fully with each other to agree upon such allocations onor prior to the Transfer Date

 

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**1.6****                               AssumedLiabilities**

 

Upon the terms and subject to the conditions of thisAgreement and in reliance upon the representations, warranties and agreementsherein set forth, the Purchasing Entities shall, effective at the time of theTransfer Date, assume, perform and discharge all of the following debts, liabilitiesor obligations of the Selling Entities (collectively, the “***AssumedLiabilities***“):

 

(a)                                  Allliabilities arising out of or relating primarily to the Business and recordedon the June Balance Sheet and not discharged as of the Transfer Date(other than any Excluded Liabilities thereon);

 

(b)                                 Allcurrent liabilities arising out of or relating primarily to the Business andincurred in the ordinary course of business since the June Balance SheetDate that would have been required by GAAP, consistently applied, to have beenrecorded on the June Balance Sheet if they had arisen prior to the June BalanceSheet Date, but only to the extent set forth on the Closing Balance Sheet (asdefined in Section 1.9(a)), other than any Excluded Liabilities thereonand other than the liabilities described in Sections 1.6(c), 1.6(f),1.6(g), 1.6(h), 1.6(i), 1.6(j), 1.6(l), 1.6(m) and 1.6(n) below which areassumed without regard to the amounts set forth on the Closing Balance Sheet;

 

(c)                                  Allliabilities and obligations of the Selling Entities in respect of (i) thePurchased Contracts and (ii) those contracts or other legally bindingcommitments that are the type required to be disclosed in the Schedules but arenot so disclosed because they fall below the minimum threshold amount ormateriality of the agreement or commitments required to be so disclosed andwhich are assigned to the Purchasing Entities other than in the case ofclauses (i) and (ii), liabilities or obligations attributable toany failure by the Selling Entities to comply with the terms thereof;

 

(d)                                 Accruedpayroll and vacation pay for “***Continuing Employees***“(as defined in Section 8.4(a)) but only to the extent of the reservetherefor shown on the Closing Balance Sheet, excluding any accrued amounts thatare required by Law to be paid by the Selling Entities on or prior to theTransfer Date;

 

(e)                                  Accruedsales commissions to Continuing Employees and to third parties in respect ofthe Business, but only to the extent of the reserve therefor shown on theClosing Balance Sheet;

 

(f)                                    Alllosses, debts, liabilities and obligations with respect to products sold orserviced (whether or not under warranty) by the Selling Entities in respect ofthe Business, including liabilities and obligations for and with respect to anyrefunds, adjustments, allowances, repairs, exchanges, returns and warranty butexcluding Product Liability, (as defined in Section 1.6(h)) which iscovered by sub-clause (h) below (and any other Excluded Liabilities);

 

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(g)                                 Anyclaim, debt, liability or obligation for workers compensation (other than suchdebt, liability or obligation that constitutes an Excluded Liability),automobile or general liability in respect of the Business to the extent suchclaims arise from events, actions or occurrences following the Transfer Date;

 

(h)                                 Anyclaim, debt, liability or obligation for product liability claims, includingbodily injury, death or property damage arising from the use or operation ofproducts manufactured, sold or serviced in whole or in part in the Business (“***Product Liability***“) to the extentsuch claims arise from events, actions or occurrences following the TransferDate;

 

(i)                                     EnvironmentalLiabilities (as defined below) arising from or relating in any way to (i) actionsoccurring or conditions existing on or before the Transfer Date, where suchactions or conditions do not constitute a violation of “***EnvironmentalLaws***“ (as defined in Section 3.6(f), as modified by Section 1.7(j)),or (ii) actions occurring or conditions coming into existence after theTransfer Date; provided, however, that with respect to the Waynesboro Facilityand the South Beloit Facility, which the Purchasing Entities will be leasingfrom the Selling Entities after the Transfer Date, the Purchasing Entitiesshall not assume any Environmental Liabilities arising from or relating in anyway to actions occurring or conditions existing on or before the Transfer Date(whether or not a violation of Environmental Laws) arising from or relating inany way to actions occurring or conditions coming into existence after theTransfer Date except to the extent such actions or conditions are caused by thePurchasing Entities.  For purposes ofthis Agreement, “***Environmental Liabilities***“means any and all liabilities arising in connection with or in any way relatingto the Business, the Purchased Assets or the Real Property, whether contingentor fixed, actual or potential, known or unknown, which arise under or relate tomatters governed by Environmental Laws;

 

(j)                                     Anyclaim, debt, liability or obligation relating to the Landis Pension Plan (asdefined in Section 5.8), including, without limitation, in respect of (i) benefitstransferred to the Landis Pension Plan from the UNOVA Pension Fund, whetherbefore, on or after the Transfer Date (which transferred benefits shall includeany claim, debt, liability or obligation in respect of the provision of thosebenefits in a manner complying with Article 141 (formerly Article 119)of the Treaty of Rome and Section 62 of the Pensions Act 1995), (ii) anyliability in respect of the levy to fund the Pension Protection Fund payablepursuant to the Pensions Act 2004 and (iii) contributions in respect ofthe period prior to the Transfer Date which have not become due and payablebefore the Transfer Date other than contributions deducted by UNOVA UK frommembers’ salaries before the Transfer Date and not paid to the Landis PensionPlan by that date;

 

(k)                                  Anyclaim, debt, liability or obligation arising from any progress payment, downpayment or advance payment received from any customer of the Business to theextent of the reserve therefor on the Closing Balance Sheet;

 

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(l)                                     Anyclaim, debt, liability or obligation arising out of in respect of or as aresult of the employment or termination of employment of any ContinuingEmployee by the Purchasing Entities (other than Excluded Liabilities);

 

(m)                               Anyactions, claims, proceedings, losses, damages, payments, penalties, costs orexpenses suffered or incurred in relation to or arising out of any personalinjury as a result of a person’s exposure at any time after the Transfer Dateto any and all asbestos and/or asbestos-containing materials, lead and/or lead-containingmaterials, or mold (whether or not the presence of such contaminantsconstitutes a violation of Environmental Laws) (collectively, “***Contaminants***“) present, dischargedor released at, or migrating from any property owned, occupied, controlled orused by the Purchasing Entities in respect of the Business; *provided*, *however*, thatfor any personal injury that is determined to have been caused by exposure toContaminants as described in this subsection 1.6(m) that relates toperiods of exposure before and after the Transfer Date, the loss arising fromsuch personal injury shall be deemed to have occurred ratably during the entireperiod of such exposure, and the Purchasing Entities’ liability for such injuryshall be limited to a pro rata portion of the losses based on the period ofexposure that occurred after the Transfer Date; and

 

(n)                                 AllFAS 106 liabilities relating to the Retiree Medical Plan (as defined in Section 5.9).

 

**1.7****                               ExcludedLiabilities**

 

Notwithstanding any provision in this Agreement or anyother writing to the contrary, the Purchasing Entities are assuming only theAssumed Liabilities and are not assuming any other liability or obligation ofthe Selling Entities (or any predecessor owner of all or part of its businessand assets) of whatever nature whether presently in existence or arising orasserted hereafter.  All such otherliabilities and obligations shall be retained by and remain obligations andliabilities of the Selling Entities (collectively, the “***ExcludedLiabilities***“).  Withoutlimiting the foregoing, none of the following shall be Assumed Liabilities forthe purposes of this Agreement:

 

(a)                                  Anydebt, liability or obligation of the Selling Entities in respect of theBusiness for Taxes that relate to periods ending on or prior to the TransferDate (including any Taxes that arise as a result of the Transactions), exceptas otherwise provided in Section 8.7(b);

 

(b)                                 Anyintercompany payable balances in respect of the Business due to UNOVA or any ofits subsidiaries (other than intercompany trade payables between the LandisGroup);

 

(c)                                  Anyclaim, debt, liability or obligation for workers compensation, automobile orgeneral liability in respect of the Business, to the extent such claims arisefrom events, actions or occurrences on or prior to the Transfer Date, otherthan a claim, debt, liability or obligation to which Section 1.6(j)applies;

 

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(d)                                 Anyclaim, debt, liability or obligation to the extent related to any of the otherExcluded Liabilities or any of the Excluded Assets, other than a claim, debt,liability or obligation to which Section 1.6(j) applies;

 

(e)                                  Anyliabilities of the Selling Entities arising under, or relating to theexecution, delivery or consummation of, this Agreement and the transactionscontemplated hereby;

 

(f)                                    Anyliabilities of the Selling Entities for Indebtedness (as defined by Section 3.8(h)),including, without limitation, the Indebtedness set forth on **Schedule 3.8(h) **and **Schedule 3.2(d)**;

 

(g)                                 Anyclaim, debt, liability or obligation under Employee Benefit Plans other thanthe Assumed Liabilities set forth in Sections 1.6(d), 1.6(e), 1.6(j) and1.6(n);

 

(h)                                 Anyclaim, debt, liability or obligation under the UNOVA Pension Fund, other thanin respect of benefits transferred to the Landis Pension Plan, whether before,on or after the Transfer Date (which transferred benefits shall include anyclaim, debt, liability or obligation in respect of the provision of thosebenefits in a manner complying with Article 141 (formerly Article 119)of the Treaty of Rome and Section 62 of the Pensions Act 1995);

 

(i)                                     Anyclaim, debt, liability or obligation for Product Liability arising from the useor operation of products manufactured, sold or serviced (in whole or in part)in the Business to the extent such claims arise from events, actions oroccurrences on or prior to the Transfer Date;

 

(j)                                     EnvironmentalLiabilities arising from or relating in any way to (i) actions occurringor conditions, whether known or unknown, existing on or before the TransferDate, where such actions or conditions constitute a violation of EnvironmentalLaws, or (ii) with respect to the Waynesboro Facility and South BeloitFacility, which the Purchasing Entities will be leasing from the SellingEntities after the Transfer Date, actions occurring or conditions coming intoexistence after the Transfer Date to the extent such actions or conditions arenot caused by the Purchasing Entities. For purposes of this Section 1.7(j), the known contamination on theWaynesboro Facility, including both the contamination being addressed by theSelling Entities in accordance with Pennsylvania’s Act 2 voluntary cleanupprogram and the chlorinated volatile organic compound contamination that hasmigrated onto the Waynesboro Facility from the adjacent Teledyne facility,shall be deemed a condition existing before the Transfer Date and to constitutean Excluded Liability;

 

(k)                                  Allclaims, debts, liabilities and obligations pursuant to violations of applicableLaws arising from, by or in connection with the Selling Entities, the Business,the Purchased Assets, or the Real Property, in each case occurring or existingon or before the Transfer Date, other than claims, debts, liabilities orobligations to which Section 1.6(j) applies;

 

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(l)                                     Thosepending or threatened litigation matters identified on **Schedule 3.14**;

 

(m)                               Anyactions, claims, proceedings, losses, damages, payments, penalties, costs orexpenses suffered or incurred in relation to or arising out of any personalinjury as a result of a person’s exposure at any time before the Transfer Dateto any and all Contaminants (as defined in Section 1.6(m)) present,discharged or released at, or migrating from any property owned, occupied,controlled or used by the Selling Entities in respect of the Business; *provided*, *however*, thatfor any personal injury that is determined to have been caused by exposure toContaminants as described in this subsection 1.7(m) that relates toperiods of exposure before and after the Transfer Date, the loss arising fromsuch personal injury shall be deemed to have occurred ratably during the entireperiod of such exposure, and the Selling Entities’ liability for such injuryshall be limited to a pro rata portion of the losses based on the period ofexposure that occurred prior to the Transfer Date;

 

(n)                                 allclaims, losses, debts, liabilities and obligations for compensation toEmployees which are set forth in the certain letter dated September 15,2005, and updated as of September 22, 2005 from UNOVA to counsel for CFL;and

 

(o)                                 accruedbonuses payable to Continuing Employees as of the Transfer Date and liabilitiesassociated with amounts withheld from employee salaries to the extent withheld asof the Transfer Date.

 

**1.8****                               Transferof English Owned Real Property and Obtaining English Reversioner’s Consent**

 

For the purposes of this Section 1.8, thefollowing definitions shall apply:

 

(i)                                     “***Actual Completion Date***“ means inrelation to each of the U.K. Properties the date on which that property istransferred, conveyed or assigned to the Purchasing Entity.

 

(ii)                                  “***Assurances***“ means the transfers,conveyances or assignments of the U.K. Properties and “***Assurance***” shall mean any one ofthem.

 

(iii)                               “***Freehold Property***“ means the U.K.freehold property located in the United Kingdom as described in **Schedule 3.6(a)**.

 

(iv)                              “***Landlord’s Consent***“ means anyreversioner’s consent to an assignment required under the terms of the leaserelating to the Leasehold Property.

 

(v)                                 “***Leasehold Property***“ means theleasehold property located in the United Kingdom occupied by the SellingEntities as described (including the particular of the current rent provided)in **Schedule 3.6(c) **and “***Leasehold Property***“ means any one ofthem.

 

(vi)                              “***Registered Properties***“ means theU.K. Property numbered 4 in **Schedule 3.6(a)**;

 

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(vii)                           “***U.K. Properties***“ means those U.K.freehold and leasehold premises occupied by the relevant Selling Entities whichare set forth in **Schedule 3.6(a) and 3.6(c)**.

 

**(a)****                                  MattersAffecting the U.K. Properties**

 

The U.K. Properties are sold subject to and with thebenefit of:

 

(i)                                     Inthe case of the Registered Properties, the exceptions, reservations andcovenants (except charges to secure the repayment of money) contained orreferred to in the charges register of their respective title numbers;

 

(ii)                                  Inthe case of the Leasehold Property, the covenants and conditions on the part ofthe tenant contained in the leases under which the relevant property is held;

 

(iii)                               Alllocal land charges; and

 

(iv)                              Allnotices served and ordered, demand, proposals or requirements made, by anylocal or other public authorities.

 

**(b)****                                  Landlord’sConsents**

 

(i)                                     Thesale of the Leasehold Property is subject to the relevant Selling Entity whichoccupies the relevant Leasehold Property obtaining Landlord’s Consent inrespect of that property.

 

(ii)                                  Therelevant Selling Entities shall as soon as reasonably practicable and at it’sown cost apply for and use all reasonable endeavours to obtain Landlord’sConsent as soon as possible.

 

(iii)                               ThePurchasing Entity and the Buyer UK (as appropriate) shall use all reasonableefforts to assist the relevant Selling Entity in obtaining Landlord’s Consentand in particular shall promptly provide all such information and references asthe relevant Selling Entity may reasonably require in relation to the obtainingof Landlord’s Consent and such other information as the landlord may beentitled to request under the terms of the relevant property lease.

 

(iv)                              Asappropriate, the Purchasing Entities and Buyer UK will enter into suchcovenants as may be reasonably required by the landlord of the LeaseholdProperty and provide such additional security for the performance by Buyer UKof the tenant’s covenants as the landlord may reasonably require.

 

(v)                                 BuyerUK shall on and from the Transfer Date be permitted to enter into occupation ofthe Leasehold Property as licensee of the relevant Selling Entity subject tothe following provisions:

 

(A)                              BuyerUK shall be entitled to receive all profit and other income from the LeaseholdProperty;

 

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(B)                                BuyerUK shall pay or indemnify the relevant Selling Entity against all outgoings andexpenses attributable to Buyer UK’s period of occupation including all sumspayable under the property lease of the Leasehold Property, in respect of theperiod after the Transfer Date;

 

(C)                                ThePurchasing Entity and Buyer UK shall observe and perform all the covenants andconditions (excluding any alienation covenants) contained or referred to in theproperty lease relating to the Leasehold Property (save that in respect of anycovenants relating to the repair of the Relevant Property Buyer UK’s liabilityshall be limited to keeping the Relevant Property in as good repair as whenBuyer UK went into occupation) and indemnify the relevant Selling Entity forany costs or liabilities as a result of a breach or non-observance or non-performanceand such covenants and conditions;

 

(D)                               Therelevant Selling Entity so far as it is lawfully able to do so shall permit theBuyer UK to remain in occupation of the Relevant Property; and

 

(E)                                 ThePurchasing Entity and Buyer UK shall not carry out any activity for which theconsent of any third party may be required under the terms of the propertylease relating to the Leaseheld Property without such consent being obtained orcarry on any activity which would constitute a breach or non-observance of thecovenants and conditions of the relevant property lease.

 

**(c)****                                  Completion**

 

(i)                                     Ifthe Landlord’s Consent is refused or has not been obtained within12 months of the Transfer Date then both parties consider that therelevant landlord is acting unreasonably in refusing or withholding consent therelevant Selling Entity shall at the request of the Purchasing Entity and atthe joint expense of the relevant Selling Entity and Purchasing Entity seek theopinion of a leading Counsel specializing in landlord and tenant law on whetherthe landlord is unreasonably withholding or has unreasonably refused consent tothe assignment.

 

(ii)                                  Ifsuch leading Counsel advises that the landlord is unreasonably withholding orhas unreasonably refused consent the relevant Selling Entity shall at the jointexpense of both parties apply to a court of competent jurisdiction for adeclaration that the landlord is acting unreasonably.

 

(iii)                               Ifthe declaration is obtained the assignment of the Relevant Property shall becompleted five business days thereafter.

 

(iv)                              Ifthe declaration referred to in Section 1.8(c)(ii) is refused or suchleading Counsel advises that consent to assign will be refused or withheld theSelling Entities shall as soon as reasonably practicable apply to the relevantlandlord(s) for all necessary consents to the grant of an underlease of theRelevant Property to the Buyer UK Entity for a term equal to the residue of theterm of the relevant property lease less three days at a rent equal to andotherwise on the same terms as the said lease and the provisions of

 

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Sections 1.8(b)(ii) and 1.8(b)(iii) shall apply tothe obtaining of such consent and if such consent is obtained the SellingEntity shall grant and the Buyer UK shall accept such underlease on the datefive business days after the date of receipt of such consent.

 

**(d)****                                  FurtherCompletion**

 

(i)                                     NotwithstandingSections 1.1, 1.2 and 2.1 of this Agreement, completion of the sale of theU.K. Properties shall take place:

 

(A)                              Inthe case of the Freehold Property, and the Leasehold Property if Landlord’sConsent has been obtained on the Transfer Date; and

 

(B)                                Inthe case of the Leasehold Property in respect of which Landlord’s Consent isnecessary but has not been obtained by the Transfer Date, by the date fivebusiness days after Landlord’s Consent has been obtained.

 

(ii)                                  Onthe Actual Completion Date the Purchasing Entity shall deliver to therelevant Selling Entity a duly executed Assurance in respect of each of theU.K. Properties.

 

**(e)****                                  Assurances**

 

The Assurances will contain (where applicable):

 

(i)                                     Acovenant by way of indemnity (but not further or otherwise) by the PurchasingEntity with the relevant Selling Entity that the Purchasing Entity and itssuccessors in title will observe and perform:

 

(A)                              Theexceptions, reservations and covenants contained or referred to in the case ofeach of the Registered Properties, the entries (except those relating tocharges to secure the repayment of money) appearing in the charges registers oftheir respective title numbers;

 

(B)                                Inthe case of the Leasehold Property, the covenants and conditions on the part ofthe tenant contained in the relevant property leases; and will indemnify andkeep indemnified the relevant Selling Entity against all actions, claims,demands and proceedings taken or made against the relevant Selling Entity andall costs, damages, expenses, liabilities and losses incurred by the relevantSelling Entity as a result of the breach, non-performance or non-observance ofthe same; and

 

(ii)                                  (Inthe case of the Leasehold Properties) an agreement and declaration to theeffect that the Selling Entity shall not be liable under any of the covenantsset out in Sections 3 or 4 of the Law of Property (MiscellaneousProvisions) Act 1994 for the consequences of any breach of the terms of theproperty leases relating to their state and condition.

 

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(iii)                               Theconsideration for the Freehold Property determined as set forth in Section 1.5(d)

 

**1.9****                               ClosingBalance Sheet**

 

**(a)****                                  Definitionof Closing Balance Sheets**

 

The “***Closing Balance Sheet***“shall be a balance sheet reflecting the US Purchased Assets and AssumedLiabilities relating to the US Landis Group calculated in US dollarsand the UK Purchased Assets and Assumed Liabilities relating to theUK Landis Group calculated in US dollars (converting UK poundsin US dollars at the spot rate published in the Wall Street Journal andquoted by Reuters and other sources applicable to banks trading in amounts of $1 millionor more, as of 4 p.m. Eastern Time (the “***WSJRate***“) on the Transfer Date) as of the Transfer Date, andprepared in accordance with generally accepted accounting principles in theUnited States of America (“***GAAP***“),applied on a basis consistent with the December Balance Sheet and the June BalanceSheet (as such terms are defined in Section 3.2(a) and Section 3.2(b),respectively); *provided*, *however*,the Closing Balance Sheet shall reflect the adjustments (the “***Agreement Adjustments***“) that arerequired to exclude the Excluded Assets and Excluded Liabilities.

 

**(b)****                                  PreliminaryClosing Balance Sheets**

 

Within 60 days following the Transfer Date, BuyerUS, with the assistance and cooperation of the Selling Entities, shall prepareand deliver to UNOVA a balance sheet reflecting the US Purchased Assetsand Assumed Liabilities relating to the US Landis Group calculated in USdollars and the UK Purchased Assets and Assumed Liabilities relating tothe UK Landis Group calculated in US dollars (converting UK poundsin US dollars at the WSJ Rate on the Transfer Date), prepared asprovided in paragraph 1.9(a) above (the “***PreliminaryClosing Balance Sheet***“). Buyer US shall also prepare and deliver to UNOVA, within sixbusiness days following the Transfer Date, the month-end financial and relatedbusiness data for the Business reasonably necessary to allow the SellingEntities to prepare their financial reports consistent with the SellingEntities’ customary practices.  Afterdelivery of the Preliminary Closing Balance Sheet, the Purchasing Entitiesshall provide UNOVA and its accountants reasonable access during normalbusiness hours to materials used in the preparation of the Preliminary ClosingBalance Sheet.

 

**(c)****                                  Reviewof Preliminary Closing Balance Sheet**

 

UNOVA shall have 30 days following its receipt ofthe Preliminary Closing Balance Sheet (the “***ReviewPeriod***“) to review the same for compliance with GAAP and theAgreement Adjustments.  On or before theexpiration of the Review Period, UNOVA shall deliver to Buyer US a writtenstatement accepting or objecting to the Preliminary Closing Balance Sheet.  In the event that UNOVA shall object to thePreliminary Closing Balance Sheet, such statement (the “***Statementof Objections***“) shall include a detailed itemization of UNOVA’sobjections and the reasons therefor.  IfUNOVA does not deliver to Buyer US the Statement of Objections within theReview Period, the Selling Entities shall be deemed to

 

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have accepted the Preliminary Closing Balance Sheet.  If UNOVA delivers to Buyer US, theStatement of Objections within the Review Period, the Selling Entities shall bedeemed to have waived any objections to the Preliminary Closing Balance Sheetthat are not included in the Statement of Objections.

 

**(d)****                                  Finalizationof Closing Balance Sheet**

 

In the event that UNOVA shall accept or shall bedeemed to have accepted the Preliminary Closing Balance Sheet as prepared anddelivered by Buyer US, the Preliminary Closing Balance Sheet shallconstitute the Closing Balance Sheet for purposes of this Agreement.  In the event, however, that UNOVA shallobject to the Preliminary Closing Balance Sheet, UNOVA and Buyer US shallpromptly meet and in good faith attempt to resolve the issues that are indispute.  In the event that the issues indispute shall not have been resolved within 30 days following Buyer US’sreceipt of UNOVA’s Statement of Objections, such disputed issues shall beresolved by KPMG LLP, or another independent certified accounting firm jointlyselected by UNOVA and Buyer US (the “***Independent Firm***“),provided the Parties shall attempt to reach a final resolution of any matterswhich remain in dispute at the earliest practicable date.  The decision of the Independent Firm shall befinal and binding on the Parties.  Thecosts and expenses of the Independent Firm in reviewing the issues in disputeshall be borne fifty percent (50%) by Buyer US and fifty percent (50%) byUNOVA.  The Preliminary Closing BalanceSheet, as adjusted to reflect the adjustments agreed upon by such Parties ordetermined by the Independent Firm, shall constitute the Closing Balance Sheetfor purposes of this Agreement.

 

**(e)****                                  NetWorking Asset Payment**

 

If the Net Working Assets (as defined below) shown onthe final Closing Balance Sheet (calculated in US dollars and convertingUK pounds into US dollars at the WSJ Rate on the Closing Date) aregreater than 29% of trailing 12-month revenues of the Business (the “***Net Working Asset Target***“), thenBuyer US and/or Buyer UK shall within five business days of the finaldetermination of the Closing Balance Sheet pay UNOVA in US dollars by wiretransfer of immediately available funds an amount equal to such excess (the “***Upward Net Working Asset Adjustment***“),plus interest on such excess amount from the Transfer Date until the date ofpayment at LIBOR plus 0.25%.  If the NetWorking Assets as shown on the Closing Balance Sheet are less than the NetWorking Asset Target, then UNOVA shall within five business days of the finaldetermination of the Closing Balance Sheet pay Buyer US and/or Buyer UK inUS dollars by wire transfer of immediately available funds an amount equalto their proportionate share of such shortfall (the “***Downward Net Working Asset Adjustment***“),plus interest on their proportionate share of such shortfall from the TransferDate until the date of payment at LIBOR plus 0.25%.  For purposes of this Agreement, “***Net Working Assets***“ means, as ofthe Transfer Date, the excess of the sum of total accounts receivable andinventories over the sum of progress billings and total accounts payable on theClosing Balance Sheet.  In the event of aDownward Net Working Asset Adjustment, the Purchasing Entities shall beentitled to satisfy claims pursuant to this Section 1.9 from the Note byreducing the principal amount outstanding under such Note by

 

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an amount equal to the payment due from UNOVA in respect of suchclaims.  “***LIBOR***“means an annual rate of interest equal to the annual rate in effect in theLondon Interbank Market applicable to one month deposits of U.S. dollarsas reported in the Wall Street Journal on the second business day preceding theTransfer Date.  If the Wall StreetJournal is not published on such business day or does not report such rate,such rate shall be as reported by such other publication or source as UNOVA andBuyer US may mutually select.

 

**(f)****                                    Limitations onCertain Claims**

 

Consistent with Section 11.6(c),the Purchasing Entities acknowledge and agree that, following the finaldetermination of the Closing Balance Sheet the Purchasing Entities may notbring any claim against the Selling Entities, and the Selling Entities shallnot have any liability to the Purchasing Entities, relating to:  (a) the noncollectability of anyaccounts receivable or the amount of the related bad debt reserve, (b) inventoryobsolescence or the amount of the related inventory reserve, (c) losscontracts for which a reserve is reflected on the Closing Balance Sheet or (d) warrantyclaims or the amount of the related warranty reserve, other than in the case offraud or willful misconduct and other than in respect of any claims relating toa breach of the representations and warranties in Section 3.12.

 

**1.10****                        Rightto Contest**

 

The assumption and agreement by the PurchasingEntities to pay, perform and discharge the Assumed Liabilities shall notprohibit the Purchasing Entities from contesting with a third party, in goodfaith and at the expense of the Purchasing Entities, the amount, validity orenforceability of any thereof; *provided*, *however*, that the Purchasing Entities shall indemnify theSelling Entities for any Loss (as defined in Section 11.1) arising fromsuch contest, other than in circumstances where the Purchasing Entities areentitled to indemnification for the Loss arising from such contest pursuant to Section 11.

 

**1.11****                        NonassignableContracts and Rights**

 

To the extent that the assignment by the SellingEntities of any contract, property, right or asset to be assigned to thePurchasing Entities pursuant to this Agreement shall require the consent orapproval of any other party, and such consent or approval shall not have beenobtained on or prior to the Transfer Date, this Agreement shall not constitutea contract to assign the same if an attempted assignment would constitute abreach thereof or would in any way adversely affect the rights of the SellingEntities (or any Purchasing Entity, as assignee) thereunder.  If any such consent or approval is requiredbut not obtained on or prior to the Transfer Date, the Parties covenant andagree that in such case, the applicable Selling Entity shall continue to dealas instructed by the Purchasing Entities with the other contracting party orparties, with the benefits of such contract, property, right or asset after theTransfer Date accruing to the benefit of the applicable Purchasing Entity andthe liabilities and obligations thereunder being performed by the applicablePurchasing Entity on such Selling Entity’s behalf; such Selling Entity shallhold all moneys received thereunder for the benefit of the applicablePurchasing Entity and shall pay the same to the applicable Purchasing Entitywithin one business day after receipt thereof; and the Parties shall use

 

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reasonable best efforts (but without payment of any penalty or fee byany Party other than by the Selling Entities as set forth in **Schedule 1.11**) to obtain and secure any and allconsents and approvals that may be necessary to effect the valid sale, transferor assignment of the same to the applicable Purchasing Entity without change inany of the material terms or conditions thereof, including without limitationthe formal assignment or novation of any of the same, if so required by thePurchasing Entities.  The Parties furthercovenant and agree to make or complete such transfers as soon as reasonablypossible and to cooperate with each other in any other reasonable arrangementdesigned to provide for the applicable Purchasing Entity the benefits of and tosuch properties, rights or assets and to provide for the performance by theapplicable Purchasing Entity of the liabilities and obligations relatedthereto.

 

**1.12****                        ValueAdded Tax**

 

**(a)**                                  Itis intended that the UK Purchased Assets shall be transferred to Buyer UKas a going concern and that the provisions of Article 5 of the Value AddedTax (Special Provisions) Order 1995 (SI 1995/1268) shall apply to suchtransfer and the sale and purchase of the UK Purchased Assets and each of UNOVAUK and Buyer UK shall use its reasonable endeavors to procure that the sale ofthe UK Purchased Assets is treated as neither a supply of goods nor a supply ofservices under the Article.

 

**(b)**                                  Notwithstandingsub-clause (a) above, all sums paid or payable under this Agreementby Buyer UK to UNOVA UK are exclusive of any VAT which is or may becomechargeable on the supply to supply for which sums form the whole or part of theconsideration for VAT purposes.

 

**(c)**                                  UNOVAUK and Buyer UK shall within 30 days of the Closing give notice of suchtransfer to the appropriate office of HM Revenue & Customs inaccordance with such regulations and requirements as may be applicable.

 

**(d)**                                  BuyerUK warrants to UNOVA UK that:

 

(i)                                     afterthe Closing the UK Purchased Assets are to be used by Buyer UK in carryingon the same kind of business as that carried on by UNOVA UK before the Closingand are not to be assigned immediately after Closing to any other person;

 

(ii)                                  BuyerUK is already or will as a result of such transfer of the UK PurchasedAssets immediately on Closing become a taxable person (as defined in Section 3of the Value Added Tax Act 1994);

 

(iii)                               ithas made or will make a valid election under paragraph 2 of Schedule 10VATA in respect of the Freehold Property effective from no later than theTransfer Date and has given or will, no later than the Transfer Date, givewritten notification of the election to and, if appropriate, has obtained theprior written permission of HM Revenue and Customs as required byparagraph 3 of Schedule 10;

 

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(iv)                              Paragraph 5(2B)of the Value Added Tax (Special Provisions) Order 1995 (SI 1995/1268) asamended by the Value Added Tax (Special Provisions) Order 2004 (SI 2004/779)does not apply to Buyer UK.

 

**(e)**                                  Subjectto Section 1.12(f), if HM Revenue and Customs determine in writing thatVAT is payable on all or part of the consideration payable for the UK PurchasedAssets pursuant to this Agreement, Buyer UK shall pay the amount of any VATwhich may properly be chargeable on the sale of the UK Purchased Assetspursuant to this Agreement on the later of:

 

(i)                                     thedate prior to the last business day on which UNOVA UK was liable to account toHM Revenue and Customs for such VAT without incurring a potential liability topenalties and interest; and

 

(ii)                                  thedate which is five business days after the delivery of a valid tax invoice anda copy of the written determination of HM Revenue and Customs in respectthereof;

 

**(f)**                                    ifafter Buyer UK has paid an amount in respect of VAT pursuant to this Agreement,HM Revenue and Customs determines that such VAT was not actually payable, then:

 

(i)                                     UNOVAUK will repay such amount to Buyer UK forthwith on receipt of such writtendetermination from HM Revenue and Customs; or

 

(ii)                                  IfUNOVA UK has already accounted for such amount in respect of VAT at the time itreceives such determination, UNOVA UK shall reclaim such amount from HM Revenueand Customs and repay such amount to Buyer UK on receiving repayment of orobtaining credit in respect thereof.

 

**(g)**                                 IfHM Revenue and Customs determines in writing that VAT is payable on all or partof the consideration payable for the UK Purchased Assets pursuant to thisAgreement:

 

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(i)                                     UNOVAUK shall as soon as reasonably practicable notify Buyer UK of such writtendetermination.  Buyer UK may within10 business days of receipt of such notification from UNOVA UK requestthat UNOVA UK contest, at Buyer UK’s cost, in writing such writtendetermination from HM Revenue and Customs. UNOVA UK shall give Buyer UK a reasonable opportunity to comment on anyrelevant communication proposed to be sent to HM Revenue and Customs in thisregard (making available any information and documents in its control requiredto establish to HM Revenue and Customs and any tribunal or court that noliability, or a reduced liability, arises on the Buyer UK or any other companyunder section 44 of VATA 1994 as a result of the sale of the UK PurchasedAssets.  Until such reasonableopportunity to comment has been given UNOVA UK may not, without Buyer UK’swritten agreement not to be unreasonably withheld, agree, compromise, settle ormake any other arrangement with HM Revenue and Customs which would result inBuyer UK incurring any liability under Section 1.12(b) above inrespect of VAT; and

 

(ii)                                  VATshall be treated as payable for the purposes of this Agreement only if HMRevenue and Customs has so confirmed in writing after full disclosure of allmaterial facts and stated in writing that Buyer UK’s VAT office agrees withthis treatment, and after the taking of any steps by Buyer UK or UNOVA UK asare contemplated by this Section 1.12(g).

 

Subject to (i) and (ii) above, to the extentthat HM Revenue and Customs confirms in writing its original determinationBuyer UK shall not have further rights under this Section 1.12(g).

 

UNOVA UK shall not be required to contest suchdetermination of HM Revenue and Customs if it reasonably determines that to doso would have a material effect on the future conduct of the business of UNOVAUK or the Selling Entities or affect the rights or reputation of any of them.

 

**(h)**                                 UNOVAUK shall apply to HM Revenue and Customs and endeavor to obtaina direction that all records referred to in Section 49 of the ValueAdded Tax Act 1994 may be obtained by UNOVA UK. If such direction is obtained, UNOVA UK will preserve the records forsuch period as may be required by law, and shall allow Buyer UK, on reasonablenotice, to inspect the records and take copies thereof.  If such direction is refused byHM Revenue and Customs, then UNOVA UK shall within 10 business daysafter receipt of notification of such refusal (or, if later, Closing) deliverto Buyer UK the VAT business records relating to the UK Purchased Assets.

 

**(i)**                                    UNOVAUK is registered for VAT under registration number 011-80110-14659.

 

**(j)**                                    Pursuantto paragraphs 2 and 3 of Schedule 10 VATA 1994 UNOVA UK has made aneffective election to waive exemption in relation to the English Owned RealProperty (an “***Election***“), has notified HMRevenue & Customs of such Election within the prescribed time limitsfor the Election to be valid and neither it nor any relevant associate as

 

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defined in paragraph 3 of Schedule 10 VATA 1994 has revokedor will revoke such Election prior to Closing.

 

**(k)**                                AllVAT payable in respect of goods and services supplied or deemed to be suppliedby UNOVA UK in connection with the UK Purchased Assets prior to Closing and allinterest payable thereon and penalties attributable thereto shall be paid to HMRevenue and Customs by UNOVA UK.  UNOVAUK shall be entitled to receive and to retain for its own benefit allreimbursement or credit from HM Revenue and Customs for VAT borne by UNOVA UKon goods and services supplied to UNOVA UK prior to Closing and any paymentsreceived in respect of VAT overpaid to HM Revenue and Customs prior thereto.

 

**(l)**                                    Inthis Section 1.12:

 

(i)                                     “***VAT***“ means Value Added Taxchargeable pursuant to the VATA; and

 

(ii)                                  “***VATA***“ means the Value Added Tax Act1994 and any legislation additional or supplemental thereto or amending orreplacing it from time to time.

 

**1.13****                        UKEmployees**

 

UNOVA UK and Buyer UK acknowledge that:

 

(a)                                  thetransfer of the UK Purchased Assets pursuant to this Agreement constitutes arelevant transfer for the purposes of the Transfer of Undertaking (Protectionof Employment) Regulations 1981 (“***Transfer Regulations***“);and

 

(b)                                 theEmployees of UNOVA UK (as listed in **Schedule 3.13(a)(4)**)will become employees of Buyer UK on the Transfer Date and UNOVA UK will useall reasonable efforts to assist in the transfer of such Employees to theemployment of Buyer UK.

 

(Article 2 follows)

 

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**ARTICLE 2.Closing and Transfer Date**

 

**2.1****                               Closing**

 

Subject to satisfaction or waiver of the conditionscontained in this Agreement, consummation of the purchase and sale of the USPurchased Assets and the other transactions provided for in this Agreement (the“***Closing***“) shall take place at theoffices of Perkins Coie LLP, counsel for UNOVA, located at 1201 ThirdAvenue, Suite 4800, Seattle, WA 98101 commencing at 8:00 a.m. PacificTime on December 9, 2005 or at such other date or time or other place asthe Parties may mutually agree upon in writing; *provided*,*however*, that the purchase and sale ofthe UK Purchased Assets shall occur at the offices of SJ Berwin LLP,222 Gray’s Inn Road, London WC1X8XF, United Kingdom on December 92005, or at such other date or time as the Parties may mutually agree upon inwriting (such date, the “***Transfer Date***“).  The purchase and sale of the US PurchasedAssets and the UK Purchased Assets and all other transactions provided in thisAgreement shall be deemed to have occurred simultaneously and shall beeffective at 11:59 p.m. (Eastern Time) on the Transfer Date, or at suchother date or time as the Parties may mutually agree upon in writing.  The Parties acknowledge and agree that thedate of Closing shall be automatically extended as may be required if theClosing shall not have occurred because either the time period under the HSRAct or any similar Law shall not have expired or any adverse action shall havebeen threatened or instituted in connection with the HSR Act or any similarLaw, and all other conditions precedent in Articles 6 and 7 have beensatisfied or are capable of being satisfied or, to the extent legallypermissible, have been waived; *provided*, *however*, that the date of Closing shall in no event beextended beyond the Extended Deadline Date (as defined in Section 10.1(b))without the prior written consent of the Parties.

 

**2.2****                               Noticeand Right to Cure**

 

At all times prior to the Transfer Date, the Partiesshall promptly notify each other of the existence of any condition or theoccurrence of any event which will or is likely to result in the failure tosatisfy any one or more of the conditions set forth in Articles 6 and7.  If any of such conditions shall nothave been satisfied or waived on or by the date on which the Closing isotherwise scheduled, then, subject to Section 10.1(b) and providedthat such Party is not in breach of this Agreement, the Party which is unableto meet such condition shall have a reasonable time and a reasonable opportunityto extend the Transfer Date (not to exceed fourteen business days) in order tosatisfy, at its expense, such condition or conditions.

 

(Article 3 follows)

 

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# **ARTICLE 3.  Representations and Warranties of the Selling Entities**

#  

As a material inducement to the PurchasingEntities to enter into this Agreement and consummate the transactionscontemplated hereby, the Selling Entities jointly and severally represent andwarrant to the Purchasing Entities that the statements contained in this Article 3are true and complete as of the date of this Agreement and will be true andcomplete as of the Transfer Date as follows; provided, however, thatSchedules 3.2(e), 3.13(a), 3.13(b), 3.13(c), 3.13(g) and 3.13(m) maybe updated by the Selling Entities as of the Closing to reflect the hiring ordeparture of any Employee, the granting of early retirement to any Employee,and any similar matter, each of which updated matters shall have beenundertaken in the ordinary course of business consistent with past practices:

 

## **3.1**                               CorporateMatters

##  

### **(a)**                                  DueOrganization, Good Standing and Qualification

###  

Each of the Selling Entities is a corporationduly organized, validly existing and in good standing under the Laws of itsjurisdiction of incorporation.  Each ofthe Selling Entities is qualified to conduct the Business as a foreigncorporation in all jurisdictions where the conduct of the Business or theownership of its assets in respect of the Business requires qualification,which jurisdictions are set forth on **Schedule 3.1(a)**,except where the failure to be so qualified would not, individually or in theaggregate, have a material adverse effect (as defined below) with respect tothe Business.

 

For purposes of this Agreement, the terms “***material adverse effect***“ or “***material adverse change***“ withrespect to the Landis Group and the Business means any circumstance, event,change, violation, failure, inaccuracy, effect or other matter that,individually or when taken together with all other circumstances, events,changes, violations, failures, inaccuracies, effects or other matters, wouldreasonably be expected to have or does have a material adverse effect on (a) theassets, liabilities, business, financial condition, or results of operations ofthe Business taken as a whole, or (b) the ability of the Selling Entitiesto timely consummate the transactions contemplated by this Agreement; and suchterms with respect to the Purchasing Entities means any circumstance, event,change, violation, failure, inaccuracy, effect or other matter that,individually or when taken together with all other circumstances, events,changes, violations, failures, inaccuracies, effects or other matters, wouldreasonably be expected to have or does have a material adverse effect on(x) the assets, liabilities, business, financial condition or results ofoperations of the Purchasing Entities, taken as a whole, or (y) theability of the Purchasing Entities to timely consummate the transactionscontemplated by this Agreement; *provided*, *however*, that in each case, the foregoing definitionsexclude the effects of changes that are generally applicable to (i) theindustries and markets in which the Business operates, (ii) the UnitedStates economy or securities or capital markets or (iii) the world economyor securities or capital markets.

 

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### **(b)**                                  CorporateAuthority to Conduct Business

###  

Each of the Selling Entities has thecorporate power and authority to own, lease and operate its properties andassets and to carry on the portion of the Business attributable to it as it isnow being conducted.

 

### **(c)**                                  CorporatePower and Authority to Enter Into Agreements

###  

Each of the Selling Entities has thecorporate power and authority to execute and deliver this Agreement and theother agreements, documents and instruments provided for herein (the “***Related Agreements***“) to which it isa party and perform its obligations hereunder and thereunder.

 

### **(d)**                                  DueExecution and Enforceability

###  

The execution, delivery and performance byand on behalf of each of the Selling Entities of this Agreement and the RelatedAgreements to which it is a party have been duly authorized by all necessarycorporate action, and no other corporate authorization on the part of each ofthe Selling Entities is required in connection therewith.  This Agreement constitutes a valid andbinding obligation of each of the Selling Entities, enforceable against each ofthem in accordance with its terms, except to the extent the same may be limitedby bankruptcy, insolvency, reorganization, moratorium or similar laws affectingcreditors’ rights generally or by general equitable principles.  The Related Agreements to which each of theSelling Entities is a party, when executed and delivered by the applicableSelling Entity, will constitute valid and binding obligations of the respectiveSelling Entity, enforceable against each of them in accordance with theirrespective terms, except to the extent the same may be limited by bankruptcy,insolvency, reorganization, moratorium or similar laws affecting creditors’rights generally or by general equitable principles.

 

### **(e)**                                  No Conflict

###  

With respect to each of the Selling Entities,except as set forth on **Schedule 3.1(e)**,the execution and delivery of this Agreement and the Related Agreements towhich such Selling Entity is a party do not, and the consummation by it of anyof the transactions contemplated hereby or thereby will not:

 

(i)            conflictwith or violate its certificate of incorporation, bylaws or other constituentdocuments;

 

(ii)           violateany applicable Law (as defined below) of any federal, state, provincial, localor foreign court or tribunal, government, regulatory body, agency or authority,including any European national or supra-national antitrust authority (a “***Governmental Body***“);

 

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(iii)          violate,conflict with, result in any breach of, or constitute a default (or an eventthat, with notice or lapse of time or both, would constitute a default) or giverise to any right of cancellation, termination or acceleration of any right orobligation under any Contract (as defined in Section 3.8) or judgment towhich it is a party or by which it is bound; or

 

(iv)          resultin the creation of any Lien on any of the Purchased Assets.

 

For purposes of this Agreement, “***Law***“ means any United States,European Union, United Kingdom, federal, state, national, provincial, local orforeign law, directive, code, regulation, statutory instrument, rule, order,writ, ordinance, permit, license, injunction, judgment, ruling, policy guidancenote or decree having the force of law, including, without limitation, the FairLabor Standards Act, the HSR Act (as defined in Section 5.3), theSecurities Act of 1933, as amended (the “***Securities Act***“),and similar applicable Laws in other jurisdictions, all Environmental Laws (asdefined in Section 3.6(f)) and all permitting and approval requirementsand common law in effect at the time of the relevant transaction; where such “***Law***“ in effect at the time of thetransaction is amended or modified after the date of the relevant transaction, “***Law***“ means as it was in effect onthe date of the relevant transaction.

 

### **(f)**                                    Subsidiariesand Other Equity Investments

###  

Except as set forth on **Schedule 3.1(f)**,no Selling Entity has any subsidiary or other equity investment or othersecurities in any corporation, company, partnership, joint venture or otherentity relating primarily or exclusively to the Business.

 

### **(g)**                                 CertainAdditional Matters

###  

With respect to each of the Selling Entitiesother than UNOVA UK:

 

(i)            Noorder has been made or petition presented or resolution passed for its windingup or liquidation;

 

(ii)           Noadministrative or other receiver under any bankruptcy or similar law has beenappointed by any person over the whole or any part of its business or assets;and

 

(iii)          Noorder has been made or petition presented under any bankruptcy or similar lawfor the appointment of an administrator or other receiver.

 

### **(h)**                                 UNOVA UKInsolvency Matters

###  

With respect to UNOVA UK, no administrativereceiver, receiver, liquidator or similar official has been appointed of thewhole or any part of the assets or undertaking of UNOVA UK and there are nocircumstances likely to give rise to the appointment of any such administrativereceiver, receiver, liquidator, administrator or similar official.

 

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## **3.2**                               FinancialStatements; Undisclosed Liabilities

##  

### **(a)**                                  December Financials

###  

Set forth on **Schedule 3.2(a) **isthe combined balance sheet of the Landis Group as of December 31, 2004(the “***December Balance Sheet***“),and the related combined statement of operations for the year then ended, asprepared by UNOVA (collectively, the “***December Financials***“).  Except as otherwise disclosed on **Schedule 3.2(a)**, the December Financials have beenprepared in conformity with GAAP consistently applied throughout the periodscovered, except as may be indicated in the notes thereto, and present fairly inall material respects the combined financial position and the combined resultsof the Landis Group operations for the year then ended, excludingreclassifications required at the corporate level because of discontinued operationsstatus and excluding allocated costs related to restricted stock and pensionsallocated to the Landis Group in UNOVA’s consolidation level adjustments to itsreported financial statements.

 

### **(b)**                                  June Financials

###  

(i)            Setforth on **Schedule 3.2(b)(i) **is thecombined balance sheet of the Landis Group as of June 30, 2005 (the “***June Balance Sheet***“) and therelated combined statement of operations for the period then ended, as preparedby UNOVA (collectively, the “***June Financials***“).  Except as otherwise disclosed on **Schedule 3.2(b)(i)**, the June Financials (includingthe notes thereto) have been prepared in conformity with GAAP consistentlyapplied throughout the period covered, except as may be indicated in the notesthereto, and present fairly in all material respects the combined financialposition and the combined results of their operations for the period thenended, excluding reclassifications required at the corporate level because ofdiscontinued operations status and excluding allocated costs related torestricted stock and pensions allocated to the Landis Group in UNOVA’sconsolidation level adjustments to its reported financial statements.

 

(ii)           Theaggregate amount of all FAS 106 liabilities for post-retirement medicalbenefits with respect to the Business reflected in the June Balance Sheethas been calculated in accordance with GAAP using the method and assumptionsset forth on **Schedule 3.2(b)(ii)**.  Since June 30, 2005, none of the SellingEntities has exercised any discretion or power to increase the benefits payableunder the Retiree Medical Plan.

 

### **(c)**                                  UNOVA UK’sAccounts

###  

Set forth on **Schedule 3.2(c) **arethe audited balance sheet as of December 31, 2004 (the “***Accounts Date***“) and the auditedprofit and loss account for the financial year ended December 31, 2004 ofUNOVA UK (the “***Accounts***“).  With respect to the Accounts, UNOVA UK hasreceived an opinion from the independent accounting firm that audited theAccounts that the audited balance sheet presents fairly, in all materialrespects, the financial position of UNOVA UK as of the Accounts Date.

 

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### **(d)**                                  UndisclosedLiabilities

###  

Except as disclosed in the June Financials,the December Financials and the Accounts (the “***FinancialStatements***“) or set forth on **Schedule 3.2(d)**,there are no liabilities of the Business of any kind whatsoever, whetheraccrued, contingent, absolute, determined, determinable or otherwise, and thereis no existing condition, situation or set of circumstances which couldreasonably be expected to result in such a liability, other than liabilitiesincurred in the ordinary course of business consistent with past practicessince the June Balance Sheet (excluding liabilities arising from theevents listed in **Schedule 3.2(d) **andthose Assumed Liabilities not required under GAAP to be reflected in theFinancial Statements) which in the aggregate are not material to the Business,taken as a whole.

 

### **(e)**                                  EventsSubsequent to June Balance Sheet

###  

Since June 30, 2005, except as approvedin writing by Buyer US or disclosed on **Schedule 3.2(e)**,the Selling Entities have conducted the Business only in the ordinary courseand consistent with past practices, and without limiting the generality of theforegoing except as aforesaid, there has not been any of the following:

 

(i)            Anymaterial adverse change or any event, occurrence, development or state ofcircumstances or facts which could reasonably be expected to result in amaterial adverse change;

 

(ii)           Anydamage, destruction or loss (whether or not covered by insurance) affecting theproperties, rights or assets of the Business in an amount greater than $100,000individually or in the aggregate;

 

(iii)          Anysale or other disposition of any capital asset used in the Business with anoriginal cost in excess of $50,000 individually, or $100,000 in the aggregate(excluding any Assets Held for Sale);

 

(iv)          Anyincrease in the wage, salary, bonus (including bonuses contingent upon orrelated to the Transactions), commission or other compensation (other than increasesgranted in the ordinary course of business and consistent with past practice)payable or to become payable by any of the Landis Group to any of the “***Employees***“ (as defined in Section 3.13(a)),other than the change in retirement benefits disclosed to CFL in a letter fromUNOVA dated October 4, 2005, or any change in any existing, or creation ofany new, insurance or other plan, other than the Landis Pension Plan, underwhich any of the Landis Group provides benefits to such Employees;

 

(v)           Anygrant of any severance or termination pay to any Employee of the Business,entering into of any employment, deferred compensation or other similaragreement (or any amendment to any such existing agreement) with any Employeeof the Business, or change in benefits payable under existing severance ortermination pay policies of the Selling Entities relating to the Business;

 

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(vi)          Anylabor dispute, other than routine individual grievances, or any activity or proceedingby a labor union or representative thereof to organize any Employees or anylockouts, strikes, slowdowns, work stoppages or threats thereof by or withrespect to such Employees or;

 

(vii)         AnyEmployee terminations (other than for poor performance or for cause) and/orlayoffs, and the Landis Group has preserved intact and kept available theservices of present Employees and, in each case in accordance with pastpractice;

 

(viii)        Anymaterial release, waiver, cancellation or compromise by any of the Landis Groupof any claim or right (or series of related rights and claims) in respect ofthe Business;

 

(ix)           Anychange in accounting methods, principles or practices used by the Business,except insofar as may have been required by a change in GAAP or Law; or

 

(x)            Anycontingent liability incurred by the Selling Entities in respect of theBusiness as guarantor or otherwise with respect to the obligations of others.

 

Furthermore, since June 30, 2005, exceptas approved by Buyer US in writing or as disclosed on **Schedule 3.2(e)**,none of the Selling Entities or any of the Selling Entities’ officers,directors or agents in their representative capacities on behalf of any suchentity, has:

 

(xi)           Paid,discharged or satisfied any material claims, liabilities or obligations(absolute, accrued or contingent) owed with respect to the Business other thanthe payment, discharge or satisfaction in the ordinary course of business andconsistent with past practice of claims, liabilities and obligations reflectedor reserved against in the Financial Statements, or prepaid any obligation inexcess of $100,000 owed with respect to the Business having a fixed maturity ofmore than ninety (90) days from the date such obligation was issued orincurred;

 

(xii)          Permittedor allowed any of the Purchased Assets to be subjected to any Lien exceptPermitted Liens or Liens that will be released prior to the Transfer Date;

 

(xiii)         Sold,transferred or otherwise disposed of any of the property or assets (real,personal or mixed, tangible or intangible) of the Business with an aggregatenet book value in excess of $100,000 (individually or in the aggregate), exceptthe sale of inventory in the ordinary course of business and except for anyAssets held for sale;

 

(xiv)        Disposedof or permitted to lapse any rights to the use of any material trademark, tradename, patent or copyright currently used in the conduct of the Business, ordisposed of or disclosed to any Person (other than representatives of thePurchasing Entities or any other Person subject to a confidentiality agreementor non-disclosure obligation) any material trade secret, formula, process orknow-how not theretofore a matter of public knowledge, which was used in theconduct of the Business;

 

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(xv)         Madeany single capital expenditure or commitment in excess of $50,000 for additionsto property, plant, equipment or intangible capital assets of the Business ormade aggregate capital expenditures in excess of $100,000 for additions toproperty, plant, equipment or intangible capital assets of the Business; or

 

(xvi)        Agreed,whether in writing or otherwise, to take any action described in this Section 3.2(e).

 

(f)            Withrespect to any Party hereunder, the term “***knowledge***“hereunder shall refer to the actual knowledge of the executive officers of suchPerson, provided that in respect of the Selling Entities the term “***knowledge***“ hereunder shall be deemedto include both the actual knowledge of the Selling Entities and also theactual knowledge of the Persons set forth on **Schedule 3.2(f)**.

 

## **3.3**                               AccountsReceivable

##  

As of the date of this Agreement, allaccounts, notes and drafts receivable (including unbilled receivables) of theBusiness reflected in the June Balance Sheet are bona fide, representtransactions actually made in the ordinary course of business and, to theknowledge of the Selling Entities are collectible in the ordinary course ofbusiness, except to the extent of the reserve for uncollectible accountsprovided for in the June Balance Sheet. All accounts, note receivables and other receivables of the Business at June 30,2005 have been included in the June Balance Sheet.

 

## **3.4**                               Inventoriesand Assets

##  

**(a)**           The inventories set forth in the June BalanceSheet were properly stated therein at the lesser of cost or fair market valuedetermined in accordance with GAAP consistently applied.  Since the June Balance Sheet, theinventories of the Business have been maintained in the ordinary course ofbusiness.  Except as disclosed on **Schedule 3.4(a) **and except as disclosed in theFinancial Statements, all such inventory is owned free and clear of allLiens.  On the Transfer Date, all of theinventory recorded on the June Balance Sheet will be in quantitiessufficient for the normal operation of the Business as currently conducted.

 

**(b)**           The fixed asset register of theSelling Entities in respect of the Business (a copy of which has been disclosedby UNOVA to Buyer UK and Buyer US) comprises a complete and accurate record ofall plant and machinery and all motor vehicles and other vehicles, office andother equipment owned, used or possessed by any of the Selling Entities inrespect of the Business (and such register or registers accurately reflectwhether such plant and machinery, vehicles or equipment are owned or leased byany of the Selling Entities).

 

**(c)**           The Selling Entities in respect ofthe Business (other than for products supplied to customers) has not providedany of their assets or property to any third party on lease, hire, hire-purchase,conditional sale or credit sale agreement terms.

 

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**(d)**           Each item of plant and machineryowned or used by the Selling Entities in the operation of the Business is inworking order (reasonable wear and tear excepted) and has been, and through theClosing will be, maintained in a manner consistent with the past maintenancepractices of the Selling Entities.

 

## **3.5**                               Absence ofLiens and Encumbrances

##  

**(a)**           For purposes of this Agreement, a “***Lien***“ shall mean any lien,encumbrance, mortgage, pledge, hypothecation, charge, security interest, titleretention or restriction or security agreement or arrangement of any kind.  “***Permitted Lien***“shall mean, collectively, any (i) Liens for Taxes, assessments orgovernmental charges or levies not yet due or, as disclosed on **Schedule 3.5**, being contested in good faith and anyLiens for Taxes disclosed on **Schedule 3.18**,(ii) statutory Liens of carriers, warehousemen, mechanics, materialmen andthe like arising in the ordinary course of business that do not impair in anymaterial respect the conduct of the Business or the use of any of the PurchasedAssets in the manner currently conducted or used, disclosed on **Schedule 3.5**, (iii) easements, restrictivecovenants, rights of way and other similar restrictions of record that do notimpair in any material respect the conduct of the Business or the use of any ofthe Purchased Assets in the manner currently conducted or used, (iv) zoning,building and other similar restrictions that do not impair in any materialrespect the conduct of the Business or the use of any of the Purchased Assetsin the manner currently conducted or used, (v) easements, encroachmentsand other minor imperfections of title that do not impair in any material respectthe value of the Purchased Assets or the continued conduct of the Business orthe continued use of any of the Purchased Assets in the manner currentlyconducted or used, (vi) in the case of leased property, all matters,whether or not of record, affecting the title of the lessor (and any underlyinglessor) of the leased property so long as such matters do not impair in anymaterial respect the conduct of the Business or the use of any of the PurchasedAssets in the manner currently conducted or used, (vii) any Lien createdby a Purchasing Entity in connection with this Agreement, (viii) otherLiens set forth on **Schedule 3.5**,(ix) Liens relating to deposits made in the ordinary course of business inconnection with workers’ compensation, employment insurance and other types ofsocial security, (x) Liens to secure the performance of leases, tradecontracts or other similar agreements and securing executory obligations underany lease that constitutes an “***operating lease***“under GAAP, and (xi) Liens to secure payment obligations in connectionwith purchased property in the ordinary course of business.  Except as set forth on **Schedule 3.5**,each of the applicable Selling Entities has good, and in the case of theUS Assets, marketable title to or, in the case of leased properties andassets, valid leasehold interests in, all of the Purchased Assets free andclear of all Liens other than Permitted Liens. The Selling Entities own all of the assets primarily or exclusively usedby them in the operation and conduct of the Business, or required by them forthe normal conduct of the Business, and those assets are the absolute legal andbeneficial property of the relevant Selling Entity, except for those assetsleased by them under leases specifically identified on **Schedule 3.6(c) **and**Schedule 3.8(d) **hereto.  Except as described on **Schedule 3.6(c) **and**Schedule 3.8(d) **hereto, nofinancing statement with respect to any of the Purchased Assets is active inany jurisdiction.

 

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**(b)**           Upon consummation of the transactionscontemplated hereby, the Purchasing Entities will acquire good and marketabletitle in and to, or a valid leasehold interest in each of the Purchased Assetsfree and clear of all Liens (other than Permitted Liens).

 

## **3.6**                               RealProperty

##  

### **(a)**                                  RealProperty

###  

Set forth on **Schedule 3.6(a) **isthe address and a description of all real property with respect to which any ofthe Selling Entities in respect of the Business is the owner and holder of afee simple, insurable interest (collectively, the “***OwnedReal Property***“).  To theknowledge of the Selling Entities, the Owned Real Property complies with allapplicable zoning, building, health and public safety, fire, subdivision, landsales or similar laws, rules, ordinances or regulations and all applicableEnvironmental Laws (as defined in Section 3.6(f)) and, except as set forthon **Schedule 3.6(a)**, none of theSelling Entities has received any written notice that the Owned Real Propertydoes not comply with all applicable zoning, building, fire, health and publicsafety, subdivision, land sales or similar laws, rules, ordinances orregulations and all applicable Environmental Laws.  Other than the Selling Entities in respect ofthe Business, no party has the right to occupy, possess or use any portion ofthe Owned Real Property.  There are nomaterial defects in the physical condition of any land, buildings orimprovements constituting part of the Owned Real Property, including without limitation,structural elements, mechanical systems, parking and loading areas, that wouldimpair the operation of the Business in any material respect in the manner inwhich it has been conducted, nor any material failure to conduct customarymaintenance and repair reasonably necessary for such operation of theBusiness.  All water, sewer, gas,electric, telephone, drainage and other utilities necessary for the lawfulcurrent operation of the Owned Real Property are available and sufficient toservice the operation of the Business as it has been conducted.  There are no material notices, orders,actions, suits or proceedings (including arbitration or condemnationproceedings) pending or, to the knowledge of the Selling Entities threatened,which could have a material adverse effect on any portion of the Owned RealProperty, at law or in equity or before or by any Governmental Body.

 

### **(b)**                                  RealtyLeases (as Lessor)

###  

Except as set forth on **Schedule 3.6(b)**,no portion of the Owned Real Property has been leased.  UNOVA has previously furnished to Buyer UStrue, correct and complete copies of the leases or similar contracts governingthe Owned Real Property that has been leased and any guaranties relatedthereto.  Each such lease is in fullforce and effect, no default or breach has occurred on the part of the SellingEntities or, to the knowledge of the Selling Entities, any other partythereto.  Except as set forth on **Schedule 3.6(b)**, no consent of any party is requiredunder any such lease in order to assign all rights and benefits in each suchlease to the applicable Purchasing Entity (or its designee) and to keep suchlease in full force and effect after the execution and delivery of thisAgreement and the consummation of the transactions contemplated hereby.

 

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### **(c)**                                  RealtyLeases (as Lessee)

###  

Set forth on **Schedule 3.6(c) **isa list and description of all real property with respect to which any of theSelling Entities is a lessee, guarantor or sublessee or other occupant (or inwhich the Selling Entities have any actual liability either as previouslicensee or guarantor) and that is used primarily or exclusively in theBusiness (the “***Leased Real Property***,” and,along with the Owned Real Property, the “***Real Property***“).  UNOVA has previously furnished to Buyer USand Buyer UK true, correct and complete copies of the leases or similarcontracts governing the Leased Real Property and any guaranties relatedthereto.  Each such lease is in fullforce and effect, no default or breach has occurred on the part of the SellingEntities or, to the knowledge of the Selling Entities, any other partythereto.  Except as set forth on **Schedule 3.6(c)**, no consent of any landlord or anyother party is required under any such lease in order to assign all rights andbenefits in each such lease to the applicable Purchasing Entity (or itsdesignee) and to keep such lease in full force and effect after the executionand delivery of this Agreement and the consummation of the transactionscontemplated hereby.

 

### **(d)**                                  [Reserved]

###  

### **(e)**                                  Violation ofLaws or Restrictive Covenants

###  

No notice of violation of any applicable Law(including without limitation any zoning and land use Law), covenant,condition, restriction, agreement or easement affecting any Real Propertyowned, leased or occupied by the Selling Entities or its use or occupancy ofsuch property, has been received by the Selling Entities in respect of theBusiness from any Governmental Body or other person entitled to enforce thesame.

 

### **(f)**                                    EnvironmentalMatters

###  

Except as otherwise disclosed on **Schedule 3.6(f)**:

 

(i)            TheSelling Entities in respect of the Business have obtained and currentlymaintain all material permits, registrations, consents, permissions, licensesand other authorizations (the “***Environmental Permits***“)which are presently required with respect to the operation of the Business orany Real Property under applicable Law relating to pollution or the regulationor protection of the environment or human health and safety, including withoutlimitation Laws and regulations relating to emission, migration, discharge orrelease of regulated levels of any “***Hazardous Substance***“(as defined below) into the environment (including without limitation soils,sediment, ambient air (including indoor air), surface water, ground water,drinking water supply, land surface or subsurface strata, and any otherenvironmental medium or natural resources, located both on and off-site) orotherwise relating to the manufacture, processing, distribution, generation,use, removal, abatement, remediation, treatment, storage, disposal, transport,recycling, recovery, reclamation, management, handling, import or export of anyHazardous Substance or waste and statutory and common law nuisance as in effectat the date hereof but excluding all Laws relating to planning and/or zoning(collectively, “***Environmental Laws***“).  The term “***Hazardous***

 

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***Substance***“ shallmean any toxic or hazardous constituents, pollutants, waste waters, byproducts,contaminants, chemicals, compounds, substances (whether in solid or liquid formor in the form of a gas or vapor and whether alone or in combination with anyother substance), materials or wastes, including without limitation asbestos,polychlorinated biphenyls, toxic mold, mildew, or fungi, petroleum or anypetroleum products or other constituents or petroleum-based derivatives or ureaformaldehyde.  None of the SellingEntities has been notified by any Governmental Body that any of theEnvironmental Permits will be materially modified or suspended or revoked, andthe Selling Entities have no reason to believe that the Environmental Permitscannot be transferred or reissued to the applicable Purchasing Entity orrenewed upon their expiration upon the same or similar terms and conditions asthe current permits, subject to requirements of applicable Environmental Lawsgoverning such Environmental Permits. Each of the Selling Entities is currently and has been since January 1,2004 in material compliance with the terms and conditions of the EnvironmentalPermits and all such permits are in full force and effect and are disclosed in **Schedule 3.6(f)**;

 

(ii)           Eachof the Selling Entities is, and has been since January 1, 2002, inmaterial compliance with and has no actual or contingent liability under allapplicable limitations, restrictions, conditions, standards, prohibitions,requirements, obligations, schedules and timetables imposed or required byEnvironmental Laws.  To the SellingEntities’ knowledge, there are no circumstances that may prevent or interferewith such compliance in the future;

 

(iii)          Thereis and has been no civil, criminal or administrative action, suit, demand,claim, hearing, notice of violation, order, investigation, proceeding, noticeor demand letter received by or pending or, to the knowledge of the SellingEntities, threatened against any of the Selling Entities in respect of theBusiness or any Real Property;

 

(iv)          Therehas been no storage, holding, existence, release, migration, spill, emission,discharge, generation, processing, treatment, remediation, abatement, removal,recycling, recovery, reclamation, disposal, handling, use or transportation ofany Hazardous Substance from, under, into, at or on any real property now orpreviously owned, occupied, operated or leased by any of the Selling Entitiesin respect of the Business  which hasresulted or is reasonably likely to result in a violation by or a materialliability of any of the Selling Entities in respect of the Business underEnvironmental Laws or which has resulted in the contamination or pollution ofany real property now or previously owned, occupied, operated, or leased by anyof the Selling Entities in respect of the Business that is required or could berequired by any Governmental Body to be investigated, reported, removed,treated, contained or remediated under Environmental Laws;

 

(v)           Nounderground storage tanks (as defined by 42 U.S.C. § 6991(1)) activeor abandoned, are or have been present at any real property now or formerlyowned, occupied, operated or leased by any of the Selling Entities in respectof the Business;

 

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(vi)          Noneof the Selling Entities in respect of the Business has transported or disposedof, or allowed or arranged for any third party to transport or dispose of, anyHazardous Substance to or at any location that is listed or proposed forlisting on the National Priorities List (the “***NPL***“)promulgated pursuant to CERCLA, CERCLIS, or any equivalent list of sites forcleanup under any analogous state program, excepting those locations where theSelling Entities were de minimis responsible parties and have resolved anypotential liabilities through a “***De Minimis Settlement***,”as that term is defined by 42 U.S.C. Section 9622(g), with the UnitedStates Environmental Protection Agency or an analogous state agency;

 

(vii)         Exceptfor routine filings related to the reassignment or assumption of permits andconsents and other operating requirements under Environmental Laws, no consent,approval, authorization, registration or filing is required under EnvironmentalLaws in connection with the execution and delivery of this Agreement or theconsummation of the transactions contemplated hereby; and

 

(viii)        Noneof the Selling Entities in respect of the Business is or has been a party to orotherwise accept or have accepted the burden of an indemnity or othercontractual provision or arrangement concerning liabilities, losses, damages,fines, penalties, charges, costs or expenses under Environmental Laws.

 

### **(g)**                                 Real EstateLiens or Encumbrances

###  

Except as disclosed in any title insurancepolicy delivered to Buyer US prior to the date hereof, none of the Owned RealProperty is subject to any easements, covenants, restrictions and reservations (ofrecord or otherwise), which prohibit or materially interfere with the currentuse of such Owned Real Property.

 

## **3.7**                               Right to UseProperties and Assets

##  

No Selling Entity is using any properties,rights or assets to conduct the Business, including the Purchased Assets, whichare not duly owned, leased, licensed or otherwise contracted for by it.  A Selling Entity is the legal and beneficialowner of each of the Purchased Assets.

 

## **3.8**                               Contractsand Commitments

##  

The agreements set forth on **Schedules 3.8(a) through 3.8(l)** are referredto herein as the “***Contracts***.”

 

### **(a)**                                  SalesOrders, Bids and Proposals

###  

Set forth on **Schedule 3.8(a) **isa list and description of each individual outstanding sales order, salescontract, change order, final bid or binding sales proposal of any of theSelling Entities relating to the Business in excess of $100,000 (the “***Sales Orders***“).  UNOVA has provided Buyer US with access tocopies of all Sales Orders.  Except as

 

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otherwise indicated on **Schedule 3.8(a)**,all Sales Orders currently in effect have been made in the ordinary course ofbusiness and at arm’s length.

 

### **(b)**                                  PurchaseOrders

###  

Set forth on **Schedule 3.8(b) **isa list and description of each individual outstanding purchase order andpurchase commitment of any of the Selling Entities relating to the Business inexcess of $100,000 (the “***Purchase Orders***“).  UNOVA has provided Buyer US with accessto copies of all Purchase Orders.  Exceptas otherwise indicated on **Schedule 3.8(b)**,all Purchase Orders have been incurred in the ordinary course of business andat arm’s length.

 

### **(c)**                                  SalesRepresentative, Distributor and Dealer Agreements

###  

Set forth on **Schedule 3.8(c) **isa list and description of all sales representative, sales agent, dealer anddistributor agreements and similar contracts or agreements of any of theSelling Entities relating to the Business. All of such contracts and agreements by their terms are terminable atany time by the applicable Selling Entity without any additional payment,indemnity or other penalty upon not more than 90 days notice, except asotherwise disclosed on **Schedule 3.8(c)**.

 

### **(d)**                                  PersonalProperty Leases (As Lessee)

###  

Set forth on **Schedule 3.8(d) **are(i) a list and description of each individual lease, contract and otheragreement under which any of the Selling Entities in respect of the Businessleases or rents (as lessee) any machinery, equipment, motor vehicle or otherpersonal property used in the Business (the “***LeasedPersonal Property***“) and which is not terminable at any time bythe applicable Selling Entity without any additional payment, indemnity orother penalty upon not more than 90 days notice, and under which the leaseor rent payments exceed $10,000 annually, and (ii) a list of each leaseunder which any of the Selling Entities leases or rents (as lessee) any motorvehicle used in the Business.

 

### **(e)**                                  NoncompetitionAgreements or Covenants

###  

Set forth on **Schedule 3.8(e) **isa list and description of every agreement or other commitment imposing on anyof the Selling Entities any restriction on the manner in which it may conductthe Business in competition with any third party.

 

### **(f)**                                    ConfidentialNondisclosure Agreements

###  

Set forth on **Schedule 3.8(f) **isa list and description of all written agreements between any of the SellingEntities and any third party in respect of the Business which containprovisions for the nondisclosure by any of the Selling Entities of confidentialor proprietary information (excluding standard confidentiality provisions in productsales or service agreements and excluding confidentiality agreements withpotential purchasers of all or any portion of the Landis Group).

 

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### **(g)**                                 Consultantsand Consultant Agreements

###  

**Schedule 3.8(g) **listsall Persons who are currently performing services for the Business who areclassified as “consultants” or “independent contractors” that receive an annualcompensation in excess of $50,000, the compensation of each such Person andwhether any Selling Entity is party to an agreement with such Person (whetheror not in writing).  Set forth on **Schedule 3.8(g) **is a list and description of alloutstanding consultant agreements of any of the Selling Entities in respect ofthe Business.  For purposes of this Section 3.8(g) theterm “***consultants***“ and “***independent contractors***“ shall notbe deemed to include attorneys, accountants and other similar professionaladvisors.

 

### **(h)**                                 Indebtedness;Guarantees

###  

Set forth on **Schedule 3.8(h) **isa list and description of any Indebtedness of any Selling Entity in respect ofthe Business.  “***Indebtedness***“means (i) any indebtedness for borrowed money or issued in substitutionfor or exchange of indebtedness for borrowed money, (ii) any indebtednessevidenced by any note, bond, debenture or other debt security, (iii) anyindebtedness for the deferred purchase price of property or services withrespect to which a Person is liable, contingently or otherwise, as obligor orotherwise, (iv) any commitment by which a Person assures a creditoragainst loss (including, without limitation, contingent reimbursement liabilitywith respect to letters of credit), (v) any indebtedness guaranteed in anymanner by a Person (including, without limitation, guarantees in the form of anagreement to repurchase or reimburse), (vi) any liabilities under leasesrecorded for accounting purposes by the applicable Person as capitalized leaseswith respect to which a Person is liable, contingently or otherwise, asobligor, guarantor or otherwise, (vii) any indebtedness secured by a Lienon a Person’s assets, (viii) any unsatisfied obligation for “withdrawalliability” to a “multiemployer plan” as such terms are defined under ERISA, (ix) anyamounts owed to any Person under any noncompetition, severance or similararrangements, (x) any change-of-control or similar payment which istriggered by the transactions contemplated by this Agreement, (xi) anyliability of the Selling Entities under deferred compensation plans, phantomstock plans, severance or bonus plans, or similar arrangements made payable inwhole or in part as a result of the Transactions contemplated herein,(xii) any off-balance sheet financing of a Person (but excluding allleases recorded for accounting purposes by the applicable Person as operatingleases), and (xiii) any accrued and unpaid interest on, and any prepaymentpremiums, penalties or similar contractual charges in respect of, any of theforegoing obligations computed as though payments is being made in respectthereof on the Transfer Date.

 

### **(i)**                                    Powers ofAttorney, Proxies

###  

Set forth on **Schedule 3.8(i) **isa list and description of all outstanding powers of attorney, agency or proxiesgranted by any Selling Entity in respect of the Business.

 

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### **(j)**                                    Letters ofCredit, Surety, Bid and Performance Bonds

###  

Set forth on **Schedule 3.8(j)**is a list and description of all commercial letters of credit, stand-by lettersof credit, surety, bid, performance bonds and other similar instruments (i) securingthe obligations of any of the Selling Entities in respect of the Business or (ii) securingany outstanding payment obligations of a third party to any of the SellingEntities in respect of the Business.

 

### **(k)**                                JointVenture Agreements

###  

Set forth on **Schedule 3.8(k)**is a list and description of all partnership, joint venture, investment orother similar agreement of any of the Selling Entities in respect of theBusiness.

 

### **(l)**                                    OtherMaterial Contracts

###  

(i)            Setforth on **Schedule 3.8(l)** is a list anddescription of any other contract or commitment of any of the Selling Entitiesin respect of the Business that is material to the Business and which is not ofthe type required to be disclosed in any other Schedule to this Agreementpursuant to the provisions hereof.  Forpurpose of this Section 3.8(l), a contract or commitment shall be deemedmaterial if the consideration paid or to be paid thereunder exceeds $100,000 orthe contract or commitment is not terminable upon not more than 90 daysnotice without penalty or other adverse consequences.  Except as otherwise disclosed in this Section 3.8,all Purchased Contracts are valid and in full force and effect, the applicableSelling Entity has performed all material obligations required to be performedthereunder, and there are not any defaults or events of default on the part ofany of the Selling Entities, or, to their knowledge, the other partiesthereto.  Except as otherwise disclosedin this Section 3.8, none of the Selling Entities has received notice thatany party to any such Purchased Contract intends to cancel, terminate or refuseto renew such Purchased Contract or to exercise or decline to exercise anyoption or right thereunder.  Assumingreceipt of all the Required Consents (including but not limited to the consentsin **Schedule 6.6** to be obtained priorto Closing), upon consummation of the transactions contemplated by thisAgreement, each such Purchased Contract shall continue in full force and effectin accordance with its respective terms without penalty or other adverseconsequences, including, without limitation termination or cancellation.

 

(ii)           Inaddition, except as set forth on **Schedule 3.8(l)**,no Selling Entity in respect of the Business has entered into any arrangement,contract or commitment which:

 

(A)          wasentered into otherwise than on an arm’s length basis or in the ordinary courseof business; or

 

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(B)           relatesto the supply of goods and/or services by or to the Selling Entities under orin relation to which retrospective or future discounts, price reductions orother incentives have been or are proposed to be given by the Selling Entitieswhich exceed 10% of the Selling Entities’ normal retail price for such goods orservices or which are not in the ordinary course of business; or

 

(C)           meansthat they enjoy an exclusive relationship with any third party including anyexclusive purchase or supply relationship;

 

(D)          isincapable of termination in accordance with its terms by the Selling Entitieson six months’ notice or less; or

 

(E)           hasa term that exceeds 12 months or more.

 

### **(m)**                              [Reserved]

###  

### **(n)**                                 RestrictiveContracts

###  

There are no contracts to which the SellingEntities are a party in connection with the Business which infringe or whichhave been or which were required to be registered or notified under theRestrictive Trade Practices Act, the Resale Prices Act, the Competition Act1980, the Competition Act 1998 or the EC Treaty; and the Selling Entities havenot in relation to the Business received any process, notice or communicationby or on behalf of the Office of Fair Trading, the Competition Commission, theEuropean Commission or any other authority in any country which hasjurisdiction in anti-trust, monopoly, competition or consumer protectionmatters.

 

## **3.9**                               Patents,Trade Names, Trademarks, Service Marks, Copyrights and Chip Registrations

##  

### **(a)**                                  IntellectualProperty Rights

###  

Set forth on **Schedule 3.9(a) **isa list and description of (i) all patents, patent applications, registereddesigns, design applications, utility models, registered trade names, internetdomains, trademark registrations and trademark applications, service markregistrations and service mark applications, domain names, copyrightregistrations and copyright registration applications, chip registrations andchip registration applications, both domestic and foreign, which are used inthe Business and (ii) all material trade names, trade marks and servicemarks (registered or unregistered), unregistered copyrights, unregistered designsand software used in the Business (collectively, the “***IntellectualProperty***“).  Except asotherwise indicated on **Schedule 3.9(a)**,such Intellectual Property, together with the Selling Entities’ trade secrets,know-how, confidential information and all other intellectual property rightsof any nature, is all of the intellectual property that is material andnecessary to operate the Business as currently conducted.  Except as otherwise indicated on **Schedule 3.9(a)**, the applicable Selling Entity owns, asof record and beneficially, all right, title and interest in and to theIntellectual Property and the Intellectual Property is not subject

 

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to any Lien other than Permitted Liens.  No claim is pending or, to the SellingEntities’ knowledge, threatened against any of the Selling Entities and/ortheir officers, employees or consultants that challenges the Selling Entities’rights in the Intellectual Property or otherwise adversely affects theaforesaid right, title and interest in and to the Intellectual Property, norhave there have been any clams, disputes or proceedings in respect of the useor ownership of the Intellectual Property in the two years before the date ofthis Agreement or the Transfer Date.  Exceptas disclosed on **Schedule 3.9(a)**, there are nopast or pending opposition proceedings, cancellation actions, reexaminations,reissues, interference proceedings or revocation actions related to any of theIntellectual Property.  Except asdisclosed on **Schedule 3.9(a)**, all patentsor patent applications and trademarks, servicemarks, registered designs,copyright registrations, domain names and applications constitutingIntellectual Property are in compliance with applicable Law (including withoutlimitation, payment of filing, examination and maintenance fees,) and are validand, to the knowledge of the Selling Entities, nothing has been done or omittedto be done (and the Selling Entities are not aware of anything) which may causeany of them to cease to be so, and are not subject to any maintenance fees,taxes or actions falling due within ninety (90) days after the date ofClosing, assuming a Closing Date of December 9, 2005.  The UK Purchased Assets do not tradeunder any name, other than “Landis Lund” and “Cranfield Precision” and noperson, form or company other than UNOVA UK has any rights in relation to thenames “Landis Lund” or “Cranfield Precision” or has requested or required UNOVAUK to refrain from using such name or attempted to prevent such use by UNOVAUK.

 

### **(b)**                                  Licenses ofIntellectual Property Rights To or From Third Parties

###  

(i)            Setforth on **Schedule 3.9(b) **is a list anddescription of (i) all licenses, assignments and other transfers ofIntellectual Property granted to others by any of the Selling Entities that areused in and material to the Business, and (ii) all licenses, assignmentsand other transfers by others of patents, trade names, domain names,trademarks, service marks, copyrights, chip registrations, trade secrets,software (other than shrink-wrap licenses), know-how, industrial property,technology or other proprietary rights granted to any of the Selling Entitiesthat are used in and material to the Business. All such agreements are in full force and effect and there is no materialdefault by any of the Selling Entities or, to the knowledge of the SellingEntities any party thereto.  Except asotherwise disclosed on **Schedule 3.9(b)**,none of the agreements described above is subject to termination, cancellation,penalty or change in its terms or provisions as a result of this Agreement orthe consummation of the transactions contemplated by this Agreement.

 

(ii)           Tothe knowledge of the Selling Entities, the information and communicationstechnology infrastructure and systems including software, hardware, firmwareand networks which is or has been used in the Business by any of the SellingEntities (the “***IT System***“) has notexperienced a material failure in the year prior to the Transfer Date.  The IT System, together with the PurchasedAssets, comprises all of the information technology material and necessary tooperate the Business.

 

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### **(c)**                                  NoInfringement

###  

Except as disclosed on **Schedule 3.9(c) **andexcept with respect to pre-packaged or off-the-shelf software, (i) to theknowledge of the Selling Entities, none of the Intellectual Property (otherthan patents) or the rights of any of the Selling Entities in the IntellectualProperty (other than patents) are being infringed by any Person, and (ii) neitherthe operation of the Business nor any activity by any of the Selling Entitiesin connection with the Business infringes the rights of any other Person in anyIntellectual Property (other than patents). Except as disclosed on **Schedule 3.9(c)**,to the knowledge, information and belief of the Selling Entities (a) noneof the patents included in the Intellectual Property or the rights of any ofthe Selling Entities in any patents included in the Intellectual Property arebeing infringed by any Person, and (b) neither the operation of theBusiness nor any activity by any of the Selling Entity in connection with theBusiness infringes the patent rights of any other Person.

 

## **3.10**                        Patent,Trade Name, Trademark, Service Mark, Copyright or Chip RegistrationIndemnification

##  

Except as set forth on **Schedule 3.10**,there are no pending or, to the knowledge of the Selling Entities, threatenedindemnification claims or demands against any of the Selling Entities relatingto the Intellectual Property.  Except asset forth on **Schedule 3.10**, none of thepropriety information or trade secrets of any of the Selling Entities relatingto the Business of any proprietary or confidential information or trade secretsnow the subject to a patent or patent application has been disclosed to anyother Person except pursuant to confidentiality agreements between the SellingEntities and such Person.

 

## **3.11**                        ConfidentialInformation or Trade Secrets

##  

**(a)**           Except as set forth on **Schedule 3.9(a)**, none of the proprietary or confidentialinformation or trade secrets of any of the Selling Entities relating to theBusiness or any proprietary or confidential information or trade secrets nowthe subject of a patent or patent application, has been disclosed to any otherPerson except pursuant to valid and binding confidentiality agreements betweenthe Selling Entities and such Person. Except as set forth on **Schedule 3.11**,there are no pending or, to the knowledge of the Selling Entities threatenedproceedings which challenge the rights of any of the Selling Entities inrespect of any proprietary or confidential information or trade secrets used inthe Business.

 

**(b)**           In respect of all and any PersonalData (as defined in the Data Protection Act 1998) processed by any of theSelling Entities, the applicable Selling Entity has made all necessaryregistrations and notifications of its particulars in accordance with the DataProtection Legislation (being all legislation relating to data protection andto the recording, interception and monitoring of communications and privacyincluding without limitation the Data Protection Acts of 1984 and 1998, and theEU Data Protection Directive 95/46/EC, the Privacy and ElectronicCommunications (EC Directive) Regulations 2003, Part 1 of theRegulation of Investigatory Powers Act 2000 as amended and any analogouslegislation in any part of the world), and have otherwise complied with theData Protection Legislation.

 

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## **3.12**                        Products andService Warranties

##  

### **(a)**                                  Products

###  

Each of the products produced, sold, packagedor marketed by any of the Selling Entities in connection with the Businessprior to delivery is, and at all times has been, in compliance in all materialrespects with all applicable Laws and, to the knowledge of the SellingEntities, conforms in all material respects to any promises or affirmation offact made on the container, label or documentation for such products or inconnection with its sale.  To theknowledge of the Selling Entities these products perform in accordance withtheir respective documented specifications and as the Selling Entities haveexpressly warranted to their customers. Except as otherwise disclosed to the Purchasing Entities in Schedule 3.12(a) tothis Agreement, there have been no product recalls or claims (other thanwarranty claims) against any of the Selling Entities in respect of the productsproduced, sold, packaged or marketed by any of the Selling Entities inconnection with the Business.

 

### **(b)**                                  ServiceWarranties

###  

Set forth on **Schedule 3.12(b) **areall the standard product and service warranty policies of the Selling Entitiesin respect of the Business.  Except asotherwise indicated on **Schedule 3.12(b)**,no Selling Entity has granted or extended any currently outstanding product orservice warranty, either in duration, scope or otherwise, that is in excess ofor different from the standard policies set forth on **Schedule 3.12(b)**.

 

## **3.13**                        Employees;Employee Benefits

##  

### **(a)**                                  Employees

###  

Subject to European data protection legislation,**Schedule 3.13(a) **sets forth,with respect to each employee of the Selling Entities who is employed in theBusiness (including any such employee of Seller who is on a leave of absence,maternity leave, short or long term disability, or on layoff status subject torecall) (the “***Employees***“) (i) the nameof such Employee and the date as of which such Employee was originally hired bythe Selling Entities, and whether the Employee is on an active or inactivestatus; (ii) such Employee’s title; (iii) whether the Employee isclassified as exempt or non-exempt under the Fair Labor Standards Act; (iv) suchEmployee’s base compensation as of the date of this Agreement, equity vestingschedule, and whether such Employee is eligible to participate in any EmployeeBenefit Plans; and (v) any governmental authorization that is held by suchEmployee and that is used in connection with the Business.  Except as disclosed on **Schedule 3.13(a)**,the employment of each of the Employees of the Business is terminable by theSelling Entities at will.  No offer ofemployment has been made by the Selling Entities to any individual which hasnot yet been accepted or which has been accepted but where the individual’semployment has not yet started.  Allcontracts of service or consultancy with any Employee in the UK can beterminated by three months notice or less without giving rise to any claim(other than statutory redundancy or unfair dismissal, if applicable) other thana claim under any applicable benefit plan. Employees in the UK holding stock options in any

 

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of the Selling Entities will be entitled toexercise those stock options for a period not less than 3 months after theTransfer Date.

 

### **(b)**                                  EmploymentContracts

###  

**Schedule 3.13(b) **listsall current employee manuals and handbooks and employment agreements relatingto the employment of the Employees.  Tothe extent permitted by law, UNOVA has provided the Purchasing Entities withaccess to all employment policy statements material records relating to healthand safety issues (including, without limitation, accident at work records,claim details, insurance records, policy and guidance documents and trainingand monitoring records) and other materials of material nature relating to theemployment of the current Employees of the Business.  All Employees are employed on the terms setout in the documents included on **Schedule 3.13(b)**.  Except as disclosed on **Schedule 3.13(b)**,(i) none of the Employees of the Business is a party to any employment,bonus, commission or other compensation agreement with any of the SellingEntities, (ii) none of the Employees of the Business has notified orotherwise indicated to the Selling Entities that he or she intends to terminatehis or her employment with the Selling Entities, (iii) the SellingEntities do not have a present intention to terminate the employment of anyEmployee of the Business, except as contemplated by Section 8.4 of theAgreement; (iv) to the knowledge of the Selling Entities, no Employee atmanagement level in relation to the Business has since July 1, 2005received an offer of employment from any other Person, (v) all employeesof the Business have executed the Selling Entities’ standard form ofnoncompetition, nondisclosure and developments agreement; (vi) to theknowledge of the Selling Entities, no Employee of the Business is a party to oris bound by any employment contract, patent disclosure agreement,noncompetition agreement or other restrictive covenant or other contract withany third party that would be likely to affect in any way (A) theperformance by such Employee of any of his or her duties or responsibilities asa Employee, or (B) the business or operations of the Business; (vii) tothe knowledge of the Selling Entities, no Employee employed at a managementlevel in relation to the Business is in violation of any term of any employmentcontract, patent disclosure agreement, noncompetition agreement, or any otherrestrictive covenant with any third party relating to the right of any suchEmployee to be employed by the Selling Entities in respect of the Business and (viii) theSelling Entities are not and have never been engaged in any dispute orlitigation with an Employee of the Business or former Employee of the Businessregarding Intellectual Property matters.

 

### **(c)**                                  Severance

###  

Except as disclosed on **Schedule 3.13(c)**,(i) none of the Selling Entities in respect of the Business has anestablished severance pay practice or policy; (ii) no Employee of theBusiness is entitled to any severance pay, bonus compensation, acceleration ofpayment or vesting of any equity interest, or other payment from the SellingEntities (other than accrued salary, vacation, or other paid time off inaccordance with the policies of the Selling Entities in respect of theBusiness) as a result of or in connection with the transactions contemplated bythis Agreement or any Related Agreement or as a result of any termination bythe

 

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Business on or after the Closing of anyPerson employed by the Selling Entities on or prior to the Transfer Date.

 

### **(d)**                                  Indebtednessto Employees

###  

Except as otherwise disclosed on **Schedule 3.13(d)**, none of the Selling Entities inrespect of the Business is indebted to any of the present or former Employeesin any amount whatsoever, other than for accrued wages, bonuses and relatedbenefits and reasonable reimbursable business expenses incurred in the ordinarycourse of business.

 

### **(e)**                                  Loans orAdvances to Employees

###  

Except as otherwise disclosed on **Schedule 3.13(e)**, none of the Selling Entities hasoutstanding and unsatisfied, in whole or in part, any loan or advance to any ofits present or former employees, other than reasonable advances for businessand related expenses made in the ordinary course of business.

 

### **(f)**                                    CollectiveBargaining Agreements

###  

(i)            Setforth on **Schedule 3.13(f) **is a listand description of all collective bargaining or similar agreements between anyof the Selling Entities and any group of Employees, union or labor organizationrepresenting any Employees including any works agreement.  Except as otherwise disclosed on **Schedule 3.13(f)**, no such agreement or understanding ispresently proposed or under discussion by the Selling Entities with Employees.  The Selling Entities in respect of theBusiness do not have a duty to bargain with any other union or labororganization.

 

(ii)           Exceptas set forth on **Schedule 3.13(f)**, the SellingEntities do not recognize a trade union nor have they done anything which mightbe construed as recognition.  The SellingEntities have not received any further application for recognition from a tradeunion.  The Selling Entities do not haveany other works or supervisory council or other body representing Employeeswhich has a right to be represented or attend at or participate in any board orcouncil meeting or a right to be informed, consulted or make representations inrelation to the Business.

 

(iii)          UNOVAUK has not received any employee request for information and consultationpursuant to Regulation 7 of the Information and Consultation of EmployeesRegulations 2004, regardless of whether the number of request issufficient to comply with the requirement for a valid employee request underRegulation 7(2) of those regulations. UNOVA UK is not involved in any negations with Employees pursuant to theInformation and Consultation of Employees Regulation 2004.

 

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### **(g)**                                 IndependentContractors

###  

All the Persons set forth on **Schedule 3.8(g) **and any other Person classified assuch by the Selling Entities in respect of the Business have been properlyclassified as independent contractors and have been engaged in accordance withall applicable foreign, federal, state and/or local laws, and have been paidall compensation due them.

 

### **(h)**                                 Commitments

###  

(A)          TheSelling Entities are not obliged to increase, nor have they made provision toincrease, the total annual remuneration payable to the Employees by more thanfive per cent.

 

(B)           Exceptas set forth in **Schedule 3.13(h)(B)**, noremuneration reviews or negotiations for an increase in the remuneration orbenefits of an officer or Employee are current or due to take place within thenext six months.

 

(C)           Exceptfor the change in retirement benefits disclosed to CFL in the letter from UNOVAdated October 4, 2005 or as set forth in **Schedule 3.2(e)**:  (1) no legally binding assurances orundertakings have been given to any of the Employees as to the continuation,introduction, increase or improvement of any terms and conditions,remuneration, benefits or other bonus or incentive scheme, and (2) to theknowledge of the Selling Entities, no Employee has any expectation of theintroduction, increase or improvement of any of his terms and conditions, remuneration,benefits or other bonus or incentive schemes. The Parties acknowledge and agree that nothing in this Section 3.13(h)(C) orotherwise in this Agreement shall restrict the ability of UNOVA UK to grantearly retirement to Employees in the ordinary course of its business, whetherbefore, on or after the date of this Agreement, and that UNOVA’s granting ofearly retirement in the ordinary course of its business shall not constitute abreach of the representations and warranties with respect to the PurchasingEntities or provide a basis for a claim for indemnification by the PurchasingEntities under this Agreement.

 

### **(i)**                                    Employmenthistory

###  

(A)          Exceptas otherwise disclosed on Schedule 3.13(i) within the period of oneyear ending on the date of this Agreement the Selling Entities in respect ofthe Business have not:

 

(1)           madeor started implementation of any collective dismissals that have required orwill require notification to any state authority or notification to orconsultation with any trade union, works council, staff association or otherbody representing employees; or

 

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(2)           beena party to any transfer of a business or undertaking other than thetransactions contemplated by this Agreement that has required or will requirenotification to or consulting with any trade union, works council, staffassociation or other body representing employees.

 

(B)           Exceptas set forth on Schedule 3.13(i), UNOVA UK has no obligation to make anypayment on the redundancy of any Employee in excess of the statutory redundancypayment and has not in the two years preceding the date of this Agreementoperated any discretionary practice of making any such excess payments to anyof its Employees.  UNOVA UK has noobligation to follow any contractual redundancy procedure.

 

(C)           Inrelation to any business reorganization, restructuring or business transferwhich has taken place in relation to the Landis Group in the United Kingdom theperiod of one year prior to this Agreement and which constitutes a transfer forthe purposes of the Transfer of Undertakings (Protection of Employment)Regulations 1981 (“***TUPE Transfer***“),

 

none of the terms and conditions ofemployment of any Employee of UNOVA UK has been varied within a period of sixmonths before or after any TUPE Transfer.

 

### **(j)**                                    Other LaborMatters

###  

Except as set forth on **Schedule 3.13(j)**,(i) the Business is in compliance in all material respects with allapplicable laws and regulations respecting labor, employment, fair employmentpractices, work place safety and health, terms and conditions of employment,wages, hours and data protection; (ii) the Business is not delinquent inany payments to any Employee for any wages, salaries, commissions, bonuses,fees or other direct compensation due with respect to any services performedfor it to the date hereof or amounts required to be reimbursed to suchEmployees; (iii) there are no, and within the last two (2) yearsthere have been no formal or informal grievances, complaints or charges withrespect to employment or labor matters (including, without limitation,allegations of employment discrimination, retaliation or unfair laborpractices) pending or threatened against the Selling Entities in respect of theBusiness in any judicial, regulatory or administrative forum, under any privatedispute procedure or internally; (iv) none of the employment policies orpractices of the Business are currently being audited or investigated, or tothe knowledge of the Selling Entities, subject to imminent audit orinvestigation by any Governmental Authority; (v) the Selling Entities arenot or have not been within the last two (2) years subject to any order,decree, injunction or judgment by an Governmental Authority or privatesettlement contract in respect of any labor or employment matters concerningthe Business; (vi) the Selling Entities are in compliance with therequirements of the Immigration Reform Control Act of 1986 with respect to allEmployees; (vii) all Employees other than Employees of UNOVA UK areemployed at will; (viii) there is no, and during the past two (2) yearsthere has not been any, labor strike, picketing of any nature, labor dispute,slowdown or any other concerted interference with normal operations, stoppage orlockout pending or, to the Selling

 

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Entities’ knowledge, threatened against oreffecting the Business, and (ix) UNOVA UK has maintained materially up-to-daterecords regarding the service of each of its Employees (including, withoutlimitation, details of terms of employments, payments of statutory sick pay,statutory maternity pay, disciplinary and health and safety matters, income taxand social security contributions, records for the purposes of the Working TimeRegulations 1998) and termination of employment.

 

### **(k)**                                EmployeeBenefit Plans

###  

Set forth on **Schedule 3.13(k)**is a list of all employee benefit plans and commitments under which liabilityremains maintained or contributed to by the Selling Entities for the benefit ofthe present or former employees of the Landis Group or any group of suchemployees, or for the benefit of dependents of any of them (collectively, the “***Employee Benefit Plans***“), includingwithout limitation any pension, life and dependent life, accidental death andhealth insurance (including medical, dental and vision), hospitalization,medical examination, savings, bonus, deferred compensation, incentivecompensation, holiday, vacation, severance pay, tax preparation assistance andequalization, estate planning, pay-in-lieu, sick pay, sick leave, disability,tuition refund, service award, company car, car allowance, scholarship,relocation, patent award, living allowances, housing allowances, annual homeleave costs, employee assistance, travel, accident, dependent schooling andsupplements, fringe benefit and other employee benefit plans, contracts,policies or practices providing employee or executive compensation orbenefits.  None of the Selling Entities inrespect of the Business has committed to establish any agreement or arrangementof the type required to be disclosed on **Schedule 3.13(k)**,except as otherwise indicated on such Schedule. Except as otherwise disclosed on **Schedule 3.13(k)**,each of the Employee Benefit Plans complies, and has complied since January 1,2002, and has been administered in compliance in all material respects, withall applicable Laws.

 

### **(l)**                                    ERISA Plans

###  

(A)          UNOVAhas provided Buyer US with access to copies of (1) each Employee BenefitPlan that is an “***employee benefit plan***“ asdefined in Section 3(3) of the Employee Retirement Income SecurityAct of 1974, as amended (“***ERISA***“),including amendments thereto but excluding any such plan applying to Employeesof UNOVA UK (each, an “***ERISA Plan***“),or, in the case of any unwritten ERISA Plan, a description thereof, (2) ifapplicable, the current trust agreement for each ERISA Plan, includingamendments thereto, (3) if applicable, the most recent summary plandescription for each ERISA Plan and all modifications thereto, (4) if applicable,the most recent Form 5500 filed for each ERISA Plan, (5) ifapplicable, the most recent actuarial valuation report prepared in connectionwith any ERISA Plan, and (6) if applicable, the most recent determinationletter received from the Internal Revenue Service with respect to such ERISAPlan.

 

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(B)           Exceptas otherwise disclosed on **Schedule 3.13(l)**,no ERISA Plan is a “***multiemployer plan***“ (asdefined in Section 3(37) or Section 4001(a)(3) of ERISA) and,during the last five years, no Selling Entity has incurred any withdrawalliability under Section 4201 of ERISA to any multiemployer plan thatcovered employees of the US division of the Landis Group.

 

(C)           Withrespect to each ERISA Plan (1) all payments due from any such plan (orfrom the applicable Selling Entity with respect to any such plan) have beenmade, (2) the applicable Selling Entity has complied in all materialrespects with, and each such ERISA Plan conforms in all material respects inform and operation to, all applicable Laws, including without limitation ERISAand the Code and all material reports and information relating to such ERISAPlan required to be filed with any Governmental Body have been timely filed, (3) allmaterial reports and information required to be disclosed or provided toparticipants or their beneficiaries have been timely disclosed or provided, (4) therehave been no prohibited transactions within the meaning of Section 406 ofERISA or Section 4975 of the Code with respect to any ERISA Plan, (5) eachsuch ERISA Plan which is intended to qualify under Section 401(a) ofthe Code (i) has received a favorable determination letter from theInternal Revenue Service (the “***IRS*** “) withrespect to such qualification  under theCode as amended by those laws commonly referred to as “GUST” or has timelyfiled for such a determination letter, or (ii) is a prototype or volumesubmitter plan that is entitled to rely on the favorable GUST opinion oradvisory letter issued by the IRS to the prototype or volume submitter plansponsor of such ERISA Plan, and to the knowledge of the Selling Entities,nothing has occurred since the date of such letter that has or is likely toadversely affect such qualification or exemption, and (6) there are noactions by any Governmental Body, suits or claims pending (other than routineclaims for benefits) or to the knowledge of the Selling Entities, threatenedwith respect to any ERISA Plan or against the assets of such ERISA Plan.

 

(D)          Withrespect to any Employee Benefit Plan subject to Title IV of ERISA or Section 412of the Code, except as disclosed on **Schedule 3.13(l)**,(1) all minimum funding contributions required under Section 302 ofERISA and Section 412 of the Code have been timely made, (2) nofunding waivers have been received or requested from the IRS, (3) noaccumulated funding deficiency as described in Section 302(a) ofERISA and Section 412(a) of the Code exists and (4) no notice ofintent to terminate has been filed and no amendment to treat such plan asterminated has been adopted.  Except asspecifically designated as such in **Schedule 3.13(l)**,no ERISA Plan provides post-employment health or welfare benefits, except asrequired by Part 6 of Subtitle B of Title I of ERISA Section 4980Bof the Code (“***COBRA***“) or other applicableLaw.

 

### **(m)**                              UK PensionPlans

###  

(A)          Except for the “UNOVA Pension Fund”,and the “Landis Pension Plan” (as defined in Section 5.8(a)) (each a “***UK Pension Plan***“), there is not inoperation as of the date of this Agreement, and no unimplemented proposal hasbeen announced to enter into or establish, any agreement, arrangement, customor practice whether or not approved by

 

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the Inland Revenue under Chapter I orChapter IV (as the case may be) of Part XIV Income and CorporationTaxes Act 1988 (“***Approved***“) for the payment byUNOVA UK of, or payment by UNOVA UK of a contribution towards, a pension, lumpsum or other similar benefit on retirement or death for the benefit of anyEmployee of UNOVA UK (“***UK Employee***“)or a UK Employee’s dependents.

 

(B)           UNOVAUK has duly complied with all applicable legal and administrative requirementsrelating to stakeholder pension schemes (as defined in Section 1(1) ofthe Welfare Reform and Pensions Act 1999).

 

(C)           Except pursuant to the purchase ofthe Cranfield Precision business by UNOVA UK, no UK Employee has ever becomeemployed by UNOVA UK as a result of a transfer pursuant to the Transfer ofUndertakings (Protection of Employment) Regulations 1981 (as amended).

 

(D)          Materially full and accurate detailsof the UNOVA Pension Fund insofar as applicable to the UK Employees and of theLandis Pension Plan have been made available to Buyer UK, including (i) acopy of all trust deeds and rules of current effect in relation to the UKEmployees, (ii) a copy of all members’ booklets and announcements ofcurrent effect in relation to the UK Employees (whether issued by UNOVA UK orotherwise) (including for the avoidance of doubt any announcement in respect ofany improvement of a benefit or other amendment not yet incorporated into thedocumentation) issued to a UK Employee who is or may become a member of eitherof them, (iii) a list of all the UK Employees who are members of either ofthe UK Pension Plans, (iv) a copy of each investment management agreementin force in relation to the management of Landis Pension Plan’s assets, (v) copiesof the HM Revenue and Customs approval letter or interim approval letter foreach of the UK Pension Plans and the contracting-out certificate issued inrespect of each of the UK Pension Plans and the contracting-out certificatesissued in respect of each of the UK Pension Plans and (vi) all datarelating to the benefits payable under each UK Pension Plan necessary, whenread with the documents referred to in (i) and (ii) above, to enableBuyer UK to quantify the liabilities in respect of the UK Employees under eachof the UK Pension Plans at the date of his Agreement (other than the liabilityin respect of the levy to fund the Pension Protection Fund payable pursuant tothe Pensions Act 2004).

 

(E)           Except as set forth in Schedule 3.2(e) orwith respect to the change in retirement benefits relating to certain employeesdisclosed to CFL in a letter from UNOVA dated October 4, 2005, at the dateof this Agreement no discretion or power has been exercised under either UKPension Plan in respect of any UK Employee (or request made for a discretion orpower to be exercised) to (i) augment benefits, (ii) provide abenefit that would not otherwise be provided, or (iii) pay a contributionthat would not otherwise have been paid.

 

(F)           Each benefit (except a refund ofcontributions) payable under the Landis Pension Plan on the death in service ofa UK Employee is at the date of this Agreement insured in full.

 

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(G)           Except for the change in retirementbenefits disclosed to CFL in a letter from UNOVA dated October 4, 2005 oras set forth in Schedule 3.2(e), no plan, proposal or intention to amend,discontinue (in whole or in part) or exercise a discretion in relation toeither UK Pension Plan has been communicated to a UK Employee at the date ofthis Agreement.

 

(H)          The Landis Pension Plan is not in theprocess of being wound up.

 

(I)            No amount due and payable by UNOVAUK in respect of the Landis Pension Plan is unpaid and no contribution inrespect of the month in which the Transfer Date occurs has been or will be paidby UNOVA UK to the Landis Pension Plan, other than contributions deducted byUNOVA UK from members’ salaries before the Transfer Date and not paid to theLandis Pension Plan by that date.

 

(J)            Except as set forth in **Schedule 3.13(m)**, each UK Pension Plan has, in relationto the UK Employees, been designed to comply with and has been administeredmaterially in accordance with, all applicable legal and administrativerequirements.

 

(K)          Except as set forth in **Schedule 3.13(m)**, in relation to the UK Employees thereno civil, criminal, arbitration, administrative, or other proceeding or dispute(whether before the Pensions Ombudsman, the Pensions Regulator or otherwise)concerning either UK Pension Plan or against the trustees or administrator ofeither UK Pension Plan or UNOVA UK in relation to either UK Pension Plan, andto the knowledge of the Selling Entities, except as aforesaid, none is pendingor threatened, and to the knowledge of the Selling Entities, except asaforesaid, there is no matter that might give rise to any proceeding or disputeconcerning either UK Pension Plan.

 

(L)           Atthe date of this Agreement, neither UNOVA UK nor any entity associated orconnected with UNOVA UK under the Insolvency Act of 1986 has received acontribution notice or financial support direction (as defined in the PensionsAct 2004) from the Pensions Regulator in relation to the Landis Pension Plan.

 

## **3.14**                        Pending orThreatened Claims, Litigation and Governmental Proceedings

##  

Set forth on **Schedule 3.14**is a list and description of every complaint, suit, action, judgment or courtorder, arbitration or regulatory, administrative or governmental proceeding orinvestigation or any other proceeding or investigation which is pending or, tothe knowledge of the Selling Entities threatened against any of the SellingEntities in respect of the Business.  Savefor the Pension Regulator’s proceedings and except as set forth in **Schedule 3.14**, no investigation, suit, action or otherjudicial or governmental proceeding is pending or, to the knowledge of theSelling Entities threatened before any court or Governmental Body which mayresult in the restraint or prohibition of, or the obtaining of substantialdamages in connection with, this Agreement or the consummation of thetransactions provided for in this Agreement.

 

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## **3.15**                        Judgments,Orders and Consent Decrees

##  

Except as set forth on **Schedule 3.15**and save in relation to the Pensions Regulator (a) none of the SellingEntities in respect of the Business is subject to any judgment, order or decreeof, or agreement with, a Governmental Body that involves the transactionscontemplated herein or that would reasonably be expected to have a materialadverse effect on the Business; and (b) no such proceeding is pending or,to the knowledge of the Selling Entities threatened against any of the SellingEntities in respect of the Business.

 

## **3.16**                        ComplianceWith Laws

##  

Except as set forth on **Schedule 3.16**,none of the Selling Entities in respect of the Business is currently inviolation of or has since January 1, 2002 violated any applicableprovisions of any Laws in any material respects, including for the avoidance ofdoubt the Business Names Act 1985.  Savein relation to the Pensions Regulator, none of the Selling Entities is underinvestigation with respect to and, to the knowledge of the Selling Entities,has not been threatened to be charged with or been given notice of anyviolation of, any law, rule, ordinance or regulation applicable to thePurchased Assets or the conduct of the Business

 

## **3.17**                        Franchises,Permits, Etc.

##  

**Schedule 3.17**describes each governmental license, permit, consents, concession or franchise(a ***“Permit***“) material to the Business,together with the name of the governmental agency or entity issuing suchPermit.  Except as set forth on **Schedule 3.17**, such Permits are valid and in full forceand effect and, assuming the related Required Consents (as defined in Section 3.19)have been obtained prior to the Transfer Date, are transferable by theapplicable Selling Entity and will not be terminated or impaired or becometerminable as a result of the transactions contemplated hereby.  Upon consummation of such transactions, thePurchasing Entities will, assuming the related Required Consents have beenobtained prior to the Transfer Date, have all of the right, title and interestin all the Permits.

 

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## **3.18**                        Taxes

##  

Except as otherwise disclosed on **Schedule 3.18**, each of the Selling Entities, and anyaffiliated group within the meaning of Section 1504 of the Code (orcomparable provision of state, local or foreign Law) (“***AffiliatedGroup***“) of which each such Selling Entity is or has been amember (but only for the taxable period during which the Selling Entity hasbeen a member thereof), (a) has filed or caused to be filed all federal,state, local and foreign Tax returns, notices, reports, statements or otherinformation or documentation (“***Tax Returns***“)required to be filed by it with a Tax authority under applicable federal,state, local or foreign Law, and (b) has timely paid or caused to be paidin full all Taxes owed (whether or not shown or required to be shown on suchTax Returns).  All such Tax Returns wereat the time they were filed true, complete and correct in all materialrespects.  There are no Liens for Taxeson any of the Purchased Assets except for Permitted Liens.  Except as otherwise disclosed on **Schedule 3.18**, all deficiencies asserted or assessmentsmade by any Tax authority against each of the Selling Entities, and anyAffiliated Group of which each such Selling Entity is or has been a member (butonly for the taxable period during which the Selling Entity has been a memberthereof), have been fully paid, and there are no audits, investigations orexaminations by any Tax authority with respect to Taxes relating to theBusiness in progress, pending or, to the knowledge of or the applicable SellingEntity, threatened.  None of the SellingEntities in respect of the Business is currently the beneficiary of any extensionof time within which to file any Tax Return (other than any income Tax Returnof an Affiliated Group of which such entity currently is a member, but not theparent corporation), and none of the Selling Entities in respect of theBusiness has waived any statute of limitation with respect to any Tax or agreedto any extension of time with respect to a Tax assessment or deficiency.  In respect of the Business, to the knowledgeof the applicable Selling Entity, no claim has ever been made by a Tax authorityin any jurisdiction where a Selling Entity does not file Tax Returns that suchSelling Entity is or may be subject to taxation by that jurisdiction.  None of the Selling Entities has anyliability for the Taxes of any Person (other than such Selling Entity oranother member of the Affiliated Group of which such entity is or has been amember, but only for the taxable periods during which the Selling Entity hasbeen a member thereof) under Treasury Regulation Section 1.1502-6(or any corresponding provision of state, local or foreign Law), or as atransferee or successor, or by contract, or otherwise.  Each of the Selling Entities in respect ofthe Business has withheld and paid all Taxes required to have been withheld andpaid in connection with amounts paid or owing to any employee, stockholder,independent contractor, creditor or other third party.  None of the Assumed Liabilities is anobligation to make a payment that as a result of the Transactions will not bedeductible under Section 280G of the Code.

 

For purposes of this Agreement, the term “***Taxes***“ means all domestic or foreignfederal, state and local taxes of any kind, including without limitation,income, capital gains, gross receipts, franchise, employment, sales, use,license, property or withholding taxes, social security contributions and VAT,together with all interest, penalties and additions imposed with respect tosuch amounts.

 

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(a)           Properrecords have been maintained by UNOVA UK and UNOVA UK has complied in allmaterial respects with all statutory provisions, rules, regulations, orders anddirections in relation to the UK Purchased Assets concerning VAT, PAYE andNational Insurance Contributions including the making on time of accuratereturns and payments and the proper maintenance and preservation of records,and UNOVA UK has not been given any penalty, notice or warning regarding thesame.

 

(b)           UNOVAUK is not involved in any dispute, or the subject of any enquiries, with HMRevenue & Customs or any other taxation authority, concerning anymatter likely to affect the UK Purchased Assets in any way other than routineinquiries of a minor nature following the submission of computations andreturns.

 

(c)           UNOVAUK has duly made all returns, given all notices and supplied all otherinformation required to be supplied to HM Revenue & Customs or to anyother governmental authority in relation to or otherwise affecting the UKPurchased Assets and all such returns, notices and information were and remaincomplete and accurate in all material respect and were made on the properbasis.

 

(d)           UNOVAUK is duly registered for Value Added Tax and all proper records have been keptand all proper returns and payments made as required by law for the enactmentsrelating to Value Added Tax in connection with the Business.

 

(e)           Noneof the UK Purchased Assets is a capital item, the input tax on which could besubject to adjustment in accordance with the provisions of Part XV of theValue Added Tax Regulations 1995.

 

(f)            Alldocuments (other than those which have ceased to have any legal effect) towhich UNOVA UK is party and which relate to the UK Purchased Assets and in theenforcement of which the UK Buyer may be interested, have been duly stamped.

 

(g)           NoHM Revenue and Customs charge for unpaid inheritance tax (as provided by theInheritance Tax Act 1984 sections 237 and 238) over any of the UKPurchased Assets is outstanding and no circumstances exist whereby any powermentioned in the Inheritance Tax Act 1984 section 212 could be exercisedin relation to any of the UK Purchased Assets.

 

## **3.19**                        GovernmentalAuthorizations; Consents

##  

Set forth on **Schedule 3.19**is a list and description of any consent, approval or authorization of, orexemption by, or filing with (a) any Governmental Body and (b) any Person(other than any Governmental Body referred to in clause (a)) under anyContract, which is required in connection with the execution, delivery andperformance of this Agreement and the Related Agreements by any of the SellingEntities (including consents required in connection with the assignment ofcontracts to the Purchasing Entities) and including any consent, approval orauthorization for Buyer UK to carry on and trade the business consisting of theUK Purchased Assets as a going concern in succession to UNOVA UK (the “***Required Consents***“).

 

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## **3.20**                        No Breach ofStatute or Contract

##  

Neither the execution and delivery of thisAgreement, nor compliance with the terms and provisions hereof by each of the SellingEntities will breach or violate any applicable Law or any Contract or othermaterial instrument to which it, or any of the Selling Entities, is a party orby which any of its properties, rights or assets are bound and the terms of allContracts and other material instruments have been complied with by all theirrelevant parties.

 

## **3.21**                        Insurance

##  

**Schedule 3.21(a) **listsall of the insurance policies (including the terms of any self-insuranceprograms) and bonds (excluding instruments referred to in Section 3.8(j))in force for the current policy year with respect to the Business and itsEmployees and any pending claims or claims made under the insurance policies inthe last three years.  The SellingEntities have, with respect to the Business, maintained adequate insuranceprotection against all liabilities against which it is customary forcorporations engaged in the same or a similar business similarly situated toinsure.  Such insurance polices remain infull force and effect.  None of theSelling Entities knows of any threatened termination of any of such policies orbonds.  None of the Selling Entities hasany pending insurance claims or unpaid proceeds of such claims relating to theoperations or former operations of the Business or any asset used or formerlyused in the Business.

 

## **3.22**                        Customersand Suppliers

##  

**(a)**           **Schedule 3.22**contains a true and complete list of (i) the ten largest customers of eachdivision of the Landis Group in terms of revenues during the years ended December 31,2003, December 31, 2004 and in the first six months of 2005 showing theapproximate total sales to each such customer during such period and (ii) theten largest suppliers of each division of the Landis Group and in terms ofpurchases of goods or services during such period, showing the approximatetotal purchases by the Landis Group from each such supplier during each suchperiods.  No Selling Entity in respect ofthe Business has received notice from and is not otherwise aware that (a) anycustomer (or group of customers under common ownership or control) thataccounted for a material percentage of the aggregate products and servicesfurnished by the Business during the past 18 months has stopped or intendsto stop purchasing the products or services of the Business or (b) anysupplier (or group of suppliers under common ownership or control) thataccounted for a material percentage of the aggregate supplies purchased by theBusiness during the past 18 months has stopped or intends to stopsupplying products or services to the Business.

 

**(b)**           Except for those customers andsuppliers set forth on Schedule 3.22, in each of the three financial yearsof the Landis Group ended on the June Balance Sheet and during its currentfinancial year no more than five per cent of the aggregate amount (by value) ofall the Landis Group’s sales or purchases have been or will be made with orobtained from (as applicable) the same customer or supplier (including anyperson connected with such customer or supplier).

 

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**(c)           Schedule 3.22**lists every claim or complaint in respect of the Landis Group’s products orservices, made in writing to the Landis Group by the customers set forth on Schedule 3.22in the two year period ending on the Agreement Date where such claim orcomplaint relates to a value of $50,000 or more.

 

## **3.23**                        Transactionswith Affiliates; Intercompany Arrangements

##  

Except as set forth on **Schedule 3.23**,(a) since January 1, 2002, there have been no transactions (asdefined below) between any of the Selling Entities in respect of the Businessand any Interested Person (as defined below) and (b) there are noagreements, loans, leases, commitments or other continuing transactions betweenany of the Selling Entities in respect of the Business and any InterestedPerson.  As used in the precedingsentence, the term “***transaction***“ includes, but isnot limited to, any sale or transfer of property or assets, the lease or otheruse of the property or assets, the provision of services and the furnishing ofpersonnel, whether or not for consideration. Except as set forth on **Schedule 3.23**,(i) no Interested Person has any interest in any property of any of theSelling Entities in respect of the Business (ii) no Interested Person isindebted to any of the Selling Entities in respect of the Business and (iii) noneof the Selling Entities in respect of the Business is indebted to anyInterested Person.  For purposes of thisAgreement,  “***InterestedPerson***“ means (A) any officer, director or stockholder ofany of the Selling Entities or any of their respective affiliates or (B) anymember of any such officer, director or stockholder’s family or any of theirrespective affiliates.  To the knowledgeof the Selling Entities, no Interested Person (x) has any material director indirect interest in any entity that does business in an amount exceeding$50,000 with any of the Selling Entities or (y) has any direct or indirectinterest in any property, asset or right that is used by any of the SellingEntities in the conduct of the Business.

 

## **3.24**                        Broker’s orFinder’s Fees

##  

Except for KeyBanc Capital Markets, adivision of McDonald Investments Inc. (“***UNOVA’s Broker***“),no Person other than UNOVA and its Affiliates (and their respective directors,officers and employees) has arranged, or participated in arranging, on behalfof the Selling Entities, the transactions provided for in this Agreement.  Except for certain fees to UNOVA’s Broker(which will be the responsibility of the Selling Entities), there are no broker’sor finder’s fees to be paid by any of the Selling Entities in connection withthe transactions provided for in this Agreement.  None of the Selling Entities has anyknowledge of, or has taken any action that would give rise to, any claim for abroker’s or finder’s fee to be paid by the Purchasing Entities in connectionwith the consummation of the transactions provided for in this Agreement.

 

## **3.25**                        Grants andAllowances

##  

None of the Selling Entities in respect ofthe Business has received any investment grants or other grants or loans fromany governmental department or agency or any local or other authority by virtueof any statute.

 

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## **3.26**                        Sufficiencyof Purchased Assets

##  

As of the date of this Agreement, thePurchased Assets, the Excluded Assets, and the assets used to provide theservices pursuant to the Transition Services Agreement (as defined in Section 6.11)constitute, and on the Transfer Date will constitute, all of the assets orproperty used or held for use in or otherwise necessary for the operation ofthe Business as of each such date.  Onthe Transfer Date, the Purchased Assets, the assets of the Landis Pension Planand the assets used to provide the services pursuant to the Transition ServicesAgreement, will constitute all of the assets necessary for the PurchasingEntities to continue to operate the Business as it has been operated prior tothe Transfer Date.

 

## **3.27**                        No OtherRepresentations

##  

Except for the representations and warrantiesexpressly made by the Selling Entities in this Agreement (including theExhibits and Schedules), none of the Selling Entities or any other Person makesany express or implied representation or warranty concerning the Business onbehalf of the Selling Entities.  Withoutlimiting the generality of the foregoing, and notwithstanding any otherwiseexpress representations and warranties made in this Article 3, the SellingEntities make no representation or warranty to the Purchasing Entities withrespect to (a) any projections, estimates or budgets delivered to or madeavailable to the Purchasing Entities of future revenues, expenses orexpenditures or future results of operations or (b) except as expresslycovered by a representation and warranty contained in this Article 3, anyother information or documents (financial or otherwise) made available to thePurchasing Entities or their counsel, accountants or advisers with respect tothe Business.

 

## **3.28**                        Disclosure

##  

The representations, warranties andstatements contained in this Agreement, the Related Agreements and in thecertificates, exhibits and schedules delivered in connection herewith andtherewith do not contain any untrue statement of a material fact and do notomit to state a material fact necessary in order to make such representations,warranties or statements not misleading in light of the circumstances underwhich they were made.

 

(Article 4 follows)

 

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# **ARTICLE 4.  Representations and Warranties of Purchasing Entities**

#  

As a material inducement to the SellingEntities to enter into this Agreement and consummate the transactionscontemplated hereby, the Purchasing Entities jointly and severally representand warrant to the Selling Entities that the statements contained in this Article 4are true and complete as of the date of this Agreement and will be true andcomplete as of the Transfer Date as follows:

 

## **4.1**                               CorporateMatters

##  

### **(a)**                                  DueOrganization

###  

CFL is a French corporation organized,validly existing and in good standing under the Laws of France.  Buyer UK is a United Kingdom corporation dulyorganized, validly existing and in good standing under the Laws of the UnitedKingdom.  Buyer US is a Delawarecorporation duly organized, validly existing and in good standing under theLaws of Delaware.

 

### **(b)**                                  CorporatePower and Authority to Enter Into Agreement

###  

Each of the Purchasing Entities has thecorporate power and authority to enter into this Agreement and the RelatedAgreements to which it is a Party and to perform its obligations hereunder andthereunder.

 

### **(c)**                                  DueExecution and Enforceability

###  

The execution, delivery and performance byand on behalf of each of the Purchasing Entities of this Agreement and theRelated Agreements to which it is a party have been duly authorized by allnecessary corporate action, and no other action on the part of each of thePurchasing Entities is required in connection therewith.  This Agreement constitutes a valid andbinding obligation of each of the Purchasing Entities, enforceable against eachof them in accordance with its terms, except to the extent the same may belimited by bankruptcy, insolvency, reorganization, moratorium or similar lawsaffecting creditors’ rights generally or by general equitable principles.  The Related Agreements to which each of thePurchasing Entities is a party, when executed and delivered by the applicablePurchasing Entity, will constitute valid and binding obligations of therespective Purchasing Entity, enforceable against each of them in accordancewith their respective terms, except to the extent the same may be limited bybankruptcy, insolvency, reorganization, moratorium or similar laws affectingcreditors’ rights generally or by general equitable principles.

 

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### **(d)**                                  No Conflict

###  

With respect to each of the PurchasingEntities, the execution and delivery of this Agreement and the RelatedAgreements to which such Purchasing Entity is a party do not, and theconsummation by it of any of the transactions contemplated hereby or therebywill not:

 

(i)            conflictwith or violate its articles of incorporation, bylaws or other constituentdocuments;

 

(ii)           violateany applicable Law of any Governmental Body; or

 

(iii)          violate,conflict with, result in any breach of, or constitute a default (or an eventthat, with notice or lapse of time or both, would constitute a default) underany contract or judgment to which it is a party or by which it is bound, exceptas would not be reasonably likely to have a material adverse effect on suchPurchasing Entity.

 

## **4.2**                               RequiredConsents

##  

Set forth on **Schedule 4.2**is a list and description of any consent, approval or authorization of, orexemption by, or filing with (a) any Governmental Body and (b) anyPerson (other than any Governmental Body referred to in clause (a) whichis required in connection with the execution, delivery and performance of thisAgreement and the Related Agreements by the Purchasing Entities, except forgovernmental and business franchises, permits, reports, licenses and otherauthorizations necessary to conduct the Business on the Transfer Date.

 

## **4.3**                               Claims,Litigation and Governmental Proceedings

##  

No investigation, suit, action or otherjudicial or governmental proceeding is pending or, to the knowledge of thePurchasing Entities, threatened before any court or Governmental Body which islikely to result in the restraint or prohibition of, or the obtaining ofsubstantial damages in connection with, this Agreement or the consummation ofthe transactions provided for in this Agreement.

 

## **4.4**                               Broker’s orFinder’s Fees

##  

Except for BNP Paribas Corporate Finance, noPerson or firm other than Buyer US and its Affiliates (and their respectivedirectors, officers and employees), has arranged, or participated in arranging,on behalf of the Purchasing Entities or their Affiliates, the transactionsprovided for in this Agreement.  Thereare no broker’s or finder’s fees to be paid by the Purchasing Entities or theirAffiliates in connection with the transactions provided for in thisAgreement.  Neither of the PurchasingEntities nor any of their Affiliates has any knowledge of, and has taken noaction which would give rise to, any claim for a broker’s or finder’s fee to bepaid by any of the Selling Entities in connection with the consummation of thetransactions provided for in this Agreement.

 

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## **4.5**                               AvailableFunds

##  

The Purchasing Entities have adequate fundsto pay the Purchase Price and to operate the Business and to pay, perform anddischarge the Assumed Liabilities as they become due and payable.  Buyer US is not insolvent, and Buyer USwill not be rendered insolvent by the transactions contemplated by thisAgreement.  Without prejudice to the factthat this Agreement does not provide for any financing condition, a true,correct and complete copy of the Financing Term Sheet is attached hereto as **Exhibit B**.

 

(Article 5 follows)

 

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# **ARTICLE 5.  Certain Covenants Pending the Closing**

#  

## **5.1**                               Full Access

##  

The Purchasing Entities and their authorizedrepresentatives shall have reasonable access during normal business hours andupon reasonable advance notice, but without unreasonably interrupting business,to all the premises and to all books of account, records and properties of theBusiness, including without limitation those relative to (a) the December Financialsand the June Financials and (b) the customers of and suppliers to theBusiness; *provided*, *however*,that the Purchasing Entities and their representatives agree that such accessand disclosure will not be permitted if it would (i) violate anyapplicable Law, or (ii) cause competitive harm to any of the SellingEntities or any of their Affiliates if the transactions contemplated by thisAgreement are not consummated.  Subjectto the foregoing limitations and the requirements of this Agreement, includingbut not limited to Section 5.7, UNOVA shall furnish or cause to befurnished to the Purchasing Entities and their authorized representatives allinformation with respect to the Business as the Purchasing Entities mayreasonably request.  No investigation bythe Purchasing Entities pursuant to this Section 5.1 shall affect anyrepresentation or warranty given by the Selling Entities hereunder or any ofthe Purchasing Entities’ rights under this Agreement, including withoutlimitation under Articles 10 and 11.

 

## **5.2**                               Carry On InRegular Course

##  

From the date hereof until the Transfer Date,the Selling Entities shall conduct the Business in the ordinary courseconsistent with past practices and shall use their reasonable best efforts topreserve intact the business organization and relationships with third partiesand to keep available the services of the present officers and Employees of theBusiness, but without prejudice to the continued operation by UNOVA UK of theexisting early retirement practices in relation to the UK Employees.  Without limiting the generality of theforegoing, from the date hereof until the Transfer Date, the Selling Entitiesshall not:

 

(a)           enterinto any sales order, sales contract, change order, final bid or binding salesproposal relating to the Business (“***Sales Order***“)other than (i) Sales Orders entered into in the ordinary course ofbusiness and consistent with past practices and which are not knowingly orintentionally bid at an anticipated loss, or (ii) any Sales Orders thatare substantially in accord with a bid or sales proposal set forth on **Schedule 3.8(a)**;

 

(b)           withoutthe prior consent of Buyer US, which consent shall not be unreasonably withheldor delayed, make any capital expenditures relating to the Business unless suchexpenditure is made pursuant to a purchase order set forth on **Schedule 3.8(b) **or the aggregate of any suchcapital expenditures is less than $100,000;

 

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(c)           withoutrestricting the exercise of any power or discretion under the Landis PensionPlan, and otherwise without the prior consent of Buyer US, which consent shallnot be unreasonably withheld or delayed (i) terminate or otherwise layoffany Employees of the Business, and will preserve intact and keep available theservices of all Employees of the Business, (ii) hire or employ any newsalaried personnel of the Business, (iii) grant any increase in the ratesof pay of any Employee (other than routine increases granted in the ordinarycourse of business and consistent with past practice), or (iv) by means ofany new or existing compensation or employee benefit plan increase thecompensation or amount or level of benefits of any Employee, other than, ineach case, any Employee whom the Parties agree will not be a ContinuingEmployee, but without prejudice to Section 5.8; and

 

(d)           takeany decision or exercise any power or discretion in relation to the LandisPension Plan without consulting Buyer UK.

 

## **5.3**                               Consents;HSR

##  

**(a)**           The Parties, in cooperation and afterconsultation and mutual agreement, shall take all reasonable action (withoutpayment of any penalty or fee) required to obtain all consents, approvals andagreements of, and to give all notices and make all filings with, any thirdparties, including Governmental Bodies, necessary to authorize, approve orpermit the transfer to the Purchasing Entities of the Purchased Assets, theShares and the Assumed Liabilities as provided for in this Agreement.

 

**(b)**           Without limiting the foregoing, theParties shall promptly respond to any requests for information in connectionwith the Pre-merger Notification and Report Form (“***HSRFiling***“) required by the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended (the “***HSR Act***“)in connection with the transactions contemplated hereby.  In connection with the efforts referencedherein, each of the Purchasing Entities on the one hand, and each of theSelling Entities on the other hand, shall (i) use its reasonable bestefforts to cooperate in all respects with the other Parties hereto inconnection with any filing or submission and in connection with anyinvestigation or other inquiry, including any proceeding initiated by a privateparty, regarding the transactions contemplated hereby, (ii) keep the otherParties, including their counsel, as the case may be, informed of any materialcommunication by or to such party or its counsel from or to the Federal TradeCommission (the “***FTC***“), the Antitrust Divisionof the Department of Justice (the “***DOJ***“) orany other Governmental Body and of any material communication received or givenin connection with any proceeding by a private party, in each case regardingany of the transactions contemplated hereby, (iii) permit the otherParties and their legal counsel to review, consult with each other in advanceof and consider in good faith the views of the other in connection with anycorrespondence, filings or communications given by it to, or between it and,the FTC, the DOJ or any other Governmental Body or in connection with anyproceeding by a private party, regarding the transactions contemplated hereby,and (iv) permit the other Parties and their legal counsel to attend andparticipate in, any meeting or conference with, the FTC, the DOJ or any suchother Governmental Body or, in

 

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connection with any proceeding by a privateparty, with any other Person, regarding the transactions contemplated hereby.

 

**(c)**           Without limiting the provisions ofparagraph (a) above, the Parties agree (i) to promptly carry out allrequired filings under any applicable anti-trust Law other than the HSR Act,and (ii) that all requests and enquiries from any Governmental Body inrelation to any anti-trust filing required by a European, governmental,supranational or trade agency, court or other regulatory body (other than underthe HSR Act) shall be dealt with by the Purchasing Entities in consultationwith the Selling Entities and each of the Parties shall promptly co-operatewith each other and provide all necessary information and assistance reasonablyrequired by such government, agency, court or body upon being requested to doso by the other.

 

## **5.4**                               Notices ofCertain Events; Continuing Disclosure

##  

**(a)**           To the extent permitted by applicableLaws, UNOVA shall promptly notify Buyer US and Buyer UK of the receipt betweenthe date of this Agreement and Closing of, and promptly provide them a copy of:

 

(i)            anynotice or other communication from any Person alleging the consent of suchPerson is or may be required in connection with the transactions contemplatedby this Agreement;

 

(ii)           anynotice or other communication from any Governmental Body in connection with thetransactions contemplated by this Agreement, including, without limitation,notices or communications received in connection with the HSR Filing;

 

(iii)          anyactions, suits, claims, investigations or proceedings commenced or, tothreatened against, or relating to or involving or otherwise affecting any ofthe Selling Entities that could reasonably be expected to have a materialadverse effect on the Business or that relate to the consummation of thetransactions contemplated by this Agreement, or any material developmentsrelating to any actions, suits, claims, investigations or proceedings disclosedpursuant to Section 3.14; and

 

(iv)          anynotice or other communication received by UNOVA UK from the office of thePensions Regulator in relation to the UK Pension Plans.

 

**(b)**           Until the Transfer Date, the SellingEntities shall have the continuing obligation promptly to advise Buyer US andBuyer UK with respect to any matter hereafter arising or discovered thatconstitutes a breach or prospective breach of this Agreement by the SellingEntities.

 

**(c)**           No notice pursuant to this Section shalleffect any representation or warranty given by the Selling Entities hereunderor any of the Purchasing Entities’ rights under this Agreement, including,without limitation, under Articles 10 and 11.

 

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## **5.5**                               Supplementsto Disclosure

##  

From time to time prior to, and in any case,at the Closing, the Selling Entities shall amend or supplement the Schedulesattached to this Agreement with respect to any matter that, if existing on thedate hereof or occurring at or prior to the Transfer Date, would have beenrequired to be set forth or described on such a Schedule or that isnecessary to complete or correct any information in any representation orwarranty contained in Article 3.  Nosuch supplement or amendment to any Schedule pursuant to this Section 5.5shall have any effect for the purpose of determining satisfaction of any of theconditions set forth in Article 6 or the Purchasing Entities’ rights underthis Agreement, including, without limitation, Articles 10 and 11.

 

## **5.6**                               ConditionsPrecedent

##  

The Parties shall use all reasonable effortsto assure that the conditions precedent set forth in Articles 6 and 7 aresatisfied or waived on or prior to December 9, 2005, to the extent thatsatisfaction of such conditions precedent is within their reasonable control.

 

## **5.7**                               Nondisclosure

##  

**(a)**           Each of the Purchasing Entities shallhold in confidence, and shall use all reasonable efforts to cause itsrepresentatives and its Affiliates to hold in confidence, between the AgreementDate and the Transfer Date, any and all confidential or secret information inrespect of the Business furnished to it, its representatives or its Affiliatesby any of the Selling Entities or UNOVA UK in connection with this Agreementand not to disclose or publish such information without the prior writtenconsent of UNOVA, provided that the Purchasing Entities may disclose such informationto its officers, directors, employees, accountants, counsel, consultants,advisors, agents and lenders in connection with the transactions contemplatedby this Agreement so long as such persons are informed by the PurchasingEntities of the confidential nature of such information and are directed by thePurchasing Entities to treat such information confidentially in accordance withthis Agreement.

 

**(b)**           In the event that this Agreement isterminated and the transactions provided for in this Agreement are abandoned ascontemplated by Section 10.1, the terms of that certain ConfidentialityAgreement, dated July 8, 2005, between CFL and UNOVA (the “***Confidentiality Agreement***“), shallremain in full force and effect, and each of the Purchasing Entities confirmsthat it will comply with the obligations thereunder as if it were a partythereto.

 

## **5.8**                               Reorganizationof U.K. Pension Plans

##  

(a)           UNOVAUK and Buyer UK shall procure that on or before Closing there is executed aDeed of Change of Principal Employer and Trustees relating to the LandisGrinding Systems Pension Fund (the “***Landis Pension Plan***“)in the form set out in **Exhibit 5.8(a)**,which the Parties agree provides that the change of principal employer of the

 

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Landis Pension Plan shall be effectivesimultaneously with the transfer of the UK Employees to Buyer UK.

 

(b)           UNOVAUK shall procure that on or before the Transfer Date the benefits under theUNOVA Pension Fund of those members of the Landis Pension Plan who have agreedto the transfer of their accrued benefits from the UNOVA Pension Fund to theLandis Pension Plan on the terms provided to Buyer UK set out at **Exhibit 5.8(b) **(the “***TransferringMembers***“) are transferred to the Landis Pension Plan on thoseterms.

 

(c)           UNOVAUK shall procure that the value of the assets transferred from the UNOVAPension Fund to the Landis Pension Plan in connection with the transferreferred to in Section 5.8(b) calculated as at 1 July 2005 usingthe method and assumptions set forth in **Exhibit 5.8(c) **(the“***Transferred Asset Value*** “) shall be nomore than £4 million less than the value of the liabilities transferred fromthe UNOVA Pension Fund to the Landis Pension Plan in connection with thetransfer referred to in Section 5.8(b) calculated as at 1 July 2005using the method and assumptions set forth in **Exhibit 5.8(c) **(the“***Transferred Liability Value*** “).  For the purpose of calculating theTransferred Liability Value the normal retirement date of all members of theLandis Pension Plan shall be taken to be and to always have been age 65 inrespect of all periods of pensionable service, including all periods in respectof which liabilities transferred from the UNOVA Pension Fund, whether before,on or after the Transfer Date, with no entitlement to bring their pensions intopayment before age 65, and no allowance shall be made for equalization ofguaranteed minimum pensions.  However,there is an allowance for retirements before normal retirement date in **Exhibit 5.8(c)**.  **Exhibit 5.8(c) **reflects the assumptions adopted inan interim valuation report as at 5 April 2005 in relation to the UNOVAPension Fund, a copy of which has been made available to Buyer UK.  Upon request UNOVA UK will provide Buyer UKwith all information reasonably necessary to enable Buyer UK to verify thecalculations referred to in this Section 5.8(c).

 

(d)           [Reserved]

 

(e)**          **Buyer UK shall further procure that neither itnor any of its Affiliates (i) takes any action or assists any Person inany manner which would result in the UNOVA Pension Fund having to pay a largeramount to the Landis Pension Plan than any amount actually paid before suchaction or assistance, or (ii) encourages or assists any Person in making aclaim against the trustees of the UNOVA Pension Fund or UNOVA UK or anyAffiliate; provided, however, that the foregoing shall not limit the ability ofthe Purchasing Entities to make a claim for indemnification under Article 11of this Agreement.

 

## **5.9**                               Assumptionof Retiree Medical Plan

##  

(a)           Effectiveas of the Transfer Date, the Selling Entities shall transfer and assign toBuyer US, and Buyer US shall assume sponsorship of, and all obligations,liabilities and rights of the Selling Entities (other than any rights of theSelling Entities under non-transferable contracts and contracts that also coveractive employees of the Selling Entities) with respect to, the retiree medicalbenefit programs made available to employees of the

 

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Landis Grinding Systems, Gardner Abrasives,and CITCO divisions of UIASI as in effect immediately prior to the TransferDate (the “***Retiree Medical Plan*** “), andthe Selling Entities shall have no obligation or liability with respect theretoon or after the Transfer Date.

 

(b)           Atthe request of Buyer US, the Selling Entities shall use reasonable efforts tocooperate with Buyer US in dealing with an insurance company or companiesselected by Buyer US in connection with the establishment of an insurancecontract or contracts to be entered into by Buyer US that are substantiallysimilar to the insurance contracts maintained by the Selling Entities inconnection with the Retiree Medical Plan immediately prior to the TransferDate.  The Selling Entities shall takeall other actions as may be reasonably necessary or, in the reasonable opinionof Buyer US, desirable to effect the assumption by Buyer US of the RetireeMedical Plan as described herein.

 

(Article 6 follows)

 

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# **ARTICLE 6.  Conditions Precedent to the Obligations of the Purchasing Entities to Close**

#  

Each and every obligation of the PurchasingEntities to be performed at Closing shall be subject to the satisfaction of thefollowing conditions:

 

## **6.1**                               Representationsand Warranties True

##  

The representations and warranties made bythe Selling Entities in this Agreement at the time of its execution anddelivery and in any certificate or other writing delivered by the SellingEntities pursuant hereto, disregarding all qualifications and exceptionscontained therein relating to materiality or material adverse effect, shall betrue and correct in all respects on the Transfer Date as if made again andreaffirmed on such date, except where the failure of such representations andwarranties to be so true and correct would not reasonably be expected to haveor result in, individually or in the aggregate, a material adverse effect onthe Business.  The Purchasing Entitiesshall have received a certificate signed by a duly authorized officer of UNOVAto the foregoing effect.

 

## **6.2**                               ComplianceWith Agreement

##  

The Selling Entities shall have performed andcomplied in all material respects with all of the obligations under thisAgreement which are to be performed or complied with by them on or prior to theTransfer Date.  The Purchasing Entitiesshall have received a certificate signed by a duly authorized officer of UNOVAto the foregoing effect.

 

## **6.3**                               No MaterialAdverse Change

##  

Since the June Balance Sheet Date thereshall have been no material adverse change in the operations of the Business,taken as a whole.

 

## **6.4**                               NoLitigation

##  

No investigation, suit, action or otherjudicial or governmental proceeding shall be pending or threatened before anycourt or Governmental Body, which is reasonably likely to result in therestraint or prohibition or the obtaining of substantial damages in connectionwith this Agreement or the consummation of the transactions provided for inthis Agreement, or that may materially adversely affect the Purchasing Entities’ability to operate the Business after the Transfer Date, and the PensionsRegulator in the United Kingdom shall not have indicated that he intends toissue a contribution notice or financial support direction under Part 1 ofthe Pensions Act 2004 with respect to or affecting the Landis Pension Plan.

 

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## **6.5**                               [Reserved]

##  

## **6.6**                               Consents andApprovals

##  

The Parties shall have obtained all necessaryand material authorizations, consents and approvals required for the validconsummation of the transactions provided for in this Agreement, provided,however, that only those Required Consents listed on **Schedule 6.6**shall be required to have been obtained as of Closing under this Section 6.6,and each of such authorizations, consents and approvals shall be in full forceand effect.  Without limiting thegenerality of the foregoing, if applicable, (i) the time period under theHSR Act shall have expired or early termination shall have been granted, and noadverse action shall have been threatened or instituted in connectiontherewith, and (ii) the European Commission, or any national relevant anti-trustauthority, shall have made an express or implied decision which, in accordancewith the relevant applicable anti-trust laws, unconditionally authorizes(without any request for the Purchasing Entities to comply with certainundertakings) or does not prevent the Transactions from being implemented underthe terms and conditions contemplated under this Agreement.

 

## **6.7**                               Instrumentsof Transfer

##  

The applicable Selling Entities shall haveexecuted and delivered to the Purchasing Entities bills of sale meeting allnecessary requirements of United States and foreign Laws sufficient to transferto the Purchasing Entities the Purchased Assets as well as deeds conveying theOwned Real Property (other than the South Beloit Facility and the WaynesboroFacility) to the Purchasing Entities. The Selling Entities shall also deliver the following:

 

(a)           Acertificate of the Secretary or an Assistant Secretary (or local equivalent) ofeach of the Selling Entities setting forth a copy of the resolutions dulyadopted by its Board of Directors and, in the case of Selling Entities otherthan UNOVA, stockholders authorizing and approving the execution and deliveryof this Agreement and the consummation of the transactions contemplated hereby;

 

(b)           Appropriateinstruments authorizing Buyer US and Buyer UK to endorse in the name of theSelling Entities all checks, drafts, notes and other instruments for thepayment of money and to receive for the account of the Purchasing Entities allproceeds thereof to which the Purchasing Entities are entitled under thisAgreement; and

 

(c)           Acertificate validly executed by a duly authorized officer of the SellingEntities in a form reasonably acceptable to Buyer US for purposes of satisfyingBuyer US’s obligations under Treasury Regulation Section 1.1445-2(c)(3).

 

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(d)           Alimited warranty deed, duly executed and acknowledged by the applicable SellingEntity, conveying good and marketable title to the Owned Real Property (otherthan the South Beloit Facility and Waynesboro Facility), free and clear fromall Liens other than Permitted Liens listed under paragraphs (i), (ii),(iii), (iv), (v), (vii) and (viii) of Section 3.5(a).

 

(e)           Thetransfer and assignment documents set forth in Section 8.11.

 

## **6.8**                               [Reserved]

##  

## **6.9**                               Opinion ofCounsel

##  

ThePurchasing Entities shall have received an opinion of Perkins Coie LLP to theeffect specified in Schedule 6.9. Such opinion shall recite that it may be relied upon by the PurchasingEntities’ bank lenders as if it were addressed to them.

 

## **6.10**                        Amendment toMAG Transition Services Agreement

##  

TheTransition Services Agreement dated as of April 3, 2005 between UIASI andMAG Industrial Automation Systems, Inc. (“***MAG***“) shall be amended in a formreasonably satisfactory to the Purchasing Entities pursuant to which MAG shallhave agreed to provide IT Services to the Landis Group until March 31,2007.

 

## **6.11**                        TransitionServices Agreement

##  

The Selling Entities shall have executed anddelivered to the Purchasing Entities an agreement in substantially the form of **Exhibit C** (the “***Transition ServicesAgreement***“) pursuant to which (i) the Selling EntitiesGroup shall continue to provide certain services to the Landis Group, and (ii) thePurchasing Entities in respect of the Landis Group shall provide certainservices to the Selling Entities.

 

## **6.12**                        Title

##  

On the Transfer Date, title to the Owned RealProperty in the United States (excluding the South Beloit Facility and theWaynesboro Facility) shall be insurable by a standard ALTA owner’s policy oftitle insurance at standard rates, including, without limitation, easements andappurtenances thereto, showing good and marketable title in fee simple to suchOwned Real Property to be vested in the Purchasing Entities, free and clear ofall Liens other than (a) Permitted Liens listed under paragraphs (i),(ii), (iii), (iv), (v), (vii) and (viii) of Section 3.5(a), (b) Liensapproved by the Purchasing Entities and (c) the exclusions and preprintedexceptions in the title company’s standard ALTA form of owner’s policy of titleinsurance.  The Purchasing Entities shallnotify the Selling Entities of any objections or exceptions to, or defects in,the title to any Owned Real Property (excluding the South Beloit Facility andthe Waynesboro Facility) that appears in the commitments obtained by them forsuch title insurance at least 30 days prior to the Transfer Date.  The Selling Entities agree to furnish suchindemnities and affidavits as may be reasonably required by the

 

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title insurance company, or to use reasonableefforts to deliver such other documents, in each case, as may be reasonablyrequired to vest in the Purchasing Entities good and marketable title in feesimple to such Owned Real Property, free and clear as described above and toenable the title insurer to issue a title insurance policy to the PurchasingEntities in accordance with the foregoing on the Transfer Date.  For purposes of this Section 6.12, OwnedReal Property shall not include the South Beloit Facility and the WaynesboroFacility and the UK Freehold Property at Keighly, England.

 

## **6.13**                        Leases

##  

**(a)**           UIASI shall have executed anddelivered to Buyer US an agreement in the form of **Exhibit D-1**pursuant to which UIASI will lease the South Beloit Facility to Buyer US.

 

**(b)**           UIASI shall have executed and deliveredto Buyer US an agreement in the form of **Exhibit D-2**pursuant to which UIASI will lease the Waynesboro Facility to Buyer US.

 

## **6.14**                        Discharge ofIndebtedness; Release of Liens

##  

**(a)**           The Purchasing Entities shall havereceived evidence reasonably satisfactory to the Purchasing Entities of thedischarge of:

 

(i)            allLiens (other than Permitted Liens excluding, for the avoidance of doubt, the Lienslisted in **Schedule 3.5**) on the PurchasedAssets; and

 

(ii)           allLiens on the Purchased Assets securing UNOVA’s revolving credit facility andUNOVA U.K.’s credit facility.

 

**(b)**           The Purchasing Entities shall havereceived a letter from UNOVA UK’s bankers and charges dated the date of Closingconfirming that none of the floating charging granted by UNOVA UK over any ofthe UK Purchased Assets has crystallized.

 

## **6.15**                        [Reserved]

##  

## **6.16**                        [Reserved]

##  

## **6.17**                        UK PensionPlans

##  

With respect to the Landis Pension Plan, avaluation (the “***Valuation***“) as at 1 July 2005shall have been signed by the actuary to the Landis Pension Plan, the related schedule ofcontributions (“***Schedule of Contributions***“)(as required under Section 58 Pensions Act 1995) shall have been approvedand signed by or on behalf of the trustees of the Landis Pension Plan and the Schedule ofContributions shall state a rate of employer contributions not exceeding 16.2%of the pensionable salary of employees in Scheme A and 18.9% of the pensionablesalary of employees in Scheme B (in the aggregate, the (“***Contribution Rate***“),

 

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and the Pension Regulator shall have raisedno objection to the Valuation or the Schedule of Contributions on orbefore Closing in relation to the Landis Pension Plan.

 

## **6.18**                        Other

##  

Except as required by Law, any conditionspecified in this Article 6 may be waived by the Purchasing Entities;provided that no such waiver shall be effective unless it is set forth in awriting executed by the Purchasing Entities or unless the Purchasing Entitiesagree in writing to consummate the transactions contemplated by this Agreementwithout fulfillment of such condition. No waiver of a closing condition by the Purchasing Entities shall limittheir rights under Article 11.

 

## **6.19**                        ClosingConditions for UNOVA UK

##  

**(a)**           A resolution in the agreed form shallhave been passed at a duly convened and constituted annual meeting orextraordinary general meeting of UNOVA UK approving the transactioncontemplated by this Agreement and any agreements referred to herein.

 

**(b)**           The business consisting of the UKPurchased Assets shall have been continued as a going concern by UNOVA UK.

 

**(c)**           UNOVA UK shall deliver or consent tobe delivered or make fully available to Buyer UK all of the UK Purchased Assetscapable of being transferred by delivery or by physical transfer.

 

## **6.20**                        Benefit ofLetters of Credit

##  

The Purchasing Entities shall be reasonablysatisfied that they shall receive the benefit after the Transfer Date of allletters of credit in favor of the Selling Entities relating to the Business asdisclosed on Schedule 1.1(l), it being acknowledged that certain lettersof credit may not be transferable and accordingly that the Selling Entitieswill continue to exercise their rights under such letters of credit for thebenefit of and at the reasonable discretion and out-of-pocket expense of thePurchasing Entities.

 

(Article 7 follows)

 

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# **ARTICLE 7.  Conditions Precedent to the Obligations of the Selling Entities to Close**

#  

Each and every obligation of the SellingEntities to be performed at Closing shall be subject to the satisfaction ofeach of the following conditions:

 

## **7.1**                               Representationsand Warranties True

##  

The representations and warranties made bythe Purchasing Entities in this Agreement at the time of its execution anddelivery and in any certificate or other writing delivered by the PurchasingEntities pursuant hereto, disregarding all qualifications and exceptionscontained therein relating to materiality or material adverse effect, shall betrue and correct in all respects on the Transfer Date as if made again andreaffirmed on such date, except where the failure of such representations andwarranties to be so true and correct would not reasonably be expected to haveor result in, individually or in the aggregate, a material adverse effect onthe Purchasing Entities.  The SellingEntities shall have received a certificate signed by a duly authorized officerof Buyer US to the foregoing effect.

 

## **7.2**                               ComplianceWith Agreement

##  

Each of the Purchasing Entities shall haveperformed and complied in all material respects with all of the obligationsunder this Agreement which are to be performed or complied with by it on orprior to the Transfer Date.  The SellingEntities shall have received a certificate signed by a duly authorized officerof Buyer US to the foregoing effect.

 

## **7.3**                               NoLitigation

##  

No investigation, suit, action or otherjudicial or governmental proceeding shall be pending or threatened before anycourt or Governmental Body which is reasonably likely to result in therestraint or prohibition, or the obtaining of substantial damages in connectionwith this Agreement or the consummation of the transactions provided for inthis Agreement, and the Pensions Regulator in the United Kingdom shall not haveindicated that he intends to issue a contribution notice or financial supportdirection under Part 1 of the Pensions Act 2004 with respect to oraffecting the UNOVA Pension Fund.

 

## **7.4**                               [Reserved]

##  

## **7.5**                               Consents andApprovals

##  

The Parties shall have obtained all necessaryand material authorizations, consents and approvals required for the validconsummation of the transactions provided for in this Agreement, and each ofsuch authorizations, consents and approvals shall be in full force and effect,provided, however, that (a) only those Required Consents listed on **Schedule 6.6** shall be required to have been obtained asof Closing under this Section 7.5, and (b)  if the PurchasingEntities (i) waive receipt of a Required Consent listed in Schedule 6.6in connection with Closing, and (ii) waive any claim for indemnificationunder Article 11 in

 

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connection with the failure to obtain suchRequired Consent, then this Section 7.5 shall be deemed satisfied withrespect to such Required Consent. Without limiting the generality of the foregoing, if applicable, thetime period under the HSR Act shall have expired or early termination shallhave been granted, and no adverse action shall have been threatened orinstituted in connection therewith.

 

## **7.6**                               PurchasePrice

##  

The Purchasing Entities shall have deliveredto UNOVA the Purchase Price.

 

## **7.7**                               Note

##  

The Note substantially in the form of **Exhibit A** shall have been delivered on the TransferDate.

 

## **7.8**                               Instrumentsof Assumption

##  

The applicable Purchasing Entities shall haveexecuted and delivered to the applicable Selling Entities instruments ofassumption sufficient for the applicable Purchasing Entities to assume theAssumed Liabilities applicable to the Purchased Assets acquired by itincluding, without limitation, a Deed of Change of Principal Employer andTrustees in the form set forth in **Exhibit 5.8(a)**.  The Purchasing Entities shall also deliver acertificate of the Secretary or an Assistant Secretary (or local equivalent) ofeach of such Persons setting forth a copy of the resolutions duly adopted byits Board of Directors authorizing and approving the execution and delivery of thisAgreement and the consummation of the transactions contemplated hereby.

 

## **7.9**                               PerformanceBonds

##  

The Purchasing Entities shall have in placefinancial instruments, including the issuance of a back-up letter of credit, ifnecessary, in a form and manner acceptable to UNOVA and Barclays Bank to securethe obligations of the Landis Group under those executory contracts, set forthon Schedules 3.8(j) (the “***Performance Bonds***“).

 

## **7.10**                        Leases

##  

**(a)**           Buyer US shall have executed anddelivered to UIASI an agreement in the form of **Exhibit D-1**pursuant to which UIASI will lease the South Beloit Facility to Buyer US.

 

**(b)**           Buyer US shall have executed anddelivered to UIASI an agreement in the form of **Exhibit D-2**pursuant to which UIASI will lease the Waynesboro Facility to Buyer US.

 

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## **7.11**                        Other

##  

Except as required by Law, any conditionspecified in this Article 7 may be waived by the Selling Entities;provided that no such waiver shall be effective unless it is set forth in awriting executed by the Selling Entities or unless the Selling Entities agreein writing to consummate the transactions contemplated by this Agreementwithout fulfillment of such condition. No waiver of a closing condition by the Selling Entities shall limittheir rights under Article 11.

 

## **7.12**                        TransitionServices Agreement

##  

The Purchasing Entities shall have executedand delivered to the Selling Entities the Transition Services Agreementpursuant to which (i) the Selling Entities Group shall continue to providecertain services to the Landis Group, and (ii) the Purchasing Entities inrespect of the Landis Group shall provide certain services to the SellingEntities.

 

(Article 8 follows)

 

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# **ARTICLE 8.  Further Requirements**

#  

## **8.1**                               Access toBooks and Records

##  

From and after the Transfer Date, (a) theSelling Entities and their authorized representatives shall have reasonableaccess, during normal business hours and upon reasonable notice, to inspect andexamine and the right to photocopy all books of account and records transferredto the Purchasing Entities pursuant to this Agreement that relate to theaffairs and business of the Landis Group conducted on or prior to the TransferDate, and (b) the Purchasing Entities will cooperate with the SellingEntities as may be reasonably necessary to permit the Selling Entities to closetheir books with respect to the Business as of the Transfer Date and to preparetheir customary financial reports, including but not limited to furnishing tothe Selling Entities and their authorized representatives with existingfinancial and operating data and other information with respect to the affairsand business of the Landis Group necessary to prepare such financial reports;provided that such inspection, examination, photocopying and requests forcooperation shall be conducted so as not to unreasonably interfere with theBusiness.  To the extent that any booksand records that constitute Excluded Assets pursuant to Section 1.2(h) arecommingled with the books and records transferred to the Purchasing Entitieshereunder, the Purchasing Entities shall notify the applicable Selling Entitiesbefore destroying any of such books and records and shall afford the SellingEntities a reasonable opportunity to photocopy or take possession of the same.

 

## **8.2**                               FurtherInstruments and Assurances

##  

From and after the Agreement Date, each ofthe Parties shall use its reasonable best efforts to take, or cause to betaken, such other action as may be required to fully and effectively carry outthe transactions contemplated by this Agreement.

 

## **8.3**                               LitigationCooperation

##  

If any Party is a party to any suit, action,proceeding or investigation concerning the Business conducted on or prior tothe Transfer Date (excluding any such suit, action, proceeding or investigationbetween any of the Selling Entities, on the one hand, and any PurchasingEntity, on the other hand), the Parties shall, upon the request of the Partyinvolved in such litigation and without charge to such Party, use their bestefforts to assist and cooperate fully with such Party in connection with suchlitigation.

 

## **8.4**                               CertainEmployee Matters

##  

### **(a)**                                  Employment

###  

As soon as practicable following theAgreement Date, the applicable Purchasing Entity shall offer employment as ofthe Transfer Date to all Employees at their current work sites, (i) attheir current rates of base pay and (ii) with the types of benefits thatare listed on

 

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Schedule 8.4(a) and that in theaggregate are comparable to those that such Employees currently receive, ineach case, for a period of 12 months. Notwithstanding the foregoing and except as is required to discharge theAssumed Liabilities under Sections 1.6(j) and 1.6(n), Buyer US will not berequired to provide any defined pension plan or retiree medical benefits toContinuing Employees.  Those Employeeswho accept such offer are referred to collectively as the “***ContinuingEmployees***“ (which, for the avoidance of doubt, includes allthose Employees of UNOVA UK who become employees of Buyer UK on Closingpursuant to the Transfer Regulations). Nothing in this Agreement creates any third-party beneficiary rightswith respect to employment of any Employee.

 

### **(b)**                                  CertainEmployee Benefits

###  

#### **(i)**                                    Past ServiceCredit

####  

The applicable Purchasing Entity shall creditthe Continuing Employees with their respective years of continuous service withUNOVA or its Affiliates for purposes of eligibility and vesting under theapplicable Purchasing Entity’s employee benefit plans.

 

#### **(ii)**                                Benefitsunder the Selling Entities’ Plans

####  

The Selling Entities shall cease accrual ofbenefits as of the Transfer Date with respect to any Continuing Employee underany of their employee benefit plans that are not assumed by any PurchasingEntity.

 

#### **(iii)**                            U.S. Medicaland Health Plan

####  

Buyer US will have in effect in the UnitedStates within 90 days of the Transfer Date a group insurance program underwhich Continuing Employees of the Landis US division (the “***US Employees***“) will bepermitted to participate in benefits consisting of medical, hospital, life anddental insurance benefits.  Eligibilityfor, the benefits of (including the reservation by Buyer US of the rightto terminate or amend such program in whole or in part at any time), and theamount, if any, of employee contributions toward, such group insurance programwill be determined by Buyer US except that Buyer US’s group insurance withrespect to US Employees will:

 

(A)          Waiveapplication of its pre-existing conditions provision to any US Employee orcovered dependent for any medical condition such US Employee or covereddependent has as of the Transfer Date unless such condition was or would havebeen excluded from coverage as a pre-existing condition under the applicableSelling Entity’s group insurance program covering such US Employee orcovered dependent as of the Transfer Date; and

 

(B)           Crediteach US Employee in Buyer US’s program plan year with eligible expensesincurred by, and claims paid on behalf of, such US Employee in the currentprogram plan year of the Selling Entity’s group insurance program applicable tosuch Employee for purposes of satisfying the deductible provisions, the out-of-pocketmaximum

 

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provisions and the maximum coverageprovisions of Buyer US group insurance program, but only to the extent Buyer USprogram plan year overlaps with the applicable Selling Entity’s current programplan year.

 

(C)           UNOVAwill provide the benefits transition services, participation in health plansand COBRA continuation coverage as set forth in the Transition ServicesAgreement.

 

#### **(iv)**                               Buyer US’s401(k) Plan

####  

Buyer US shall offer all Continuing Employeesthe opportunity to enroll in Buyer US’s 401(k) plan (the “***Buyer US’s 401(k) Plan***“)subject to the enrollment requirements of Buyer US’s 401(k) Plan.  Except as otherwise provided below withrespect to the “***FSSP/UPP Transition Period***“(as defined below), as soon as Buyer US shall have reasonably concluded thatUNOVA’s 401(k) plan (the “***FSSP***“) istax-qualified, it shall cause Buyer US’s 401(k) Plan to accept the directrollover of the pre-tax account balance under the FSSP of any ContinuingEmployee who elects to enroll as an active participant in Buyer US’s401(k) Plan and to have such account balance transferred to Buyer US’s401(k) Plan.  UNOVA shall cause thePlan Administrator designated under the FSSP to extend the repayment period ofa loan of any Continuing Employee from 30 days to 90 days followingthe Transfer Date, it being understood that any such loan that is not repaid bythe end of the calendar quarter after the calendar quarter when the most recentinstallment was due will be deemed to be in default.  If mutually acceptable to Buyer US and UNOVAand if legally permissible, UNOVA shall permit the employees of the Landis USdivision who become Continuing Employees to continue to participate in the FSSPand the UNOVA Pension Plan (the “***UPP***“) for aperiod of up to six months following the Transfer Date (the “***FSSP/UPP Transition Period***“);provided that in such event, Buyer US shall pay to UNOVA (or, in the solediscretion of UNOVA, directly to the FSSP or the UPP, as the case may be) thecontributions, costs and administrative charges relative to the benefits earnedby such employees while participating in the FSSP and UPP during the FSSP/UPPTransition Period.  The payments ofcontributions, costs and administrative charges described in the preceding sentenceshall be made promptly after each payroll period.  In the case of contributions relative tobenefits earned by Continuing Employees under the FSSP, payments for eachpayroll period shall include all employee contributions and related employermatching contributions for such payroll period. In the case of contributions relative to benefits earned by ContinuingEmployees under the UPP, payments for each payroll period shall include a pro-rataportion of the required annual employer contribution to the UPP, determined bydividing the projected annual employer contribution to the UPP for ContinuingEmployees (as determined by the actuary for the UPP) by the number of payrollperiods over which Continuing Employees accrue benefits in the UPP during theyear.  In the event that Buyer US fails tomake such payments as required, UNOVA shall be entitled to immediatelyterminate the participation of such employees in the FSSP and UPP.  Buyer US shall take all steps requiredto maintain the tax-qualified status of the FSSP and the UPP (as determined byUNOVA in its sole discretion, and including, if necessary, adopting the FSSP

 

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and UPP as a co-sponsor), and shall cooperatewith UNOVA in making any filings required by any Governmental Body with respectto the FSSP and the UPP.

 

### **(c)**                                  WARN Act

###  

The Purchasing Entities shall comply with theapplicable provisions of the Worker Adjustment and Retraining Notification Actof 1988 (the “***WARN Act***“) and any similarfederal, state or local Law, regarding the Employees and their employment withany Purchasing Entity following the Transfer Date, and shall indemnify theSelling Entities in respect thereof.  TheSelling Entities shall comply with the applicable provisions of the WARN Actand any similar federal, state or local law regarding the Employees and theiremployment with the Selling Entities prior to or as of the Transfer Date, andshall, subject to satisfaction of the covenants of the Purchasing Entities in Section 8.4(a),indemnify the Purchasing Entities for their Losses in respect thereof.

 

## **8.5**                               Use of UNOVAName and Mark

##  

**(a)**           Notwithstanding the provisions of Section 1.2(i),from and after the Transfer Date, the Purchasing Entities shall be permitted touse, in the operation of the Business, (i) the existing inventories of rawmaterials, work-in-process and finished goods that bear the names “UNOVA” or “UNOVAIndustrial Automation Systems, Inc.” or any variation thereof or anytrademark relating thereto, or any acronym or abbreviation thereof(collectively, the “***Seller Names***“) for areasonable period to exhaust such inventories, but in no event longer than oneyear following the Transfer Date, and (ii) existing stationery, packaging,shipping, invoices, purchase orders and similar supplies which bear any of theSeller Names for the period necessary to exhaust such supplies, but in no eventlonger than one year following the Transfer Date; *provided*,*however*, that in each case, thePurchasing Entities shall use reasonable efforts (to the extent commerciallyfeasible) to overprint, overstamp, apply an appropriate label or otherwiseobliterate the Seller Names on such items or shall otherwise indicate that theBusiness has been sold to the Purchasing Entities and is independent of any ofthe Selling Entities.  Except as providedin this Section 8.5, the Purchasing Entities shall not use or permit anyof the Landis Group to use the name “UNOVA”, or any confusingly similar name ormark, or any trademarks (including applications and registrations therefor)relating thereto, or any acronym or abbreviation thereof.

 

**(b)**           The Purchasing Entities shall not beobligated to change Seller Names on goods in the hands of dealers, distributorsand customers.

 

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**(c)**           From and after the Transfer Date, theSelling Entities shall not use the names or brands held for use primarily orexclusively in the Business, including, without limitation, the names or brandsof “Landis”, “Landis Cincinnati,” “Landis Gardner”, “Landis Lund”, “Gardner Abrasives”,“CITCO”, “Cranfield Precision” and “Goldcrown” or any variation thereof or anytrademark relating thereto, or any acronym or abbreviation thereof.

 

## **8.6**                               Exclusivity

##  

Until the earlier of the Closing ortermination of this Agreement, the Selling Entities shall not, and shall notpermit or authorize any of their officers, directors, agents or representativesto, directly or indirectly, solicit or encourage any “***AcquisitionProposals***“ (as defined below) or participate in any discussionsor negotiations relating to an Acquisition Proposal relating, directly orindirectly, to the Landis Group.  Untilthe earlier of the Closing or termination of this Agreement, UNOVA shallpromptly notify Buyer US in writing of any such Acquisition Proposal orany communication or indication from any person that it or any other person isconsidering making such an Acquisition Proposal, whether oral or written.  The term “***AcquisitionProposal***“ shall mean any proposal for any business combinationinvolving the Landis Group or the acquisition, directly or indirectly, of allor a portion of the Purchased Assets.

 

## **8.7**                               Taxes

##  

### **(a)**                                  TaxesRelating to the Business and UNOVA UK

###  

Subject to the provisions of Section 8.7(d),the Selling Entities shall pay all Taxes with respect to the ownership, use oroperation of the Purchased Assets on or prior to the Transfer Date and BuyerUS, Buyer UK or their Affiliates shall pay all such Taxes with respect to theBusiness and the ownership, use or operation of the Purchased Assets after theTransfer Date.  Any and all real propertyTaxes, personal property Taxes, assessments, utilities, lease rentals, fuel andother charges applicable to the Purchased Assets that are payable in the yearthat includes the Transfer Date shall be pro-rated to the Transfer Date basedon the percentage of the year prior to the Transfer Date, and such Taxes andother pro-ratedamounts shall be allocated between the Parties by adjustment to the PurchasePrice at the Closing.

 

### **(b)**                                  TransferTaxes

###  

The Selling Entities, on the one hand, andthe Purchasing Entities, on the other hand, shall each be responsible for one-halfof all real estate, transfer, sales, use, excise, stamp, registration and othersuch Taxes and fees (including any penalties and interest) incurred inconnection with the Transactions, and shall, at their own expense, file allnecessary Tax Returns and other documentation with respect thereto.  The Parties shall cooperate with each otherto minimize any such Taxes.

 

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### **(c)**                                  EmploymentTaxes

###  

Buyer US shall prepare and furnish to each ofthe Continuing Employees employed in the United States following the Closing a Form W-2 that shall reflectall wages and compensation paid to such employee for the period after theTransfer Date in the calendar year in which the Transfer Date occurs, and shallfile with the Social Security Administration Forms W-2 (Copy A) withrespect to such employees and such period. The Selling Entities shall prepare and furnish such Forms W-2 for the periodprior to and including the Transfer Date. The Selling Entities shall furnish to Buyer US the Forms W-4 and W-5, as applicable, ofeach such employee.  It is the intent ofthe Parties hereunder that the obligations of Buyer US and the Selling Entitiesunder this Section 8.7(c) shall be carried out in accordance with Section 5of Revenue Procedure 2004-53.

 

### **(d)**                                  StockOptions

###  

Notwithstanding any provision to the contraryin this Agreement, the Selling Entities shall claim the benefit of federal,state and local Tax deductions related to the exercise of all options topurchase shares of UNOVA and none of the Purchasing Entities shall claim anysuch Tax deductions.  Subject to Section 8.7(c),the Selling Entities shall be responsible for the proper payroll Tax treatmentand the proper Tax reporting of compensation relating to such option exercises.  Notwithstanding the preceding words of this Section 8.7(c),the Selling Entities shall fully indemnify the relevant Purchasing Entities inrespect of all Taxes (including for the avoidance of doubt all nationalinsurance contribution liabilities and payments) arising in relation to theexercise of any option to purchase shares or other securities in any of theSelling Entities or affiliates thereof.

 

### **(e)**                                  TaxTreatment

###  

Any indemnification payments made pursuant tothis Agreement shall be treated by the Parties, to the extent permitted byapplicable Law, as a purchase price adjustment unless determined otherwise in afinal determination as defined in Section 1313 of the Code.

 

### **(f)**                                    Interpretation

###  

The provisions of this Section 8.7 shallcontrol over any conflicting provisions of Article 11.

 

## **8.8**                               Settlementof Intercompany Accounts

##  

On the Transfer Date, the Selling Entitiesshall cause all intercompany payables and receivables (other than tradepayables or receivables) to be settled.

 

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## **8.9**                               IntellectualProperty Registrations

##  

On or prior to the Transfer Date, the SellingEntities shall execute the assignment documents prepared by the PurchasingEntities in the form set out as **Exhibit E**to transfer and assign all Intellectual Property applications and registrationsfor the Intellectual Property which form part of the Purchased Assets and shallprovide such assignment documents to the Purchasing Entities for filing withthe relevant Governmental Body.  The Partieshereto agree to cooperate fully for an orderly transfer of such applicationsand registrations.

 

## **8.10**                        Authorization;Mail

##  

The Selling Entities agree that they willpromptly transfer and deliver to Buyer UK any cash or other property thatthe Selling Entities may receive in respect of any receivables or other itemswhich shall be transferred to Buyer US or Buyer UK as provided herein.  The Selling Entities authorize and empowerBuyer US and Buyer UK from and after the Transfer Date (a) to receive andopen mail addressed to them and (b) to deal with the contents thereof inany manner Buyer US or Buyer UK sees fit, provided such mail and the contentsthereof relate to the Purchased Assets or otherwise to their Business or to anyof the Assumed Liabilities.  The SellingEntities agree to deliver to Buyer US or Buyer UK (as appropriate) promptlyupon receipt and identification any mail, checks or other documents received bythem pertaining to the Purchased Assets or otherwise to the Landis Group or anyof the Assumed Liabilities.

 

## **8.11**                        Post-ClosingCooperation

##  

To the extent not already provided for underthis Agreement, each of the Parties shall cooperate fully, as and to the extentreasonably requested by the other Parties, in providing information that may berequired by such Parties in connection with their respective audit, securitiescompliance and reporting and similar post-Closing activities related to thetransactions contemplated by this Agreement.

 

## **8.12**                        PurchasedAssets Not Transferred

##  

Withoutprejudice to any other rights or remedies of the Purchasing Entities under thisAgreement, if any of the Purchased Assets has not been transferred to or is notvested in one of the Purchasing Entities by virtue of the transactions carriedout pursuant to this Agreement, the relevant Purchasing Entity may give writtennotice to the relevant Selling Entity at any time in the 18 monthsfollowing the Closing.  If such notice isgiven:

 

**(a)          **the relevant Selling Entity shall, as soon as practicable and so far asit is able, transfer at their cost (or procure the transfer by the relevantSelling Entity) such asset (together with any benefit or sum, net of tax andother out of pocket expenses, accruing to any Selling Entity as a result ofholding such asset since Closing) to such person as that Purchasing Entityshall direct (provided that it is one of the Purchasing Entities) on terms thatno consideration is payable by any Purchasing Entity for such transfer; and

 

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**(b)          **that Purchasing Entity shall provide such assistance to the SellingEntity as the Selling Entity reasonably requires for the purposes of paragraph (a) ofthis Section 8.12.

 

## **8.13**                        Confidentiality

##  

The Selling Entities and their Affiliateswill hold, and will use their best efforts to cause their respective officers,directors, employees, accountants, counsel, consultants, advisors and agents tohold, in confidence, unless compelled to disclose by judicial or administrativeprocess or by other requirements of law, all confidential documents andinformation concerning the Purchasing Entities that have been furnished to theSelling Entities or their Affiliates in connection with the transactionscontemplated by this Agreement, and, after the Transfer Date, all confidentialdocuments and information concerning the Business, except to the extent thatsuch information can be shown to have been (i) previously known on anonconfidential basis by the Selling Entities, (ii) in the public domainthrough no fault of the Selling Entities or (iii) later lawfully acquiredby the Selling Entities from sources other than the Purchasing Entities;provided that the Selling Entities may disclose such information to itsofficers, directors, employees, accountants, counsel, consultants, advisors andagents in connection with the transactions contemplated by this Agreement solong as such persons are informed by the Selling Entities of the confidentialnature of such information and are directed by the Selling Entities to treatsuch information confidentially in accordance with this Agreement.  The obligation of the Selling Entities andtheir Affiliates to hold any such information in confidence shall be satisfiedif they exercise the same care with respect to such information as they wouldtake to preserve the confidentiality of their own similar information.  If this Agreement is terminated, to theextent permitted by applicable Law, the Selling Entities and their Affiliateswill, and will use their best efforts to cause their respective officers,directors, employees, accountants, counsel, consultants, advisors and agentsto, destroy or deliver to the Purchasing Entities, upon request, all documentsand other materials, and all copies thereof, obtained by the Selling Entitiesor their Affiliates or on their behalf concerning the Purchasing Entities inconnection with this Agreement that are subject to such confidence.

 

## **8.14**                        PerformanceBonds

##  

The Purchasing Entities shall effect thesubstitution of their credit and/or the credit of the Landis Group under thePerformance Bonds within nine months following the Transfer Date.  Pending such substitution, the PurchasingEntities shall reimburse the Selling Entities for all costs incurred by SellingEntities in maintaining the Performance Bonds and shall pay such amountspromptly upon receipt of an invoice therefor. In the event that the beneficiary of any of the Performance Bonds shalldraw on the Performance Bonds for any reason, the applicable Selling Entitiesshall be entitled to prompt reimbursement from the Purchasing Entities for theamount so drawn plus all associated costs incurred by the Selling Entities.

 

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## **8.15**                        ClaimCooperation

##  

If the representations and warranties made byEnviros Consulting Limited to UNOVA in the report entitled “Phase 1 EnvironmentReview:  Landis Lund Skpton Road, CrossHills” dated June 2005 (ref: CAN UN0370007A) (the “***Phase 1Report***“) have been breached and result in a Loss to thePurchasing Entities, to the extent that UNOVA has a claim for breach under thePhase 1 Report, UNOVA shall cooperate with the Purchasing Entities as maybe reasonably requested by the Purchasing Entities to pursue such claim at thesole expense of the Purchasing Entities, including but not limited to assigningUNOVA’s claim for such breach to the Purchasing Entities and paying over anydamages received by UNOVA as a result of such claim.

 

(Article 9 follows)

 

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# **ARTICLE 9.  Noncompetition Agreement**

#  

## **9.1**                               NoncompetitionAgreement

##  

For and in consideration of the benefits tobe derived, directly and indirectly, from this Agreement, each of the SellingEntities covenants and agrees that for a period of five years (three years inEurope) (the “***Non-Compete Term***“) followingthe Transfer Date, it shall not (and none of its Affiliates shall), own,manage, operate, join, control or participate in the ownership, management,operation or control of, or be connected (as director, officer, employee, consultant,agent, independent contractor, or otherwise) in any other manner with anybusiness activity constituting “***Competitive Business***“(as defined in Section 9.3) or any business substantially similar theretoin any country or territory in the world.

 

## **9.2**                               Limitationson Noncompetition Agreement

##  

**(a)**           Notwithstanding anything in Section 9.1to the contrary, the Selling Entities and their Affiliates shall not beprohibited from (i)  the acquisition or investment in any corporation,company, partnership or other business entity (a “***Company***“)partially engaged in the Competitive Business provided that such activity doesnot exceed five percent (5%) of the net revenues or net assets of such Company,(ii) the ownership of not more than one percent (1%), in the aggregate, ofany class of debt or equity security of any Company principally engaged in theCompetitive Business provided that such security is traded on a nationalsecurities exchange or an inter-dealer quotation system, or (iii) anyinvestments made by the investment managers of UNOVA’s pension plans or themanagers of UNOVA’s 401(k) plans or similar non-qualified retirementplans.

 

**(b)**           In the event that any provision ofthis Article 9 shall be held invalid, illegal, void, inoperative orunenforceable in an arbitration pursuant to Section 12.11 by reason of thegeographic or business scope or the duration of such provision, suchinvalidity, illegality or unenforceability shall attach only to the scope orduration of such provision and shall not affect or render invalid, illegal,void, inoperative or unenforceable any other provision of this Agreement, and,to the fullest extent permitted by Law, this Agreement shall be construed as ifthe geographic or business scope or the duration of such provision had beenmore narrowly drafted so as not to be invalid, illegal, void, inoperative orunenforceable.

 

## **9.3**                               Definitionof Competitive Business

##  

As used in this Agreement, the term the “***Competitive Business***“ means thedesign, manufacture, sale and service of grinding and abrasives systems forcamshaft, crankshaft, centerless and disc grinder machines and other specialhigh precision machine tools, including high speed grinding spindles, highlyengineered diamond and cBN® cutting tools, superabrasive wheels and dressingproducts.

 

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## **9.4**                               Nonsolicitation

##  

For a period of two years following theTransfer Date, the Selling Entities shall not (and none of their Affiliatesshall), directly or indirectly, without the prior written consent of Buyer US, (a) solicit,offer to hire, entice away or hire any Continuing Employee as an employee,consultant, independent contractor or otherwise, or (b) divert or attemptto divert from the Purchasing Entities any business whatsoever included in theBusiness as conducted by the Landis Group as of the Transfer Date byinfluencing or attempting to influence any current or former customer orsupplier of the Business as of the Transfer Date.  The foregoing restrictions shall not prohibitgeneral employment solicitations to the public or hiring of any ContinuingEmployee who contacts any of the Selling Entities in response to such generalsolicitation.

 

## **9.5**                               Injunctiveand Equitable Relief

##  

The Selling Entities agree that the remedy ofdamages for any breach of Article 9 would be inadequate and that, in theevent of any such breach or threatened breach by UNOVA or its Affiliates, theapplicable Purchasing Entity shall be entitled to injunctive relief in additionto any other remedy at Law, in equity or under this Agreement to which it maybe entitled.

 

(Article 10 follows)

 

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# **ARTICLE 10. Termination**

#  

## **10.1**                        Termination

##  

This Agreement may be terminated immediatelyupon the receipt of notice of termination as provided for in Section 10.2,and the transactions provided for in this Agreement may be abandoned, withoutliability on the part of the Party effecting such termination except asotherwise provided in Section 10.3:

 

(a)           Bymutual written consent of all of the Parties;

 

(b)           Byany Party, if (i) any court of competent jurisdiction or any GovernmentalBody shall have issued a final order, decree or ruling or taken any other finalaction restraining, enjoining or otherwise prohibiting the consummation of thetransactions contemplated hereby and such order, decree, ruling or other actionis or shall have become final and nonappealable, or (ii) the Closing shallnot have been consummated on or before December 9, 2005 (the “***Deadline Date***“); provided, that(x) no party may terminate this Agreement pursuant to clause (b)(ii) ifsuch Party’s failure to fulfill any of its obligations under this Agreementshall have been the reason that the Closing shall not have occurred on orbefore the Deadline Date, and (y) if the Closing shall not have occurredby the Deadline Date because either the time period under the HSR Act or anysimilar Law shall not have expired or any adverse action shall have beenthreatened or instituted in connection with the HSR Act or any similar Law, andall other conditions precedent in Articles 6 and 7 have beensatisfied or are capable of being satisfied or, to the extent legallypermissible, have been waived, the Deadline Date shall be December 23,2005 (the “***Extended Deadline Date***“);

 

(c)           Subjectto Section 2.2 and Section 10.1(b)(ii), by Buyer US, if any ofthe conditions of Article 6 of this Agreement have not been satisfied onor before the Deadline Date and have not been waived by the Purchasing Entitiesin writing; *provided*, *however*,that the foregoing termination right shall not exist to the extent that anyPurchasing Entity has breached any of its material obligations hereunder;

 

(d)           Subjectto Section 2.2 and Section 10.1(b)(ii), by UNOVA, if any of theconditions of Article 7 of this Agreement have not been satisfied on orbefore the Deadline Date and have not been waived by UNOVA in writing; *provided*, *however*, thatthe foregoing termination right shall not exist to the extent that one or moreof the Selling Entities has breached any of its material obligations hereunder;

 

(e)           Byany Purchasing Entity, if any of the Selling Entities files on or before theTransfer Date a petition in bankruptcy, reorganization, liquidation orreceivership or a petition in bankruptcy, reorganization or receivership isfiled on or before the Transfer Date against any of the Selling Entities;

 

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(f)            ByUNOVA, if a Purchasing Entity files on or before the Transfer Date a petitionin bankruptcy, reorganization, liquidation or receivership or a petition inbankruptcy, reorganization or receivership is filed on or before the TransferDate against a Purchasing Entity; or

 

(g)           Bythe Purchasing Entities, upon a material breach of any representation, warrantyor covenant of the Selling Entities contained in this Agreement or any RelatedAgreement; provided that such breach is not capable of being cured or has notbeen cured within 30 days after the giving of notice thereof by thePurchasing Entities to the Selling Entities.

 

## **10.2**                        Notice ofTermination

##  

Any Party terminating this Agreement inaccordance with Section 10.1 shall give the other Parties prompt writtennotice of termination, setting forth in reasonable detail the cause oftermination.

 

## **10.3**                        Effect of Termination

##  

In the event of termination of this Agreementas provided in Section 10.1 and Section 10.2, this Agreement willforthwith become void and have no effect, without any liability on the part ofany Party other than the provisions of this Section 10.3 and Article 12,which provisions survive such termination; provided that nothing herein willrelieve any Party from any liability for any material breach by such party ofany of its representations, warranties, covenants or agreements set forth inthis Agreement.

 

(Article 11 follows)

 

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# **ARTICLE 11. Indemnification**

#  

## **11.1**                        Indemnificationby the Selling Entities

##  

In order to induce the Purchasing Entities toenter into this Agreement and to consummate the transactions contemplatedhereby, each of the Selling Entities (collectively, the “***IndemnifyingSelling Entities***“) jointly and severally covenants and agrees toand shall indemnify each of the Purchasing Entities and their respectiveofficers, directors and affiliates (collectively, the “***BuyingIndemnified Parties***“) and shall hold the Buying IndemnifiedParties harmless against and with respect to any and all losses, damages, costsor expenses (including reasonable expenses of investigation and reasonable attorneys’fees and costs) (“***Losses***“ or individually a “***Loss***“) suffered or incurred by theBuying Indemnified Parties and resulting from or arising out of the mattersdescribed below in this Section 11.1. The Buyer Indemnified Parties’ right to indemnification, payment ofdamages or other remedies based on the Selling Entities’ covenants andrepresentations or warranties will not be affected by any investigationconducted with respect to, or any knowledge acquired (or capable of beingacquired) at any time by the Purchasing Entities, whether prior to or after theexecution and delivery of this Agreement or the Transfer Date.

 

### **(a)**                                  Misrepresentationor Breach of Warranty

###  

Any misrepresentation or breach of any of therepresentations and warranties of the Selling Entities set forth in thisAgreement (determined without regard to any materiality qualification containedin any representation or warranty giving rise to any claim for indemnityhereunder) or in any certificate delivered pursuant to hereto;

 

### **(b)**                                  Breach ofCovenant or Agreement

###  

Any breach or nonfulfillment any of thecovenants, agreements or other obligations of any of the Selling Entities setforth in this Agreement;

 

### **(c)**                                  ExcludedLiabilities

###  

Any failure of the Selling Entities todischarge the Excluded Liabilities when due;

 

### **(d)**                                  PensionLiabilities

###  

(i)            Anyclaim that benefits under the UNOVA Pension Fund have not been calculated in away which complies with the requirements of Article 141 (formerly Article 119)of the Treaty of Rome or Section 62 of the Pensions Act 1995 made by or inrespect of the membership of any UK Employee other than a claim made by orin respect of the membership of any such UK Employee who agreed to thetransfer of his or her accrued benefits from the UNOVA Pension Fund to theLandis Pension Plan.

 

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(ii)           Anyclaim by or in respect of any UK Employee who became employed by UNOVA UKpursuant to the purchase of the Cranfield Precision business by UNOVA UK thatany “relevant benefits” as defined in Section 612 of the Income andCorporation Taxes Act 1988 are payable to or in respect of him in addition tothe benefits described in the documents and data referred to in Section 3.13(m)(D) byvirtue of the operation of the Transfer of Undertakings (Protection ofEmployment) Regulations 1981 (as amended), but only in so far as such claim isin respect of such benefits which relate to pensionable service before theTransfer Date calculated by reference to pensionable salary as at the TransferDate.

 

### **(e)**                                  Bulk Sales

###  

Any liability or obligation relating tononcompliance with any applicable bulk sales or transfer Law; and

 

### **(f)**                                    UK Employees

###  

(i)            Anyclaims, proceedings, demands, awards, losses, damages, costs, liabilities,interest or expenses (“***Employment Liabilities***“)that may be suffered or incurred by Buyer UK in connection with theemployment or dismissal of any person who is not a UK Employee but whotransfers or claims to transfer to the Buyer UK pursuant to the TransferRegulations (as defined in Section 1.13) or otherwise as a result of theBuyer UK entering into this Agreement or Closing provided Buyer UK takesall reasonable steps to minimize those Employment Liabilities and save for anyEmployment Liabilities which arise in respect of a finding or allegation thatthe Buyer UK unlawfully discriminated against such person.

 

(ii)           Savein relation to “relevant benefits” as defined in Section 612 of the Incomeand Corporation Taxes Act 1988, UNOVA UK shall procure the performance and dischargeof all contractual, statutory and other obligations in respect of all of theUK Employees up to and including the Transfer Date and, save as aforesaid,the Selling Entities shall indemnify the Purchasing Entities against anyEmployment Liabilities arising from any act or omission of UNOVA UK orfailure by UNOVA UK to discharge any obligation relating to any of the UKEmployees on or prior to the Transfer Date.

 

(iii)          AnyEmployment Liabilities Buyer UK incurs if any UK Employee or his or heremployee representative brings a claim arising from a failure by UNOVA UK tocarry out its duty to inform and consult under Regulation 10 of theTransfer Regulations provided the Buyer UK complies with its obligationsarising under Regulation 10(3) of the Transfer Regulations.

 

## **11.2**                        Indemnificationby Purchasing Entities

##  

In order to induce the Selling Entities toenter into this Agreement and to consummate the transactions contemplatedhereby, the Purchasing Entities (the “***Indemnifying PurchasingEntities***“) covenant and agree to and shall jointly and severallyindemnify the

 

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Selling Entities and their respectiveofficers, directors and affiliates and additionally, in respect of Section 11.2(g),the current and former trustees of the UNOVA Pension Fund and of the LandisPension Plan (collectively, the “***Selling IndemnifiedParties***“) and shall jointly and severally hold the SellingIndemnified Parties harmless against and with respect to any and all Lossessuffered or incurred by the Selling Indemnified Parties and resulting from orarising out of:

 

### **(a)**                                  Misrepresentationor Breach of Warranty

###  

Any misrepresentation or breach of any of therepresentations and warranties of the Purchasing Entities set forth in thisAgreement (determined without regard to any materiality qualification containedin any representation or warranty giving rise to any claim for indemnityhereunder) or in any certificate delivered pursuant hereto;

 

### **(b)**                                  Breach ofCovenant or Agreement

###  

Any breach or nonfulfillment by a PurchasingEntity of any of its respective covenants, agreements or other obligations setforth in this Agreement;

 

### **(c)**                                  AssumedLiabilities

###  

Any failure of the Purchasing Entities todischarge the Assumed Liabilities when due;

 

### **(d)**                                  Operationsof the Business

###  

The operation of the Business byBuyer UK and the other Purchasing Entities after the Transfer Date, exceptto the extent that a Purchasing Entity is entitled to indemnification from theIndemnifying Selling Entities pursuant to Section 11.1;

 

### **(e)**                                  PerformanceBonds; Letters of Credit

###  

Any claims against any of the SellingEntities (i) under the Performance Bonds, or (ii) in respect of anyletters of credit in favor of the Selling Entities relating to the Businessthat are maintained by any of the Selling Entities for the benefit of thePurchasing Entities pursuant to the terms of this Agreement.

 

### **(f)**                                    UK Employees

###  

(i)            BuyerUK shall procure the performance and discharge of all contractual, statutoryand other obligations in respect of all of the UK Employees after the TransferDate and all contractual, statutory and other obligations in respect of all theUK Employees in relation to “relevant benefits” as defined in Section 6.12of the Income and Corporation Taxes Act 1988 whether relating to a periodbefore, on or after the Transfer Date and Buyer UK shall indemnify UNOVA UKagainst (i) any Employment Liabilities (as defined in Article 11.1(f)(i))arising from any act or omission of Buyer UK or the failure of the Buyer UK todischarge any obligation relating to any of the UK Employees after the

 

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Transfer Date (except where such obligationis an Excluded Liability); and (ii) any anticipatory breach of thecontract of employment of an Employee of UNOVA UK by Buyer UK.

 

(ii)           BuyerUK agrees to provide UNOVA UK with details of any measures it intends to takein relation to the UK Employees (as required by Regulation 10(2)(d) ofthe Transfer Regulations) and to indemnify UNOVA UK against any EmploymentLiabilities it may incur as a result of any failure by Buyer UK to provide thisinformation to UNOVA UK.

 

### **(g)**                                 PensionLiabilities

###  

(i)            Anyclaims or liabilities in relation to the Landis Pension Plan (including,without limitation, any claim or liability relating to a contribution noticeissued under Section 38 or Section 47 of the Pensions Act 2004 or afinancial support direction issued under Section 43 of that Act, whetherthe notice or direction is issued before, on or after the Transfer Date, andany claim or liability relating to the levy to fund the Pension Protection Fundpayable pursuant to the Pensions Act 2004); provided, however, that theforegoing right to indemnity shall not exist with respect to claims andliabilities for which the Purchasing Entities are entitled to indemnificationunder Section 11.1;

 

(ii)           Anyclaim that any benefit under the UNOVA Pension Fund or that any transfer paidby the UNOVA Pension Fund has not been calculated in accordance with Article 141(formerly Article 119) of the Treaty of Rome or Section 62 of thePensions Act 1995 made by or in respect of the membership of any UK Employeewho agreed to the transfer of his or her accrued benefits from the UNOVAPension Fund to the Landis Pension Plan.

 

## **11.3**                        Claims forReimbursement

##  

In the event that any of the BuyingIndemnified Parties or the Selling Indemnified Parties shall have (i) sufferedany Loss, or (ii) received any notice of the commencement of any action,proceeding or investigation or the making of any claim or demand by a thirdparty (a “***Third Party Claim***“), in eachcase, in respect of which indemnification may be sought by such party pursuantto this Article 11, the party who shall have suffered such Loss orreceived such notice of such Third Party Claim and who shall seekindemnification in respect thereof (the “***Indemnified Party***“)shall give either UNOVA (if the Indemnified Party is a Buying IndemnifiedParty), or Buyer US (if the Indemnified Party is a Selling Indemnified Party),as the case may be (the “***Indemnifying Party***“),prompt written notice of such Loss or Third Party Claim setting forth inreasonable detail such information as it shall have pertaining thereto and theIndemnified Party’s demand for indemnification in respect thereof.

 

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In the case of Third Party Claims, writtennotice thereof shall be given to the Indemnifying Party as promptly aspracticable; *provided*, *however*,that the failure of any Indemnified Party to give timely notice shall notaffect rights to indemnification hereunder if (i) such failure to givetimely notice does not materially affect the ability or right of theIndemnifying Party to participate in the defense of such Third Party Claim andthe Indemnifying Party is not otherwise materially prejudiced thereby, and (ii) actualnotice is given to the Indemnifying Party within a reasonable time.

 

The Indemnifying Party shall have30 days from the date of receipt of such notice (the “***InvestigationPeriod***“) to investigate and dispute the nature, validity oramount of any such claim of Loss or Third Party Claim.  During the Investigation Period, theIndemnified Party shall cooperate with the Indemnifying Party for the purposeof such investigation and, without limitation, the Indemnified Party shall makeavailable to the Indemnifying Party the information relied upon by theIndemnified Party to substantiate the Indemnified Party’s claim and theIndemnifying Party shall have reasonable access, during normal business hours,to the books, records and other documents of the Indemnified Party relating tosuch claim and shall have the right to take copies at its expense of suchrelevant books, records and documents for the purpose of such investigation.  In the event that the Indemnifying Partyshall dispute the nature, validity or amount of a claim hereunder, theIndemnifying Party shall give the Indemnified Party written notice of suchdispute within the Investigation Period, and the relevant Parties shall meetpromptly thereafter and in good faith attempt to resolve such dispute.  To the extent that such Parties cannotresolve any dispute by agreement within 21 days following such notice ofdispute, such dispute shall be resolved pursuant to Section 12.11.

 

In the absence of a dispute, the IndemnifyingParty shall promptly, and in any event not later than the expiration of theInvestigation Period, reimburse the Indemnified Party in full (subject to thelimitations of Section 11.6) for such Loss, as set forth in thenotice.  In the event that theIndemnifying Party shall dispute only the amount (and not the validity) of theclaim, the Indemnifying Party shall, concurrently with the delivery of itsnotice of dispute, pay to the Indemnified Party any undisputed portion of theclaim.

 

## **11.4**                        Defense andSettlement of Third Party Claims

##  

**(a)**           In the event of a Third Party claim,except for a claim involving a Governmental Body or a claim for injunctiverelief or non-monetary relief or a claim which may, in the reasonable opinionof the Purchasing Entities, prejudice the legitimate business interests of thePurchasing Entities or the Business, the Indemnifying Party shall have theoption to take control of the defense and investigation of such Third PartyClaim, and to employ and engage attorneys of its own choice to handle anddefend the same, at the Indemnifying Party’s sole cost, risk and expense,provided that, upon assumption and control by the Indemnifying Party of suchdefense, the Indemnifying Party shall be deemed to have acknowledged itsresponsibility for all Losses relating to such claims, subject to thelimitations set forth in Section 11.6 (the “***DirectLitigation Option***“).  TheIndemnifying Party may elect to exercise the Direct Litigation Option by givingprior written notice to the

 

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Indemnified Party.  If the Indemnifying Party so elects, theIndemnified Party shall cooperate in all reasonable respects with theIndemnifying Party and such attorneys in the investigation, trial and defenseof such Third Party Claim and any appeal arising therefrom and shall permitaccess to the personnel of the Indemnified Party and to any relevant books,records and documents within the possession or control of the Indemnified Partyin connection with such claim and to take copies of such relevant materials atthe expense of the Indemnifying Party; *provided*, *however*, that the Indemnified Party may, at its own cost,participate in (but not control) such investigation, trial and defense of suchThird Party Claim and any appeal arising therefrom.  If the Indemnifying Party does not elect theDirect Litigation Option, then the Indemnified Party shall defend against theThird Party Claim in the manner it deems appropriate.

 

**(b)**           The Indemnified Party (or theIndemnifying Party if it has exercised the Direct Litigation Option) shall notsettle, adjust or compromise the Third Party Claim except with the priorconsent of the Indemnifying Party (or the Indemnified Party), which consentshall not be unreasonably withheld.

 

**(c)**           In no event shall a Party make anyadmission of liability or enter into any settlement, adjustment or compromiseof any Third Party Claim without the prior written consent of the other Party,if as a result of such admission, settlement, adjustment or compromise aninjunction or other non-monetary relief would be imposed against theIndemnified Party.

 

## **11.5**                        [Reserved]

##  

## **11.6**                        Limitationson Indemnification

##  

### **(a)**                                  Duration

###  

Claims for indemnification under Section 11.1or 11.2 must be made prior to the 18 month anniversary of the TransferDate, except for claims made pursuant to the following:

 

(i)            Section 11.1(a) (Misrepresentationor Breach of Warranty), to the extent it is based on a breach of Section 3.13(l)(ERISA Plans), Section 3.13(m) (UK Pension Plans) or of Section 3.18(Taxes), which may be made at any time prior to the expiration of theapplicable statute of limitations (including any extensions thereof) plus30 days;

 

(ii)           Section 11.1(a) (Misrepresentationor Breach of Warranty), to the extent it is based on a breach of Section 3.6(f) (EnvironmentalMatters) or Section 3.23 (Transactions with Affiliates; IntercompanyArrangements), which may be made at any time prior to the fifth anniversary ofthe Transfer Date;

 

(iii)          Section 11.1(a) (Misrepresentationor Breach of Warranty), to the extent it is based on a breach of Section 3.1(c) (CorporatePower and Authority to Enter Into Agreements), which may be made at any time;

 

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(iv)          Section 11.1(b) (Breachof Covenant or Agreement), Section 11.1(c) (Excluded Liabilities), Section 11.1(d) (PensionLiabilities) or Section 11.1(f) (UK Employees), which may be made atany time;

 

(v)           Section 11.2(a) (Misrepresentationor Breach of Warranty), to the extent it is based on a breach of Section 4.1(b) (CorporatePower and Authority to Enter Into Agreements), which may be made at any time;and

 

(vi)          Section 11.2(b) (Breachof Covenant or Agreement), Section 11.2(c) (Assumed Liabilities), Section 11.2(d) (Operationsof the Business), Section 11.2(f) (UK Employees) or Section 11.2(g) (PensionLiabilities), which may be made at any time.

 

Indemnification pursuant to Section 11.1or 11.2 shall be payable after the expiration of the aforesaid periods (ifany), so long as the claim was identified and asserted in reasonable detailprior to such expiration.

 

### **(b)**                                  Amount

###  

#### **(i)**                                    Basket

####  

Notwithstanding anything to the contrarycontained in Section 11.1 and subject to the exceptions set forth in Section 11.6(b)(iii) andSection 11.6(c)(i), neither the Indemnifying Selling Entities nor theIndemnifying Buying Entities, as the case may be, shall be obligated to pay anyclaims for indemnification pursuant to Section 11.1 until the aggregate ofall Losses exceeds $500,000 (the, “***Threshold***“),with any individual claim below $50,000 forgiven (the, “***ClaimThreshold***“) whereupon the Buying Indemnified Parties and SellingIndemnified Parties, as the case may be, shall be entitled to indemnificationfor all Losses attributable to claims exceeding the Claim Threshold withoutregard to the Threshold.  For purposes ofthe Claim Threshold, a number of claims arising out of the same fact, event orcircumstance shall be aggregated and shall form a single claim.

 

#### **(ii)**                                Cap

####  

Subject to the exceptions set forth in Section 11.6(b)(iii) below,the maximum aggregate amount that the Indemnifying Selling Entities orIndemnifying Buying Entities, as the case may be, shall be obligated to paypursuant to Section 11.1 shall be $8,000,000 (the “***Cap***“),and provided further, that, with respect to the Indemnifying Selling Entities,the maximum amount to be paid in cash for claims under Section 11.1(a) (Misrepresentationor Breach of Warranty), other than claims for breaches of Section 3.13(m)(UK Pension Plans), shall not exceed the amount of cash received by UNOVA inrespect of the Purchase Price.  To theextent that the Selling Entities would otherwise (but for the precedingsentence) be obligated to pay indemnification pursuant to Section 11.1 theamount of such indemnification shall reduce the balance of the Note and thenthe cash received by the Selling Entities.

 

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#### **(iii)**                            NoLimitation on Certain Claims

####  

Notwithstanding anything herein to thecontrary, Buyer Indemnified Parties (i) shall be entitled to dollar-for-dollarindemnification from the first dollar, (ii) shall not be subject to theThreshold or Claim Threshold and (iii) shall not be subject to the Capwith respect to:

 

(A)          Lossesinvolving a breach by the Selling Entities of any of the representations andwarranties contained in Section 3.1(c) (Corporate Power and Authorityto Enter Into Agreements), Section 3.13(l) (ERISA Plans), Section 3.18(Taxes) and Section 3.23 (Transactions with Affiliates; IntercompanyArrangements); *provided*, *however*,that the maximum aggregate amount that the Indemnifying Selling Entities shallbe obligated to pay pursuant to this Section 11.6(b)(iii)(A) shall bethe Purchase Price;

 

(B)           Lossesinvolving Excluded Liabilities and liabilities under Section 11.1(d) (PensionLiabilities);

 

(C)           Lossesarising from the fraud or willful misconduct of the Selling Entities,

 

(D)          Lossesarising from any breach or nonfulfillment by a Selling Entity of any of itsrespective covenants set forth in this Agreement; and

 

(E)           Lossesarising from any breach of the representations and warranties set forth in Section 3.13(m)(UK Pension Plans).

 

### **(c)**                                  OtherLimitations

###  

(i)            Notwithstandinganything herein to the contrary, Seller Indemnified Parties (i) shall beentitled to dollar-for-dollar indemnification from the first dollar, and (ii) shallnot be subject to the Cap with respect to:

 

(A)          Lossesinvolving Assumed Liabilities and liabilities under Section 11.2(g) (PensionLiabilities);

 

(B)           Lossesarising from the fraud or willful misconduct of the Purchasing Entities;

 

(C)           Lossesarising from any breach or nonfulfillment by a Purchasing Entity of any of itsrespective covenants set forth in this Agreement;

 

(D)          Claimsunder Sections 1.5(b); *provided*, *however*, that the maximum aggregate amount that theIndemnifying Buying Entities shall be obligated to pay pursuant to this Section 11.6(c)(i)(D) shallbe the Purchase Price.

 

Notwithstanding the foregoing, none of theIndemnifying Selling Entities shall have any liability for the following:

 

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(ii)           Foraccounts receivable collectibility, inventory obsolescence, loss contracts forwhich a reserve is reflected on the Closing Balance Sheet or warranty claimsfollowing the final determination of the Closing Balance Sheet, (other than inthe case of fraud or willful misconduct and other than in respect of any claimsrelating to a breach of the representations and warranties in Section 3.12;

 

(iii)          Anymatter subject to indemnification pursuant to Section 11.1, to the extentsuch liability would not have arisen but for a change in legislation oraccounting policies made after the Transfer Date or a change in theinterpretation of a Law as determined by any court of competent jurisdiction orpursuant to an administrative rule-making decision of a governmental authorityafter the Transfer Date; or

 

(iv)          Anymatter subject to indemnification pursuant to Section 11.1, to the extentsuch liability would not have arisen but for some act, omission, transaction orarrangement carried out at the written request or with the written approval ofa Purchasing Entity or its authorized representatives prior to Closing or whichwas expressly authorized by this Agreement other than in respect of any claimsfor a breach of any representation and warranty.

 

### **(d)**                                  Duty toMitigate Damages

###  

Nothing in this Article 11 shall limitor restrict the Parties’ general obligation under the governing Law to mitigateany loss or damage which it may incur as a result of any matter giving rise toindemnification under this Agreement.

 

### **(e)**                                  No DoubleRecovery

###  

Any Party’s payment of an indemnificationclaim shall to the extent of such payment satisfy and preclude any furtherindemnification claim against such Party which is capable of being made inrespect of the same subject matter.

 

### **(f)**                                    No Waiver

###  

No waiver of a closing condition by a partyor knowledge of a breach of representation or warranty or covenant by the otherParty shall limit a Party’s right under this Section 11.

 

### **(g)**                                 Set-OffAgainst Note

###  

To the extent that the Buying IndemnifiedParties have incurred Losses for a claim and either (a) a non-appealablejudgment or final appellate decision including such Losses has been enteredagainst the Indemnifying Selling Entities, or (b) a final settlementagreement including such Losses has been executed with the Indemnifying SellingEntities as provided in Section 11.4, then upon written notice to theIndemnifying Selling Entities, the Buying Indemnified Parties shall set off anddeduct the amounts of any Losses against the principal of the Note.  If any bona fide claims made in good faith bythe Buyer Indemnified

 

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Parties remain unresolved at the maturity ofthe Note (a “***Note Claim***“), Buyer US shallplace into an escrow account with an independent, third-party escrow agent anamount equal to the amount of such pending claim outstanding that will besubject to an escrow agreement to be mutually agreed upon by UNOVA and BuyerUS.

 

## **11.7**                        ExclusiveRemedy

##  

Except with respect to claims related tofraud, the indemnification and other remedies set forth under this Article 11shall constitute the sole and exclusive monetary remedies of the Parties withrespect to any maters arising under or relating to this Agreement.  Subject to the foregoing, the Parties shallhave and retain all other rights existing in their favor in equity includingany actions for specific performance and/or injunctive or other equitablerelief to enforce or prevent any violations of the provisions of thisAgreement.

 

(Article 12 follows)

 

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# **ARTICLE 12. Miscellaneous Provisions**

#  

## **12.1**                        PublicStatements and Press Releases

##  

No Party shall make, issue or release anypublic announcement, press release, public statement or public acknowledgmentof the terms, conditions and status of, the transactions provided for in thisAgreement, without the prior written consent of the other Parties as to thecontent and time of release and the media in which such statement orannouncement is to be made; *provided*, *however*, that in the case of announcements, statements oracknowledgments or revelation which any Party, in the written opinion of suchParty’s counsel, is required by Law or regulations, including those of publicstock exchanges on which the securities of such Party or its affiliates aretraded, to make, issue or release (a “***Legally Required Statement***“),the making, issuing or releasing of any such Legally Required Statement shallnot constitute a breach of this Agreement if such Party shall have given, tothe extent reasonably possible, three days prior notice to the other Party, andshall have attempted, to the extent reasonably possible, to clear suchdisclosure with the other Party.  EachParty agrees that it will not unreasonably withhold or delay any such consentor clearance.

 

## **12.2**                        Costs andExpenses

##  

Each Party shall be responsible for and bearits respective costs and expenses in connection with, or arising out of, thenegotiation and execution of this Agreement and consummation of thetransactions provided for in this Agreement.

 

## **12.3**                        Amendmentand Modification

##  

This Agreement may be amended, modified orsupplemented only by a writing executed on behalf of each of the Parties.

 

## **12.4**                        NoAssignment

##  

No Party shall assign, in whole or in part,this Agreement or its respective rights and obligations hereunder without theexpress prior written consent of the other Parties, and any assignment by operationof Law or otherwise without the consent of the Parties shall be void.  Notwithstanding the foregoing, each ofBuyer US and Buyer UK may, without the prior consent of any otherParty, assign any or all of its rights and interests under this Agreement andthe Related Agreements to (a) any Affiliate and (b) their rightsunder this Agreement and the Related Agreements for collateral securitypurposes to any lender providing financing to Buyer US and Buyer UK,such permitted assign or any of their Affiliates and any such lender mayexercise all of the rights and remedies of such assignee hereunder andthereunder; provided, however, that notwithstanding any such assignment, thePurchasing Entities shall remain liable for their obligations hereunder.

 

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## **12.5**                        Notices

##  

All notices, requests, demands or othercommunications hereunder must be in writing and executed by an authorizedrepresentative of the Party responsible therefor, and must be given either byhand or telecopy, telefax or other telecommunication device capable of creatinga written record which acknowledges receipt, as follows:

 

### **(a)**                                  The SellingEntities

###  

If such notice is directed to any of theSelling Entities, it shall be sent to:  (i) UNOVA, Inc.,6001 – 36th Avenue West, Everett, WA 98203-1264, Attention:  General Counsel; Fax No. (425) 356-3574;or to such other person or place as UNOVA shall have specified to thePurchasing Entities in writing by a notice in accordance with this Section 12.5,with a copy to Perkins Coie LLP, 1201 Third Avenue, Suite 4800,Seattle, Washington 98101, Attention: Andrew Bor, Fax No. (206) 359-9000.

 

### **(b)**                                  A PurchasingEntity

###  

If such notice is directed to any PurchasingEntity, it shall be sent to such Purchasing Entity, c/o Compagnie deFives-Lille, 38, rue de la Republique, 93 100 Mentreuil-sous-Bois, France, Fax No. +33-1-49.88.39.24,Attention:  General Counsel, or to suchother person or place as Buyer US shall have specified to UNOVA in writing by anotice in accordance with this Section 12.5, with a copy to SJ Berwin LLP,64 avenue Kleber, 75116 Paris, France, Attention: Maxence Bloch, Fax No. 33(0)1 44 34 63 47 and Goodwin Procter LLP, Exchange Place, Boston, MA 02190,Attention: George Lloyd, Fax No. (617) 523-1231.

 

## **12.6**                        Counterpartsand Facsimile

##  

This Agreement may be executed simultaneouslyin two or more counterparts, each of which shall be deemed an original, but allof which together shall constitute but one and the same instrument and any ofsuch counterparts may be delivered by facsimile transmission.

 

## **12.7**                        Captions

##  

The captions and table of contents containedin this Agreement are provided for convenience of reference only and shall notbe deemed to constitute a part of this Agreement.

 

## **12.8**                        Schedulesand Exhibits

##  

One complete set of the Schedules andExhibits has been marked for identification and delivered to each of theParties prior to the execution and delivery of this Agreement.  The Schedules and Exhibits are an integralpart of this Agreement and are incorporated into this Agreement by thisreference.

 

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## **12.9**                        Waiver;Remedies

##  

No single or partial waiver of any breach ofany provision of this Agreement shall be held to be a waiver of any other orsubsequent breach, and the failure of a Party to enforce at any time anyprovision of this Agreement shall not be deemed a waiver of any right of anysuch Party to subsequently enforce such provision.  All remedies afforded in this Agreement shallbe taken and construed as cumulative, that is, in addition to every otherremedy provided in this Agreement or by Law.

 

## **12.10**                 GoverningLaw and Jurisdiction

##  

This Agreement shall be construed,interpreted and enforced in accordance with the Laws of the State of New York,without resort to its conflict of Law rules.

 

## **12.11**                 Resolutionof Disputes

##  

Except fordisputes to be resolved by the Independent Firm, all disputes arising out of orin connection with this Agreement shall be finally settled under the Rules ofArbitration of the International Chamber of Commerce (“***ICC*** “) by one or more arbitrators(and who shall be familiar and experienced with asset sale and purchaseagreements) appointed in accordance with such Rules.

 

The arbitration proceedings shall take placein the City of New York and shall be conducted in the English language.  The award shall be binding and non-appealable,and it shall be enforceable in any court of competent jurisdiction.  There will be no discovery procedure and therequests for the production of documents will be limited pursuant to the IBA Rules (InternationalBar Association Rules) on the taking of evidence in international commercialarbitration.

 

The successful or prevailing party or partiesshall be entitled to recover reasonable attorney’s fees and other costsincurred in arbitration proceedings and actions brought for the enforcement ofthis Agreement.

 

## **12.12**                 Severability

##  

In the event that any provision or anyportion of any provision of this Agreement shall be held invalid, illegal orunenforceable under applicable Law, the remainder of this Agreement shallremain valid and enforceable, unless such invalidity, illegality orunenforceability substantially diminishes the rights and obligations, taken asa whole, of any Party.

 

## **12.13**                 No ThirdParty Beneficiaries

##  

Nothing in this Agreement, whether express orimplied shall be enforceable by virtue of the Contracts Rights of Third PartiesAct 1999 or is intended to confer any rights or remedies under or by reason ofthis Agreement on any persons other than the Parties and

 

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their respective successors and permittedassigns, nor is anything in this Agreement intended to relieve or discharge theobligation or liability of any third persons to any Party, nor shall anyprovision of this Agreement give any third persons any right of subrogation oraction against any Party, save that the provisions of Article 11 shall beenforceable by any of the Persons entitled to indemnification thereunder,whether or not such Person is a Party to this Agreement.

 

## **12.14**                 Construction

##  

This Agreement and the Related Agreementsshall be interpreted without regard to any presumption or rule requiringconstruction against the Party causing such agreements to be drafted.

 

## **12.15**                 EntireAgreement

##  

This Agreement, including the Exhibits andSchedules and the Related Agreements, constitutes the sole understanding andagreement of the Parties with respect to the subject matter of this Agreementand supersedes and cancels all prior understandings and agreements.

 

## **12.16**                 Currency

##  

Unless otherwise indicated, all dollaramounts referred to in this Agreement are in United States funds.

 

(*Signature pages follow*)

 

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IN WITNESS WHEREOF, the Parties, intending tobe legally bound, have caused this Agreement to be executed on and as of thedate first above written.

 

 
| **CINETIC  LANDIS GRINDING CORP.**                  |
|-----------------------------------------------------|
|                                                |
|                                                |
| BY:                                                 |  /s/ Frédéric Sanchez |   |
| NAME:                                               |  Frédéric Sanchez |   |
| TITLE:                                              |  Chairman |   |
|                                                |
|                                                |
| **CINETIC  LANDIS GRINDING LIMITED**                |
|                                                |
|                                                |
| BY:                                                 |  /s/ Frédéric Sanchez |   |
| NAME:                                               |  Frédéric Sanchez |   |
| TITLE:                                              |  Chairman |   |
|                                                |
|                                                |
| **COMPAGNIE DE FIVES-LILLE**                        |
|                                                |
|                                                |
| BY:                                                 |  /s/ Frédéric Sanchez |   |
| NAME:                                               |  Frédéric Sanchez |   |
| TITLE:                                              |  President of the Executive Board |   |
|                                                |
|                                                |
| **UNOVA,  INC.**                                    |
|                                                |
|                                                |
| BY:                                                 |  /s/ Kenneth L. Cohen |   |
| NAME:                                               |  Kenneth L. Cohen |   |
| TITLE:                                              |  Vice President, Treasurer & Tax |   |
|                                                |
|                                                |
| **UNOVA  Industrial Automation Systems, Inc.** |
|                                                |
|                                                |
| BY:                                                 |  /s/ Kenneth L. Cohen |   |
| NAME:                                               |  Kenneth L. Cohen |   |
| TITLE:                                              |  Vice President & Treasurer |   |
|                                                |
|                                                |
| **UNOVA IP  Corp.**                                 |
|                                                |
|                                                |
| BY:                                                 |  /s/ Kenneth L. Cohen |   |
| NAME:                                               |  Kenneth L. Cohen |   |
| TITLE:                                              |  Vice President & Treasurer |   |
|                                                     |  |  |  |  |

 

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