**Exhibit 10.42**

 

**PURCHASE AND SALE AGREEMENT**

** **

**among**

** **

**UNOVA, INC.**

** **

**UNOVA INDUSTRIAL AUTOMATION 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 DEFINED TERMS***
| ***A***                                | *** *** | *** *** |
|----------------------------------------|--------------|--------------|
| *** ***                           | *** *** | *** *** |
| Accounts                               |         | 27           |
| Accounts Date                          |         | 27           |
| Acquisition Proposal                   |         | 78           |
| Acquisition Proposals                  |         | 78           |
| Actual Completion Date                 |         | 12           |
| Affiliate                              |         | 7            |
| Affiliated Group                       |         | 52           |
| Agreement                              |         | 1            |
| Agreement Adjustments                  |         | 16           |
| Agreement Date                         |         | 1            |
| Approved                               |         | 49           |
| Assets Held for Sale                   |         | 5            |
| Assumed Liabilities                    |         | 6, 8         |
| Assurances                             |         | 12           |
|                                   |         |         |
| ***B***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| Business                               |         | 1            |
| Buyer UK                               |         | 1            |
| Buyer US                               |         | 1            |
| Buyer US’s 401(k) Plan       |         | 76           |
| Buying Indemnified Parties             |         | 87           |
|                                   |         |         |
| ***C***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| Cap                                    |         | 93           |
| CFL                                    |         | 1            |
| Claim Threshold                        |         | 93           |
| Closing                                |         | 6, 23        |
| Closing Balance Sheet                  |         | 16           |
| COBRA                                  |         | 48           |
| Code                                   |         | 7            |
| Company                                |         | 83           |
| Competitive Business                   |         | 83           |
| Confidentiality Agreement              |         | 63           |
| consultants                            |         | 37           |
| Contaminants                           |         | 10           |
| Continuing Employees                   |         | 8, 75        |
| Contracts                              |         | 35           |
| Contribution Rate                      |         | 70           |
|                                   |         |         |
| ***D***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| De Minimis Settlement                  |         | 35           |
| Deadline Date                          |         | 85           |
| December Balance Sheet                 |         | 27           |
| December Financials                    |         | 27           |
| Direct Litigation Option               |         | 91           |
| DOJ                                    |         | 61           |
| Downward Net Working Asset Adjustment  |         | 18           |
|                                   |         |         |
| ***E***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| Election                               |         | 22           |
| employee benefit plan                  |         | 47           |
| Employee Benefit Plans                 |         | 5, 47        |
| Employees                              |         | 28, 42       |
| Employment Liabilities                 |         | 88           |
| Environmental Laws                     |         | 9, 34        |
| Environmental Liabilities              |         | 9            |
| Environmental Permits                  |         | 33           |
| ERISA                                  |         | 47           |
| ERISA Plan                             |         | 47           |
| Estimated Net Working Asset Adjustment |         | 18           |
| Excluded Assets                        |         | 4            |
| Excluded Contracts                     |         | 6            |
| Excluded Liabilities                   |         | 5, 10        |
| Extended Deadline Date                 |         | 85           |
|                                   |         |         |
| ***F***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| Financial Statements                   |         | 28           |
| Freehold Property                      |         | 12           |
| FSSP                                   |         | 76           |
| FSSP/UPP Transition Period             |         | 76           |
| FTC                                    |         | 61           |
|                                   |         |         |
| ***G***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| GAAP                                   |         | 16           |
| Governmental Body                      |         | 3, 6, 25     |
|                                   |         |         |
| ***H***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| Hazardous Substance                    |         | 33, 34       |
| HSR Act                                |         | 61           |
| HSR Filing                             |         | 61           |
|                                   |         |         |
| ***I***                                | *** *** | *** *** |
| *** ***                           | *** *** | *** *** |
| ICC                                    |         | 99           |
| Indebtedness                           |         | 6, 37        |
| Indemnified Party                      |         | 90           |
| Indemnifying Party                     |         | 90           |
| Indemnifying Purchasing Entities       |         | 88           |
| Indemnifying Selling Entities          |         | 87           |
| independent contractors                |         | 37           |
| Independent Firm                       |         | 17           |
| Intellectual Property                  |         | 39           |
| Interested Person                      |         | 55           |

 

i

----

 
| Investigation Periods             |         | 91           |
|-----------------------------------|--------------|--------------|
| IRS                               |         | 48           |
| IT System                         |         | 40           |
|                              |         |         |
| ***J***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| June Balance Sheet                |         | 27           |
| June Balance Sheet Date           |         | 2            |
| June Financials                   |         | 27           |
|                              |         |         |
| ***K***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| knowledge                         |         | 30           |
|                              |         |         |
| ***L***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| Landis Group                      |         | 1            |
| Landis Pension Plan               |         | 63           |
| Landlord’s Consent           |         | 12           |
| Law                               |         | 5, 26        |
| Leased Personal Property          |         | 36           |
| Leased Real Property              |         | 33           |
| Leasehold Property                |         | 13           |
| Legally Required Statement        |         | 97           |
| LIBOR                             |         | 18           |
| Lien                              |         | 31           |
| Liens                             |         | 2            |
| Loss                              |         | 87           |
| Losses                            |         | 87           |
|                              |         |         |
| ***M***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| MAG                               |         | 68           |
| material adverse change           |         | 24           |
| material adverse effect           |         | 24           |
| multiemployer plan                |         | 48           |
| ***N***                           | *** *** | *** *** |
| Net Working Asset Target          |         | 17           |
| Net Working Assets                |         | 18           |
| Non-Compete Term                  |         | 83           |
| Note                              |         | 6            |
| Note Claim                        |         | 96           |
| NPL                               |         | 35           |
|                              |         |         |
| ***O***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| operating lease                   |         | 31           |
| Owned Real Property               |         | 2, 32        |
|                              |         |         |
| ***P***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| Parties                           |         | 1            |
| Party                             |         | 1            |
| Performance Bonds                 |         | 72           |
| Permit                            |         | 51           |
| Permitted Lien                    |         | 31           |
| Permitted Liens                   |         | 2            |
| Person                            |         | 6            |
| Phase 1 Report               |         | 82           |
| Preliminary Closing Balance Sheet |         | 16           |
| Product Liability                 |         | 9            |
| Purchase Orders                   |         | 36           |
| Purchase Price                    |         | 6            |
| Purchased Assets                  |         | 2            |
| Purchased Contracts               |         | 4            |
| Purchasing Entities               |         | 1            |
|                              |         |         |
| ***R***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| Real Property                     |         | 33           |
| reasonable endeavors              |         | 64           |
| Registered Properties             |         | 13           |
| Related Agreements                |         | 25           |
| Required Consents                 |         | 53           |
| Retiree Medical Plan              |         | 64           |
| Review Period                     |         | 17           |
|                              |         |         |
| ***S***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| Sales Order                       |         | 60           |
| Sales Orders                      |         | 35           |
| Schedule of Contributions         |         | 69           |
| Section 1060 Allocation      |         | 7            |
| Securities Act                    |         | 26           |
| Seller Names                      |         | 77           |
| Selling Entities                  |         | 1            |
| Selling Indemnified Parties       |         | 89           |
| South Beloit Facility             |         | 5            |
| Statement of Objections           |         | 17           |
|                              |         |         |
| ***T***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| Tax Returns                       |         | 52           |
| Taxes                             |         | 4, 52        |
| Third Party Claim                 |         | 90           |
| Threshold                         |         | 93           |
| transaction                       |         | 55           |
| Transactions                      |         | 2            |
| Transfer Date                     |         | 2, 23        |
| Transfer Regulations              |         | 22           |
| Transferring Members              |         | 64           |
| Transition Services Agreement     |         | 68           |
| TUPE Transfer                     |         | 46           |
|                              |         |         |
| ***U***                           | *** *** | *** *** |
| *** ***                      | *** *** | *** *** |
| U.K. Properties                   |         | 13           |
| UIASI                             |         | 1            |
| UK Asset Sale                     |         | 2            |
| UK Employee                       |         | 49           |
| UK Landis Group                   |         | 1            |
| UK Pension Plan                   |         | 48           |
| UK Purchased Assets               |         | 1            |
| UNOVA                             |         | 1            |
| UNOVA IP                          |         | 1            |

 

ii

----

 
| UNOVA UK                            |         | 1            |
|-------------------------------------|--------------|--------------|
| UNOVA’s Broker                 |         | 55           |
| UPP                                 |         | 76           |
| Upward Net Working Asset Adjustment |         | 17           |
| US Asset Sale                       |         | 1            |
| US Employees                   |         | 75           |
| US Landis Group                     |         | 1            |
| US Purchased Assets                 |         | 1            |
|                                |         |         |
| ***V***                             | *** *** | *** *** |
| *** ***                        | *** *** | *** *** |
| Valuation                           |         | 69           |
| VAT                                 |         | 22           |
| VATA                                |         | 22           |
|                                |         |         |
| ***W***                             | *** *** | *** *** |
| *** ***                        | *** *** | *** *** |
| WARN Act                            |         | 77           |
| Waynesboro Facility                 |         | 6            |
| WSJ RATE                            |         | 16           |

 

iii

----

 

***CONTENTS***

*** ***
| ARTICLE 1.             | The Transactions                                        | 2      |
|-----------------------------|---------------------------------------------------------|--------|
|                        | 1.1                                                     |   | Transfer of Assets | 2 |
|                        | 1.2                                                     |   | Excluded Assets | 4 |
|                        | 1.3                                                     |   | [Reserved] | 6 |
|                        | 1.4                                                     |   | Consideration | 6 |
|                        | 1.5                                                     |   | Purchase Price and Payment; Deliveries at  the Closing | 6 |
|                        |                                                    |   | (a) | Purchase Price | 6 |
|                        |                                                    |   | (b) | Payment of Purchase Price | 6 |
|                        |                                                    |   | (c) | Deliveries at the Closing | 6 |
|                        |                                                    |   | (d) | Purchase Price Allocation | 7 |
|                        | 1.6                                                     |   | Assumed Liabilities | 8 |
|                        | 1.7                                                     |   | Excluded Liabilities | 10 |
|                        | 1.8                                                     |   | Transfer of English Owned Real Property and  Obtaining English Reversioner’s Consent | 12 |
|                        |                                                    |   | (a) | Matters Affecting the U.K. Properties | 13 |
|                        |                                                    |   | (b) | Landlord’s Consents | 13 |
|                        |                                                    |   | (c) | Completion | 14 |
|                        |                                                    |   | (d) | Further Completion | 15 |
|                        |                                                    |   | (e) | Assurances | 15 |
|                        | 1.9                                                     |   | Closing Balance Sheet | 16 |
|                        |                                                    |   | (a) | Definition of Closing Balance Sheets | 16 |
|                        |                                                    |   | (b) | Preliminary Closing Balance Sheets | 16 |
|                        |                                                    |   | (c) | Review of Preliminary Closing Balance Sheet | 16 |
|                        |                                                    |   | (d) | Finalization of Closing Balance Sheet | 17 |
|                        |                                                    |   | (e) | Net Working Asset Payment | 17 |
|                        |                                                    |   | (f) | Limitations  on Certain Claims | 18 |
|                        | 1.10                                                    |   | Right to Contest | 18 |
|                        | 1.11                                                    |   | Nonassignable Contracts and Rights | 18 |
|                        | 1.12                                                    |   | Value Added Tax | 19 |
|                        | 1.13                                                    |   | UK Employees | 22 |
|                        |                                                    |   |   |   |
| ARTICLE 2.   | Closing and Transfer Date                               | 23     |
|                        | 2.1                                                     |   | Closing | 23 |
|                        | 2.2                                                     |   | Notice and Right to Cure | 23 |
|                        |                                                    |   |   |   |   |
| ARTICLE 3.   | Representations and Warranties of the  Selling Entities | 24     |
|                        | 3.1                                                     |   | Corporate Matters | 24 |
|                        |                                                    |   | (a) | Due Organization, Good Standing and  Qualification | 24 |
|                        |                                                    |   | (b) | Corporate Authority to Conduct Business | 25 |
|                        |                                                    |   | (c) | Corporate Power and Authority to Enter Into  Agreements | 25 |
|                        |                                                    |   | (d) | Due Execution and Enforceability | 25 |
|                        |                                                    |   | (e) | No Conflict | 25 |
|                        |                                                    |   | (f) | Subsidiaries and Other Equity Investments | 26 |
|                        |                                                    |   | (g) | Certain Additional Matters | 26 |

 

i

----

 
|   |   |   | (h)                                                                                          | UNOVA UK Insolvency Matters                                        |   |
|--------|--------|--------|----------------------------------------------------------------------------------------------|--------------------------------------------------------------------|--------|
|   | 3.2    |   | Financial Statements; Undisclosed  Liabilities                                               |                                                               |
|   |   |   | (a)                                                                                          | December Financials                                                | 27     |
|   |   |   | (b)                                                                                          | June Financials                                                    | 27     |
|   |   |   | (c)                                                                                          | UNOVA UK’s Accounts                                           | 27     |
|   |   |   | (d)                                                                                          | Undisclosed Liabilities                                            | 28     |
|   |   |   | (e)                                                                                          | Events Subsequent to June Balance Sheet                            | 28     |
|   | 3.3    |   | Accounts Receivable                                                                          | 30                                                                 |
|   | 3.4    |   | Inventories and Assets                                                                       | 30                                                                 |
|   | 3.5    |   | Absence of Liens and Encumbrances                                                            | 31                                                                 |
|   | 3.6    |   | Real Property                                                                                | 32                                                                 |
|   |   |   | (a)                                                                                          | Real Property                                                      | 32     |
|   |   |   | (b)                                                                                          | Realty Leases (as Lessor)                                          | 32     |
|   |   |   | (c)                                                                                          | Realty Leases (as Lessee)                                          | 33     |
|   |   |   | (d)                                                                                          | [Reserved]                                                         | 33     |
|   |   |   | (e)                                                                                          | Violation of Laws or Restrictive Covenants                         | 33     |
|   |   |   | (f)                                                                                          | Environmental Matters                                              | 33     |
|   |   |   | (g)                                                                                          | Real Estate Liens or Encumbrances                                  | 35     |
|   | 3.7    |   | Right to Use Properties and Assets                                                           | 35                                                                 |
|   | 3.8    |   | Contracts and Commitments                                                                    | 35                                                                 |
|   |   |   | (a)                                                                                          | Sales Orders, Bids and Proposals                                   | 35     |
|   |   |   | (b)                                                                                          | Purchase Orders                                                    | 36     |
|   |   |   | (c)                                                                                          | Sales Representative, Distributor and  Dealer Agreements           | 36     |
|   |   |   | (d)                                                                                          | Personal Property Leases (As Lessee)                               | 36     |
|   |   |   | (e)                                                                                          | Noncompetition Agreements or Covenants                             | 36     |
|   |   |   | (f)                                                                                          | Confidential Nondisclosure Agreements                              | 36     |
|   |   |   | (g)                                                                                          | Consultants and Consultant Agreements                              | 37     |
|   |   |   | (h)                                                                                          | Indebtedness; Guarantees                                           | 37     |
|   |   |   | (i)                                                                                          | Powers of Attorney, Proxies                                        | 37     |
|   |   |   | (j)                                                                                          | Letters of Credit, Surety, Bid and  Performance Bonds              | 38     |
|   |   |   | (k)                                                                                          | Joint Venture Agreements                                           | 38     |
|   |   |   | (l)                                                                                          | Other Material Contracts                                           | 38     |
|   |   |   | (m)                                                                                          | [Reserved]                                                         | 39     |
|   |   |   | (n)                                                                                          | Restrictive Contracts                                              | 39     |
|   | 3.9    |   | Patents, Trade Names, Trademarks, Service  Marks, Copyrights and Chip Registrations          | 39                                                                 |
|   |   |   | (a)                                                                                          | Intellectual Property Rights                                       | 39     |
|   |   |   | (b)                                                                                          | Licenses of Intellectual Property Rights To  or From Third Parties | 40     |
|   |   |   | (c)                                                                                          | No Infringement                                                    | 41     |
|   | 3.10   |   | Patent, Trade Name, Trademark, Service  Mark, Copyright or Chip Registration Indemnification | 41                                                                 |
|   | 3.11   |   | Confidential Information or Trade Secrets                                                    | 41                                                                 |
|   | 3.12   |   | Products and Service Warranties                                                              | 42                                                                 |
|   |   |   | (a)                                                                                          | Products                                                           | 42     |
|   |   |   | (b)                                                                                          | Service Warranties                                                 | 42     |

 

ii

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|                        | 3.13                                                   |   | Employees; Employee Benefits                                           | 42                                                     |
|-----------------------------|--------------------------------------------------------|--------|------------------------------------------------------------------------|--------------------------------------------------------|
|                        |                                                   |   | (a)                                                                    | Employees                                              | 42 |
|                        |                                                   |   | (b)                                                                    | Employment Contracts                                   | 43 |
|                        |                                                   |   | (c)                                                                    | Severance                                              | 43 |
|                        |                                                   |   | (d)                                                                    | Indebtedness to Employees                              | 44 |
|                        |                                                   |   | (e)                                                                    | Loans or Advances to Employees                         | 44 |
|                        |                                                   |   | (f)                                                                    | Collective Bargaining Agreements                       | 44 |
|                        |                                                   |   | (g)                                                                    | Independent Contractors                                | 45 |
|                        |                                                   |   | (h)                                                                    | Commitments                                            | 45 |
|                        |                                                   |   | (i)                                                                    | Employment history                                     | 45 |
|                        |                                                   |   | (j)                                                                    | Other Labor Matters                                    | 46 |
|                        |                                                   |   | (k)                                                                    | Employee Benefit Plans                                 | 47 |
|                        |                                                   |   | (l)                                                                    | ERISA Plans                                            | 47 |
|                        |                                                   |   | (m)                                                                    | UK Pension Plans                                       | 48 |
|                        | 3.14                                                   |   | Pending or Threatened Claims, Litigation  and Governmental Proceedings | 50                                                     |
|                        | 3.15                                                   |   | Judgments, Orders and Consent Decrees                                  | 51                                                     |
|                        | 3.16                                                   |   | Compliance With Laws                                                   | 51                                                     |
|                        | 3.17                                                   |   | Franchises, Permits, Etc.                                              | 51                                                     |
|                        | 3.18                                                   |   | Taxes                                                                  | 52                                                     |
|                        | 3.19                                                   |   | Governmental Authorizations; Consents                                  | 53                                                     |
|                        | 3.20                                                   |   | No Breach of Statute or Contract                                       | 54                                                     |
|                        | 3.21                                                   |   | Insurance                                                              | 54                                                     |
|                        | 3.22                                                   |   | Customers and Suppliers                                                | 54                                                     |
|                        | 3.23                                                   |   | Transactions with Affiliates; Intercompany  Arrangements               | 55                                                     |
|                        | 3.24                                                   |   | Broker’s or Finder’s Fees                                    | 55                                                     |
|                        | 3.25                                                   |   | Grants and Allowances                                                  | 55                                                     |
|                        | 3.26                                                   |   | Sufficiency of Purchased Assets                                        | 56                                                     |
|                        | 3.27                                                   |   | No Other Representations                                               | 56                                                     |
|                        | 3.28                                                   |   | Disclosure                                                             | 56                                                     |
|                        |                                                   |   |                                                                   |                                                   |
| ARTICLE 4.   | Representations and Warranties of  Purchasing Entities | 57     |
|                        | 4.1                                                    |   | Corporate Matters                                                      | 57                                                     |
|                        |                                                   |   | (a)                                                                    | Due Organization                                       | 57 |
|                        |                                                   |   | (b)                                                                    | Corporate Power and Authority to Enter Into  Agreement | 57 |
|                        |                                                   |   | (c)                                                                    | Due Execution and Enforceability                       | 57 |
|                        |                                                   |   | (d)                                                                    | No Conflict                                            | 58 |
|                        | 4.2                                                    |   | Required Consents                                                      | 58                                                     |
|                        | 4.3                                                    |   | Claims, Litigation and Governmental  Proceedings                       | 58                                                     |
|                        | 4.4                                                    |   | Broker’s or Finder’s Fees                                    | 58                                                     |
|                        | 4.5                                                    |   | Available Funds                                                        | 59                                                     |
|                        |                                                   |   |                                                                   |                                                   |
| ARTICLE 5.   | Certain Covenants Pending the Closing                  | 60     |
|                        | 5.1                                                    |   | Full Access                                                            | 60                                                     |
|                        | 5.2                                                    |   | Carry On In Regular Course                                             | 60                                                     |
|                        | 5.3                                                    |   | Consents; HSR                                                          | 61                                                     |
|                             |                                                        |        |                                                                        |                                                        |  |  |  |

 

iii

----

 
|                        | 5.4                                                                          |   | Notices of Certain Events; Continuing  Disclosure | 62     |
|-----------------------------|------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                        | 5.5                                                                          |   | Supplements to Disclosure                         | 63     |
|                        | 5.6                                                                          |   | Conditions Precedent                              | 63     |
|                        | 5.7                                                                          |   | Nondisclosure                                     | 63     |
|                        | 5.8                                                                          |   | Reorganization of U.K. Pension Plans              | 63     |
|                        | 5.9                                                                          |   | Assumption of Retiree Medical Plan                | 64     |
|                        |                                                                         |   |                                              |   |
| ARTICLE 6.   | Conditions Precedent to the Obligations of  the Purchasing Entities to Close | 66     |
|                        | 6.1                                                                          |   | Representations and Warranties True               | 66     |
|                        | 6.2                                                                          |   | Compliance With Agreement                         | 66     |
|                        | 6.3                                                                          |   | No Material Adverse Change                        | 66     |
|                        | 6.4                                                                          |   | No Litigation                                     | 66     |
|                        | 6.5                                                                          |   | [Reserved]                                        | 67     |
|                        | 6.6                                                                          |   | Consents and Approvals                            | 67     |
|                        | 6.7                                                                          |   | Instruments of Transfer                           | 67     |
|                        | 6.8                                                                          |   | [Reserved]                                        | 68     |
|                        | 6.9                                                                          |   | Opinion of Counsel                                | 68     |
|                        | 6.10                                                                         |   | Amendment to MAG Transition Services  Agreement   | 68     |
|                        | 6.11                                                                         |   | Transition Services Agreement                     | 68     |
|                        | 6.12                                                                         |   | Title                                             | 68     |
|                        | 6.13                                                                         |   | Leases                                            | 69     |
|                        | 6.14                                                                         |   | Discharge of Indebtedness; Release of Liens       | 69     |
|                        | 6.15                                                                         |   | [Reserved]                                        | 69     |
|                        | 6.16                                                                         |   | [Reserved]                                        | 69     |
|                        | 6.17                                                                         |   | UK Pension Plans                                  | 69     |
|                        | 6.18                                                                         |   | Other                                             | 70     |
|                        | 6.19                                                                         |   | Closing Conditions for UNOVA UK                   | 70     |
|                        | 6.20                                                                         |   | Benefit of Letters of Credit                      | 70     |
|                        |                                                                         |   |                                              |   |
| ARTICLE 7.   | Conditions Precedent to the Obligations of  the Selling Entities to Close    | 71     |
|                        | 7.1                                                                          |   | Representations and Warranties True               | 71     |
|                        | 7.2                                                                          |   | Compliance With Agreement                         | 71     |
|                        | 7.3                                                                          |   | No Litigation                                     | 71     |
|                        | 7.4                                                                          |   | [Reserved]                                        | 71     |
|                        | 7.5                                                                          |   | Consents and Approvals                            | 71     |
|                        | 7.6                                                                          |   | Purchase Price                                    | 72     |
|                        | 7.7                                                                          |   | Note                                              | 72     |
|                        | 7.8                                                                          |   | Instruments of Assumption                         | 72     |
|                        | 7.9                                                                          |   | Performance Bonds                                 | 72     |
|                        | 7.10                                                                         |   | Leases                                            | 72     |
|                        | 7.11                                                                         |   | Other                                             | 73     |
|                        | 7.12                                                                         |   | Transition Services Agreement                     | 73     |
|                        |                                                                         |   |                                              |   |
| ARTICLE 8.   | Further Requirements                                                         | 74     |
|                        | 8.1                                                                          |   | Access to Books and Records                       | 74     |

 

iv

----

 
|                        | 8.2                      |   | Further Instruments and Assurances      | 74                                          |
|-----------------------------|--------------------------|--------|-----------------------------------------|---------------------------------------------|
|                        | 8.3                      |   | Litigation Cooperation                  | 74                                          |
|                        | 8.4                      |   | Certain Employee Matters                | 74                                          |
|                        |                     |   | (a)                                     | Employment                                  | 74 |
|                        |                     |   | (b)                                     | Certain Employee Benefits                   | 75 |
|                        |                     |   |                                    | (i)                                         | Past Service Credit | 75 |
|                        |                     |   |                                    | (ii)                                        | Benefits under the Selling Entities’ Plans | 75 |
|                        |                     |   |                                    | (iii)                                       | U.S. Medical and Health Plan | 75 |
|                        |                     |   |                                    | (iv)                                        | Buyer US’s 401(k) Plan | 76 |
|                        |                     |   | (c)                                     | WARN Act                                    | 77 |
|                        | 8.5                      |   | Use of UNOVA Name and Mark              | 77                                          |
|                        | 8.6                      |   | Exclusivity                             | 78                                          |
|                        | 8.7                      |   | Taxes                                   | 78                                          |
|                        |                     |   | (a)                                     | Taxes Relating to the Business and UNOVA UK | 78 |
|                        |                     |   | (b)                                     | Transfer Taxes                              | 78 |
|                        |                     |   | (c)                                     | Employment Taxes                            | 79 |
|                        |                     |   | (d)                                     | Stock Options                               | 79 |
|                        |                     |   | (e)                                     | Tax Treatment                               | 79 |
|                        |                     |   | (f)                                     | Interpretation                              | 79 |
|                        | 8.8                      |   | Settlement of Intercompany Accounts     | 79                                          |
|                        | 8.9                      |   | Intellectual Property Registrations     | 80                                          |
|                        | 8.10                     |   | Authorization; Mail                     | 80                                          |
|                        | 8.11                     |   | Post-Closing Cooperation                | 80                                          |
|                        | 8.12                     |   | Purchased Assets Not Transferred        | 80                                          |
|                        | 8.13                     |   | Confidentiality                         | 81                                          |
|                        | 8.14                     |   | Performance Bonds                       | 81                                          |
|                        | 8.15                     |   | Claim Cooperation                       | 82                                          |
|                        |                     |   |                                    |                                        |
| ARTICLE 9.   | Noncompetition Agreement | 83     |
|                        | 9.1                      |   | Noncompetition Agreement                | 83                                          |
|                        | 9.2                      |   | Limitations on Noncompetition Agreement | 83                                          |
|                        | 9.3                      |   | Definition of Competitive Business      | 83                                          |
|                        | 9.4                      |   | Nonsolicitation                         | 84                                          |
|                        | 9.5                      |   | Injunctive and Equitable Relief         | 84                                          |
|                        |                     |   |                                    |                                        |
| ARTICLE 10.       | Termination              | 85     |
|                        | 10.1                     |   | Termination                             | 85                                          |
|                        | 10.2                     |   | Notice of Termination                   | 86                                          |
|                        | 10.3                     |   | Effect of Termination                   | 86                                          |
|                        |                     |   |                                    |                                        |
| ARTICLE 11.       | Indemnification          | 87     |
|                        | 11.1                     |   | Indemnification by the Selling Entities | 87                                          |
|                        |                     |   | (a)                                     | Misrepresentation or Breach of Warranty     | 87 |
|                        |                     |   | (b)                                     | Breach of Covenant or Agreement             | 87 |
|                        |                     |   | (c)                                     | Excluded Liabilities                        | 87 |
|                        |                     |   | (d)                                     | Pension Liabilities                         | 87 |
|                        |                     |   | (e)                                     | Bulk Sales                                  | 88 |
|                             |                          |        |                                         |                                             |  |  |  |  |

 

v

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|                   |                     |   | (f)                                           | UK Employees                    | 88 |
|------------------------|--------------------------|--------|-----------------------------------------------|---------------------------------|----|
|                   | 11.2                     |   | Indemnification by Purchasing Entities        | 88                              |
|                   |                     | (a)    | Misrepresentation or Breach of Warranty       | 89                              |
|                   |                     | (b)    | Breach of Covenant or Agreement               | 89                              |
|                   |                     | (c)    | Assumed Liabilities                           | 89                              |
|                   |                     | (d)    | Operations of the Business                    | 89                              |
|                   |                     | (e)    | Performance Bonds; Letters of Credit          | 89                              |
|                   |                     | (f)    | UK Employees                                  | 89                              |
|                   |                     | (g)    | Pension Liabilities                           | 90                              |
|                   | 11.3                     |   | Claims for Reimbursement                      | 90                              |
|                   | 11.4                     |   | Defense and Settlement of Third Party  Claims | 91                              |
|                   | 11.5                     |   | [Reserved]                                    | 92                              |
|                   | 11.6                     |   | Limitations on Indemnification                | 92                              |
|                   |                     | (a)    | Duration                                      | 92                              |
|                   |                     | (b)    | Amount                                        | 93                              |
|                   |                     |   | (i)                                           | Basket                          | 93 |
|                   |                     |   | (ii)                                          | Cap                             | 93 |
|                   |                     |   | (iii)                                         | No Limitation on Certain Claims | 94 |
|                   |                     | (c)    | Other Limitations                             | 94                              |
|                   |                     | (d)    | Duty to Mitigate Damages                      | 95                              |
|                   |                     | (e)    | No Double Recovery                            | 95                              |
|                   |                     | (f)    | No Waiver                                     | 95                              |
|                   |                     | (g)    | Set-Off Against Note                          | 95                              |
|                   | 11.7                     |   | Exclusive Remedy                              | 96                              |
|                   |                     |   |                                          |
| ARTICLE 12.  | Miscellaneous Provisions | 97     |
|                   | 12.1                     |   | Public Statements and Press Releases          | 97                              |
|                   | 12.2                     |   | Costs and Expenses                            | 97                              |
|                   | 12.3                     |   | Amendment and Modification                    | 97                              |
|                   | 12.4                     |   | No Assignment                                 | 97                              |
|                   | 12.5                     |   | Notices                                       | 98                              |
|                   |                     | (a)    | The Selling Entities                          | 98                              |
|                   |                     | (b)    | A Purchasing Entity                           | 98                              |
|                   | 12.6                     |   | Counterparts and Facsimile                    | 98                              |
|                   | 12.7                     |   | Captions                                      | 98                              |
|                   | 12.8                     |   | Schedules and Exhibits                        | 98                              |
|                   | 12.9                     |   | Waiver; Remedies                              | 99                              |
|                   | 12.10                    |   | Governing Law and Jurisdiction                | 99                              |
|                   | 12.11                    |   | Resolution of Disputes                        | 99                              |
|                   | 12.12                    |   | Severability                                  | 99                              |
|                   | 12.13                    |   | No Third Party Beneficiaries                  | 99                              |
|                   | 12.14                    |   | Construction                                  | 100                             |
|                   | 12.15                    |   | Entire Agreement                              | 100                             |
|                   | 12.16                    |   | Currency                                      | 100                             |

 

vi

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**PURCHASE ANDSALE AGREEMENT**

** **

This Purchaseand Sale Agreement (this “***Agreement”***)is made and entered into on and as of the 27th day of October, 2005 (the “***Agreement Date”***), among UNOVA, Inc.(“***UNOVA”***), a Delaware corporation;UNOVA Industrial Automation Systems, Inc. (“***UIASI”***),a Delaware corporation and a wholly-owned subsidiary of UNOVA; UNOVA IP Corp. (“***UNOVA IP”***), a Delaware corporationand a wholly-owned subsidiary of UIASI; UNOVA UK Limited (“***UNOVAUK”***) a company registered in England under Registration Number1218921 and a wholly-owned subsidiary of UNOVA, (UNOVA, UIASI, UNOVA IP andUNOVA UK are sometimes referred to collectively as the “***SellingEntities***”); and Compagnie de Fives-Lille, a French corporation (“***CFL*** ”), Cinetic Landis GrindingCorp. (“***Buyer US***”), a Delawarecorporation and Cinetic Landis Grinding Limited (“***BuyerUK”***), a United Kingdom corporation. CFL, Buyer US and Buyer UKare sometimes referred to collectively as the “***PurchasingEntities”***. Each of the Selling Entities and each of thePurchasing Entities are sometimes referred to collectively as the “***Parties***” and individually as a “***Party***.”

 

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

** **

WHEREAS, the “***Landis Group***” is comprised of thefollowing operating divisions of UNOVA: the Landis Grinding Systems, Gardner Abrasives, and CITCO divisions ofUIASI (the “***US Landis Group***”); and theLandis Lund and Cranfield Precision divisions of UNOVA UK (the “***UK Landis Group***”);

 

WHEREAS, theLandis Group is engaged in the design, manufacture, sale and service ofgrinding and abrasives systems for camshaft, crankshaft, centerless and discgrinder machines and other special high precision machine tools, including highspeed grinding spindles, highly engineered diamond and cBN® cutting tools,superabrasive wheels and dressing products (such activity as carried on by theLandis Group is referred to as the “***Business***”);

 

WHEREAS, BuyerUS desires to purchase from the Selling Entities, and the Selling Entitiesdesire to sell to Buyer US, substantially all of the assets, subject to theassumption of specified liabilities, of the US Landis Group (the “***US Purchased Assets***”) upon the termsand conditions set forth in this Agreement (the “***USAsset Sale***”);

 

WHEREAS, BuyerUK 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 specifiedliabilities of the UK Landis Group (the “***UK Purchased Assets***”),as a going concern, upon the terms and conditions set forth in this Agreement(the “***UK Asset Sale***”);

 

WHEREAS, theUS Asset Sale and the UK Asset Sale are sometimes referred to collectivelyherein as the “***Transactions***”;

 

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NOW,THEREFORE, in consideration of the premises and the mutual benefits to be derivedfrom this Agreement and the Transactions provided for in this Agreement, theParties agree as follows:

 

# **ARTICLE 1.  The Transactions**

#  

## **1.1**                               Transfer ofAssets

##  

Except asotherwise provided in Section 1.2, effective as of the “***Transfer Date***” (as defined inArticle 2), the Selling Entities shall sell, transfer, assign, grant,convey and deliver as legal and beneficial owner to Buyer US in respect of theUS Purchased Assets and to Buyer UK in respect of the UK Purchased 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 of inthe ordinary course of business since June 30, 2005 (the “***June Balance Sheet Date***”), and allassets of the Business acquired by the Selling Entities between the JuneBalance Sheet Date and the Transfer Date, (such properties, rights and assetsare referred to as the “***Purchased Assets***”).In the case of any of the Purchased Assets which are capable of transfer bydelivery, title to that Purchased Asset shall pass to the relevant PurchasingEntity by delivery. Except as otherwise provided in Section 1.2, thePurchased 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 inSection 1.2(n)), and all improvements, fixtures and fittings thereon, andeasements, servitudes, rights-of-way and other appurtenances thereto (such asappurtenant rights in and 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;

 

2

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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 theSelling Entities, and which are set forth on **Schedule1.1(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)           All lists and information pertainingto customers, suppliers, distributors, sales and purchasing agents andpersonnel;

 

(r)            All patents, registered designs,utility models, patent applications, trademarks, trademark applications, tradenames, domain names, service marks, logos, copyrights, chip registrations,licenses, processes, inventions, formulae, trade secrets and royalties,including all registrations, applications and related international priorityrights and all rights to sue for past infringement, including, withoutlimitation, the names or brands “Landis”, “Landis Cincinnati”, “Landis Gardner”,“Gardner Abrasives”, “CITCO”, “Goldcrown”, “Landis Lund” and “CRANFIELDPRECISION”;

 

(s)           All manufacturer and sellerwarranties on any goods, fixtures, or services provided to the SellingEntities;

 

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

 

3

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(u)           All books, records, files and papers,whether in hard copy or computer format, including but not limited to invoices,advertising materials, catalogs, price lists, mailing lists, photographs,production data, sale and promotional materials and records, purchasing materialsand records and documentation developed or used for accounting, marketing,engineering, manufacturing or any other purpose;

 

(v)           All bids and sales and serviceproposals, including any rights to revoke or withdraw the same;

 

(w)          [Reserved];

 

(x)            All utility, lease and similardeposits;

 

(y)           All medical, safety and healthsupplies;

 

(z)            Except for any Excluded Contracts(as defined in Section 1.2(o)), all rights under all contracts,agreements, leases, licenses, commitments, sales and purchase orders used bythe Selling Entities or held by the Selling Entities for use in connection withthe Business, including, without limitation, the contracts listed on **Schedules 3.8**(a) through **3.8(g)**and **Schedules 3.8(i)** through **3.8(l)** and including, for the avoidance of doubt, anycontracts or agreements entered by UNOVA UK under the name “Landis Lund” (the ***“Purchased Contracts”***); and

 

(aa)         All goodwill associated with theBusiness or the Purchased Assets together with the right to represent to thirdparties that the Purchasing Entities are the successors to the Business.

 

## **1.2**                               ExcludedAssets

##  

Notwithstandinganything in this Agreement to the contrary, the Purchased Assets shall notinclude any right, title or interest in or to any of the following properties,rights or assets of the Selling Entities (collectively, the ***“Excluded Assets”***):

 

(a)           Cash, cash equivalents and short-termsecurities;

 

(b)           Any and all claims for refunds, carrybacks or carry forwards of the Selling Entities 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)           Any intercompany receivable balancedue from UNOVA or any of its subsidiaries (other than intercompany tradereceivables between the Landis Group);

 

(d)           All insurance policies and self-insuranceprograms and any coverage or other rights under such policies and self-insuranceprograms;

 

4

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(e)           Any property or asset designated as “assetsheld for sale” on the books and records of the Selling Entities and which areset forth on Schedule 1.2(e) (collectively, the ***“AssetsHeld for Sale”***);

 

(f)            Any property, right or asset to theextent exclusively relating to any other Excluded Asset or any of the ***“Excluded Liabilities”*** (as definedin Section 1.7);

 

(g)           All assets of all “Employee BenefitPlans“ (as defined in Section 3.13(k)), including assets held in trust,including assets held in medical trusts, or insurance contracts for the benefitof Employee Benefit Plan participants or beneficiaries;

 

(h)           All books, records, files and datapertaining to any of the Excluded Assets or any of the Excluded Liabilities;

 

(i)            Subject to Section 8.5, allrights in, to and under the name “UNOVA” and the logos of the Selling Entitiesother than those logos that are primarily or exclusively related to theBusiness (including, without limitation, any logos with the names or brandslisted in Section 1.1(r));

 

(j)            Any rights of any of the SellingEntities under this Agreement;

 

(k)           The franchise of each of the SellingEntities to be a corporation and its articles or certificate of incorporation,bylaws and other records pertaining to its corporate existence, and all booksand records of a nature required by ***“Law”*** (as definedin Section 3.1(e)) to be maintained by the Selling Entities, including allfinancial and tax records relating to the Business that form part of theSelling Entities’ general ledger, provided that the Selling Entities shall makeavailable for duplication at the Purchasing Entities’ expense copies of suchfinancial and tax records as such documents exist as of the December BalanceSheet Date, the June Balance Sheet Date and the Transfer Date to the extentsuch records are related to the Business and as reasonably requested by thePurchasing Entities;

 

(l)            All shares of capital stock or otherequity interests in any other Person (as defined below) owned by the SellingEntities, including Honsberg Lamb Sonderwekzeugmaschinen GmbH;

 

(m)          The real property located at481 Gardner Street, South Beloit, Illinois (the ***“SouthBeloit Facility”***);

 

(n)           The real property located at20 East Sixth Street, Waynesboro, Pennsylvania (the ***“WaynesboroFacility”***); and

 

(o)           All rights existing under eachcontract set forth on **Schedule 1.2**(o)(the ***“Excluded Contracts”***).

 

5

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For purposesof this Agreement, ***“Person”*** shall mean andinclude an individual, a partnership, a corporation, a limited liabilitycompany, a trust, a joint venture, an unincorporated organization and any ***“Governmental Body”*** (as defined inSection 3.1(e)).

 

## **1.3**                               [Reserved]

##  

## **1.4**                               Consideration

##  

For and inconsideration of the sale to the Purchasing Entities of the Purchased Assets,the Purchasing Entities shall (i) at Closing pay to UNOVA (as agent forthe Selling Entities) the “***Purchase Price”***(as defined in Section 1.5(a)) in accordance with and to the extentprovided in Section 1.5 and (ii) the Purchasing Entities shall,effective as of the Transfer Date, assume the “***AssumedLiabilities”*** (as defined in Section 1.6 and as limited bySection 1.7).

 

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

##  

### **(a)**                                  PurchasePrice

###  

The purchaseprice for the Purchased Assets is $79,000,000 plus the assumption of theAssumed Liabilities (the *“**PurchasePrice”***). The Purchase Price is subject to furtheradjustment following the Closing in accordance with Section 1.9. To theextent any Indebtedness (as defined in Section 3.8(h)) is assumed by thePurchasing Entities at the Transfer Date, the amount of such Indebtedness shallbe deducted from the Purchase Price. 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)**                                  Payment ofPurchase Price

###  

At the “***Closing”*** (as defined inSection 2.1), the Purchasing Entities shall (i) pay and remit toUNOVA (as agent for the Selling Entities) $69,000,000 in cash (less anyIndebtedness to be deducted pursuant to Section 1.5(a)) via wire transfersof immediately available funds to UNOVA’s bank accounts as indicated in **Schedule 1.5(b)**, (ii) deliver to UNOVA apromissory 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 theClosing,

 

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

 

6

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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 partiesagree that the Purchase Price shall be allocated as follows:  $53,333,333 plus the amount of the AssumedLiabilities of or relating to the US Landis Group shall be allocated to the USPurchased Assets, and $25,666,667 plus the amount of the Assumed Liabilities ofor relating to the UK Landis Group shall be allocated to the UK PurchasedAssets.

 

(ii)           Section1060 Allocation

 

Within six(6) months after the Transfer Date, Buyer US (on behalf of itself and theother Purchasing Entities) shall prepare and deliver to UNOVA an allocation ofthe Purchase Price and the Assumed Liabilities among the US Purchased Assetsand the UK Purchased Assets sold to the Purchasing Entities in accordance withSection 1060 of the Internal Revenue Code of 1986, as amended (the “***Code”***), and the regulationsthereunder (the “***Section 1060 Allocation”***).If UNOVA does not object to the Section 1060 Allocation prepared by BuyerUS within 30 days after receipt thereof, such allocations shall be finalfor purposes of this Agreement. If UNOVA objects to the Section 1060Allocation within 30 days after receipt thereof, Buyer US and UNOVA shallmeet promptly and in a good faith attempt to resolve any objections of UNOVAand to use their best efforts to agree upon the allocation. In the event BuyerUS and UNOVA 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 shallcooperate fully with each other and make available to each other such Tax dataand other information as may be reasonably required in order to timely completethe Section 1060 Allocation and any other required statements or schedules.Except as required pursuant to applicable Law or a determination (as defined inSection 1313 of the Code or any similar provision of Law), the Parties andtheir Affiliates (as defined below) shall report the Transactions for all Taxpurposes consistently with the Section 1060 Allocation. For purposes ofthis Agreement, “***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. Tothe extent that the parties require allocations of the Purchase Price and theAssumed Liabilities at or prior to Closing, including for United Kingdom Lawpurposes, then the parties shall endeavor to cooperate fully with each other toagree upon such allocations on or prior to the Transfer Date

 

7

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## **1.6**                               AssumedLiabilities

##  

Upon the termsand subject to the conditions of this Agreement and in reliance upon therepresentations, warranties and agreements herein set forth, the PurchasingEntities shall, effective at the time of the Transfer Date, assume, perform anddischarge all of the following debts, liabilities or obligations of the SellingEntities (collectively, the “***Assumed Liabilities***”):

 

(a)           All liabilities arising out of orrelating primarily to the Business and recorded on the June Balance Sheet andnot discharged as of the Transfer Date (other than any Excluded Liabilitiesthereon);

 

(b)           All current liabilities arising outof or relating primarily to the Business and incurred in the ordinary course ofbusiness since the June Balance Sheet Date that would have been required byGAAP, consistently applied, to have been recorded on the June Balance Sheet ifthey had arisen prior to the June Balance Sheet Date, but only to the extentset forth on the Closing Balance Sheet (as defined in Section 1.9(a)),other than any Excluded Liabilities thereon and other than the liabilitiesdescribed 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 are assumed without regard to the amountsset forth on the Closing Balance Sheet;

 

(c)           All liabilities and obligations ofthe Selling Entities in respect of (i) the Purchased Contracts and(ii) those contracts or other legally binding commitments that are thetype required to be disclosed in the Schedules but are not so disclosed becausethey fall below the minimum threshold amount or materiality of the agreement orcommitments required to be so disclosed and which are assigned to thePurchasing Entities other than in the case of clauses (i) and (ii),liabilities or obligations attributable to any failure by the Selling Entitiesto comply with the terms thereof;

 

(d)           Accrued payroll 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)           Accrued sales commissions toContinuing Employees and to third parties in respect of the Business, but onlyto the extent of the reserve therefor shown on the Closing Balance Sheet;

 

(f)            All losses, debts, liabilities andobligations with respect to products sold or serviced (whether or not underwarranty) by the Selling Entities in respect of the Business, includingliabilities and obligations for and with respect to any refunds, adjustments,allowances, repairs, exchanges, returns and warranty but excluding ProductLiability, (as defined in Section 1.6(h)) which is covered by sub-clause (h)below (and any other Excluded Liabilities);

 

8

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(g)           Any claim, debt, liability orobligation for workers compensation (other than such debt, liability orobligation that constitutes an Excluded Liability), automobile or generalliability in respect of the Business to the extent such claims arise fromevents, actions or occurrences following the Transfer Date;

 

(h)           Any claim, debt, liability orobligation for product liability claims, including bodily injury, death orproperty damage  arising from the use oroperation of products manufactured, sold or serviced in whole or in part in theBusiness (***“Product Liability”***) to theextent such claims arise from events, actions or occurrences following theTransfer Date;

 

(i)            Environmental Liabilities (asdefined 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 bySection 1.7(j)), or (ii) actions occurring or conditions coming intoexistence after the Transfer Date; provided, however, that with respect to theWaynesboro Facility and the South Beloit Facility, which the PurchasingEntities will be leasing from the Selling Entities after the Transfer Date, thePurchasing Entities shall not assume any Environmental Liabilities arising fromor relating in any way to actions occurring or conditions existing on or beforethe Transfer Date (whether or not a violation of Environmental Laws) arisingfrom or relating in any way to actions occurring or conditions coming intoexistence after the Transfer Date except to the extent such actions orconditions are caused by the Purchasing Entities. For purposes of thisAgreement, ***“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)            Any claim, debt, liability orobligation relating to the Landis Pension Plan (as defined inSection 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 (formerlyArticle 119) of the Treaty of Rome and Section 62 of the Pensions Act1995), (ii) any liability in respect of the levy to fund the PensionProtection Fund payable pursuant to the Pensions Act 2004 and (iii) contributionsin respect of the period prior to the Transfer Date which have not become dueand payable before the Transfer Date other than contributions deducted by UNOVAUK from members’ salaries before the Transfer Date and not paid to the LandisPension Plan by that date;

 

(k)           Any claim, debt, liability orobligation arising from any progress payment, down payment or advance paymentreceived from any customer of the Business to the extent of the reservetherefor on the Closing Balance Sheet;

 

9

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(l)            Any claim, debt, liability orobligation arising out of in respect of or as a result of the employment ortermination of employment of any Continuing Employee by the Purchasing Entities(other than Excluded Liabilities);

 

(m)          Any actions, claims, proceedings,losses, damages, payments, penalties, costs or expenses suffered or incurred inrelation to or arising out of any personal injury as a result of a person’sexposure at any time after the Transfer Date to any and all asbestos and/orasbestos-containing materials, lead and/or lead-containing materials, or mold(whether or not the presence of such contaminants constitutes a violation ofEnvironmental Laws) (collectively, ***“Contaminants”***)present, discharged or released at, or migrating from any property owned,occupied, controlled or used by the Purchasing Entities in respect of theBusiness; provided, however, that for any personal injury that is determined tohave been caused by exposure to Contaminants as described in thissubsection 1.6(m) that relates to periods of exposure before and after theTransfer Date, the loss arising from such personal injury shall be deemed tohave occurred ratably during the entire period of such exposure, and thePurchasing Entities’ liability for such injury shall be limited to a pro rataportion of the losses based on the period of exposure that occurred after theTransfer Date; and

 

(n)           All FAS 106 liabilities relatingto the Retiree Medical Plan (as defined in Section 5.9).

 

## **1.7**                               ExcludedLiabilities

##  

Notwithstandingany provision in this Agreement or any other writing to the contrary, thePurchasing Entities are assuming only the Assumed Liabilities and are notassuming any other liability or obligation of the Selling Entities (or anypredecessor owner of all or part of its business and assets) of whatever naturewhether presently in existence or arising or asserted hereafter. All such otherliabilities and obligations shall be retained by and remain obligations andliabilities of the Selling Entities (collectively, the “Excluded Liabilities“).Without limiting the foregoing, none of the following shall be AssumedLiabilities for the purposes of this Agreement:

 

(a)           Any debt, liability or obligation ofthe Selling Entities in respect of the Business for Taxes that relate toperiods ending on or prior to the Transfer Date (including any Taxes that ariseas a result of the Transactions), except as otherwise provided inSection 8.7(b);

 

(b)           Any intercompany payable balances inrespect of the Business due to UNOVA or any of its subsidiaries (other thanintercompany trade payables between the Landis Group);

 

(c)           Any claim, debt, liability orobligation for workers compensation, automobile or general liability in respectof the Business, to the extent such claims arise from events, actions oroccurrences on or prior to the Transfer Date, other than a claim, debt,liability or obligation to which Section 1.6(j) applies;

 

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(d)           Any claim, debt, liability orobligation to the extent related to any of the other Excluded Liabilities orany of the Excluded Assets, other than a claim, debt, liability or obligationto which Section 1.6(j) applies;

 

(e)           Any liabilities of the SellingEntities arising under, or relating to the execution, delivery or consummationof, this Agreement and the transactions contemplated hereby;

 

(f)            Any liabilities of the SellingEntities 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)           Any claim, debt, liability orobligation under Employee Benefit Plans other than the Assumed Liabilities setforth in Sections 1.6(d), 1.6(e), 1.6(j) and 1.6(n);

 

(h)           Any claim, debt, liability orobligation under the UNOVA Pension Fund, other than in respect of benefitstransferred to the Landis Pension Plan, whether before, on or after theTransfer Date (which transferred benefits shall include any claim, debt,liability or obligation in respect of the provision of those benefits in amanner complying with Article 141 (formerly Article 119) of theTreaty 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 thisSection 1.7(j), the known contamination on the Waynesboro Facility,including both the contamination being addressed by the Selling Entities inaccordance with Pennsylvania’s Act 2 voluntary cleanup program and thechlorinated volatile organic compound contamination that has migrated onto theWaynesboro Facility from the adjacent Teledyne facility, shall be deemed acondition existing before the Transfer Date and to constitute an ExcludedLiability;

 

(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)            Those pending or threatenedlitigation matters identified on **Schedule 3.14**;

 

(m)          Any actions, claims, proceedings, losses,damages, payments, penalties, costs or expenses suffered or incurred inrelation to or arising out of any personal injury as a result of a person’sexposure at any time before the Transfer Date to any and all Contaminants (asdefined in Section 1.6(m)) present, discharged or released at, ormigrating from any property owned, occupied, controlled or used by the SellingEntities in respect of the Business; provided, however, that for any personalinjury that is determined to have been caused by exposure to Contaminants asdescribed in this subsection 1.7(m) that relates to periods of exposurebefore and after the Transfer Date, the loss arising from such personal injuryshall be deemed to have occurred ratably during the entire period of such exposure,and the Selling Entities’ liability for such injury shall be limited to a prorata portion of the losses based on the period of exposure that occurred priorto the Transfer Date;

 

(n)           all claims, losses, debts,liabilities and obligations for compensation to Employees which are set forthin the certain letter dated September 15, 2005, and updated as ofSeptember 22, 2005 from UNOVA to counsel for CFL; and

 

(o)           accrued bonuses payable to ContinuingEmployees as of the Transfer Date and liabilities associated with amountswithheld from employee salaries to the extent withheld as of the Transfer Date.

 

## **1.8**                               Transfer ofEnglish Owned Real Property and Obtaining English Reversioner’s Consent

##  

**For the purposes of this Section 1.8,the following 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 the benefit 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 to theobtaining of such consent and if such consent is obtained the Selling Entityshall grant and the Buyer UK shall accept such underlease on the date fivebusiness 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 to chargesto secure the repayment of money) appearing in the charges registers of theirrespective 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 inSection 1.5(d)

 

## **1.9**                               ClosingBalance Sheet

##  

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

###  

The “***Closing Balance Sheet***” shall be abalance sheet reflecting the US Purchased Assets and Assumed Liabilities relatingto the US Landis Group calculated in US dollars and theUK Purchased Assets and Assumed Liabilities relating to the UK LandisGroup calculated in US dollars (converting UK pounds inUS 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 million or more, as of 4 p.m. Eastern Time (the “***WSJ Rate”***) on the Transfer Date) asof the Transfer Date, and prepared in accordance with generally acceptedaccounting principles in the United States of America (“***GAAP”***),applied on a basis consistent with the December Balance Sheet and the JuneBalance Sheet (as such terms are defined in Section 3.2(a) andSection 3.2(b), respectively); *provided*, *however*, the Closing Balance Sheet shall reflect theadjustments (the “***Agreement Adjustments”***) thatare required to exclude the Excluded Assets and Excluded Liabilities.

 

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

###  

Within60 days following the Transfer Date, Buyer US, with the assistance andcooperation of the Selling Entities, shall prepare and deliver to UNOVA abalance sheet reflecting the US Purchased Assets and Assumed Liabilitiesrelating to the US Landis Group calculated in US dollars and theUK Purchased Assets and Assumed Liabilities relating to the UK LandisGroup calculated in US dollars (converting UK pounds inUS 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 anddeliver to UNOVA, within six business days following the Transfer Date, themonth-end financial and related business data for the Business reasonablynecessary to allow the Selling Entities to prepare their financial reportsconsistent with the Selling Entities’ customary practices. After delivery ofthe Preliminary Closing Balance Sheet, the Purchasing Entities shall provideUNOVA and its accountants reasonable access during normal business hours tomaterials used in the preparation of the Preliminary Closing Balance Sheet.

 

### **(c)**                                  Review ofPreliminary Closing Balance Sheet

###  

UNOVA shallhave 30 days following its receipt of the Preliminary Closing BalanceSheet (the “***Review Period”***) to review thesame for compliance with GAAP and the Agreement 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. Inthe event that UNOVA shall object to the Preliminary Closing Balance Sheet,such statement (the “***Statement of Objections”***)shall include a detailed itemization of UNOVA’s objections and the reasonstherefor. If UNOVA does not deliver to Buyer US the Statement ofObjections within the Review Period, the Selling Entities shall be deemed to 

 

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have accepted the Preliminary Closing Balance Sheet. If UNOVA deliversto Buyer US, the Statement of Objections within the Review Period, theSelling Entities shall be deemed to have waived any objections to thePreliminary Closing Balance Sheet that are not included in the Statement ofObjections.

 

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

###  

In the eventthat UNOVA shall accept or shall be deemed to have accepted the PreliminaryClosing Balance Sheet as prepared and delivered by Buyer US, thePreliminary Closing Balance Sheet shall constitute the Closing Balance Sheetfor purposes of this Agreement. In the event, however, that UNOVA shall objectto the Preliminary Closing Balance Sheet, UNOVA and Buyer US shall promptlymeet and in good faith attempt to resolve the issues that are in dispute. Inthe event that the issues in dispute shall not have been resolved within30 days following Buyer US’s receipt of UNOVA’s Statement of Objections,such disputed issues shall be resolved by KPMG LLP, or another independentcertified accounting firm jointly selected by UNOVA and Buyer US (the “***Independent Firm***”), provided theParties shall attempt to reach a final resolution of any matters which remainin dispute at the earliest practicable date. The decision of the IndependentFirm shall be final and binding on the Parties. The costs and expenses of theIndependent Firm in reviewing the issues in dispute shall be borne fiftypercent (50%) by Buyer US and fifty percent (50%) by UNOVA. The PreliminaryClosing Balance Sheet, as adjusted to reflect the adjustments agreed upon bysuch Parties or determined by the Independent Firm, shall constitute theClosing Balance Sheet for purposes of this Agreement.

 

### **(e)**                                  Net WorkingAsset Payment

###  

If the NetWorking Assets (as defined below) shown on the final Closing Balance Sheet(calculated in US dollars and converting UK pounds intoUS dollars at the WSJ Rate on the Closing Date) are greater than 29% oftrailing 12-month revenues of the Business (the “***NetWorking Asset Target”***), then Buyer US and/or Buyer UK shallwithin five business days of the final determination of the Closing BalanceSheet pay UNOVA in US dollars by wire transfer of immediately available fundsan amount equal to such excess (the “***Upward Net Working AssetAdjustment”***), plus interest on such excess amount from theTransfer Date until the date of payment at LIBOR plus 0.25%. If the Net WorkingAssets as shown on the Closing Balance Sheet are less than the Net WorkingAsset 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 thisAgreement, “***Net Working Assets”*** means, asof the 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 a Downward Net Working Asset Adjustment,the Purchasing Entities shall be entitled to satisfy claims pursuant to thisSection 1.9 from the Note by reducing the principal amount outstandingunder such Note by 

 

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an amount equal to the payment due from UNOVA in respect of such claims.“***LIBOR”*** means an annual rate ofinterest equal to the annual rate in effect in the London Interbank Marketapplicable to one month deposits of U.S. dollars as reported in the WallStreet Journal on the second business day preceding the Transfer Date. If theWall Street Journal is not published on such business day or does not reportsuch rate, such rate shall be as reported by such other publication or sourceas UNOVA and Buyer US may mutually select.

 

### **(f)**                                    Limitations on Certain Claims

###  

Consistent with Section 11.6(c), the Purchasing Entitiesacknowledge and agree that, following the final determination of the ClosingBalance Sheet the Purchasing Entities may not bring any claim against theSelling Entities, and the Selling Entities shall not have any liability to thePurchasing Entities, relating to: (a) the noncollectability of any accounts receivable or the amountof the related bad debt reserve, (b) inventory obsolescence or the amountof the related inventory reserve, (c) loss contracts for which a reserveis reflected on the Closing Balance Sheet or (d) warranty claims or theamount of the related warranty reserve, other than in the case of fraud orwillful misconduct and other than in respect of any claims relating to a breachof the representations and warranties in Section 3.12.

 

## **1.10**                        Right toContest

##  

The assumptionand agreement by the Purchasing Entities to pay, perform and discharge theAssumed Liabilities shall not prohibit the Purchasing Entities from contestingwith a third party, in good faith and at the expense of the PurchasingEntities, the amount, validity or enforceability of any thereof; *provided*, *however*, thatthe Purchasing Entities shall indemnify the Selling Entities for any Loss (asdefined in Section 11.1) arising from such contest, other than incircumstances where the Purchasing Entities are entitled to indemnification forthe Loss arising from such contest pursuant to Section 11.

 

## **1.11**                        NonassignableContracts and Rights

##  

To the extentthat the assignment by the Selling Entities of any contract, property, right orasset to be assigned to the Purchasing Entities pursuant to this Agreementshall require the consent or approval of any other party, and such consent orapproval shall not have been obtained on or prior to the Transfer Date, thisAgreement shall not constitute a contract to assign the same if an attemptedassignment would constitute a breach thereof or would in any way adverselyaffect the rights of the Selling Entities (or any Purchasing Entity, as assignee)thereunder. If any such consent or approval is required but not obtained on orprior to the Transfer Date, the Parties covenant and agree that in such case,the applicable Selling Entity shall continue to deal as instructed by thePurchasing Entities with the other contracting party or parties, with thebenefits of such contract, property, right or asset after the Transfer Dateaccruing to the benefit of the applicable Purchasing Entity and the liabilitiesand obligations thereunder being performed by the applicable Purchasing Entityon such Selling Entity’s behalf; such Selling Entity shall hold all moneysreceived thereunder for the benefit of the applicable Purchasing Entity andshall pay the same to the applicable Purchasing Entity within one business dayafter receipt thereof; and the Parties shall use 

 

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reasonable best efforts (butwithout payment of any penalty or fee by any Party other than by the SellingEntities as set forth in **Schedule 1.11**)to obtain and secure any and all consents and approvals that may be necessaryto effect the valid sale, transfer or assignment of the same to the applicablePurchasing Entity without change in any of the material terms or conditionsthereof, including without limitation the formal assignment or novation of anyof the same, if so required by the Purchasing 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 related thereto.

 

## **1.12**                        Value AddedTax

##  

**(a)**           It is intended that theUK Purchased Assets shall be transferred to Buyer UK as a going concernand that the provisions of Article 5 of the Value Added Tax (SpecialProvisions) Order 1995 (SI 1995/1268) shall apply to such transfer and thesale and purchase of the UK Purchased Assets and each of UNOVA UK and Buyer UKshall use its reasonable endeavors to procure that the sale of the UK PurchasedAssets is treated as neither a supply of goods nor a supply of services underthe Article.

 

**(b)**           Notwithstanding sub-clause (a)above, all sums paid or payable under this Agreement by Buyer UK to UNOVA UKare exclusive of any VAT which is or may become chargeable on the supply tosupply for which sums form the whole or part of the consideration for VATpurposes.

 

**(c)**           UNOVA UK and Buyer UKshall within 30 days of the Closing give notice of such transfer to theappropriate office of HM Revenue & Customs in accordance with suchregulations and requirements as may be applicable.

 

**(d)**           Buyer UK warrants toUNOVA 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 inSection 3 of the Value Added Tax Act 1994);

 

(iii)          ithas made or will make a valid election under paragraph 2 ofSchedule 10 VATA in respect of the Freehold Property effective from nolater than the Transfer Date and has given or will, no later than the TransferDate, give written notification of the election to and, if appropriate, hasobtained the prior 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 within 10 business days of receipt of suchnotification from UNOVA UK request that UNOVA UK contest, at Buyer UK’s cost,in writing such written determination from HM Revenue and Customs. UNOVA UKshall give Buyer UK a reasonable opportunity to comment on any relevantcommunication proposed to be sent to HM Revenue and Customs in this regard(making available any information and documents in its control required toestablish 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 reasonable opportunity to comment has been given UNOVA UKmay not, without Buyer UK’s written agreement not to be unreasonably withheld,agree, compromise, settle or make any other arrangement with HM Revenue andCustoms which would result in Buyer UK incurring any liability underSection 1.12(b) above in respect 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 with thistreatment, and after the taking of any steps by Buyer UK or UNOVA UK as arecontemplated by this Section 1.12(g).

 

Subject to (i) and (ii) above, to theextent that HM Revenue and Customs confirms in writing its originaldetermination Buyer UK shall not have further rights under thisSection 1.12(g).

 

UNOVA UK shall not be required to contestsuch determination of HM Revenue and Customs if it reasonably determines thatto do so would have a material effect on the future conduct of the business ofUNOVA UK or the Selling Entities or affect the rights or reputation of any ofthem.

 

**(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 for such period as may be required by law,and shall allow Buyer UK, on reasonable notice, to inspect the records and takecopies thereof. If such direction is refused by HM Revenue and Customs,then UNOVA UK shall within 10 business days after receipt of notificationof such refusal (or, if later, Closing) deliver to Buyer UK the VAT businessrecords 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 ofSchedule 10 VATA 1994 has revoked or will revoke such Election prior toClosing.

 

**(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. UNOVA UK shall be entitled to receive and toretain for its own benefit all reimbursement or credit from HM Revenue andCustoms for VAT borne by UNOVA UK on goods and services supplied to UNOVA UKprior to Closing and any payments received in respect of VAT overpaid to HMRevenue 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**                        UK Employees

 

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 theconditions contained in this Agreement, consummation of the purchase and saleof the US Purchased Assets and the other transactions provided for in thisAgreement (the “***Closing***”) shall take place atthe offices 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 Purchased Assets and the UK Purchased Assetsand all other transactions provided in this Agreement shall be deemed to haveoccurred simultaneously and shall be effective at 11:59 p.m. (EasternTime) on the Transfer Date, or at such other date or time as the Parties maymutually agree upon in writing. The Parties acknowledge and agree that the dateof Closing shall be automatically extended as may be required if the Closingshall not have occurred 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; *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**                               Notice andRight to Cure

 

At all times prior to the Transfer Date, theParties shall promptly notify each other of the existence of any condition orthe occurrence 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 and 7. Ifany of such conditions shall not have been satisfied or waived on or by thedate on which the Closing is otherwise scheduled, then, subject toSection 10.1(b) and provided that such Party is not in breach of thisAgreement, the Party which is unable to meet such condition shall have areasonable time and a reasonable opportunity to extend the Transfer Date (notto exceed fourteen business days) in order to satisfy, at its expense, suchcondition 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 thisArticle 3 are true and complete as of the date of this Agreement and willbe true and complete as of the Transfer Date as follows; provided, however,that Schedules 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 of the Selling Entities is qualified toconduct the Business as a foreign corporation in all jurisdictions where theconduct of the Business or the ownership of its assets in respect of theBusiness requires qualification, which jurisdictions are set forth on **Schedule 3.1(a)**, except where the failure to be soqualified would not, individually or in the aggregate, have a material adverseeffect (as defined below) with respect to the 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) the assets, liabilities, business, financial condition, or results ofoperations of the Business taken as a whole, or (b) the ability of theSelling Entities to timely consummate the transactions contemplated by thisAgreement; and such terms with respect to the Purchasing Entities means anycircumstance, event, change, violation, failure, inaccuracy, effect or othermatter that, individually or when taken together with all other circumstances,events, changes, violations, failures, inaccuracies, effects or other matters,would reasonably 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 constitutesa valid and binding obligation of each of the Selling Entities, enforceableagainst each of them in accordance with its terms, except to the extent thesame may be limited by bankruptcy, insolvency, reorganization, moratorium orsimilar laws affecting creditors’ rights generally or by general equitableprinciples. The Related Agreements to which each of the Selling Entities is aparty, when executed and delivered by the applicable Selling Entity, willconstitute valid and binding obligations of the respective Selling Entity,enforceable against each of them in accordance with their respective terms,except to the extent the same may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ rights generallyor 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)**                                  DecemberFinancials

###  

Set forth on **Schedule 3.2(a)**is the combined balance sheet of the Landis Group as of December 31, 2004(the “***December Balance Sheet***”), andthe 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 been prepared in conformity with GAAP consistentlyapplied throughout the periods covered, except as may be indicated in the notesthereto, and present fairly in all material respects the combined financialposition and the combined results of the Landis Group operations for the yearthen ended, excluding reclassifications required at the corporate level becauseof discontinued 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.

 

### **(b)**                                  JuneFinancials

###  

(i)            Setforth on **Schedule 3.2(b)(i)** is the combinedbalance sheet of the Landis Group as of June 30, 2005 (the “***June Balance Sheet***”) and the relatedcombined statement of operations for the period then ended, as prepared byUNOVA (collectively, the “***June Financials***”).Except as otherwise disclosed on **Schedule 3.2(b)(i)**,the June Financials (including the notes thereto) have been prepared inconformity with GAAP consistently applied throughout the period covered, exceptas may be indicated in the notes thereto, and present fairly in all materialrespects the combined financial position and the combined results of theiroperations for the period then ended, excluding reclassifications required atthe corporate level because of discontinued operations status and excludingallocated costs related to restricted stock and pensions allocated to theLandis Group in UNOVA’s consolidation level adjustments to its reportedfinancial statements.

 

(ii)           Theaggregate amount of all FAS 106 liabilities for post-retirement medicalbenefits with respect to the Business reflected in the June Balance Sheet hasbeen calculated in accordance with GAAP using the method and assumptions setforth on **Schedule 3.2(b)(ii)**. SinceJune 30, 2005, none of the Selling Entities has exercised any discretionor power to increase the benefits payable under the Retiree Medical Plan.

 

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

###  

Set forth on **Schedule 3.2(c)**are the 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 tothe Accounts, UNOVA UK has received an opinion from the independent accountingfirm that audited the Accounts that the audited balance sheet presents fairly,in all material respects, the financial position of UNOVA UK as of the AccountsDate.

 

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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 practices sincethe June Balance Sheet (excluding liabilities arising from the events listed in**Schedule 3.2(d)** and those AssumedLiabilities not required under GAAP to be reflected in the FinancialStatements) which in the aggregate are not material to the Business, taken as awhole.

 

### **(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 thanincreases granted in the ordinary course of business and consistent with pastpractice) payable or to become payable by any of the Landis Group to any of the“***Employees***” (as defined inSection 3.13(a)), other than the change in retirement benefits disclosedto CFL in a letter from UNOVA dated October 4, 2005, or any change in anyexisting, or creation of any new, insurance or other plan, other than theLandis Pension Plan, under which any of the Landis Group provides benefits tosuch Employees;

 

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

 

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(vi)          Anylabor dispute, other than routine individual grievances, or any activity orproceeding by a labor union or representative thereof to organize any Employeesor any lockouts, strikes, slowdowns, work stoppages or threats thereof by orwith respect 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 thisSection 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 andother receivables of the Business at June 30, 2005 have been included inthe June Balance Sheet.

 

## **3.4**                               Inventoriesand Assets

##  

**(a)**           Theinventories set forth in the June Balance Sheet were properly stated therein atthe lesser of cost or fair market value determined in accordance with GAAPconsistently applied. Since the June Balance Sheet, the inventories of theBusiness have been maintained in the ordinary course of business. Except asdisclosed on **Schedule 3.4(a)** and except asdisclosed in the Financial Statements, all such inventory is owned free andclear of all Liens. On the Transfer Date, all of the inventory recorded on theJune Balance Sheet will be in quantities sufficient for the normal operation ofthe Business as currently conducted.

 

**(b)**           Thefixed asset register of the Selling Entities in respect of the Business (a copyof which has been disclosed by UNOVA to Buyer UK and Buyer US) comprises acomplete and accurate record of all plant and machinery and all motor vehiclesand other vehicles, office and other equipment owned, used or possessed by anyof the Selling Entities in respect of the Business (and such register orregisters accurately reflect whether such plant and machinery, vehicles orequipment are owned or leased by any of the Selling Entities).

 

**(c)**           TheSelling Entities in respect of the Business (other than for products suppliedto customers) has not provided any of their assets or property to any thirdparty on lease, hire, hire-purchase, conditional sale or credit sale agreementterms.

 

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**(d)**           Eachitem of plant and machinery owned or used by the Selling Entities in theoperation of the Business is in working order (reasonable wear and tearexcepted) and has been, and through the Closing will be, maintained in a mannerconsistent with the past maintenance practices of the Selling Entities.

 

## **3.5**                               Absence ofLiens and Encumbrances

##  

**(a)**           Forpurposes of this Agreement, a “***Lien***” shallmean any lien, encumbrance, mortgage, pledge, hypothecation, charge, securityinterest, title retention or restriction or security agreement or arrangementof any kind. “***Permitted Lien***” shall mean,collectively, any (i) Liens for Taxes, assessments or governmental chargesor levies not yet due or, as disclosed on **Schedule 3.5**,being contested in good faith and any Liens for Taxes disclosed on **Schedule 3.18**, (ii) statutory Liens of carriers,warehousemen, mechanics, materialmen and the like arising in the ordinarycourse of business that do not impair in any material respect the conduct ofthe Business or the use of any of the Purchased Assets in the manner currentlyconducted or used, disclosed on **Schedule 3.5**,(iii) easements, restrictive covenants, rights of way and other similarrestrictions of record that do not impair in any material respect the conductof the Business or the use of any of the Purchased Assets in the mannercurrently conducted or used, (iv) zoning, building and other similarrestrictions that do not impair in any material respect the conduct of theBusiness or the use of any of the Purchased Assets in the manner currentlyconducted or used, (v) easements, encroachments and other minorimperfections of title that do not impair in any material respect the value ofthe Purchased Assets or the continued conduct of the Business or the continueduse of any of the Purchased Assets in the manner currently conducted or used,(vi) in the case of leased property, all matters, whether or not ofrecord, affecting the title of the lessor (and any underlying lessor) of theleased property so long as such matters do not impair in any material respectthe conduct of the Business or the use of any of the Purchased Assets in themanner currently conducted or used, (vii) any Lien created by a PurchasingEntity in connection with this Agreement, (viii) other Liens set forth on **Schedule 3.5**, (ix) Liens relating to deposits madein the ordinary course of business in connection with workers’ compensation,employment insurance and other types of social security, (x) Liens tosecure the performance of leases, trade contracts or other similar agreementsand securing executory obligations under any lease that constitutes an “***operating lease***” under GAAP, and(xi) Liens to secure payment obligations in connection with purchasedproperty in the ordinary course of business. Except as set forth on **Schedule 3.5**, each of the applicable Selling Entitieshas good, and in the case of the US Assets, marketable title to or, in thecase of leased properties and assets, valid leasehold interests in, all of thePurchased Assets free and clear of all Liens other than Permitted Liens. TheSelling Entities own all of the assets primarily or exclusively used by them inthe operation and conduct of the Business, or required by them for the normalconduct of the Business, and those assets are the absolute legal and beneficialproperty of the relevant Selling Entity, except for those assets leased by themunder leases specifically identified on **Schedule 3.6(c)**and **Schedule 3.8(d)** hereto. Except asdescribed on **Schedule 3.6(c)** and **Schedule 3.8(d)** hereto, no financing statement withrespect to any of the Purchased Assets is active in any jurisdiction.

 

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**(b)**           Uponconsummation of the transactions contemplated hereby, the Purchasing Entitieswill acquire good and marketable title in and to, or a valid leasehold interestin each of the Purchased Assets free and clear of all Liens (other thanPermitted Liens).

 

## **3.6**                               RealProperty

##  

### **(a)**                                  RealProperty

###  

Set forth on **Schedule 3.6(a)**is the address and a description of all real property with respect to which anyof the Selling Entities in respect of the Business is the owner and holder of afee simple, insurable interest (collectively, the “***OwnedReal Property***”). To the knowledge of the Selling Entities, theOwned Real Property complies with all applicable zoning, building, health andpublic safety, fire, subdivision, land sales or similar laws, rules, ordinancesor regulations and all applicable Environmental Laws (as defined inSection 3.6(f)) and, except as set forth on **Schedule 3.6(a)**,none of the Selling Entities has received any written notice that the OwnedReal Property does not comply with all applicable zoning, building, fire,health and public safety, subdivision, land sales or similar laws, rules,ordinances or regulations and all applicable Environmental Laws. Other than theSelling Entities in respect of the Business, no party has the right to occupy,possess or use any portion of the Owned Real Property. There are no materialdefects in the physical condition of any land, buildings or improvementsconstituting 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 the Business.All water, sewer, gas, electric, telephone, drainage and other utilitiesnecessary for the lawful current operation of the Owned Real Property areavailable and sufficient to service the operation of the Business as it hasbeen conducted. There are no material notices, orders, actions, suits orproceedings (including arbitration or condemnation proceedings) pending or, tothe knowledge of the Selling Entities threatened, which could have a materialadverse effect on any portion of the Owned Real Property, at law or in equityor 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 previouslyfurnished to Buyer US true, correct and complete copies of the leases orsimilar contracts governing the Owned Real Property that has been leased andany guaranties related thereto. Each such lease is in full force and effect, nodefault or breach has occurred on the part of the Selling Entities or, to theknowledge of the Selling Entities, any other party thereto. Except as set forthon **Schedule 3.6(b)**, no consent of anyparty 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.

 

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

###  

Set forth on **Schedule 3.6(c)**is a 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 US and Buyer UK true, correct andcomplete copies of the leases or similar contracts governing the Leased RealProperty and any guaranties related thereto. Each such lease is in full forceand effect, no default or breach has occurred on the part of the SellingEntities or, to the knowledge of the Selling Entities, any other party thereto.Except as set forth on **Schedule 3.6(c)**,no consent of any landlord or any other party is required under any such leasein order to assign all rights and benefits in each such lease to the applicablePurchasing Entity (or its designee) and to keep such lease in full force andeffect after the execution and delivery of this Agreement and the consummationof the transactions contemplated 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***”). Theterm “***Hazardous***

 

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***Substance***”shall mean any toxic or hazardous constituents, pollutants, waste waters,byproducts, contaminants, chemicals, compounds, substances (whether in solid orliquid form or in the form of a gas or vapor and whether alone or incombination with any other substance), materials or wastes, including withoutlimitation asbestos, polychlorinated biphenyls, toxic mold, mildew, or fungi,petroleum or any petroleum products or other constituents or petroleum-basedderivatives or urea formaldehyde. None of the Selling Entities has been notifiedby any Governmental Body that any of the Environmental Permits will bematerially modified or suspended or revoked, and the Selling Entities have noreason to believe that the Environmental Permits cannot be transferred orreissued to the applicable Purchasing Entity or renewed upon their expirationupon the same or similar terms and conditions as the current permits, subjectto requirements of applicable Environmental Laws governing such EnvironmentalPermits. Each of the Selling Entities is currently and has been sinceJanuary 1, 2004 in material compliance with the terms and conditions ofthe Environmental Permits and all such permits are in full force and effect andare 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 by EnvironmentalLaws. To the Selling Entities’ knowledge, there are no circumstances that mayprevent or interfere with 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 has resulted or is reasonably likely to resultin a violation by or a material liability of any of the Selling Entities inrespect of the Business under Environmental Laws or which has resulted in thecontamination or pollution of any real property now or previously owned,occupied, operated, or leased by any of the Selling Entities in respect of theBusiness that is required or could be required by any Governmental Body to beinvestigated, reported, removed, treated, contained or remediated underEnvironmental 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(of record or otherwise), which prohibit or materially interfere with thecurrent use 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. ASelling Entity is the legal and beneficial owner of each of the Purchased Assets.

 

## **3.8**                               Contractsand Commitments

##  

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

 

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

###  

Set forth on **Schedule 3.8(a)**is a 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 providedBuyer US with access to copies 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)**is a 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 access to 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)**is a 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 agreementsby their terms are terminable at any time by the applicable Selling Entitywithout any additional payment, indemnity or other penalty upon not more than90 days notice, except as otherwise 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 andother agreement under which any of the Selling Entities in respect of theBusiness leases or rents (as lessee) any machinery, equipment, motor vehicle orother personal 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)**is a list and description of every agreement or other commitment imposing onany of the Selling Entities any restriction on the manner in which it mayconduct the Business in competition with any third party.

 

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

###  

Set forth on **Schedule 3.8(f)**is a 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 inproduct sales or service agreements and excluding confidentiality agreementswith potential purchasers of all or any portion of the Landis Group).

 

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

###  

**Schedule 3.8(g)**lists all Persons who are currently performing services for the Business whoare classified as “consultants” or “independent contractors” that receive anannual compensation in excess of $50,000, the compensation of each such Personand whether any Selling Entity is party to an agreement with such Person(whether or not in writing). Set forth on **Schedule 3.8(g)**is a list and description of all outstanding consultant agreements of any ofthe Selling Entities in respect of the Business. For purposes of thisSection 3.8(g) the term “***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)**is a list and description of any Indebtedness of any Selling Entity in respectof the Business. “***Indebtedness***” means(i) any indebtedness for borrowed money or issued in substitution for orexchange 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)**is a list and description of all outstanding powers of attorney, agency orproxies granted 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) securing the obligations of any of the Selling Entities in respect ofthe Business or (ii) securing any outstanding payment obligations of athird party to any of the Selling Entities 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)**                                    Other MaterialContracts

###  

(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. For purpose of this Section 3.8(l), acontract or commitment shall be deemed material if the consideration paid or tobe paid thereunder exceeds $100,000 or the contract or commitment is notterminable upon not more than 90 days notice without penalty or otheradverse 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 parties thereto.Except as otherwise disclosed in this Section 3.8, none of the SellingEntities has received notice that any party to any such Purchased Contractintends to cancel, terminate or refuse to renew such Purchased Contract or toexercise or decline to exercise any option 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 has jurisdictionin anti-trust, monopoly, competition or consumer protection matters.

 

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

##  

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

###  

Set forth on **Schedule 3.9(a)**is a list and description of (i) all patents, patent applications,registered designs, design applications, utility models, registered tradenames, internet domains, trademark registrations and trademark applications,service mark registrations and service mark applications, domain names,copyright registrations and copyright registration applications, chipregistrations and chip registration applications, both domestic and foreign,which are used in the Business and (ii) all material trade names, trademarks and service marks (registered or unregistered), unregistered copyrights,unregistered designs and software used in the Business (collectively, the “***Intellectual Property***”). 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 indicatedon **Schedule 3.9(a)**, the applicableSelling Entity owns, as of record and beneficially, all right, title andinterest in and to the Intellectual Property and the Intellectual Property isnot subject

 

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to any Lien other than Permitted Liens. Noclaim is pending or, to the Selling Entities’ knowledge, threatened against anyof the Selling Entities and/or their officers, employees or consultants thatchallenges the Selling Entities’ rights in the Intellectual Property orotherwise adversely affects the aforesaid right, title and interest in and tothe Intellectual Property, nor have there have been any clams, disputes orproceedings in respect of the use or ownership of the Intellectual Property inthe two years before the date of this Agreement or the Transfer Date. Except asdisclosed 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 as disclosed on **Schedule 3.9(a)**,all patents or patent applications and trademarks, servicemarks, registereddesigns, 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 PurchasedAssets do not trade under any name, other than “Landis Lund” and “CranfieldPrecision” and no person, form or company other than UNOVA UK has any rights inrelation to the names “Landis Lund” or “Cranfield Precision” or has requestedor required UNOVA UK to refrain from using such name or attempted to preventsuch use by UNOVA UK.

 

### **(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 fullforce and effect and there is no material default by any of the SellingEntities or, to the knowledge of the Selling Entities any party thereto. Exceptas otherwise 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 ITSystem, together with the Purchased Assets, comprises all of the informationtechnology material and necessary to operate the Business.

 

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### **(c)**                                  NoInfringement

###  

Except as disclosed on **Schedule 3.9(c)**and except with respect to pre-packaged or off-the-shelf software, (i) tothe knowledge 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) neither the operation of the Business nor any activity by any of theSelling Entities in connection with the Business infringes the rights of anyother Person in any Intellectual Property (other than patents). Except asdisclosed on **Schedule 3.9(c)**, to theknowledge, information and belief of the Selling Entities (a) none of thepatents included in the Intellectual Property or the rights of any of theSelling Entities in any patents included in the Intellectual Property are beinginfringed by any Person, and (b) neither the operation of the Business norany activity by any of the Selling Entity in connection with the Businessinfringes 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 as set forth on **Schedule 3.10**,none of the propriety information or trade secrets of any of the SellingEntities relating to the Business of any proprietary or confidentialinformation or trade secrets now the subject to a patent or patent applicationhas been disclosed to any other Person except pursuant to confidentialityagreements between the Selling Entities and such Person.

 

## **3.11**                        ConfidentialInformation or Trade Secrets

##  

**(a)**           Exceptas set forth on **Schedule 3.9(a)**, none of theproprietary or confidential information or trade secrets of any of the SellingEntities relating to the Business or any proprietary or confidentialinformation or trade secrets now the subject of a patent or patent application,has been disclosed to any other Person except pursuant to valid and bindingconfidentiality agreements between the Selling Entities and such Person. Exceptas set forth on **Schedule 3.11**, there are nopending or, to the knowledge of the Selling Entities threatened proceedingswhich challenge the rights of any of the Selling Entities in respect of anyproprietary or confidential information or trade secrets used in the Business.

 

**(b)**           Inrespect of all and any Personal Data (as defined in the Data Protection Act1998) processed by any of the Selling Entities, the applicable Selling Entityhas made all necessary registrations and notifications of its particulars inaccordance with the Data Protection Legislation (being all legislation relatingto data protection and to the recording, interception and monitoring ofcommunications and privacy including without limitation the Data ProtectionActs of 1984 and 1998, and the EU Data Protection Directive 95/46/EC, thePrivacy and Electronic Communications (EC Directive) Regulations 2003,Part 1 of the Regulation of Investigatory Powers Act 2000 as amended andany analogous legislation in any part of the world), and have otherwisecomplied with the Data 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 the knowledge of the Selling Entities theseproducts perform in accordance with their respective documented specificationsand as the Selling Entities have expressly warranted to their customers. Exceptas 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)**are all the standard product and service warranty policies of the SellingEntities in respect of the Business. Except as otherwise indicated on **Schedule 3.12(b)**, no Selling Entity has granted orextended any currently outstanding product or service warranty, either induration, scope or otherwise, that is in excess of or different from thestandard policies set forth on **Schedule 3.12(b)**.

 

## **3.13**                        Employees;Employee Benefits

##  

### **(a)**                                  Employees

###  

Subject to European data protectionlegislation, **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) such Employee’s base compensation as of the date of this Agreement,equity vesting schedule, and whether such Employee is eligible to participatein any Employee Benefit Plans; and (v) any governmental authorization thatis held by such Employee and that is used in connection with the Business. Exceptas disclosed on **Schedule 3.13(a)**, theemployment of each of the Employees of the Business is terminable by theSelling Entities at will. No offer of employment has been made by the SellingEntities to any individual which has not yet been accepted or which has beenaccepted but where the individual’s employment 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 stockoptions 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)**lists all current employee manuals and handbooks and employment agreementsrelating to the employment of the Employees. To the extent permitted by law,UNOVA has provided the Purchasing Entities with access to all employment policystatements material records relating to health and safety issues (including,without limitation, accident at work records, claim details, insurance records,policy and guidance documents and training and monitoring records) and othermaterials of material nature relating to the employment of the currentEmployees of the Business. All Employees are employed on the terms set out inthe 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) to the knowledge of the Selling Entities, no Employee employed at amanagement level in relation to the Business is in violation of any term of anyemployment contract, patent disclosure agreement, noncompetition agreement, orany other restrictive covenant with any third party relating to the right ofany such Employee to be employed by the Selling Entities in respect of theBusiness and (viii) the Selling Entities are not and have never beenengaged in any dispute or litigation with an Employee of the Business or formerEmployee of the Business regarding 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 list anddescription of all collective bargaining or similar agreements between any ofthe Selling Entities and any group of Employees, union or labor organizationrepresenting any Employees including any works agreement. Except as otherwisedisclosed on **Schedule 3.13(f)**, no suchagreement or understanding is presently proposed or under discussion by theSelling 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 Selling Entities have not received any furtherapplication for recognition from a trade union. The Selling Entities do nothave any other works or supervisory council or other body representingEmployees which has a right to be represented or attend at or participate inany board or council meeting or a right to be informed, consulted or makerepresentations in relation 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 anynegations with Employees pursuant to the Information and Consultation ofEmployees Regulation 2004.

 

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### **(g)**                                 IndependentContractors

###  

All the Persons set forth on **Schedule 3.8(g)** and any other Person classified as suchby 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 Partiesacknowledge and agree that nothing in this Section 3.13(h)(C) or otherwisein this Agreement shall restrict the ability of UNOVA UK to grant earlyretirement to Employees in the ordinary course of its business, whether before,on or after the date of this Agreement, and that UNOVA’s granting of earlyretirement in the ordinary course of its business shall not constitute a breachof the representations and warranties with respect to the Purchasing Entitiesor provide a basis for a claim for indemnification by the Purchasing Entitiesunder this Agreement.

 

### **(i)**                                    Employmenthistory

###  

(A)          Exceptas otherwise disclosed on Schedule 3.13(i) within the period of one year endingon the date of this Agreement the Selling Entities in respect of the Businesshave 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 the transactionscontemplated by this Agreement that has required or will require notificationto or consulting with any trade union, works council, staff association orother 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 no obligation to follow any contractualredundancy 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 to theknowledge of the Selling Entities, subject to imminent audit or investigationby any Governmental Authority; (v) the Selling Entities are not or havenot been within the last two (2) years subject to any order, decree,injunction or judgment by an Governmental Authority or private settlementcontract in respect of any labor or employment matters concerning the Business;(vi) the Selling Entities are in compliance with the requirements of theImmigration Reform Control Act of 1986 with respect to all Employees; (vii) allEmployees other than Employees of UNOVA UK are employed at will;(viii) there is no, and during the past two (2) years there has notbeen any, labor strike, picketing of any nature, labor dispute, slowdown or anyother concerted interference with normal operations, stoppage or lockoutpending 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 home leavecosts, employee assistance, travel, accident, dependent schooling andsupplements, fringe benefit and other employee benefit plans, contracts,policies or practices providing employee or executive compensation or benefits.None of the Selling Entities in respect of the Business has committed toestablish any agreement or arrangement of the type required to be disclosed on **Schedule 3.13(k)**, except as otherwise indicated on suchSchedule. Except as otherwise disclosed on **Schedule 3.13(k)**,each of the Employee Benefit Plans complies, and has complied sinceJanuary 1, 2002, and has been administered in compliance in all materialrespects, with all 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 Security Act of1974, as amended (“***ERISA***”), including amendmentsthereto but excluding any such plan applying to Employees of UNOVA UK (each, an“***ERISA Plan***”), or, in the case of anyunwritten ERISA Plan, a description thereof, (2) if applicable, thecurrent trust agreement for each ERISA Plan, including amendments thereto,(3) if applicable, the most recent summary plan description for each ERISAPlan and all modifications thereto, (4) if applicable, the most recentForm 5500 filed for each ERISA Plan, (5) if applicable, the mostrecent actuarial valuation report prepared in connection with any ERISA Plan,and (6) if applicable, the most recent determination letter received fromthe Internal Revenue Service with respect to such ERISA Plan.

 

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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, duringthe last five years, no Selling Entity has incurred any withdrawal liabilityunder Section 4201 of ERISA to any multiemployer plan that coveredemployees 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) all material reports and information required to be disclosed orprovided to participants or their beneficiaries have been timely disclosed orprovided, (4) there have been no prohibited transactions within themeaning of Section 406 of ERISA or Section 4975 of the Code withrespect to any ERISA Plan, (5) each such ERISA Plan which is intended toqualify under Section 401(a) of the Code (i) has received a favorabledetermination letter from the Internal Revenue Service (the “***IRS***”) with respect to suchqualification under the Code as amended by those laws commonly referred to as “GUST”or has timely filed for such a determination letter, or (ii) is a prototype orvolume submitter 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 orSection 412 of 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) of ERISA andSection 412(a) of the Code exists and (4) no notice of intent toterminate has been filed and no amendment to treat such plan as terminated hasbeen adopted. Except as specifically 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 ERISASection 4980B of the Code (“***COBRA***”) orother applicable Law.

 

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

###  

(A)          Exceptfor the “UNOVA Pension Fund”, and the “Landis Pension Plan” (as defined inSection 5.8(a)) (each a “***UK Pension Plan***”),there is not in operation as of the date of this Agreement, and nounimplemented proposal has been announced to enter into or establish, anyagreement, arrangement, custom or practice whether or not approved by

 

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the Inland Revenue underChapter I or Chapter IV (as the case may be) of Part XIV Incomeand Corporation Taxes Act 1988 (“***Approved***”)for the payment by UNOVA UK of, or payment by UNOVA UK of a contributiontowards, a pension, lump sum or other similar benefit on retirement or deathfor the benefit of any Employee of UNOVA UK (“***UKEmployee***”) 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) of theWelfare Reform and Pensions Act 1999).

 

(C)           Exceptpursuant to the purchase of the Cranfield Precision business by UNOVA UK, no UKEmployee has ever become employed by UNOVA UK as a result of a transferpursuant to the Transfer of Undertakings (Protection of Employment) Regulations1981 (as amended).

 

(D)          Materiallyfull and accurate details of the UNOVA Pension Fund insofar as applicable tothe UK Employees and of the Landis Pension Plan have been made available toBuyer UK, including (i) a copy of all trust deeds and rules of currenteffect in relation to the UK Employees, (ii) a copy of all members’booklets and announcements of current effect in relation to the UK Employees(whether issued by UNOVA UK or otherwise) (including for the avoidance of doubtany announcement in respect of any improvement of a benefit or other amendmentnot yet incorporated into the documentation) issued to a UK Employee who is ormay become a member of either of them, (iii) a list of all the UKEmployees who are members of either of the UK Pension Plans, (iv) a copyof each investment management agreement in force in relation to the managementof Landis Pension Plan’s assets, (v) copies of the HM Revenue and Customsapproval letter or interim approval letter for each of the UK Pension Plans andthe contracting-out certificate issued in respect of each of the UK PensionPlans and the contracting-out certificates issued in respect of each of the UKPension Plans and (vi) all data relating to the benefits payable under each UKPension Plan necessary, when read with the documents referred to in (i) and(ii) above, to enable Buyer UK to quantify the liabilities in respect of the UKEmployees under each of the UK Pension Plans at the date of his Agreement(other than the liability in respect of the levy to fund the Pension ProtectionFund payable pursuant to the Pensions Act 2004).

 

(E)           Exceptas set forth in Schedule 3.2(e) or with respect to the change in retirementbenefits relating to certain employees disclosed to CFL in a letter from UNOVAdated October 4, 2005, at the date of this Agreement no discretion orpower has been exercised under either UK Pension Plan in respect of any UKEmployee (or request made for a discretion or power to be exercised) to (i) augmentbenefits, (ii) provide a benefit that would not otherwise be provided, or(iii) pay a contribution that would not otherwise have been paid.

 

(F)           Eachbenefit (except a refund of contributions) payable under the Landis PensionPlan on the death in service of a UK Employee is at the date of this Agreementinsured in full.

 

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(G)           Exceptfor the change in retirement benefits disclosed to CFL in a letter from UNOVAdated October 4, 2005 or as set forth in Schedule 3.2(e), no plan,proposal or intention to amend, discontinue (in whole or in part) or exercise adiscretion in relation to either UK Pension Plan has been communicated to a UKEmployee at the date of this Agreement.

 

(H)          TheLandis Pension Plan is not in the process of being wound up.

 

(I)            Noamount due and payable by UNOVA UK in respect of the Landis Pension Plan is unpaidand no contribution in respect of the month in which the Transfer Date occurshas been or will be paid by UNOVA UK to the Landis Pension Plan, other thancontributions deducted by UNOVA UK from members’ salaries before the TransferDate and not paid to the Landis Pension Plan by that date.

 

(J)            Exceptas set forth in **Schedule 3.13(m)**, each UKPension Plan has, in relation to the UK Employees, been designed to comply withand has been administered materially in accordance with, all applicable legaland administrative requirements.

 

(K)          Exceptas set forth in **Schedule 3.13(m)**, in relationto the UK Employees there no civil, criminal, arbitration, administrative, orother proceeding or dispute (whether before the Pensions Ombudsman, thePensions Regulator or otherwise) concerning either UK Pension Plan or againstthe trustees or administrator of either UK Pension Plan or UNOVA UK in relationto either UK Pension Plan, and to the knowledge of the Selling Entities, exceptas aforesaid, none is pending or threatened, and to the knowledge of theSelling Entities, except as aforesaid, there is no matter that might give riseto any proceeding or dispute concerning 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. Save for the Pension Regulator’sproceedings and except as set forth in **Schedule 3.14**,no investigation, suit, action or other judicial or governmental proceeding ispending or, to the knowledge of the Selling Entities threatened before anycourt or Governmental Body which may result in the restraint or prohibition of,or the obtaining of substantial damages in connection with, this Agreement orthe consummation of the transactions 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. Save in relation to the Pensions Regulator,none of the Selling Entities is under investigation with respect to and, to theknowledge of the Selling Entities, has not been threatened to be charged withor been given notice of any violation of, any law, rule, ordinance orregulation applicable to the Purchased 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 such Permit.Except as set forth on **Schedule 3.17**,such Permits are valid and in full force and effect and, assuming the relatedRequired Consents (as defined in Section 3.19) have been obtained prior tothe Transfer Date, are transferable by the applicable Selling Entity and willnot be terminated or impaired or become terminable as a result of thetransactions 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 were at the time they were filed true,complete and correct in all material respects. There are no Liens for Taxes onany of the Purchased Assets except for Permitted Liens. Except as otherwisedisclosed on **Schedule 3.18**, alldeficiencies asserted or assessments made by any Tax authority against each ofthe Selling Entities, and any Affiliated Group of which each such SellingEntity is or has been a member (but only for the taxable period during whichthe Selling Entity has been a member thereof), have been fully paid, and thereare no audits, investigations or examinations by any Tax authority with respectto Taxes relating to the Business in progress, pending or, to the knowledge ofor the applicable Selling Entity, threatened. None of the Selling Entities inrespect of the Business is currently the beneficiary of any extension of timewithin which to file any Tax Return (other than any income Tax Return of anAffiliated Group of which such entity currently is a member, but not the parentcorporation), and none of the Selling Entities in respect of the Business haswaived any statute of limitation with respect to any Tax or agreed to anyextension of time with respect to a Tax assessment or deficiency. In respect ofthe Business, to the knowledge of the applicable Selling Entity, no claim hasever been made by a Tax authority in any jurisdiction where a Selling Entitydoes not file Tax Returns that such Selling Entity is or may be subject to taxationby that jurisdiction. None of the Selling Entities has any liability for theTaxes of any Person (other than such Selling Entity or another member of theAffiliated Group of which such entity is or has been a member, but only for thetaxable periods during which the Selling Entity has been a member thereof)under Treasury Regulation Section 1.1502-6 (or any corresponding provisionof state, local or foreign Law), or as a transferee or successor, or bycontract, or otherwise. Each of the Selling Entities in respect of the Businesshas withheld and paid all Taxes required to have been withheld and paid inconnection with amounts paid or owing to any employee, stockholder, independentcontractor, creditor or other third party. None of the Assumed Liabilities isan obligation to make a payment that as a result of the Transactions will notbe deductible 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) anyPerson (other than any Governmental Body referred to in clause (a)) underany Contract, 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 theSelling Entities will breach or violate any applicable Law or any Contract orother material instrument to which it, or any of the Selling Entities, is aparty or by which any of its properties, rights or assets are bound and theterms of all Contracts and other material instruments have been complied withby all their relevant parties.

 

## **3.21**                        Insurance

##  

**Schedule 3.21(a)**lists all 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 Selling Entities have, with respect to the Business,maintained adequate insurance protection against all liabilities against whichit is customary for corporations engaged in the same or a similar businesssimilarly situated to insure. Such insurance polices remain in full force andeffect. None of the Selling Entities knows of any threatened termination of anyof such policies or bonds. None of the Selling Entities has any pendinginsurance claims or unpaid proceeds of such claims relating to the operationsor former operations of the Business or any asset used or formerly used in theBusiness.

 

## **3.22**                        Customersand Suppliers

##  

**(a)**           **Schedule 3.22** contains a true and complete list of(i) the ten largest customers of each division of the Landis Group interms 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) the ten largest suppliers of each division of the Landis Group and interms of purchases of goods or services during such period, showing theapproximate total purchases by the Landis Group from each such supplier duringeach such periods. No Selling Entity in respect of the Business has receivednotice from and is not otherwise aware that (a) any customer (or group ofcustomers under common ownership or control) that accounted for a materialpercentage of the aggregate products and services furnished by the Businessduring the past 18 months has stopped or intends to stop purchasing theproducts or services of the Business or (b) any supplier (or group ofsuppliers under common ownership or control) that accounted for a materialpercentage of the aggregate supplies purchased by the Business during the past18 months has stopped or intends to stop supplying products or services tothe Business.

 

**(b)**           Exceptfor those customers and suppliers set forth on Schedule 3.22, in each of thethree financial years of the Landis Group ended on the June Balance Sheet andduring its current financial year no more than five per cent of the aggregateamount (by value) of all the Landis Group’s sales or purchases have been orwill be made with or obtained from (as applicable) the same customer orsupplier (including any person 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 onSchedule 3.22 in the two year period ending on the Agreement Date wheresuch claim or complaint 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 preceding sentence, the term “***transaction***”includes, but is not limited to, any sale or transfer of property or assets,the lease or other use of the property or assets, the provision of services andthe furnishing of personnel, whether or not for consideration. Except as setforth on **Schedule 3.23**, (i) noInterested Person has any interest in any property of any of the SellingEntities in respect of the Business (ii) no Interested Person is indebtedto 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 this Agreement,  “***Interested Person***”means (A) any officer, director or stockholder of any of the SellingEntities or any of their respective affiliates or (B) any member of anysuch officer, director or stockholder’s family or any of their respectiveaffiliates. To the knowledge of the Selling Entities, no Interested Person(x) has any material direct or indirect interest in any entity that doesbusiness in an amount exceeding $50,000 with any of the Selling Entities or(y) has any direct or indirect interest in any property, asset or rightthat is used by any of the Selling Entities 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. Exceptfor certain fees to UNOVA’s Broker (which will be the responsibility of theSelling Entities), there are no broker’s or finder’s fees to be paid by any ofthe Selling Entities in connection with the transactions provided for in thisAgreement. None of the Selling Entities has any knowledge of, or has taken anyaction that would give rise to, any claim for a broker’s or finder’s fee to bepaid by the Purchasing Entities in connection with the consummation of the transactionsprovided 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 inSection 6.11) constitute, and on the Transfer Date will constitute, all ofthe assets or property used or held for use in or otherwise necessary for theoperation of the Business as of each such date. On the Transfer Date, thePurchased Assets, the assets of the Landis Pension Plan and the assets used toprovide the services pursuant to the Transition Services Agreement, willconstitute all of the assets necessary for the Purchasing Entities to continue tooperate the Business as it has been operated prior to the 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. Without limiting the generality of theforegoing, and notwithstanding any otherwise express representations andwarranties made in this Article 3, the Selling Entities make norepresentation or warranty to the Purchasing Entities with respect to(a) any projections, estimates or budgets delivered to or made availableto the Purchasing Entities of future revenues, expenses or expenditures orfuture results of operations or (b) except as expressly covered by arepresentation and warranty contained in this Article 3, any otherinformation 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 thisArticle 4 are true and complete as of the date of this Agreement and willbe true and complete 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 aUnited Kingdom corporation duly organized, validly existing and in goodstanding under the Laws of the United Kingdom. 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 the PurchasingEntities is required in connection therewith. This Agreement constitutes avalid and binding obligation of each of the Purchasing Entities, enforceableagainst each of them in accordance with its terms, except to the extent thesame may be limited by bankruptcy, insolvency, reorganization, moratorium orsimilar laws affecting creditors’ rights generally or by general equitableprinciples. The Related Agreements to which each of the Purchasing Entities isa party, when executed and delivered by the applicable Purchasing Entity, willconstitute valid and binding obligations of the respective Purchasing Entity,enforceable against each of them in accordance with their respective terms,except to the extent the same may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ rightsgenerally 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) which isrequired 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. There are no broker’s or finder’s fees to bepaid by the Purchasing Entities or their Affiliates in connection with thetransactions provided for in this Agreement. Neither of the Purchasing Entitiesnor any of their Affiliates has any knowledge of, and has taken no action whichwould give rise to, any claim for a broker’s or finder’s fee to be paid by anyof the Selling Entities in connection with the consummation of the transactionsprovided 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 isnot insolvent, and Buyer US will not be rendered insolvent by thetransactions contemplated by this Agreement. Without prejudice to the fact thatthis Agreement does not provide for any financing condition, a true, correctand 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 DecemberFinancials and the June Financials and (b) the customers of and suppliersto the Business; *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. Subject to the foregoing limitations and therequirements of this Agreement, including but not limited to Section 5.7,UNOVA shall furnish or cause to be furnished to the Purchasing Entities andtheir authorized representatives all information with respect to the Businessas the Purchasing Entities may reasonably request. No investigation by thePurchasing 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 to preserveintact the business organization and relationships with third parties and tokeep 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. Withoutlimiting the generality of the foregoing, from the date hereof until theTransfer Date, the Selling Entities shall 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 such capitalexpenditures 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)**           TheParties, in cooperation and after consultation and mutual agreement, shall takeall reasonable action (without payment of any penalty or fee) required toobtain all consents, approvals and agreements of, and to give all notices andmake all filings with, any third parties, including Governmental Bodies,necessary to authorize, approve or permit the transfer to the PurchasingEntities of the Purchased Assets, the Shares and the Assumed Liabilities asprovided for in this Agreement.

 

**(b)**           Withoutlimiting the foregoing, the Parties shall promptly respond to any requests forinformation in connection with the Pre-merger Notification and Report Form (“***HSR Filing***”) required by the Hart-Scott-RodinoAntitrust Improvements Act of 1976, as amended (the “***HSRAct***”) in connection with the transactions contemplated hereby. Inconnection with the efforts referenced herein, each of the Purchasing Entitieson the one hand, and each of the Selling Entities on the other hand, shall(i) use its reasonable best efforts to cooperate in all respects with theother Parties hereto in connection with any filing or submission and inconnection with any investigation or other inquiry, including any proceedinginitiated by a private party, regarding the transactions contemplated hereby,(ii) keep the other Parties, including their counsel, as the case may be,informed of any material communication by or to such party or its counsel fromor to the Federal Trade Commission (the “***FTC***”), theAntitrust Division of the Department of Justice (the “***DOJ***”)or any other Governmental Body and of any material communication received orgiven in connection with any proceeding by a private party, in each caseregarding any of the transactions contemplated hereby, (iii) permit theother Parties and their legal counsel to review, consult with each other inadvance of and consider in good faith the views of the other in connection withany correspondence, filings or communications given by it to, or between itand, 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 such otherGovernmental Body or, in

 

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connection with any proceedingby a private party, with any other Person, regarding the transactionscontemplated hereby.

 

**(c)**           Withoutlimiting the provisions of paragraph (a) above, the Parties agree (i) topromptly carry out all required filings under any applicable anti-trust Lawother than the HSR Act, and (ii) that all requests and enquiries from anyGovernmental Body in relation to any anti-trust filing required by a European,governmental, supranational or trade agency, court or other regulatory body(other than under the HSR Act) shall be dealt with by the Purchasing Entitiesin consultation with the Selling Entities and each of the Parties shallpromptly co-operate with each other and provide all necessary information andassistance reasonably required by such government, agency, court or body uponbeing requested to do so by the other.

 

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

##  

**(a)**           Tothe extent permitted by applicable Laws, UNOVA shall promptly notify Buyer USand Buyer UK of the receipt between the 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)**           Untilthe Transfer Date, the Selling Entities shall have the continuing obligationpromptly to advise Buyer US and Buyer UK with respect to any matter hereafterarising or discovered that constitutes a breach or prospective breach of thisAgreement by the Selling Entities.

 

**(c)**           Nonotice pursuant to this Section shall effect any representation or warrantygiven by the Selling Entities hereunder or any of the Purchasing Entities’rights under this Agreement, including, without limitation, underArticles 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 is necessaryto complete or correct any information in any representation or warrantycontained in Article 3. No such supplement or amendment to any Schedulepursuant to this Section 5.5 shall have any effect for the purpose ofdetermining satisfaction of any of the conditions set forth in Article 6or the Purchasing Entities’ rights under this Agreement, including, withoutlimitation, 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)**           Eachof the Purchasing Entities shall hold in confidence, and shall use allreasonable efforts to cause its representatives and its Affiliates to hold inconfidence, between the Agreement Date and the Transfer Date, any and allconfidential or secret information in respect of the Business furnished to it,its representatives or its Affiliates by any of the Selling Entities or UNOVAUK in connection with this Agreement and not to disclose or publish suchinformation without the prior written consent of UNOVA, provided that thePurchasing Entities may disclose such information to its officers, directors,employees, accountants, counsel, consultants, advisors, agents and lenders inconnection with the transactions contemplated by this Agreement so long as suchpersons are informed by the Purchasing Entities of the confidential nature ofsuch information and are directed by the Purchasing Entities to treat suchinformation confidentially in accordance with this Agreement.

 

**(b)**           Inthe event that this Agreement is terminated and the transactions provided forin this Agreement are abandoned as contemplated by Section 10.1, the termsof that certain Confidentiality Agreement, dated July 8, 2005, between CFLand UNOVA (the “***Confidentiality Agreement***”),shall remain in full force and effect, and each of the Purchasing Entitiesconfirms that it will comply with the obligations thereunder as if it were aparty thereto.

 

## **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 beeffective simultaneously 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 using themethod and assumptions set forth in **Exhibit 5.8(c)**(the “***Transferred Asset Value***”)shall be no more than £4 million less than the value of the liabilitiestransferred from the UNOVA Pension Fund to the Landis Pension Plan inconnection with the transfer referred to in Section 5.8(b) calculated asat 1 July 2005 using the method and assumptions set forth in **Exhibit 5.8(c)** (the “***TransferredLiability 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 retirementsbefore normal retirement date in **Exhibit 5.8(c)**.**Exhibit 5.8(c)** reflects theassumptions adopted in an interim valuation report as at 5 April 2005 inrelation to the UNOVA Pension Fund, a copy of which has been made available toBuyer UK. Upon request UNOVA UK will provide Buyer UK with all informationreasonably necessary to enable Buyer UK to verify the calculations referred toin this Section 5.8(c).

 

(d)           [Reserved]

 

(e)**          **BuyerUK shall further procure that neither it nor any of its Affiliates(i) takes any action or assists any Person in any manner which wouldresult in the UNOVA Pension Fund having to pay a larger amount to the LandisPension Plan than any amount actually paid before such action or assistance, or(ii) encourages or assists any Person in making a claim against thetrustees of the UNOVA Pension Fund or UNOVA UK or any Affiliate; provided,however, that the foregoing shall not limit the ability of the Purchasing Entitiesto make a claim for indemnification under Article 11 of 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

 

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Selling Entities) with respectto, the retiree medical benefit programs made available to employees of theLandis Grinding Systems, Gardner Abrasives, and CITCO divisions of UIASI as ineffect immediately prior to the Transfer Date (the “***RetireeMedical Plan***”), and the Selling Entities shall have noobligation or liability with respect thereto on 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 in connectionwith the Retiree Medical Plan immediately prior to the Transfer Date. TheSelling Entities shall take all other actions as may be reasonably necessaryor, in the reasonable opinion of Buyer US, desirable to effect the assumptionby Buyer US of the Retiree Medical 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 and deliveryand in any certificate or other writing delivered by the Selling Entitiespursuant hereto, disregarding all qualifications and exceptions containedtherein relating to materiality or material adverse effect, shall be true andcorrect in all respects on the Transfer Date as if made again and reaffirmed onsuch date, except where the failure of such representations and warranties tobe so true and correct would not reasonably be expected to have or result in,individually or in the aggregate, a material adverse effect on the Business. ThePurchasing Entities shall have received a certificate signed by a dulyauthorized officer of UNOVA to 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 Entities shall have received a certificate signedby a duly authorized officer of UNOVA to the foregoing effect.

 

## **6.3**                               No MaterialAdverse Change

##  

Since the June Balance Sheet Date there shallhave been no material adverse change in the operations of the Business, takenas a whole.

 

## **6.4**                               NoLitigation

##  

No investigation, suit, action or other judicialor governmental proceeding shall be pending or threatened before any court orGovernmental Body, which is reasonably likely to result in the restraint orprohibition or the obtaining of substantial damages in connection with thisAgreement or the consummation of the transactions provided for in thisAgreement, 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 of thePensions 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 thisSection 6.6, and each of such authorizations, consents and approvals shallbe in full force and effect. Without limiting the generality of the foregoing,if applicable, (i) the time period under the HSR Act shall have expired orearly termination shall have been granted, and no adverse action shall havebeen threatened or instituted in connection therewith, and (ii) theEuropean Commission, or any national relevant anti-trust authority, shall havemade an express or implied decision which, in accordance with the relevantapplicable anti-trust laws, unconditionally authorizes (without any request forthe Purchasing Entities to comply with certain undertakings) or does not preventthe Transactions from being implemented under the terms and conditionscontemplated 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 deliverthe 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 berelied upon by the Purchasing Entities’ bank lenders as if itwere 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 form reasonably satisfactory to the Purchasing Entitiespursuant to which MAG shall have agreed to provide IT Services to the LandisGroup 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) the Purchasing Entities in respect of the Landis Group shall providecertain services 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 shall notify the Selling Entities of anyobjections or exceptions to, or defects in, the title to any Owned RealProperty (excluding the South Beloit Facility and the Waynesboro Facility) thatappears in the commitments obtained by them for such title insurance at least30 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 ofthis Section 6.12, Owned Real Property shall not include the South BeloitFacility and the Waynesboro Facility and the UK Freehold Property at Keighly,England.

 

## **6.13**                        Leases

##  

**(a)**           UIASIshall have executed and delivered to Buyer US an agreement in the form of **Exhibit D-1** pursuant to which UIASI will lease the SouthBeloit Facility to Buyer US.

 

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

 

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

##  

**(a)**           ThePurchasing Entities shall have received evidence reasonably satisfactory to thePurchasing Entities of the discharge of:

 

(i)            allLiens (other than Permitted Liens excluding, for the avoidance of doubt, theLiens listed in **Schedule 3.5**) on thePurchased Assets; and

 

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

 

**(b)**           ThePurchasing Entities shall have received a letter from UNOVA UK’s bankers andcharges dated the date of Closing confirming that none of the floating charginggranted by UNOVA UK over any of the 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 July2005 shall have been signed by the actuary to the Landis Pension Plan, therelated schedule of contributions (“***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 theSchedule of Contributions shall state a rate of employer contributions notexceeding 16.2% of the pensionable salary of employees in Scheme A and 18.9% ofthe pensionable salary 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 or beforeClosing 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; providedthat no such waiver shall be effective unless it is set forth in a writingexecuted by the Purchasing Entities or unless the Purchasing Entities agree inwriting to consummate the transactions contemplated by this Agreement withoutfulfillment of such condition. No waiver of a closing condition by thePurchasing Entities shall limit their rights under Article 11.

 

## **6.19**                        ClosingConditions for UNOVA UK

##  

**(a)**           Aresolution in the agreed form shall have been passed at a duly convened andconstituted annual meeting or extraordinary general meeting of UNOVA UKapproving the transaction contemplated by this Agreement and any agreementsreferred to herein.

 

**(b)**           Thebusiness consisting of the UK Purchased Assets shall have been continued as agoing concern by UNOVA UK.

 

**(c)**           UNOVAUK shall deliver or consent to be delivered or make fully available to Buyer UKall of the UK Purchased Assets capable of being transferred by delivery or byphysical 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 Selling Entities shall have received a certificatesigned by a duly authorized officer of 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 Selling Entities shall have received acertificate signed by a duly authorized officer of Buyer US to the foregoingeffect.

 

## **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 or affectingthe 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 inSchedule 6.6 in connection with Closing, and (ii) waive any claim forindemnification under 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 theforegoing, if applicable, the time period under the HSR Act shall have expiredor early termination shall have been granted, and no adverse action shall havebeen threatened or instituted 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 a certificate of the Secretary or anAssistant Secretary (or local equivalent) of each of such Persons setting fortha copy of the resolutions duly adopted by its Board of Directors authorizingand approving the execution and delivery of this Agreement and the consummationof 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 USshall have executed and delivered to UIASI an agreement in the form of **Exhibit D-1** pursuant to which UIASI will lease theSouth Beloit Facility to Buyer US.

 

**(b)**           Buyer USshall have executed and delivered to UIASI an agreement in the form of **Exhibit D-2** pursuant to which UIASI will lease theWaynesboro 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 theSelling Entities shall limit their 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) the Selling Entities and their authorized representatives shall havereasonable access, during normal business hours and upon reasonable notice, toinspect and examine and the right to photocopy all books of account and recordstransferred to the Purchasing Entities pursuant to this Agreement that relateto the affairs and business of the Landis Group conducted on or prior to theTransfer Date, and (b) the Purchasing Entities will cooperate with theSelling Entities as may be reasonably necessary to permit the Selling Entitiesto close their books with respect to the Business as of the Transfer Date andto prepare their customary financial reports, including but not limited tofurnishing to the Selling Entities and their authorized representatives withexisting financial and operating data and other information with respect to theaffairs and business of the Landis Group necessary to prepare such financialreports; provided that such inspection, examination, photocopying and requestsfor cooperation shall be conducted so as not to unreasonably interfere with theBusiness. To the extent that any books and records that constitute ExcludedAssets pursuant to Section 1.2(h) are commingled with the books andrecords transferred to the Purchasing Entities hereunder, the PurchasingEntities shall notify the applicable Selling Entities before destroying any ofsuch books and records and shall afford the Selling Entities a reasonableopportunity 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 andexcept as is required to discharge the Assumed Liabilities underSections 1.6(j) and 1.6(n), Buyer US will not be required to provide anydefined pension plan or retiree medical benefits to Continuing Employees. ThoseEmployees who accept such offer are referred to collectively as the “***Continuing Employees***” (which, forthe avoidance of doubt, includes all those Employees of UNOVA UK who becomeemployees of Buyer UK on Closing pursuant to the Transfer Regulations). Nothingin this Agreement creates any third-party beneficiary rights with respect toemployment 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. Eligibility for, the benefits of (including thereservation by Buyer US of the right to terminate or amend such program inwhole or in part at any time), and the amount, if any, of employeecontributions toward, such group insurance program will be determined by BuyerUS except that Buyer US’s group insurance with respect to US Employeeswill:

 

(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 maximumcoverage provisions of Buyer US group insurance program, but only to the extentBuyer US program plan year overlaps with the applicable Selling Entity’scurrent program plan year.

 

(C)           UNOVAwill provide the benefits transition services, participation in health plans andCOBRA continuation coverage as set forth in the Transition Services Agreement.

 

#### **(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. Exceptas otherwise provided below with respect to the “***FSSP/UPPTransition Period***” (as defined below), as soon as Buyer US shallhave reasonably concluded that UNOVA’s 401(k) plan (the “***FSSP***”) is tax-qualified, it shallcause Buyer US’s 401(k) Plan to accept the direct rollover of the pre-taxaccount balance under the FSSP of any Continuing Employee who elects to enrollas an active participant in Buyer US’s 401(k) Plan and to have suchaccount balance transferred to Buyer US’s 401(k) Plan. UNOVA shallcause the Plan Administrator designated under the FSSP to extend the repaymentperiod of a loan of any Continuing Employee from 30 days to 90 daysfollowing the Transfer Date, it being understood that any such loan that is notrepaid by the end of the calendar quarter after the calendar quarter when themost recent installment was due will be deemed to be in default. If mutuallyacceptable to Buyer US and UNOVA and if legally permissible, UNOVA shall permitthe employees of the Landis US division who become Continuing Employees tocontinue to participate in the FSSP and the UNOVA Pension Plan (the “***UPP***”) for a period of up to sixmonths 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 of contributions, costs and administrativecharges described in the preceding sentence shall be made promptly after eachpayroll period. In the case of contributions relative to benefits earned byContinuing Employees under the FSSP, payments for each payroll period shallinclude all employee contributions and related employer matching contributionsfor such payroll period. In the case of contributions relative to benefitsearned by Continuing Employees under the UPP, payments for each payroll periodshall include a pro-rata portion of the required annual employer contributionto the UPP, determined by dividing the projected annual employer contributionto the UPP for Continuing Employees (as determined by the actuary for the UPP)by the number of payroll periods over which Continuing Employees accruebenefits in the UPP during the year. In the event that Buyer US fails to makesuch payments as required, UNOVA shall be entitled to immediately terminate theparticipation of such employees in the FSSP and UPP. Buyer US shall takeall steps required to maintain the tax-qualified status of the FSSP and the UPP(as determined by UNOVA 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. The Selling Entities shall comply with theapplicable provisions of the WARN Act and any similar federal, state or locallaw regarding the Employees and their employment with the Selling Entitiesprior to or as of the Transfer Date, and shall, subject to satisfaction of thecovenants of the Purchasing Entities in Section 8.4(a), indemnify thePurchasing Entities for their Losses in respect thereof.

 

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

##  

**(a)**           Notwithstandingthe provisions of Section 1.2(i), from and after the Transfer Date, thePurchasing Entities shall be permitted to use, in the operation of theBusiness, (i) the existing inventories of raw materials, work-in-processand finished goods that bear the names “UNOVA” or “UNOVA Industrial AutomationSystems, Inc.” or any variation thereof or any trademark relating thereto, orany acronym or abbreviation thereof (collectively, the “***SellerNames***”) for a reasonable period to exhaust such inventories, butin no event longer than one year following the Transfer Date, and(ii) existing stationery, packaging, shipping, invoices, purchase ordersand similar supplies which bear any of the Seller Names for the periodnecessary to exhaust such supplies, but in no event longer than one yearfollowing the Transfer Date; *provided*, *however*, that in each case, the Purchasing Entities shalluse reasonable efforts (to the extent commercially feasible) to overprint,overstamp, apply an appropriate label or otherwise obliterate the Seller Nameson such items or shall otherwise indicate that the Business has been sold tothe Purchasing Entities and is independent of any of the Selling Entities. Exceptas provided in this Section 8.5, the Purchasing Entities shall not use orpermit any of the Landis Group to use the name “UNOVA”, or any confusinglysimilar name or mark, or any trademarks (including applications andregistrations therefor) relating thereto, or any acronym or abbreviationthereof.

 

**(b)**           ThePurchasing Entities shall not be obligated to change Seller Names on goods inthe hands of dealers, distributors and customers.

 

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**(c)**           Fromand after the Transfer Date, the Selling Entities shall not use the names or brandsheld for use primarily or exclusively in the Business, including, withoutlimitation, the names or brands of “Landis”, “Landis Cincinnati,” “LandisGardner”, “Landis Lund”, “Gardner Abrasives”, “CITCO”, “Cranfield Precision”and “Goldcrown” or any variation thereof or any trademark relating thereto, orany 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. Until the earlier of the Closing ortermination of this Agreement, UNOVA shall promptly notify Buyer US inwriting of any such Acquisition Proposal or any communication or indicationfrom any person that it or any other person is considering making such anAcquisition 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 ofSection 8.7(d), the Selling Entities shall pay all Taxes with respect tothe ownership, use or operation of the Purchased Assets on or prior to theTransfer Date and Buyer US, Buyer UK or their Affiliates shall pay all suchTaxes with respect to the Business and the ownership, use or operation of thePurchased Assets after the Transfer Date. Any and all real property Taxes,personal property Taxes, assessments, utilities, lease rentals, fuel and othercharges applicable to the Purchased Assets that are payable in the year thatincludes the Transfer Date shall be pro-rated to the Transfer Date based on thepercentage of the year prior to the Transfer Date, and such Taxes and other pro-rated amounts shallbe allocated between the Parties by adjustment to the Purchase Price at theClosing.

 

### **(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 Partiesshall cooperate with each other to 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 aForm W-2that shall reflect all wages and compensation paid to such employee for theperiod after the Transfer Date in the calendar year in which the Transfer Dateoccurs, and shall file with the Social Security Administration Forms W-2 (Copy A) withrespect to such employees and such period. The Selling Entities shall prepareand furnish such Forms W-2for the period prior to and including the Transfer Date. The Selling Entitiesshall furnish to Buyer US the Forms W-4 and W-5,as applicable, of each such employee. It is the intent of the Parties hereunderthat the obligations of Buyer US and the Selling Entities under thisSection 8.7(c) shall be carried out in accordance with Section 5 ofRevenue 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 shallbe responsible for the proper payroll Tax treatment and the proper Taxreporting of compensation relating to such option exercises. Notwithstandingthe preceding words of this Section 8.7(c), the Selling Entities shallfully indemnify the relevant Purchasing Entities in respect of all Taxes(including for the avoidance of doubt all national insurance contributionliabilities and payments) arising in relation to the exercise of any option topurchase shares or other securities in any of the Selling Entities oraffiliates 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 trade payablesor receivables) to be settled.

 

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## **8.9**          Intellectual Property Registrations

##  

On or prior tothe Transfer Date, the Selling Entities shall execute the assignment documentsprepared by the Purchasing Entities 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 Parties hereto agree to cooperate fully foran orderly transfer of such applications and registrations.

 

## **8.10**        Authorization; Mail

##  

The SellingEntities agree that they will promptly transfer and deliver to Buyer UKany cash or other property that the Selling Entities may receive in respect ofany receivables or other items which shall be transferred to Buyer US or BuyerUK as provided herein. The Selling Entities authorize and empower Buyer US andBuyer UK from and after the Transfer Date (a) to receive and open mailaddressed to them and (b) to deal with the contents thereof in any mannerBuyer US or Buyer UK sees fit, provided such mail and the contents thereofrelate to the Purchased Assets or otherwise to their Business or to any of theAssumed Liabilities. The Selling Entities agree to deliver to Buyer US or BuyerUK (as appropriate) promptly upon receipt and identification any mail, checksor other documents received by them pertaining to the Purchased Assets orotherwise to the Landis Group or any of the Assumed Liabilities.

 

## **8.11**        Post-Closing Cooperation

##  

To the extentnot already provided for under this Agreement, each of the Parties shallcooperate fully, as and to the extent reasonably requested by the otherParties, in providing information that may be required by such Parties in connectionwith their respective audit, securities compliance and reporting and similarpost-Closing activities related to the transactions contemplated by thisAgreement.

 

## **8.12**        Purchased Assets Not Transferred

##  

Without prejudice to any other rights or remedies of the PurchasingEntities under this Agreement, if any of the Purchased Assets has not beentransferred to or is not vested in one of the Purchasing Entities by virtue ofthe transactions carried out pursuant to this Agreement, the relevant PurchasingEntity may give written notice to the relevant Selling Entity at any time inthe 18 months following the Closing. If such notice is given:

 

**(a)****          **the relevant Selling Entity shall, as soonas practicable and so far as it is able, transfer at their cost (or procure thetransfer by the relevant Selling Entity) such asset (together with any benefitor sum, net of tax and other out of pocket expenses, accruing to any SellingEntity as a result of holding such asset since Closing) to such person as thatPurchasing Entity shall direct (provided that it is one of the PurchasingEntities) on terms that no consideration is payable by any Purchasing Entityfor such transfer; and

 

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**(b)****          **that Purchasing Entity shall provide suchassistance to the Selling Entity as the Selling Entity reasonably requires forthe purposes of paragraph (a) of this Section 8.12.

 

## **8.13**        Confidentiality

##  

The SellingEntities and their Affiliates will hold, and will use their best efforts to causetheir respective officers, directors, employees, accountants, counsel,consultants, advisors and agents to hold, in confidence, unless compelled todisclose by judicial or administrative process or by other requirements of law,all confidential documents and information concerning the Purchasing Entitiesthat have been furnished to the Selling Entities or their Affiliates inconnection with the transactions contemplated by this Agreement, and, after theTransfer Date, all confidential documents and information concerning theBusiness, except to the extent that such information can be shown to have been(i) previously known on a nonconfidential basis by the Selling Entities,(ii) in the public domain through no fault of the Selling Entities or(iii) later lawfully acquired by the Selling Entities from sources otherthan the Purchasing Entities; provided that the Selling Entities may disclosesuch information to its officers, directors, employees, accountants, counsel,consultants, advisors and agents in connection with the transactionscontemplated by this Agreement so long as such persons are informed by theSelling Entities of the confidential nature of such information and aredirected by the Selling Entities to treat such information confidentially in accordancewith this Agreement. The obligation of the Selling Entities and theirAffiliates to hold any such information in confidence shall be satisfied ifthey exercise the same care with respect to such information as they would taketo preserve the confidentiality of their own similar information. If thisAgreement is terminated, to the extent permitted by applicable Law, the SellingEntities and their Affiliates will, and will use their best efforts to causetheir respective officers, directors, employees, accountants, counsel,consultants, advisors and agents to, destroy or deliver to the PurchasingEntities, upon request, all documents and other materials, and all copiesthereof, obtained by the Selling Entities or their Affiliates or on their behalfconcerning the Purchasing Entities in connection with this Agreement that aresubject to such confidence.

 

## **8.14**        Performance Bonds

##  

The PurchasingEntities shall effect the substitution of their credit and/or the credit of theLandis Group under the Performance Bonds within nine months following theTransfer Date. Pending such substitution, the Purchasing Entities shallreimburse the Selling Entities for all costs incurred by Selling Entities inmaintaining the Performance Bonds and shall pay such amounts promptly uponreceipt of an invoice therefor. In the event that the beneficiary of any of thePerformance Bonds shall draw on the Performance Bonds for any reason, theapplicable Selling Entities shall be entitled to prompt reimbursement from thePurchasing Entities for the amount so drawn plus all associated costs incurredby the Selling Entities.

 

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## **8.15**        Claim Cooperation

##  

If therepresentations and warranties made by Enviros Consulting Limited to UNOVA in thereport entitled “Phase 1 Environment Review: Landis Lund Skpton Road, Cross Hills” dated June 2005 (ref: CANUN0370007A) (the “***Phase 1 Report***”) havebeen breached and result in a Loss to the Purchasing Entities, to the extentthat UNOVA has a claim for breach under the Phase 1 Report, UNOVA shallcooperate with the Purchasing Entities as may be reasonably requested by thePurchasing Entities to pursue such claim at the sole expense of the PurchasingEntities, including but not limited to assigning UNOVA’s claim for such breachto the Purchasing Entities and paying over any damages received by UNOVA as aresult of such claim.

 

(Article 9follows)

 

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# **  ARTICLE 9.  Noncompetition Agreement**

#  

## **9.1**          Noncompetition Agreement

##  

For and inconsideration of the benefits to be derived, directly and indirectly, from thisAgreement, each of the Selling Entities covenants and agrees that for a periodof five years (three years in Europe) (the “***Non-CompeteTerm”***) following the Transfer Date, it shall not (and none ofits Affiliates shall), own, manage, operate, join, control or participate inthe ownership, management, operation or control of, or be connected (asdirector, officer, employee, consultant, agent, independent contractor, orotherwise) in any other manner with any business activity constituting “***Competitive Business”*** (as defined inSection 9.3) or any business substantially similar thereto in any countryor territory in the world.

 

## **9.2**          Limitations on Noncompetition Agreement

##  

**(a)**           Notwithstandinganything in Section 9.1 to the contrary, the Selling Entities and theirAffiliates shall not be prohibited from (i)  the acquisition or investmentin any corporation, company, partnership or other business entity (a “***Company***”) partially engaged in theCompetitive Business provided that such activity does not exceed five percent(5%) of the net revenues or net assets of such Company, (ii) the ownershipof not more than one percent (1%), in the aggregate, of any class of debt orequity security of any Company principally engaged in the Competitive Businessprovided that such security is traded on a national securities exchange or aninter-dealer quotation system, or (iii) any investments made by theinvestment managers of UNOVA’s pension plans or the managers of UNOVA’s401(k) plans or similar non-qualified retirement plans.

 

**(b)**           In the event that anyprovision of this Article 9 shall be held invalid, illegal, void,inoperative or unenforceable in an arbitration pursuant to Section 12.11by reason of the geographic or business scope or the duration of suchprovision, such invalidity, illegality or unenforceability shall attach only tothe scope or duration of such provision and shall not affect or render invalid,illegal, void, inoperative or unenforceable any other provision of thisAgreement, and, to the fullest extent permitted by Law, this Agreement shall beconstrued as if the geographic or business scope or the duration of suchprovision had been more narrowly drafted so as not to be invalid, illegal,void, inoperative or unenforceable.

 

## **9.3**          Definition of Competitive Business

##  

As used inthis Agreement, the term the “***Competitive Business”***means the design, manufacture, sale and service of grinding and abrasivessystems for camshaft, crankshaft, centerless and disc grinder machines andother special high precision machine tools, including high speed grindingspindles, highly engineered diamond and cBN® cutting tools, superabrasivewheels and dressing products.

 

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## **9.4**          Nonsolicitation

##  

For a periodof two years following the Transfer Date, the Selling Entities shall not (andnone of their Affiliates shall), directly or indirectly, without the priorwritten consent of Buyer US, (a) solicit, offer to hire, entice away orhire any Continuing Employee as an employee, consultant, independent contractoror otherwise, or (b) divert or attempt to divert from the PurchasingEntities any business whatsoever included in the Business as conducted by theLandis Group as of the Transfer Date by influencing or attempting to influenceany current or former customer or supplier of the Business as of the TransferDate. The foregoing restrictions shall not prohibit general employmentsolicitations to the public or hiring of any Continuing Employee who contactsany of the Selling Entities in response to such general solicitation.

 

## **9.5**          Injunctive and Equitable Relief

##  

The SellingEntities agree that the remedy of damages for any breach of Article 9would be inadequate and that, in the event of any such breach or threatenedbreach by UNOVA or its Affiliates, the applicable Purchasing Entity shall beentitled to injunctive relief in addition to any other remedy at Law, in equityor under this Agreement to which it may be entitled.

 

(Article 10follows)

 

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# ** ARTICLE 10. Termination**

#  

## **10.1**        Termination

##  

This Agreementmay be terminated immediately upon the receipt of notice of termination asprovided for in Section 10.2, and the transactions provided for in thisAgreement may be abandoned, without liability on the part of the Partyeffecting such termination except as otherwise 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)if such 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 of Termination

##  

Any Partyterminating this Agreement in accordance with Section 10.1 shall give theother Parties prompt written notice of termination, setting forth in reasonabledetail the cause of termination.

 

## **10.3**        Effect of Termination

##  

In the eventof termination of this Agreement as provided in Section 10.1 andSection 10.2, this Agreement will forthwith become void and have noeffect, without any liability on the part of any Party other than theprovisions of this Section 10.3 and Article 12, which provisionssurvive such termination; provided that nothing herein will relieve any Partyfrom any liability for any material breach by such party of any of itsrepresentations, warranties, covenants or agreements set forth in thisAgreement.

 

(Article 11follows)

 

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# ** ARTICLE 11. Indemnification**

#  

## **11.1**        Indemnification by the Selling Entities

##  

In order toinduce the Purchasing Entities to enter into this Agreement and to consummatethe transactions contemplated hereby, each of the Selling Entities(collectively, the “***Indemnifying Selling Entities***”)jointly and severally covenants and agrees to and shall indemnify each of thePurchasing Entities and their respective officers, directors and affiliates(collectively, the “***Buying Indemnified Parties***”)and shall hold the Buying Indemnified Parties harmless against and with respectto any and all losses, damages, costs or expenses (including reasonableexpenses 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’ rightto indemnification, payment of damages or other remedies based on the SellingEntities’ covenants and representations or warranties will not be affected byany investigation conducted with respect to, or any knowledge acquired (orcapable of being acquired) at any time by the Purchasing Entities, whetherprior to or after the execution and delivery of this Agreement or the TransferDate.

 

### **(a)**           Misrepresentation or Breach of Warranty

###  

Any misrepresentation or breach of any of the representations andwarranties of the Selling Entities set forth in this Agreement (determinedwithout regard to any materiality qualification contained in any representationor warranty giving rise to any claim for indemnity hereunder) or in anycertificate delivered pursuant to hereto;

 

### **(b)**           Breach of Covenant or Agreement

###  

Any breach or nonfulfillment any of the covenants, agreements or otherobligations of any of the Selling Entities set forth in this Agreement;

 

### **(c)**           Excluded Liabilities

###  

Any failure of the Selling Entities to discharge the ExcludedLiabilities when due;

 

### **(d)**           Pension Liabilities

###  

(i)            Anyclaim that benefits under the UNOVA Pension Fund have not been calculated in away which complies with the requirements of Article 141 (formerlyArticle 119) of the Treaty of Rome or Section 62 of the Pensions Act1995 made by or in respect of the membership of any UK Employee other thana claim made by or in respect of the membership of any such UK Employeewho agreed to the transfer of his or her accrued benefits from the UNOVAPension Fund to the Landis 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 and CorporationTaxes Act 1988 are payable to or in respect of him in addition to the benefitsdescribed in the documents and data referred to in Section 3.13(m)(D) byvirtue of the operation of the Transfer of Undertakings (Protection of Employment)Regulations 1981 (as amended), but only in so far as such claim is in respectof such benefits which relate to pensionable service before the Transfer Datecalculated by reference to pensionable salary as at the Transfer Date.

 

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

###  

Any liabilityor obligation relating to noncompliance with any applicable bulk sales ortransfer Law; and

 

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

###  

(i)            Any claims,proceedings, demands, awards, losses, damages, costs, liabilities, interest orexpenses (“***Employment Liabilities***”) thatmay be suffered or incurred by Buyer UK in connection with the employmentor dismissal of any person who is not a UK Employee but who transfers orclaims to transfer to the Buyer UK pursuant to the Transfer Regulations (asdefined in Section 1.13) or otherwise as a result of the Buyer UKentering into this Agreement or Closing provided Buyer UK takes all reasonablesteps to minimize those Employment Liabilities and save for any EmploymentLiabilities which arise in respect of a finding or allegation that the Buyer UKunlawfully discriminated against such person.

 

(ii)           Savein relation to “relevant benefits” as defined in Section 612 of the Income andCorporation Taxes Act 1988, UNOVA UK shall procure the performance anddischarge of all contractual, statutory and other obligations in respect of allof the UK Employees up to and including the Transfer Date and, save asaforesaid, the Selling Entities shall indemnify the Purchasing Entities againstany Employment 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**        Indemnification by Purchasing Entities

##  

In order toinduce the Selling Entities to enter into this Agreement and to consummate thetransactions contemplated hereby, the Purchasing Entities (the “***Indemnifying Purchasing Entities***”)covenant and agree to and shall jointly and severally indemnify the 

 

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Selling Entities and theirrespective officers, directors and affiliates and additionally, in respect ofSection 11.2(g), the current and former trustees of the UNOVA Pension Fundand of the Landis Pension Plan (collectively, the “***SellingIndemnified Parties***”) and shall jointly and severally hold theSelling Indemnified Parties harmless against and with respect to any and allLosses suffered or incurred by the Selling Indemnified Parties and resultingfrom or arising out of:

 

### **(a)**           Misrepresentation or Breach of Warranty

###  

Anymisrepresentation or breach of any of the representations and warranties of thePurchasing Entities set forth in this Agreement (determined without regard toany materiality qualification contained in any representation or warrantygiving rise to any claim for indemnity hereunder) or in any certificatedelivered pursuant hereto;

 

### **(b)**           Breach of Covenant or Agreement

###  

Any breach ornonfulfillment by a Purchasing Entity of any of its respective covenants,agreements or other obligations set forth in this Agreement;

 

### **(c)**           Assumed Liabilities

###  

Any failure ofthe Purchasing Entities to discharge the Assumed Liabilities when due;

 

### **(d)**           Operations of the Business

###  

The operationof the Business by Buyer UK and the other Purchasing Entities after theTransfer Date, except to the extent that a Purchasing Entity is entitled toindemnification from the Indemnifying Selling Entities pursuant toSection 11.1;

 

### **(e)**           Performance Bonds; Letters of Credit

###  

Any claimsagainst any of the Selling Entities (i) under the Performance Bonds, or(ii) in respect of any letters of credit in favor of the Selling Entitiesrelating to the Business that are maintained by any of the Selling Entities forthe benefit of the Purchasing 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 obligation is an Excluded Liability);and (ii) any anticipatory breach of the contract of employment of an Employeeof 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) of theTransfer 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)**           Pension Liabilities

###  

(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 Article141 (formerly Article 119) of the Treaty of Rome or Section 62 of the PensionsAct 1995 made by or in respect of the membership of any UK Employee who agreedto the transfer of his or her accrued benefits from the UNOVA Pension Fund tothe Landis Pension Plan.

 

## **11.3**        Claims for Reimbursement

##  

In the eventthat any of the Buying Indemnified Parties or the Selling Indemnified Partiesshall have (i) suffered any Loss, or (ii) received any notice of thecommencement of any action, proceeding or investigation or the making of anyclaim or demand by a third party (a “***Third Party Claim***”),in each case, in respect of which indemnification may be sought by such partypursuant to this Article 11, the party who shall have suffered such Lossor received such notice of such Third Party Claim and who shall seek indemnificationin 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 ofThird Party Claims, written notice thereof shall be given to the IndemnifyingParty as promptly as practicable; *provided*, *however*, that the failure of any Indemnified Party to givetimely notice shall not affect rights to indemnification hereunder if(i) such failure to give timely notice does not materially affect theability or right of the Indemnifying Party to participate in the defense ofsuch Third Party Claim and the Indemnifying Party is not otherwise materiallyprejudiced thereby, and (ii) actual notice is given to the IndemnifyingParty within a reasonable time.

 

TheIndemnifying Party shall have 30 days from the date of receipt of suchnotice (the “***Investigation Period***”) toinvestigate and dispute the nature, validity or amount of any such claim ofLoss or Third Party Claim. During the Investigation Period, the IndemnifiedParty shall cooperate with the Indemnifying Party for the purpose of suchinvestigation and, without limitation, the Indemnified Party shall make availableto the Indemnifying Party the information relied upon by the Indemnified Partyto substantiate the Indemnified Party’s claim and the Indemnifying Party shallhave reasonable access, during normal business hours, to the books, records andother documents of the Indemnified Party relating to such claim and shall havethe right to take copies at its expense of such relevant books, records anddocuments for the purpose of such investigation. In the event that theIndemnifying Party shall dispute the nature, validity or amount of a claimhereunder, the Indemnifying Party shall give the Indemnified Party writtennotice of such dispute within the Investigation Period, and the relevantParties shall meet promptly thereafter and in good faith attempt to resolvesuch dispute. To the extent that such Parties cannot resolve any dispute byagreement within 21 days following such notice of dispute, such disputeshall be resolved pursuant to Section 12.11.

 

In the absenceof a dispute, the Indemnifying Party shall promptly, and in any event not laterthan the expiration of the Investigation Period, reimburse the IndemnifiedParty in full (subject to the limitations of Section 11.6) for such Loss,as set forth in the notice. In the event that the Indemnifying Party shalldispute only the amount (and not the validity) of the claim, the IndemnifyingParty shall, concurrently with the delivery of its notice of dispute, pay tothe Indemnified Party any undisputed portion of the claim.

 

## **11.4**        Defense and Settlement of Third PartyClaims

##  

**(a)**           In the event of a ThirdParty claim, except for a claim involving a Governmental Body or a claim forinjunctive relief or non-monetary relief or a claim which may, in thereasonable opinion of the Purchasing Entities, prejudice the legitimatebusiness interests of the Purchasing Entities or the Business, the IndemnifyingParty shall have the option to take control of the defense and investigation ofsuch Third Party Claim, and to employ and engage attorneys of its own choice tohandle and defend the same, at the Indemnifying Party’s sole cost, risk andexpense, provided that, upon assumption and control by the Indemnifying Partyof such defense, the Indemnifying Party shall be deemed to have acknowledgedits responsibility for all Losses relating to such claims, subject to thelimitations set forth in Section 11.6 (the “***DirectLitigation Option***”). The Indemnifying Party may elect toexercise the Direct Litigation Option by giving prior written notice to the 

 

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Indemnified Party. If theIndemnifying Party so elects, the Indemnified Party shall cooperate in allreasonable respects with the Indemnifying Party and such attorneys in theinvestigation, trial and defense of such Third Party Claim and any appealarising therefrom and shall permit access to the personnel of the IndemnifiedParty and to any relevant books, records and documents within the possession orcontrol of the Indemnified Party in connection with such claim and to takecopies of such relevant materials at the expense of the Indemnifying Party; *provided*, *however*, thatthe Indemnified Party may, at its own cost, participate in (but not control)such investigation, trial and defense of such Third Party Claim and any appealarising therefrom. If the Indemnifying Party does not elect the DirectLitigation Option, then the Indemnified Party shall defend against the ThirdParty Claim in the manner it deems appropriate.

 

**(b)**           The Indemnified Party(or the Indemnifying Party if it has exercised the Direct Litigation Option)shall not settle, adjust or compromise the Third Party Claim except with theprior consent of the Indemnifying Party (or the Indemnified Party), whichconsent shall not be unreasonably withheld.

 

**(c)**           In no event shall a Partymake any admission of liability or enter into any settlement, adjustment orcompromise of any Third Party Claim without the prior written consent of theother Party, if as a result of such admission, settlement, adjustment orcompromise an injunction or other non-monetary relief would be imposed againstthe Indemnified Party.

 

## **11.5**        [Reserved]

##  

## **11.6**        Limitations on Indemnification

##  

### **(a)**           Duration

###  

Claims forindemnification under Section 11.1 or 11.2 must be made prior to the18 month anniversary of the Transfer Date, except for claims made pursuantto the following:

 

(i)            Section 11.1(a)(Misrepresentation or Breach of Warranty), to the extent it is based on abreach of Section 3.13(l) (ERISA Plans), Section 3.13(m) (UK PensionPlans) or of Section 3.18 (Taxes), which may be made at any time prior tothe expiration of the applicable statute of limitations (including anyextensions thereof) plus 30 days;

 

(ii)           Section 11.1(a)(Misrepresentation or Breach of Warranty), to the extent it is based on abreach of Section 3.6(f) (Environmental Matters) or Section 3.23(Transactions with Affiliates; Intercompany Arrangements), which may be made atany time prior to the fifth anniversary of the Transfer Date;

 

(iii)          Section 11.1(a)(Misrepresentation or Breach of Warranty), to the extent it is based on abreach of Section 3.1(c) (Corporate Power and Authority to Enter IntoAgreements), which may be made at any time;

 

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(iv)          Section 11.1(b)(Breach of Covenant or Agreement), Section 11.1(c) (Excluded Liabilities),Section 11.1(d) (Pension Liabilities) or Section 11.1(f) (UKEmployees), which may be made at any time;

 

(v)           Section 11.2(a)(Misrepresentation or Breach of Warranty), to the extent it is based on abreach of Section 4.1(b) (Corporate Power and Authority to Enter IntoAgreements), which may be made at any time; and

 

(vi)          Section 11.2(b)(Breach of Covenant or Agreement), Section 11.2(c) (Assumed Liabilities),Section 11.2(d) (Operations of the Business), Section 11.2(f) (UKEmployees) or Section 11.2(g) (Pension Liabilities), which may be made atany time.

 

Indemnificationpursuant to Section 11.1 or 11.2 shall be payable after the expiration ofthe aforesaid periods (if any), so long as the claim was identified andasserted in reasonable detail prior to such expiration.

 

### **(b)**           Amount

###  

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

####  

Notwithstandinganything to the contrary contained in Section 11.1 and subject to theexceptions set forth in Section 11.6(b)(iii) and Section 11.6(c)(i),neither the Indemnifying Selling Entities nor the Indemnifying Buying Entities,as the case may be, shall be obligated to pay any claims for indemnificationpursuant to Section 11.1 until the aggregate of all Losses exceeds$500,000 (the, “***Threshold***”), with anyindividual 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 of the Claim Threshold, a number ofclaims arising out of the same fact, event or circumstance shall be aggregatedand shall form a single claim.

 

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

####  

Subject to theexceptions set forth in Section 11.6(b)(iii) below, the maximum aggregateamount that the Indemnifying Selling Entities or Indemnifying Buying Entities,as the case may be, shall be obligated to pay pursuant to Section 11.1shall be $8,000,000 (the “***Cap***”), andprovided further, that, with respect to the Indemnifying Selling Entities, themaximum amount to be paid in cash for claims under Section 11.1(a)(Misrepresentation or Breach of Warranty), other than claims for breaches ofSection 3.13(m) (UK Pension Plans), shall not exceed the amount of cashreceived by UNOVA in respect of the Purchase Price. To the extent that theSelling Entities would otherwise (but for the preceding sentence) be obligatedto pay indemnification pursuant to Section 11.1 the amount of suchindemnification shall reduce the balance of the Note and then the cash receivedby the Selling Entities.

 

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#### **(iii)**         No Limitation on Certain Claims

####  

Notwithstandinganything herein to the contrary, Buyer Indemnified Parties (i) shall beentitled to dollar-for-dollar indemnification from the first dollar,(ii) shall not be subject to the Threshold or Claim Threshold and(iii) shall not be subject to the Cap with 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 Authority toEnter Into Agreements), Section 3.13(l) (ERISA Plans), Section 3.18(Taxes) and Section 3.23 (Transactions with Affiliates; Intercompany Arrangements);*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 be thePurchase Price;

 

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

 

(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 inSection 3.13(m) (UK Pension Plans).

 

### **(c)**           Other Limitations

###  

(i)            Notwithstandinganything herein to the contrary, Seller Indemnified Parties (i) shall beentitled to dollar-for-dollar indemnification from the first dollar, and(ii) shall not be subject to the Cap with respect to:

 

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

 

(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 thisSection 11.6(c)(i)(D) shall be the Purchase Price.

 

Notwithstandingthe foregoing, none of the Indemnifying Selling Entities shall have anyliability 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 inSection 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 to Mitigate Damages

###  

Nothing inthis Article 11 shall limit or restrict the Parties’ general obligationunder the governing Law to mitigate any loss or damage which it may incur as aresult of any matter giving rise to indemnification under this Agreement.

 

### **(e)**           No Double Recovery

###  

Any Party’spayment of an indemnification claim shall to the extent of such payment satisfyand preclude any further indemnification claim against such Party which iscapable of being made in respect of the same subject matter.

 

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

###  

No waiver of aclosing condition by a party or knowledge of a breach of representation orwarranty or covenant by the other Party shall limit a Party’s right under thisSection 11.

 

### **(g)**           Set-Off Against Note

###  

To the extentthat the Buying Indemnified Parties have incurred Losses for a claim and either(a) a non-appealable judgment or final appellate decision including suchLosses has been entered against the Indemnifying Selling Entities, or (b) afinal settlement agreement including such Losses has been executed with theIndemnifying Selling Entities as provided in Section 11.4, then uponwritten notice to the Indemnifying Selling Entities, the Buying Indemnified 

 

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Parties shall set off anddeduct the amounts of any Losses against the principal of the Note. If any bonafide claims made in good faith by the Buyer Indemnified Parties remainunresolved at the maturity of the Note (a “***Note Claim***”),Buyer US shall place into an escrow account with an independent, third-partyescrow agent an amount equal to the amount of such pending claim outstandingthat will be subject to an escrow agreement to be mutually agreed upon by UNOVAand Buyer US.

 

## **11.7**        Exclusive Remedy

##  

Except withrespect to claims related to fraud, the indemnification and other remedies setforth under this Article 11 shall constitute the sole and exclusivemonetary remedies of the Parties with respect to any maters arising under orrelating to this Agreement. Subject to the foregoing, the Parties shall haveand retain all other rights existing in their favor in equity including anyactions for specific performance and/or injunctive or other equitable relief toenforce or prevent any violations of the provisions of this Agreement.

 

(Article 12follows)

 

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# ** ARTICLE 12. Miscellaneous Provisions**

#  

## **12.1**        Public Statements and Press Releases

##  

No Party shallmake, issue or release any public announcement, press release, public statementor public acknowledgment of the terms, conditions and status of, thetransactions provided for in this Agreement, without the prior written consentof the other Parties as to the content and time of release and the media inwhich such statement or announcement is to be made; *provided*,*however*, that in the case ofannouncements, statements or acknowledgments or revelation which any Party, inthe written opinion of such Party’s counsel, is required by Law or regulations,including those of public stock exchanges on which the securities of such Partyor its affiliates are traded, to make, issue or release (a “***Legally Required Statement***”), themaking, issuing or releasing of any such Legally Required Statement shall notconstitute a breach of this Agreement if such Party shall have given, to theextent 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. Each Party agrees that it will notunreasonably withhold or delay any such consent or clearance.

 

## **12.2**        Costs and Expenses

##  

Each Partyshall be responsible for and bear its respective costs and expenses inconnection with, or arising out of, the negotiation and execution of thisAgreement and consummation of the transactions provided for in this Agreement.

 

## **12.3**        Amendment and Modification

##  

This Agreementmay be amended, modified or supplemented only by a writing executed on behalfof each of the Parties.

 

## **12.4**        No Assignment

##  

No Party shallassign, in whole or in part, this Agreement or its respective rights andobligations hereunder without the express prior written consent of the otherParties, and any assignment by operation of Law or otherwise without the consentof 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 other communications hereunder must be in writing andexecuted by an authorized representative of the Party responsible therefor, andmust be given either by hand or telecopy, telefax or other telecommunicationdevice capable of creating a written record which acknowledges receipt, asfollows:

 

### **(a)**           The Selling Entities

###  

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

 

### **(b)**           A Purchasing Entity

###  

If such noticeis directed to any Purchasing Entity, it shall be sent to such PurchasingEntity, c/o Compagnie de Fives-Lille, 38, rue de la Republique, 93 100Mentreuil-sous-Bois, France, Fax No. +33-1-49.88.39.24, Attention:  General Counsel, or to such other person orplace as Buyer US shall have specified to UNOVA in writing by a notice inaccordance with this Section 12.5, with a copy to SJ Berwin LLP,64 avenue Kleber, 75116 Paris, France, Attention: Maxence Bloch, FaxNo. 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**        Counterparts and Facsimile

##  

This Agreementmay be executed simultaneously in two or more counterparts, each of which shallbe deemed an original, but all of which together shall constitute but one andthe same instrument and any of such counterparts may be delivered by facsimiletransmission.

 

## **12.7**        Captions

##  

The captionsand table of contents contained in this Agreement are provided for convenienceof reference only and shall not be deemed to constitute a part of thisAgreement.

 

## **12.8**        Schedules and Exhibits

##  

One completeset of the Schedules and Exhibits has been marked for identification anddelivered to each of the Parties prior to the execution and delivery of thisAgreement. The Schedules and Exhibits are an integral part of this Agreementand are incorporated into this Agreement by this reference.

 

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## **12.9**        Waiver; Remedies

##  

No single orpartial waiver of any breach of any provision of this Agreement shall be heldto be a waiver of any other or subsequent breach, and the failure of a Party toenforce at any time any provision of this Agreement shall not be deemed awaiver of any right of any such Party to subsequently enforce such provision. Allremedies afforded in this Agreement shall be taken and construed as cumulative,that is, in addition to every other remedy provided in this Agreement or byLaw.

 

## **12.10**      Governing Law and Jurisdiction

##  

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

 

## **12.11**      Resolution of Disputes

##  

Except for disputes to be resolved by the Independent Firm, alldisputes arising out of or in connection with this Agreement shall be finallysettled under the Rules of Arbitration of the International Chamber of Commerce(“***ICC*** ”) by one or morearbitrators (and who shall be familiar and experienced with asset sale andpurchase agreements) appointed in accordance with such Rules.

 

Thearbitration proceedings shall take place in the City of New York and shall beconducted in the English language. The award shall be binding and non-appealable,and it shall be enforceable in any court of competent jurisdiction. There willbe no discovery procedure and the requests for the production of documents willbe limited pursuant to the IBA Rules (International Bar Association Rules) onthe taking of evidence in international commercial arbitration.

 

The successfulor prevailing party or parties shall be entitled to recover reasonable attorney’sfees and other costs incurred in arbitration proceedings and actions broughtfor the enforcement of this Agreement.

 

## **12.12**      Severability

##  

In the eventthat any provision or any portion of any provision of this Agreement shall beheld invalid, illegal or unenforceable under applicable Law, the remainder ofthis Agreement shall remain valid and enforceable, unless such invalidity,illegality or unenforceability substantially diminishes the rights andobligations, taken as a whole, of any Party.

 

## **12.13**      No Third Party Beneficiaries

##  

Nothing in thisAgreement, whether express or implied shall be enforceable by virtue of theContracts Rights of Third Parties Act 1999 or is intended to confer any rightsor remedies under or by reason of this Agreement on any persons other than theParties and 

 

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their respective successors andpermitted assigns, nor is anything in this Agreement intended to relieve ordischarge the obligation or liability of any third persons to any Party, norshall any provision of this Agreement give any third persons any right ofsubrogation or action against any Party, save that the provisions of Article 11shall be enforceable by any of the Persons entitled to indemnificationthereunder, whether or not such Person is a Party to this Agreement.

 

## **12.14**      Construction

##  

This Agreementand the Related Agreements shall be interpreted without regard to anypresumption or rule requiring construction against the Party causing suchagreements to be drafted.

 

## **12.15**      Entire Agreement

##  

This Agreement,including the Exhibits and Schedules and the Related Agreements, constitutesthe sole understanding and agreement of the Parties with respect to the subjectmatter of this Agreement and supersedes and cancels all prior understandingsand agreements.

 

## **12.16**      Currency

##  

Unlessotherwise indicated, all dollar amounts referred to in this Agreement are inUnited States funds.

 

(*Signature pages follow*)

 

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IN WITNESSWHEREOF, the Parties, intending to be legally bound, have caused this Agreementto be executed on and as of the date first above written.

 
| **CINETIC LANDIS GRINDING CORP.**             |                                |
|-----------------------------------------------|-------------------------------------|
|                                          |                                |
|                                          |                                |
| BY:                                           | /s/  FREDERIC SANCHEZ               |   |
| NAME:                                         | Frederic Sanchez                    |   |
| TITLE:                                        | Chairman                            |   |
|                                          |                                |
|                                          |                                |
| **CINETIC LANDIS GRINDING LIMITED**           |                                |
|                                          |                                |
|                                          |                                |
| BY:                                           | /s/  FREDERIC SANCHEZ               |   |
| NAME:                                         | Frederic Sanchez                    |   |
| TITLE:                                        | Chairman                            |   |
|                                          |                                |
|                                          |                                |
| **COMPAGNIE DE FIVES-LILLE**                  |                                |
|                                          |                                |
|                                          |                                |
| BY:                                           | /s/  FREDERIC SANCHEZ               |   |
| NAME:                                         | Frederic 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 & Tax |   |
|                                               |                                     |  |  |  |

 

101

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| **UNOVA IP Corp.** |                                |
|--------------------|-------------------------------------|
|               |                                |
|               |                                |
| BY:                | /s/ KENNETH L. COHEN                |   |
| NAME:              | Kenneth L. Cohen                    |   |
| TITLE:             | Vice President, Treasurer & Tax |   |
|                    |                                     |  |  |  |

 

102

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