deepdown_8kex10-1.htm


    
      
        

      

    

    Exhibit
10.1

     

    Execution
Copy

    


     

    
      


       

      


    

    


     

    


     

    


     

    


     

    STOCK
PURCHASE AGREEMENT

    by and
among

    


    DEEP
DOWN, INC.,

    


    CUMING
CORPORATION

    


    And

    


    THE
SELLING STOCKHOLDERS

    


    ______________

    


    Dated as
of May 3, 2010

    


     

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    TABLE
OF CONTENTS

     

    
      
        
          	 	 Page
	
                  ARTICLE
      I

                	 	
                  1

                
	
                  DEFINITIONS

                	 	
                  1

                
	
                  1.1

                	
                  Certain
      Definitions

                	 	
                  1

                
	
                  1.2

                	
                  Terms

                	 	
                  8

                
	
                  1.3

                	
                  Other
      Definitional and Interpretive Matters

                	 	
                  10

                
	
                  ARTICLE
      II SALE AND PURCHASE OF SHARES, PURCHASE PRICE; CLOSING

                	 	
                  11

                
	
                  2.1

                	
                  Sale
      and Purchase of Shares

                	 	
                  11

                
	
                  2.2

                	
                  Purchase
      Price

                	 	
                  11

                
	
                  2.3

                	
                  Payment
      of Purchase Price

                	 	
                  11

                
	
                  2.4

                	
                  Purchase
      Price Adjustment for Working Capital.

                	 	
                  12

                
	
                  2.5

                	
                  Closing
      Date

                	 	
                  14

                
	
                  2.6

                	
                  Deliveries
      Prior to the Closing Date

                	 	
                  14

                
	
                  2.7

                	
                  Deliveries
      on the Closing Date

                	 	
                  14

                
	
                  ARTICLE
      III REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLING
      STOCKHOLDERS

                	 	
                  15

                
	
                  3.1

                	
                  Organization
      and Good Standing

                	 	
                  15

                
	
                  3.2

                	
                  Authorization
      of Agreement.

                	 	
                  16

                
	
                  3.3

                	
                  Conflicts;
      Consents of Third Parties.

                	 	
                  16

                
	
                  3.4

                	
                  Ownership
      and Transfer of Shares.

                	 	
                  16

                
	
                  3.5

                	
                  Litigation

                	 	
                  16

                
	
                  3.6

                	
                  Financial
      Advisors

                	 	
                  17

                
	
                  ARTICLE
      IV REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY

                	 	
                  17

                
	
                  4.1

                	
                  Organization
      and Good Standing

                	 	
                  17

                
	
                  4.2

                	
                  Authorization
      of Agreement

                	 	
                  17

                
	
                  4.3

                	
                  Conflicts;
      Consents of Third Parties

                	 	
                  17

                
	
                  4.4

                	
                  Capitalization

                	 	
                  18

                
	
                  4.5

                	
                  Subsidiaries

                	 	
                  19

                
	
                  4.6

                	
                  Corporate
      Records.

                	 	
                  19

                
	
                  4.7

                	
                  Financial
      Statements.

                	 	
                  20

                
	
                  4.8

                	
                  No
      Undisclosed Liabilities

                	 	
                  21

                


        

         

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

        
           

          TABLE
OF CONTENTS

          (continued)

           

        

        
          
            	 	 	 Page
	
                    4.9

                  	
                    Absence
      of Certain Developments

                  	 	
                    21

                  
	
                    4.10

                  	
                    Taxes

                  	 	
                    23

                  
	
                    4.11

                  	
                    Real
      Property.

                  	 	
                    26

                  
	
                    4.12

                  	
                    Tangible
      Personal Property.

                  	 	
                    27

                  
	
                    4.13

                  	
                    Technology
      and Intellectual Property.

                  	 	
                    28

                  
	
                    4.14

                  	
                    Material
      Contracts

                  	 	
                    32

                  
	
                    4.15

                  	
                    Employee
      Benefits Plans

                  	 	
                    34

                  
	
                    4.16

                  	
                    Labor

                  	 	
                    37

                  
	
                    4.17

                  	
                    Litigation

                  	 	
                    38

                  
	
                    4.18

                  	
                    Compliance
      with Laws; Permits

                  	 	
                    38

                  
	
                    4.19

                  	
                    Environmental
      Matters

                  	 	
                    39

                  
	
                    4.20

                  	
                    Insurance.

                  	 	
                    40

                  
	
                    4.21

                  	
                    Inventories

                  	 	
                    40

                  
	
                    4.22

                  	
                    Accounts
      and Notes Receivable and Payable

                  	 	
                    41

                  
	
                    4.23

                  	
                    Related
      Party Transactions.

                  	 	
                    41

                  
	
                    4.24

                  	
                    Customers
      and Suppliers

                  	 	
                    41

                  
	
                    4.25

                  	
                    Product
      Warranty; Product Liability.

                  	 	
                    42

                  
	
                    4.26

                  	
                    Banks;
      Power of Attorney

                  	 	
                    42

                  
	
                    4.27

                  	
                    Certain
      Payments

                  	 	
                    43

                  
	
                    4.28

                  	
                    Certain
      Governmental Matters

                  	 	
                    43

                  
	
                    4.29

                  	
                    Financial
      Advisors

                  	 	
                    43

                  
	
                    4.30

                  	
                    Full
      Disclosure.

                  	 	
                    43

                  
	
                    ARTICLE
      V REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  	 	
                    43

                  
	
                    5.1

                  	
                    Organization
      and Good Standing

                  	 	
                    43

                  
	
                    5.2

                  	
                    Authorization
      of Agreement

                  	 	
                    44

                  
	
                    5.3

                  	
                    Conflicts;
      Consents of Third Parties

                  	 	
                    44

                  
	
                    5.4

                  	
                    Litigation

                  	 	
                    44

                  
	
                    5.5

                  	
                    Investment
      Intention

                  	 	
                    44

                  
	
                    5.6

                  	
                    Financial
      Advisors

                  	 	
                    45

                  
	
                    ARTICLE
      VI COVENANTS

                  	 	
                    45

                  


          

           

           

          
            
              
              

            

            
              iii

              
                

              

            

            
              
              

            

          

           

          TABLE
OF CONTENTS

          (continued)

           

          
            
              	 	 	 Page
	
                      6.1

                    	
                      Access
      to Information; Confidentiality

                    	 	
                      45

                    
	
                      6.2

                    	
                      Conduct
      of the Business Pending the Closing

                    	 	
                      46

                    
	
                      6.3

                    	
                      Third
      Party Consents

                    	 	
                      49

                    
	
                      6.4

                    	
                      Governmental
      Consents and Approvals

                    	 	
                      50

                    
	
                      6.5

                    	
                      Further
      Assurances

                    	 	
                      50

                    
	
                      6.6

                    	
                      No
      Shop

                    	 	
                      50

                    
	
                      6.7

                    	
                      Non-Competition;
      Non-Solicitation; Confidentiality

                    	 	
                      51

                    
	
                      6.8

                    	
                      Preservation
      of Records

                    	 	
                      52

                    
	
                      6.9

                    	
                      Publicity.

                    	 	
                      53

                    
	
                      6.10

                    	
                      Cooperation
      with Financing

                    	 	
                      53

                    
	
                      6.11

                    	
                      Related-Party
      Transactions with Non-Management Affiliates

                    	 	
                      53

                    
	
                      6.12

                    	
                      Monthly
      Financial Statements

                    	 	
                      54

                    
	
                      6.13

                    	
                      Fees
      and Expenses

                    	 	
                      54

                    
	
                      6.14

                    	
                      Notification
      of Certain Matters.

                    	 	
                      54

                    
	
                      6.15

                    	
                      Indebt

                    	 	
                      55

                    
	
                      6.16

                    	
                      Resignation
      of Directors

                    	 	
                      55

                    
	
                      6.17

                    	
                      Use
      of Name.

                    	 	
                      55

                    
	
                      6.18

                    	
                      Registration
      Rights for Purchaser Common Stock

                    	 	
                      56

                    
	
                      6.19

                    	
                      Environmental
      Matters.

                    	 	
                      56

                    
	
                      ARTICLE
      VII CONDITIONS TO CLOSING

                    	 	
                      56

                    
	
                      7.1

                    	
                      Conditions
      Precedent to Obligations of Purchaser

                    	 	
                      56

                    
	
                      7.2

                    	
                      Conditions
      Precedent to Obligations of the Selling Stockholders

                    	 	
                      59

                    
	
                      ARTICLE
      VIII INDEMNIFICATION

                    	 	
                      60

                    
	
                      8.1

                    	
                      Survival
      of Representations and Warranties

                    	 	
                      60

                    
	
                      8.2

                    	
                      Indemnification

                    	 	
                      60

                    
	
                      8.3

                    	
                      Indemnification
      Procedures

                    	 	
                      62

                    
	
                      8.4

                    	
                      Limitations
      on Indemnification for Breaches of Representations and
      Warranties

                    	 	
                      64

                    
	
                      8.5

                    	
                      Tax
      Matters

                    	 	
                      64

                    
	
                      8.6

                    	
                      Indemnity
      Escrow

                    	 	
                      67

                    
	
                      8.7

                    	
                      Tax
      Treatment of Indemnity Payments.

                    	 	
                      68

                    


            

             

             

            
              
                
                

              

              
                iv

                
                  

                

              

              
                
                

              

            

            
               

              TABLE
OF CONTENTS

              (continued)

               

            

            
              	 	 Page
	
                      ARTICLE
      IX TERMINATION

                    	 	
                      68

                    
	
                      9.1

                    	
                      Termination
      of Agreement

                    	 	
                      68

                    
	
                      9.2

                    	
                      Procedure
      Upon Termination.

                    	 	
                      69

                    
	
                      9.3

                    	
                      Effect
      of Termination

                    	 	
                      69

                    
	
                      9.4

                    	
                      Deposit.

                    	 	
                      70

                    
	
                      ARTICLE
      X MISCELLANEOUS

                    	 	
                      70

                    
	
                      10.1

                    	
                      Expenses

                    	 	
                      70

                    
	
                      10.2

                    	
                      Stockholder
      Representative

                    	 	
                      70

                    
	
                      10.3

                    	
                      Submission
      to Jurisdiction; Consent to Service of Process; Waiver of Jury
      Trial

                    	 	
                      71

                    
	
                      10.4

                    	
                      Entire
      Agreement; Amendments and Waivers

                    	 	
                      72

                    
	
                      10.5

                    	
                      Governing
      Law

                    	 	
                      72

                    
	
                      10.6

                    	
                      Notices.

                    	 	
                      72

                    
	
                      10.7

                    	
                      Severability

                    	 	
                      73

                    
	
                      10.8

                    	
                      Binding
      Effect; Assignment

                    	 	
                      73

                    
	
                      10.9

                    	
                      Non-Recourse

                    	 	
                      74

                    
	
                      10.10

                    	
                      Counterparts.

                    	 	
                      74

                    


            

          

        

      

    

     

    Exhibits

    


    Exhibit A
– Selling Stockholders Information

    


    Exhibit B
– Termination and Release relating to leases at 225 Bodwell Street

    


    Exhibit C
– Escrow Agreement

    


    Exhibit D
– Side Letter Agreement

    


    Exhibit E
– Affiliate Waiver and Release

    


    Exhibit F
– Transition Services Agreement

    


    Exhibit G
– Lease between Company and 225 Bodwell Corporation

     

     

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

     

    STOCK
PURCHASE AGREEMENT


     

    This
STOCK PURCHASE
AGREEMENT, dated May 3, 2010 (the “Agreement”),
by and among Deep Down, Inc., a corporation existing under the laws of Nevada
(“Purchaser”),
Cuming Corporation, a corporation existing under the laws of Massachusetts (the
“Company”),
and the stockholders of the Company listed on the signature pages hereof under
the heading “Selling Stockholders” (collectively, the “Selling
Stockholders”).

     

    W I T N E
S S E T H:

    


    WHEREAS, the Selling
Stockholders own an aggregate of 10,000 shares of the common stock, $1.00 par
value per share (the “Shares”),
of the Company, which, together with the Preferred Stock (as defined herein),
constitute all of the issued and outstanding shares of capital stock of the
Company;

     

    WHEREAS, the Selling
Stockholders desire to sell to Purchaser, and Purchaser desires to purchase from
the Selling Stockholders, the Shares for the Purchase Price and upon the terms
and conditions hereinafter set forth; and

     

    WHEREAS, certain terms used in
this Agreement are defined in Section 1.1;

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements
hereinafter contained, the parties hereby agree as follows:

     

    ARTICLE
I

     

    DEFINITIONS

     

    1.1           Certain
Definitions. For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section
1.1:

     

    “Adjustment
Escrow Account” means a separate account, set up pursuant to the Escrow
Agreement, where the Adjustment Escrow Amount is held for disbursement by the
Escrow Agent, in accordance with the terms of the Escrow Agreement.

     

    “Adjustment
Escrow Amount” means $1,000,000.

     

    “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person, and the term “control”
(including the terms “controlled
by” and “under
common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities, by contract or
otherwise.

     

    “Affiliated
Group” means any affiliated group within the meaning of Section 1504 of
the Code or any comparable or analogous group under applicable Law.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Business
Day” means any day of the year on which national banking institutions in
Texas or Massachusetts are open to the public for conducting business and are
not required or authorized to close.

     

    “Cash”
means the amount of cash and bank deposits as reflected in bank statements, and
certificates of deposit less escrowed amounts or other restricted cash balances
and less the amounts of any unpaid checks, drafts and wire transfers issued on
or prior to the date of determination, calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial
Statements.

     

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

     

    “Company
Transaction Expenses” means, except as otherwise expressly set forth in
this Agreement, the aggregate amount of all out-of-pocket fees and expenses,
incurred by or on behalf of, or paid or to be paid by, the Company or any of the
Subsidiaries at or prior to the Closing Date in connection with the process of
selling the Company or otherwise relating to the negotiation, preparation or
execution of this Agreement or any documents or agreements contemplated hereby
or the performance or consummation of the transactions contemplated hereby,
including (A) any fees and expenses associated with obtaining necessary or
appropriate waivers, consents or approvals of any Governmental Body or third
parties on behalf of the Company or any of the Subsidiaries, (B) any fees or
expenses associated with obtaining the release and termination of any Liens; (C)
all brokers’ or finders’ fees; (D) fees and expenses of counsel, advisors,
consultants, investment bankers, accountants, and auditors and experts, and (E)
all sale, “stay-around,” retention, or similar bonuses or payments to current or
former directors, officers, employees and consultants paid as a result of or in
connection with the transactions contemplated hereby.

     

    “Contract”
means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license, commitment or other arrangement, understanding,
undertaking, commitment or obligation.

     

    “Customer
Related Letters of Credit for Advance Payment or Contract Performance
Guarantees” means
standby letters of credit issued by Rockland Trust Company in favor of Daewoo
Shipbuilding and Marine Engineering Co. Ltd. and Hyundai Heavy Industries Co.,
Ltd. for advance performance payments received on contracts and/or warranty
performance guarantees on contracts in the Company’s order backlog.

     

    “Deferred
Revenue” means a
liability on the Company’s balance sheet reflecting advance payments from
customers net of accrued revenues recorded as net sales when shipments are made
at no charge due to fixed milestone payment schedules per the customer’s
contract.

     

    “Environmental
Costs and Liabilities” means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages
(including punitive damages and consequential damages), costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person or in response to any violation of Environmental Law, whether
known or unknown, accrued or contingent, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
otherwise, to the extent based upon, related to, or arising under or pursuant to
any Environmental Law, Environmental Permit, Order or agreement with any
Governmental Body or other Person, which relates to any environmental, health or
safety condition, violation of Environmental Law or a Release or threatened
Release of Hazardous Materials.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Environmental
Law” means any Law in any way relating to the protection of human health
and safety, the environment or natural resources including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601
et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean
Water Act (33 U.S.C. § 1251 et seq.), the Clean Air
Act (42 U.S.C. § 7401 et seq.) the Toxic
Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has
been or may be amended and the regulations promulgated pursuant
thereto.

     

    “Environmental
Permit” means any Permit required by Environmental Laws for the operation
of the Company and the Subsidiaries and any Order related thereto.

     

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

     

    “Escrow
Agent” means a financial institution mutually agreed by Purchaser and
Selling Stockholders.

     

    “Escrow
Agreement” means an escrow agreement by and among the Escrow Agent,
Purchaser and Stockholder Representative in substantially the form of Exhibit
C hereto.

     

    “Excluded
Affiliates” means Cuming Microwave Corporation, Cuming Lehman Chambers,
Inc. and 225 Bodwell Corporation, each of which is a corporation existing under
the laws of Massachusetts, and 244 Bodwell, LLC, a limited liability company
existing under the laws of Massachusetts, and any other Person that, directly or
indirectly, is controlled by any such entity.

     

    “GAAP”
means generally accepted accounting principles in the United States as of the
date hereof.

     

    “Governmental
Body” means any government or governmental or regulatory body thereof, or
political subdivision thereof, whether federal, state, local or foreign, or any
agency, instrumentality or authority thereof, or any court or arbitrator (public
or private).

     

    “Hazardous
Material” means any substance, material or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous,”
“toxic,”
“pollutant,”
“contaminant,”
“radioactive,”
or words of similar meaning or effect, including petroleum and its by-products,
asbestos, polychlorinated biphenyls, radon, mold and urea formaldehyde
insulation.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Included
Current Assets” means accounts
receivable, inventory, contracts in progress,  and prepaid expenses,
but excluding deferred tax assets and receivables from any of the Company’s
Affiliates, directors, employees, officers or Stockholders and any of their
Affiliates, determined in accordance with GAAP applied using the same accounting
methods, practices, principles, policies and procedures, with consistent
classifications, judgments and valuation and estimation methodologies that were
used in the preparation of the Company’s audited Financial Statements for the
most recent fiscal year end as if such accounts were being prepared and audited
as of a fiscal year end; provided, however, that any
amounts that otherwise would be included in the foregoing Included Current
Assets but are included in the calculation of Net Customer Deposit Liabilities
as of the Closing Date shall not be included for purposes of this definition;
provided, further, however, if it is
determined after Closing as part of the process set forth in Section 2.4 that the
amount of Net Customer Deposit Liabilities as of the Closing Date that were
reflected in an adjustment to the payment of the Purchase Price as provided
under Section
2.2 was not the actual amount of Net Customer Deposit Liabilities as of
the Closing Date then the excess (if any) of (i) the amount by which the
Purchase Price was reduced pursuant to Section 2.2 over (ii)
the actual amount of Net Customer Deposit Liabilities as of the Closing Date,
shall be considered an Included Current Asset for purposes of determining
Closing Working Capital.

     

    “Included
Current Liabilities” means accounts payable,
accrued and unpaid Taxes, accrued and unpaid expenses, and accrued and unpaid
wages and withholdings, but excluding payables to any of the Company’s
Affiliates, directors, officers or Stockholders and any of their Affiliates and
the current portion of long term Indebtedness, determined in accordance with
GAAP applied using the same accounting methods, practices, principles, policies
and procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Company’s
audited Financial Statements for the most recent fiscal year end as if such
accounts were being prepared and audited as of a fiscal year end; provided, however, that any
amounts that otherwise would be included in the foregoing Included Current
Liabilities but are included in the calculation of Net Customer Deposit
Liabilities as of the Closing Date shall not be included for purposes of this
definition; provided further, however, if it is
determined after Closing as part of the process set forth in Section 2.4 that the
amount of Net Customer Deposit Liabilities as of the Closing Date that were
reflected in an adjustment to the payment of the Purchase Price as provided
under Section
2.2 was not the actual amount of Net Customer Deposit Liabilities as of
the Closing Date then the excess (if any) of (i) the actual amount of Net
Customer Deposit Liabilities as of the Closing Date over (ii) the amount by
which the Purchase Price was reduced pursuant to Section 2.2, shall be
considered an Included Current Liability for purposes of determining Closing
Working Capital.

     

     “Indebtedness”
of any Person means, without duplication, (i) the principal, accreted
value, accrued and unpaid interest, prepayment and redemption premiums or
penalties (if any), unpaid fees or expenses and other monetary obligations in
respect of (A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;
(ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business (other than the current liability portion of
any indebtedness for borrowed money)); (iii) all obligations of such Person
under leases required to be capitalized in accordance with GAAP; (iv) all
obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker’s acceptance or similar credit transaction; (v) all obligations
of such Person under interest rate or currency swap transactions (valued at the
termination value thereof); (vi) the liquidation value, accrued and unpaid
dividends, prepayment or redemption premiums and penalties (if any), unpaid fees
or expenses and other monetary obligations in respect of any redeemable
preferred stock of such Person; (vii) all obligations of the type referred
to in clauses (i) through (vi) of any Persons for the payment of which such
Person is responsible or liable, directly or indirectly, as obligor, guarantor,
surety or otherwise, including guarantees of such obligations; and
(viii) all obligations of the type referred to in clauses (i) through (vii)
of other Persons secured by (or for which the holder of such obligations has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person).

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Indemnity
Escrow Account” means an account, set up pursuant to the Escrow
Agreement, where the Indemnity Escrow Amount is held for disbursement by the
Escrow Agent, in accordance with the terms of the Escrow Agreement.

     

    “Indemnity
Escrow Amount” means $2,000,000.

     

    “Independent
Valuation Firm” means KPMG Forensic, and if KPMG Forensic refuses or is
unable to perform the requested services, Purchaser and the Stockholder
Representative shall negotiate in good faith to agree upon a different valuation
firm.

     

    “Intellectual
Property” means any rights available (including with respect to
Technology) under patent, copyright, trade secret or trademark law or any other
similar statutory provision or common law doctrine in the United States, or
wherever they may exist,  and also domain names.

     

    “IRS”
means the Internal Revenue Service.

     

    “Knowledge”
means, with respect to any Person that is not an individual, the knowledge after
due inquiry of such Person’s directors and executive officers and all other
officers and managers having responsibility relating to the applicable matter
or, in the case of an individual, knowledge after due inquiry.

     

    “Law”
means any foreign, federal, state or local law (including common law), statute,
code, ordinance, rule, regulation, Order or other requirement.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Legal
Proceeding” means any judicial, administrative or arbitral actions,
suits, mediation, investigation, inquiry, proceedings or claims (including
counterclaims) by or before a Governmental Body.

     

    “Liability”
means any debt, loss, damage, adverse claim, fines, penalties, liability or
obligation (whether direct or indirect, known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured,
determined or determinable, liquidated or unliquidated, or due or to become due,
and whether in contract, tort, strict liability or otherwise), and including all
costs and expenses relating thereto, including all fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and costs of
investigation.

     

    “Lien”
means any lien, pledge, mortgage, deed of trust, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude, proxy,
voting trust or agreement, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation
whatsoever.

     

    “Material
Adverse Effect” means a material adverse effect on (i) the business,
assets, properties, results of operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole, or (ii) the
ability of the Selling Stockholders to consummate the transactions contemplated
by this Agreement or perform their obligations under this Agreement or the
Selling Stockholder Documents.

     

    “Net
Customer Deposit Liabilities” means (A) deferred revenue less (B) cash
and  investments used as collateral for Customer Related Letters of
Credit for Advance Payment or Contract Performance
Guarantees,  prepaid sales commissions, prepaid letter of credit
issuance fees, unamortized tooling and customer progress milestone invoices in
Accounts Receivable not related to shipments that have been reclassed to
Deferred Revenue.

     

    “Order”
means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.

     

    “Ordinary
Course of Business” means the ordinary and usual course of day-to-day
operations of the business of the Company and the Subsidiaries through the date
hereof consistent with past practice.

     

    “Permits”
means any approvals, authorizations, consents, licenses, permits or certificates
of a Governmental Body.

     

    “Permitted
Exceptions” means (i) all defects, exceptions, restrictions, easements,
rights of way and encumbrances disclosed in policies of title insurance which
have been delivered to Purchaser; (ii) statutory liens for current Taxes,
assessments or other governmental charges not yet delinquent or the amount or
validity of which is being contested in good faith by appropriate proceedings,
provided an appropriate reserve has been established herefore in the Financial
Statements in accordance with GAAP; (iii) mechanics’, carriers’, workers’, and
repairers’ Liens arising or incurred in the Ordinary Course of Business that are
not material to the business, operations and financial condition of the Company
Property so encumbered and that are not resulting from a breach, default or
violation by the Company or any of the Subsidiaries of any Contract or Law; and
(iv) zoning, entitlement and other land use and environmental regulations
by any Governmental Body, provided that such
regulations have not been violated.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Person”
means any individual, corporation, limited liability company, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.

     

    “Release”
means any release, spill, emission, leaking, pumping, poring, injection,
deposit, dumping, emptying, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, or into or out of any
property.

     

    “Remedial
Action” means all actions including any capital expenditures undertaken
to (i) clean up, remove, treat or in any other way address any Hazardous
Material; (ii) prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care; (iv) prevent exposure, including any activity and use limitations or
restrictions adopted or imposed pursuant to Environmental Laws,
or  (v)  correct a condition of noncompliance with
Environmental Laws.

     

    “Securities
Act” means the Securities Act of 1933, as amended.

     

    “Software”
means any and all computer programs, whether in source code or object code;
databases and compilations, whether machine readable or otherwise; descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing; and all documentation including user manuals and other
training documentation related to any of the foregoing.

     

    “Subsidiary”
means any Person of which (i) a majority of the outstanding share capital,
voting securities or other equity interests are owned, directly or indirectly,
by the Company or (ii) the Company is entitled, directly or indirectly, to
appoint a majority of the board of directors, board of managers or comparable
body of such Person.

     

    “Target
Working Capital” means an amount equal to $9,100,000.

     

    “Taxes”
means (i) all federal, state, local or foreign taxes, charges, fees, imposts,
levies or other assessments, including all income, gross receipts, capital,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and estimated
taxes, customs duties, fees, assessments and charges of any kind whatsoever,
(ii) all interest, penalties, fines, additions to tax or additional amounts
imposed by any Taxing Authority in connection with any item described in clause
(i), and (iii) any transferee liability in respect of any items described in
clauses (i) or (ii) payable by reason of Contract, assumption, transferee
liability, operation of Law, Treasury Regulation Section 1.1502-6(a) (or any
predecessor or successor thereof of any analogous or similar provision under
Law) or otherwise.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Taxing
Authority” means the IRS and any other Governmental Body responsible for
the administration of any Tax.

     

    “Tax
Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, schedules or
attachments thereto, and any amendment thereof), including any information
return, claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, combined, consolidated or unitary
returns for any group of entities that includes the Company, any of the
Subsidiaries, or any of their Affiliates.

     

    “Technology”
means, collectively, designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, results of research and development, Software,
tools, data, inventions, apparatus, creations, improvements, works of authorship
and other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and any other embodiments of the above, in any
form whether or not specifically listed herein, and all related technology, that
are used, incorporated, or embodied in or displayed by any of the foregoing or
used in the design, development, reproduction, sale, marketing, maintenance or
modification of any of the foregoing.

     

    “WARN”
means the Worker Adjustment and Retraining Notification Act of 1988, as
amended.

     

    1.2           Terms Defined. Elsewhere in
this Agreement For purposes of this Agreement, the following terms have meanings
set forth in the sections indicated:

     

    
      	 	
              Term

            	
              Section

            
	 	 	 
	 	
              Acquisition
      Transaction

            	
              6.6(a)

            
	 	
              Agreement

            	
              Recitals

            
	 	
              Balance
      Sheet

            	
              4.7(a)

            
	 	
              Balance
      Sheet Date

            	
              4.7(a)

            
	 	
              Basket

            	
              8.4(a)

            
	 	
              Closing

            	
              2.5

            
	 	
              Closing
      Balance Sheet

            	
              2.4(b)

            
	 	
              Closing
      Date

            	
              2.5

            
	 	
              Closing
      Working Capital

            	
              2.4(a)

            
	 	
              Closing
      Working Capital Statement

            	
              2.4(b)

            
	 	
              COBRA

            	
              4.15(p)

            
	 	
              Common
      Stock

            	
              4.4(a)

            
	 	
              Company

              Company
      Documents

              Company
      Marks

            	
              Recitals

              4.2

              6.17

            
	 	
              Company
      Permits

            	
              4.18(b)

            
	 	
              Company
      Plans

            	
              4.15(a)

            
	 	
              Company
      Property

            	
              4.11(a)

            
	 	
              Company
      Properties

            	
              4.11(a)

            
	 	
              Confidential
      Information

            	
              6.7(c)

            


       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      	 	
              Term

            	
              Section

            
	 	 	 
	 	
              Confidentiality
      Agreement

              Deposit

            	
              6.1

              9.4

            
	 	
              Employees

              Environmental
      Assessment

            	
              4.15(a)

              6.19

            
	 	
              ERISA
      Affiliate

              Escrowed
      Stock

            	
              4.15(a)

              9.4

            
	 	
              Facility

              Final
      Closing Working Capital

            	
              6.2(b)(xi)

              2.4(d)

            
	 	
              Financial
      Statements

            	
              4.7(a)

            
	 	
              FIRPTA
      Affidavit

            	
              2.7(h)

            
	 	
              Government
      Contract

            	
              4.28

            
	 	
              Losses

            	
              8.2(a)

            
	 	
              Material
      Contracts

              Multiemployer
      Plan

            	
              4.14(a)

              4.15(a)

            
	 	
              Owned
      Property

            	
              4.11(a)

            
	 	
              Owned
      Properties

            	
              4.11(a)

            
	 	
              PBGC

            	
              4.15(i)

            
	 	
              Personal
      Property Leases

              Phase
      III Project

              Preferred
      Stock

            	
              4.12(b)

              6.2(b)(xi)

              4.4(a)

            
	 	
              Purchase
      Price

              Purchaser

              Purchaser
      Common Stock

              Purchaser
      Common Stock Escrow Agent

              Purchaser
      Common Stock Escrow Agreement

              Purchaser
      Documents

              Purchaser
      Expenses

            	
              2.2

              Recitals

              2.2

              9.4

              9.4

              5.2

              9.3

            
	 	
              Purchaser
      Indemnified Parties

            	
              8.2(a)

            
	 	
              Real
      Property Lease

              Real
      Property Leases

            	
              4.11(a)

              4.11(a)

            
	 	
              Related
      Persons

            	
              4.23

            
	 	
              Representatives

            	
              6.6(a)

            
	 	
              Restricted
      Business

            	
              6.7(a)

            
	 	
              Selling
      Stockholders

            	
              Recitals

            
	 	
              Selling
      Stockholder Documents

            	
              3.2

            
	 	
              Selling
      Stockholder Indemnified Parties

            	
              8.2(b)

            
	 	
              Stockholder
      Representative

            	
              10.2(a)

            
	 	
              Straddle
      Period

            	
              8.5(c)

            
	 	
              Shares

            	
              Recitals

            
	 	
              Survival
      Period

            	
              8.1

            
	 	
              Tax
      Claim

            	
              8.5(d)(i)

            
	 	
              Termination
      Date

            	
              9.1(a)

            
	 	
              Third
      Party Claim

            	
              8.3(b)

            
	 	
              Title
      IV Plans

            	
              4.15(a)

            
	 	
              Unresolved
      Claims

            	
              8.6

            


    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    1.3           Other Definitional and
Interpretive Matters.

     

    (a)  Unless
otherwise expressly provided, for purposes of this Agreement, the following
rules of interpretation shall apply:

     

    Calculation of Time
Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business
Day.

     

    Dollars.  Any
reference in this Agreement to $ shall mean U.S. dollars.

     

    Exhibits/Schedules.  The
Exhibits and Schedules to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.  All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.  Any
capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.

     

    Gender and
Number.  Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.

     

    Headings.  The
provision of a Table of Contents, the division of this Agreement into Articles,
Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing
or interpreting this Agreement.  All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

     

    Herein.  The
words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to
this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires.

     

    Including.  The
word “including” or any
variation thereof means “including, without
limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

     

    Laws.  Any
reference to a particular law (whether of a specific act, statute or section
thereto) shall be deemed also to refer to such law as it may be amended from
time to time and to any successor law or provision thereto.

     

    
(b)           The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provision of this
Agreement.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ARTICLE
II

     

    SALE
AND PURCHASE OF SHARES, PURCHASE PRICE; CLOSING

     

    2.1           Sale and Purchase of
Shares. Upon
the terms and subject to the conditions contained herein, on the Closing Date,
each Selling Stockholder agrees to sell to Purchaser, free and clear of any and
all Liens, and Purchaser agrees to purchase from each Selling Stockholder, the
Shares owned by such Selling Stockholder set forth opposite such Selling
Stockholder’s name on Exhibit
A hereto.

     

    2.2           Purchase
Price.  The
aggregate purchase price to be paid by Purchaser for the Shares shall be an
amount in cash equal to $47,000,000.00, less (i)  an amount
equal to the Net Customer Deposit Liabilities (subject to adjustment as provided
in Section 2.4
(the “Cash
Price”), plus
(ii) the issuance and delivery to the Selling Stockholders of 25,000,000
shares (as adjusted from time to time after the date hereof to and until the
Closing Date commensurately in respect of any issuance of additional shares by
Purchaser as a dividend or other distribution on outstanding shares of such
stock or any combination or subdivision of the shares of such stock into a
smaller or greater, respectively, number of shares of such stock) of common
stock (which includes the Escrowed Stock held pursuant to Section 9.4 ), par
value $0.001 per share, of Purchaser (“Purchaser
Common Stock,” and collectively with the Cash Price, the “Purchase
Price”).

     

    2.3           Payment of Purchase
Price.

     

    (a)  On
the Closing Date, Purchaser shall pay the Cash Price less the Adjustment Escrow
Amount and the Indemnity Escrow Amount to the Selling Stockholders, which shall
be paid to or at the direction of the Selling Stockholders by wire transfer of
immediately available funds into accounts designated in writing by the Selling
Stockholders not less than two (2) Business Days prior to the Closing Date; with
such amounts paid to the accounts of the Selling Stockholders allocated among
them in accordance with their pro rata ownership of the Shares as set forth on
Exhibit
A.

     

    (b)  On
the Closing Date, Purchaser shall deliver, or with respect to the Escrowed
Stock, cause to be delivered to the Selling Stockholders the Purchaser Common
Stock n the applicable share amounts among them as set forth on Exhibit
A.

     

    (c)  On
the Closing Date, Purchaser shall pay the Adjustment Escrow Amount and the
Indemnity Escrow Amount to the Escrow Agent by wire transfer of immediately
available funds for deposit into the Adjustment Escrow Account and the Indemnity
Escrow Account, respectively, established pursuant to the terms of the Escrow
Agreement, to be held by the Escrow Agent pursuant to the terms and conditions
thereof.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (d)  Seller
represents and warrants that no payments that will be made in respect of the
Purchase Price hereunder to any Selling Stockholder will be subject to any
employment-related Taxes.  If, however, it is determined that any such
payments are subject to any employment-related Taxes, such payments made to the
Selling Stockholders, who are (or were) employees of the Company, under this
Agreement shall be subject to such reduction for employment-related Taxes as
shall be required by applicable federal and state withholding Laws and all such
withheld amounts shall be remitted to the applicable Taxing Authorities promptly
following the date of payment.  Despite having amounts so withheld,
the applicable Selling Stockholders shall be treated as though they had received
and shall be deemed to have received the full amounts of the Purchase Price to
which they are otherwise entitled.

     

    2.4           Purchase Price Adjustment
for Working Capital.


     

    (a)  Following
the Closing, the Purchase Price shall be adjusted as provided herein to reflect
the difference between Closing Working Capital and Target Working Capital.
“Closing
Working Capital” means (A) the consolidated Included Current Assets of
the Company and the Subsidiaries, less (B) the consolidated Included Current
Liabilities of the Company and the Subsidiaries, determined as of the open of
business on the Closing Date.

     

    (b)  Within
seventy-five (75) days following the Closing Date, Purchaser shall deliver to
the Stockholder Representative a consolidated balance sheet of the Company and
the Subsidiaries as of the open of business on the Closing Date (the “Closing
Balance Sheet”) and a statement of Closing Working Capital and final Net
Customer Deposit Liabilities derived from the Closing Balance Sheet (the “Closing
Working Capital Statement”).  The Closing Balance Sheet and the
Closing Working Capital Statement shall be prepared in accordance with GAAP
applied using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Company’s
audited Financial Statements for the most recent fiscal year end as if such
Closing Balance Sheet was as of a fiscal year end.

     

    (c)  Acceptance of Statements;
Dispute Procedures. The Closing Balance Sheet and the Closing Working
Capital Statement (and the computation of Closing Working Capital and Net
Customer Deposit Liabilities indicated thereon) delivered by Purchaser to the
Stockholder Representative shall be conclusive and binding upon the parties
unless the Stockholder Representative, within thirty (30) days after delivery to
the Stockholder Representative of the Closing Balance Sheet and the Closing
Working Capital Statement, notifies Purchaser in writing that the Stockholder
Representative disputes any of the amounts set forth therein, specifying the
nature of the dispute and the basis therefor. 
The parties shall in good faith attempt to resolve any dispute and, if the
parties so resolve all disputes, the Closing Balance Sheet and the Closing
Working Capital Statement (and the computation of Closing Working Capital and
Net Customer Deposit Liabilities indicated thereon), as amended to the extent
necessary to reflect the resolution of the dispute, shall be conclusive and
binding on the parties.  If the Purchaser and the Stockholder
Representative do not reach agreement in resolving the dispute within sixty (60)
days after notice is given by the Stockholder Representative to Purchaser
pursuant to the second preceding sentence, the parties shall submit the dispute
to the Independent Valuation Firm for resolution. Each of Purchaser and the
Stockholder Representative agrees to execute, if requested by the Independent
Valuation Firm, a reasonable engagement letter.  Purchaser and the
Stockholder Representative shall cooperate with the Independent Valuation Firm
and promptly provide all documents and information requested by the Independent
Valuation Firm.  Promptly, but no later than thirty (30) days after
acceptance of appointment as the Independent Valuation Firm, the Independent
Valuation Firm shall determine (it being understood that in making such
determination, the Independent Valuation Firm shall be functioning as an expert
and not as an arbitrator), based solely on written submissions by Purchaser and
the Stockholder Representative, and not by independent review, only those issues
in dispute and shall render a written report as to the resolution of the dispute
and the resulting computation of the Closing Working Capital which shall be
conclusive and binding on the parties hereto. All proceedings conducted by the
Independent Valuation Firm shall take place in Houston, Texas.  In
resolving any disputed item, the Independent Valuation Firm (i) shall be
bound by the provisions of this Section 2.4 and
(ii) may not assign a value to any item greater than the greatest value for
such items claimed by either Purchaser or Stockholder Representative or less
than the smallest value for such items claimed by either
thereof.  Judgment may be entered to enforce such report in any court
of competent jurisdiction. The fees, costs and expenses of the Independent
Valuation Firm shall be allocated to and borne by Purchaser and the Selling
Stockholders based on the inverse of the percentage that the Independent
Valuation Firm’s determination (before such allocation) bears to the total
amount of the total items in dispute as originally submitted to the Independent
Valuation Firm. For example, should the items in dispute total in amount to
$1,000 and the Independent Valuation Firm awards $600 in favor of the Selling
Stockholders’ position, 60% of the costs of its review would be borne by
Purchaser and 40% of the costs would be borne by the Selling
Stockholders.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (d)  The
Closing Working Capital derived from the items and amounts deemed agreed
pursuant to Section
2.4(c) above, collectively with those items and amounts as resolved by
the Independent Valuation Firm pursuant to Section 2.4(c) above,
shall constitute the “Final
Closing Working Capital”.

     

    (e)  Payment.  Upon
final determination of the Final Closing Working Capital as provided above,
(A) if Final Closing Working Capital is greater than the Target Working
Capital, the Purchase Price shall be increased by the amount of such excess and
Purchaser shall promptly, but no later than ten (10) Business Days after such
final determination of Final Closing Working Capital, pay the amount of such
increase to the Stockholder Representative for distribution to the Selling
Stockholders in accordance with their pro rata ownership of the Shares as set
forth on Exhibit
A, and (B) if Final Closing Working Capital is less than the Target
Working Capital, the Purchase Price shall be decreased by the amount of such
excess of Target Working Capital over Closing Working Capital and, subject to
the terms of Section
2.4(e) below, the Selling Stockholders, jointly and severally, shall
promptly, but no later than ten (10) Business Days after such final
determination of Final Closing Working Capital, pay to Purchaser the amount of
such decrease.

     

    (f)  Any
payment to be made by the Selling Stockholders to Purchaser pursuant to Section 2.4(d) above
will first be made by a distribution from the Adjustment Escrow Account by an
amount equal to such payment in accordance with the terms of the Escrow
Agreement.  Other than any such payment from the Adjustment Escrow
Account, any payment to be made under this Section 2.4 shall be
made by wire transfer of immediately available funds.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (g)  The
Selling Stockholders and Purchaser acknowledge and agree that in connection with
any final purchase price adjustment pursuant to Section 2.4(c) or
2.4(f), as the
case may be, the balance of the funds held in the Adjustment Escrow Account,
after payment of such final adjustment amount, shall be paid to the Selling
Stockholders in accordance with the terms of the Escrow Agreement.

     

    2.5           Closing
Date. The
consummation of the sale and purchase of the Shares provided for in Section 2.1 hereof
(the “Closing”)
shall take place at the offices of Looper Reed & McGraw, P.C. located at
1300 Post Oak Boulevard, Suite 2000, Houston, Texas 77056 (or at such other
place as the parties may designate in writing) at 10:00 a.m. (Houston time) on a
date to be specified by the parties (the “Closing
Date”), which date shall be no later than the third Business Day after
the satisfaction or waiver of the conditions set forth in Article VII (other
than conditions that by their nature are to be satisfied at Closing, but subject
to the satisfaction or waiver of those conditions at such time), unless another
time, date or place is agreed to in writing by the parties hereto.

     

    2.6           Deliveries Prior to the
Closing Date.  No
later than two (2) Business Days prior to the Closing Date, the Company shall
deliver to Purchaser:

     

    (a)  the
pay-off letters or final invoices in respect of Company Transaction Expenses and
the certificate setting forth an estimate of Company Transaction Expenses,
pursuant to Section
6.13;

     

    (b)  the
pay-off letters in respect of Indebtedness to be repaid as of the Closing and
the certificate setting forth an estimate of Indebtedness, pursuant to Section
6.15;

     

    (c)  copies
of the instruments executed by the Company’s Board of Directors and the holders
of the Preferred Stock  providing for the repurchase and redemption of
the Preferred Stock and the full release of the Company from and against any
claims relating to the Preferred Stock, pursuant to Section
6.15;

     

    (d)  a
certificate disclosing the Net Customer Deposit Liabilities as of the
Closing.

     

    2.7           Deliveries on the Closing
Date. At the
Closing, the Selling Stockholders shall deliver or cause the Company to deliver,
as applicable, to Purchaser:

     

    (a)  copies
of resolutions, certified by the Secretary of the Company and an authorized
person of each Selling Stockholder, respectively, as to the authorization of
this Agreement and all of the transactions contemplated hereby;

     

    (b)  copies
of the releases from Affiliates of the Company, pursuant to Section 6.11;

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (c)  stock
certificates from each of the Selling Stockholders representing the Shares, duly
endorsed in blank or accompanied by stock transfer powers and with all requisite
stock transfer tax stamps attached and otherwise sufficient to transfer the
Shares to Purchaser free and clear of all Liens;

     

    (d)  certificates
of good standing dated not more than five Business Days prior to the Closing
Date with respect to the Company issued by the Secretary of State of the
Commonwealth of Massachusetts and for each state in which the Company is
qualified to do business as a foreign corporation;

     

    (e)  all
instruments and documents necessary to release any and all Liens other than
Permitted Exceptions, including appropriate UCC financing statement amendments
(termination statements);

     

    (f)   the
certificate indicating the Company Transaction Expenses as of the close of
business on the day immediately preceding the Closing Date, pursuant to Section
6.13;

     

    (g)  the
certificate indicating the amount of Indebtedness to be repaid as of the
Closing, pursuant to Section
6.15;

     

    (h)  affidavits
of non-foreign status from each of the Selling Stockholders that complies with
Section 1445 of the Code (a “FIRPTA
Affidavit”);

     

    (i)   subordination
and non-disturbance agreement executed by Rockland Trust Company with regard to
property at 225 Bodwell Street, Avon, Massachusetts leased by the Company, in
form reasonably satisfactory to Purchaser;

     

    (j)   documentation
in form reasonably satisfactory to the Purchaser evidencing that the executors
of the estate of William Cuming possess full legal authority to transfer all of
the estate's shares in the Company to Purchaser; and

     

    (k)  such
other documents (e.g.,
estoppel certificates, lien searches and title commitments to real property) as
Purchaser shall reasonably request.

     

    ARTICLE
III


     

    REPRESENTATIONS
AND WARRANTIES RELATING TO THE SELLING STOCKHOLDERS

     

    Each
Selling Stockholder, severally and jointly, hereby represents and warrants to
Purchaser that:

     

    3.1           Organization and Good
Standing.  Such
Selling Stockholder (if other than an individual) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now conducted.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    3.2           Authorization of
Agreement.  Such
Selling Stockholder has all requisite power, authority and legal capacity to
execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
such Selling Stockholder in connection with the consummation of the
transactions contemplated by this Agreement (the “Selling
Stockholder Documents”), and to consummate the transactions contemplated
hereby and thereby.  The execution, delivery and performance of this
Agreement and each of the Selling Stockholder Documents, and the consummation of
the transactions contemplated hereby and thereby, has been duly authorized and
approved by all required action on the part of such Selling Stockholder (if
other than an individual).  This Agreement has been, and each of the
Selling Stockholder Documents will be at or prior to the Closing, duly and
validly executed and delivered by such Selling Stockholder and (assuming due
authorization, execution and delivery by Purchaser) this Agreement constitutes,
and each of the Selling Stockholder Documents when so executed and delivered
will constitute, legal, valid and binding obligations of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance with its
terms.

     

    3.3           Conflicts; Consents of Third
Parties.


     

    (a)  None
of the execution and delivery by such Selling Stockholder of this Agreement or
the Selling Stockholder Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by such Selling Stockholder with
any of the provisions hereof or thereof will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of (i) if such Selling Stockholder is other than an individual,
the organizational documents of such Selling Stockholder; (ii) any Contract or
Permit to which any Selling Stockholder is a party or by which any of the
properties or assets of such Selling Stockholder are bound; (iii) any Order of
any Governmental Body applicable to such Selling Stockholder or by which any of
the properties or assets of such Selling Stockholder are bound; or (iv) any
applicable Law.

     

    (b)  No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is
required on the part of such Selling Stockholder in connection with the
execution and delivery of this Agreement, the Selling Stockholder Documents, the
compliance by such Selling Stockholder with any of the provisions hereof, or the
consummation of the transactions contemplated hereby, except for those set forth
in Section
3.3(b) of the Disclosure Schedule.

     

    3.4           Ownership and Transfer of
Shares. Such
Selling Stockholder is the record and beneficial owner of the Shares indicated
as being owned by such Selling Stockholder on Exhibit
A, free and clear of any and all Liens.  Such Selling
Stockholder has the power and authority to sell, transfer, assign and deliver
such Shares as provided in this Agreement, and such delivery will convey to
Purchaser good and marketable title to such Shares, free and clear of any and
all Liens.

     

    3.5           Litigation.  There
is no Legal Proceeding pending or, to the Knowledge of such Selling Stockholder,
threatened against such Selling Stockholder or to which such Selling Stockholder
is otherwise a party relating to this Agreement, the Selling Stockholder
Documents or the transactions contemplated hereby or thereby.

     

    
      
        
        

      

      
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    3.6           Financial
Advisors.  Except
as set forth in Section 3.6 of the
Disclosure Schedule, no Person has acted, directly or indirectly, as a broker,
finder or financial advisor for such Selling Stockholder in connection with the
transactions contemplated by this Agreement and no Person is or will be entitled
to any fee or commission or like payment in respect thereof.
 

     

    ARTICLE
IV

     

    REPRESENTATIONS
AND WARRANTIES RELATING TO THE COMPANY

     

    The
Selling Stockholders, jointly and severally, hereby represent and warrant to
Purchaser that:

     

    4.1           Organization and Good
Standing.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted and as currently proposed to be
conducted.  The Company is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization.

     

    4.2           Authorization of
Agreement.  The
Company has all requisite power, authority and legal capacity to execute and
deliver this Agreement and each other agreement, document, or instrument or
certificate contemplated by this Agreement or to be executed by the Company in
connection with the transactions contemplated by this Agreement (the “Company
Documents”), to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance of this Agreement and each of the Company
Documents, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by all required action on the
part of the Company.  This Agreement has been, and each of the Company
Documents will be at or prior to the Closing, duly and validly executed and
delivered by the Company and (assuming due authorization, execution and delivery
by Purchaser) this Agreement constitutes, and each of the Company Documents when
so executed and delivered will constitute, legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms.

     

    4.3           Conflicts; Consents of Third
Parties.

     

    (a)  None
of the execution and delivery by the Company of this Agreement or the Company
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by the Company with any of the provisions hereof or thereof will
conflict with, or result in any violation or breach of, conflict with or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or give rise to any obligation of the Company to
make any payment under, or to the increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Liens upon any of the properties or assets of Company or any Subsidiary
under, any provision of (i) the certificate of incorporation and by-laws or
comparable organizational documents of the Company or any Subsidiary;
(ii) any Contract or Permit to which the Company or any Subsidiary is a
party or by which any of the properties or assets of the Company or any
Subsidiary are bound; (iii) any Order applicable to the Company or any
Subsidiary or any of the properties or assets of the Company or any Subsidiary;
or (iv) any applicable Law.

     

    
      
        
        

      

      
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    (b)  No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is
required on the part of the Company or any Subsidiary in connection with (i) the
execution and delivery of this Agreement, the Company Documents, respectively,
the compliance by the Company with any of the provisions hereof and thereof, or
the consummation of the transactions contemplated hereby or thereby, or
(ii) the continuing validity and effectiveness immediately following the
Closing of any Permit or Contract of the Company or any Subsidiary, except for
those set forth in Section 4.3(b) of the
Disclosure Schedule.

     

    4.4           Capitalization.

     

    (a)  The
authorized capital stock of the Company consists of 250,000 common shares, $1.00
par value per share (the “Common
Stock”), 10,000 shares of Class A Preferred Stock, $100 par value per
share (the “Class A
Preferred”) and 10,000 shares of Class B Preferred Stock, $1,000 par
value per share (the “Class B
Preferred” and, together with the Class A Preferred, collectively the
“Preferred
Stock”).  As of the date hereof, there are 10,000 shares of
Common Stock issued and outstanding, 7,500 shares of Class A Preferred issued
and outstanding, and 1,600 shares of Class B Preferred issued and outstanding,
and no shares of capital stock of the Company are held by the Company as
treasury stock.  All of the issued and outstanding shares of Common
Stock and Preferred Stock were duly authorized for issuance and are validly
issued, fully paid and non-assessable and were not issued in violation of any
purchase or call option, right of first refusal, subscription right, preemptive
right or any similar rights.  All of the outstanding shares of Common
Stock and Preferred Stock are owned of record by the holders and in the
respective amounts as are set forth on Exhibit
A.

     

    (b)  There
is no existing option, warrant, call, right or Contract to which any Selling
Stockholder or the Company is a party requiring, and, except for the Preferred
Stock, there are no securities of the Company outstanding which upon conversion
or exchange would require, the issuance, sale or transfer of any additional
shares of capital stock or other equity securities of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity securities of
the Company.  There are no obligations, contingent or otherwise, of
the Company or any Subsidiary to (i) repurchase, redeem or otherwise acquire any
shares of Common Stock or the capital stock or other equity interests of any
Subsidiary or (ii) provide material funds to, or make any material investment in
(in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any Person.  There are
no outstanding stock appreciation, phantom stock, profit participation or
similar rights with respect to the Company or any of the
Subsidiaries.  There are no bonds, debentures, notes or other
indebtedness of the Company or the Subsidiaries having the right to vote or
consent (or, convertible into, or exchangeable for, securities having the right
to vote or consent) on any matters on which stockholders (or other
equityholders) of the Company of the Subsidiaries may vote.  There are
no voting trusts, irrevocable proxies or other Contracts or understandings to
which the Company or any Subsidiary or any Selling Stockholder is a party or is
bound with respect to the voting or consent of any shares of Common Stock or the
equity interests of any Subsidiary.

     

    
      
        
        

      

      
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    4.5           Subsidiaries.  Section 4.5 of the
Disclosure Schedule sets forth the name of each Subsidiary, and, with respect to
each Subsidiary, the jurisdiction in which it is incorporated or organized, the
jurisdictions, if any, in which it is qualified to do business, the number of
shares of its authorized capital stock, the number and class of shares thereof
duly issued and outstanding, the names of all stockholders or other equity
owners and the number of shares of stock owned by each stockholder or the amount
of equity owned by each equity owner.  Each Subsidiary is a duly
organized and validly existing corporation, partnership or other entity in good
standing under the laws of the jurisdiction of its incorporation or organization
and is duly qualified or authorized to do business as a foreign corporation or
entity and is in good standing under the laws of each jurisdiction in which the
conduct of its business or the ownership of its properties requires such
qualification or authorization.  Each Subsidiary has all requisite
corporate or entity power and authority to own its properties and carry on its
business as presently conducted.  The outstanding shares of capital
stock or equity interests of each Subsidiary are validly issued, fully paid and
non-assessable and were not issued in violation of any purchase or call option,
right of first refusal, subscription right, preemptive right or any similar
right.  All such shares or other equity interests represented as being
owned by the Company or any of the Subsidiaries are owned by them free and clear
of any and all Liens.  No shares of capital stock are held by any
Subsidiary as treasury stock.  There is no existing option, warrant,
call, right or Contract to which any Subsidiary is a party requiring, and there
are no convertible securities of any Subsidiary outstanding which upon
conversion would require, the issuance of any shares of capital stock or other
equity interests of any Subsidiary or other securities convertible into shares
of capital stock or other equity interests of any Subsidiary. Except as set
forth in Section
4.5 of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or equity securities of any Person other than the
Subsidiaries.  There are no material restrictions on the ability of
the Subsidiaries to make distributions of cash to their respective equity
holders.

     

    4.6           Corporate
Records.


     

    (a)  The
Company has delivered to Purchaser true, correct and complete copies of the
certificate[s] of incorporation (each certified by the Secretary of State or
other appropriate official of the applicable jurisdiction of organization) and
by-laws or comparable organizational documents of the Company and each of the
Subsidiaries in each case as amended and in effect on the due date hereof,
including all amendments thereto.

     

    (b)  The
minute books of the Company and each Subsidiary previously made available to
Purchaser contain true and correct records of all meetings and accurately
reflect all other corporate action of the stockholders and board of directors
(including committees thereof) of the Company and the
Subsidiaries.  The stock certificate books and stock transfer ledgers
of the Company and the Subsidiaries previously made available to Purchaser are
true, correct and complete.  All stock transfer taxes levied, if any,
or payable with respect to all transfers of shares of the Company and the
Subsidiaries prior to the date hereof have been paid and appropriate transfer
tax stamps affixed.

     

    
      
        
        

      

      
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    4.7           Financial
Statements.

     

    (a)  The
Company has delivered to Purchaser copies of (i) the audited consolidated
balance sheets of the Company and the Subsidiaries as at December 31, 2006, 2007
and 2008 and the related audited consolidated statements of income,
stockholders’ equity and of cash flows of the Company and the Subsidiaries for
the years then ended and (ii) the unaudited consolidated balance sheet of
the Company and the Subsidiaries as at September 30, 2009 and the related
consolidated statements of income, stockholders’ equity and of cash flows of the
Company and the Subsidiaries for the nine (9) month period then ended (such
audited and unaudited statements, including the related notes and schedules
thereto, are referred to herein as the “Financial
Statements”).  Each of the Financial Statements is complete and
correct, has been prepared in accordance with GAAP consistently applied by the
Company without modification of the accounting principles used in the
preparation thereof throughout the periods presented and presents fairly in all
material respects the consolidated financial position, results of operations and
cash flows of the Company and the Subsidiaries as at the dates and for the
periods indicated therein.

     

    The
audited consolidated balance sheet of the Company and the Subsidiaries as at
December 31, 2008 is referred to herein as the “Balance
Sheet” and such date is referred to herein as the “Balance
Sheet Date.”

     

    (b)  All
books, records and accounts of the Company and the Subsidiaries are accurate and
complete and are maintained in all material respects in accordance with good
business practice and all applicable Laws.  The Company and the
Subsidiaries maintain systems of internal accounting controls sufficient to
provide reasonable assurances that:  (i) transactions are recorded as
necessary to permit the preparation of financial statements in conformity with
GAAP and to maintain accountability for assets; and (ii) the recorded
accountability for assets is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any
differences.

     

    (c)  The
financial projections and business plan provided by the Company to Purchaser
prior to the date hereof were reasonably prepared in good faith on a basis
reflecting reasonable  estimates, assumptions and judgments, at the
time provided to Purchaser, as to the future financial performance of the
Company and the Subsidiaries.  Without limitation of the foregoing
sentence, Purchaser acknowledges that such financial projections and business
plan are subject to assumptions, risks and uncertainties relating to the future
condition of outside variables, such as the operating environment, economies and
markets in which the Company operates, which are difficult to predict and
therefore the actual results may differ from those contained in such financial
projections and business plan, and that no assurances can be given that the
revenues or net earnings contained in such financial projections and business
plan will be achieved.

     

    
      
        
        

      

      
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    (d)  The
Company has provided to Purchaser copies of all issued auditors’ reports,
letters to management regarding accounting practices and systems of internal
controls, and all responses to such letters from management, in each case to the
extent relating to the business and the operation thereof, whether the same are
issued to the Company or any of its Subsidiaries.

     

    (e)   The
Company’s principal executive officer and its principal financial officer have
disclosed, based on their most recent evaluation, to the Company’s auditors (i)
all significant deficiencies in the design or operation of internal controls
which could adversely affect the Company’s ability to record, process, summarize
and report financial data and have identified for the Company’s auditors any
material weaknesses in internal controls and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls.

     

    4.8           No Undisclosed
Liabilities.  Except
as set forth in Section 4.25 of the
Disclosure Schedule, neither the Company nor any Subsidiary has any Indebtedness
or Liabilities (whether or not required under GAAP to be reflected on a balance
sheet or the notes thereto) other than those (i) specifically reflected on and
fully reserved against in the Balance Sheet, (ii) incurred in the Ordinary
Course of Business since the Balance Sheet Date or (iii) that are immaterial to
the Company or any Subsidiary.

     

    4.9           Absence of Certain
Developments.  Except
as expressly contemplated by this Agreement or as set forth in Section 4.9 of
the Disclosure Schedule, since the Balance Sheet Date (i) the Company and
the Subsidiaries have conducted their respective businesses only in the Ordinary
Course of Business and (ii) there has not been any event, change, occurrence or
circumstance that, individually or in the aggregate with any such events,
changes, occurrences or circumstances, has had or could reasonably be expected
to have a Material Adverse Effect. Without limiting the generality of the
foregoing, except as set forth in Section 4.9 of the
Disclosure Schedule, since the Balance Sheet Date:

     

    (a)  there
has not been any damage, destruction or loss, whether or not covered by
insurance, with respect to the property and assets of the Company or any
Subsidiary having a replacement cost of more than $100,000 for any single loss
or $250,000 for all such losses;

     

    (b)  there
has not been any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interest in, the Company or any Subsidiary;

     

    (c)  neither
the Company nor any Subsidiary has awarded or paid any bonuses to employees of
the Company or any Subsidiary, except to the extent accrued on the Balance
Sheet, or entered into any employment, deferred compensation, severance or
similar agreement (nor amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of the Company’s or any
Subsidiary’s directors, officers, employees, agents or representatives or agreed
to increase the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees, agents or
representatives;

     

    
      
        
        

      

      
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    (d)  there
has not been any change by the Company or any Subsidiary in accounting or Tax
reporting principles, methods or policies;

     

    (e)   neither
the Company nor any Subsidiary has made or rescinded any election relating to
Taxes or settled or compromised any claim relating to Taxes;

     

    (f)  
neither the Company nor any Subsidiary has entered into any transaction or
Contract other than in the Ordinary Course of Business;

     

    (g)  
neither the Company nor any Subsidiary has failed to promptly pay and discharge
current liabilities, except where disputed in good faith by appropriate
proceedings;

     

    (h)   neither
the Company nor any Subsidiary has made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or expenses to
any Selling Stockholder or any director, officer, partner, stockholder or
Affiliate of any Selling Stockholder other than reimbursements of business
expenses incurred and arising in the Ordinary Course of Business;

     

    (i)  neither
the Company nor any Subsidiary has (A) mortgaged, pledged or subjected to any
Lien any of its assets, or (B) acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of the Company
or any Subsidiary, except, in the case of clause (B), for assets acquired, sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the Ordinary
Course of Business;

     

    (j)  neither
the Company nor any Subsidiary has discharged or satisfied any Lien, or paid any
Liability, except in the Ordinary Course of Business;

     

    (k)  neither
the Company nor any Subsidiary has canceled or compromised any debt or claim or
amended, canceled, terminated, relinquished, waived or released any Contract or
right except in the Ordinary Course of Business and which, in the aggregate,
would not be material to the Company and the Subsidiaries taken as a
whole;

     

    (l)  neither
the Company nor any Subsidiary has made or committed to make any capital
expenditures or capital additions or betterments in excess of $100,000
individually or $250,000 in the aggregate;

     

    (m)  neither
the Company nor any Subsidiary has issued, created, incurred, assumed,
guaranteed, endorsed or otherwise become liable or responsible with respect to
(whether directly, contingently, or otherwise) any Indebtedness, except in the
Ordinary Course of Business;

     

    
      
        
        

      

      
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    (n)  the
Company has not granted any license or sublicense of any rights under or with
respect to any Intellectual Property owned by the Company or any of its
Subsidiaries, except in the Ordinary Course of Business;

     

    (o)  neither
the Company nor any Subsidiary has instituted or settled any Legal Proceeding
resulting in a loss of revenue in excess of $100,000 in the aggregate;
and

     

    (p)  none
of the Selling Stockholders or the Company has agreed, committed, arranged or
entered into any understanding to do anything set forth in this Section
4.9.

     

    4.10          Taxes.

     

    (a)   (i)
All Tax Returns required to be filed by or on behalf of each of the Company, any
Subsidiary and any Affiliated Group of which the Company or any Subsidiary is or
was a member have been duly and timely filed with the appropriate Taxing
Authority in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings), and all such Tax Returns are true, complete and correct in all
respects; and (ii) all Taxes payable by or on behalf of each of the Company, any
Subsidiary and any Affiliated Group of which the Company or any Subsidiary is or
was a member have been fully and timely paid.  With respect to any
period for which Tax Returns have not yet been filed or for which Taxes are not
yet due or owing, the Company has made due and sufficient accruals for such
Taxes in the Financial Statements and its books and records.  All
required estimated Tax payments sufficient to avoid any underpayment penalties
or interest have been made by or on behalf of the Company and each
Subsidiary.

     

    (b)   The
Company and each Subsidiary has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes and has duly
and timely withheld and paid over to the appropriate Taxing Authority all
amounts required to be so withheld and paid under all applicable
Laws.

     

    (c)  Purchaser
has received complete copies of (i) all federal, state, local and foreign income
or franchise Tax Returns of the Company and the Subsidiaries relating to the
taxable periods since January 1, 2003 and (ii) any audit report issued within
the last three years relating to any Taxes due from or with respect to the
Company or any Subsidiary.  All income and franchise Tax Returns filed
by or on behalf of the Company or any Subsidiary have been examined by the
relevant Taxing Authority or the statute of limitations with respect to such Tax
Returns has expired.

     

    (d)  Section 4.10(d) of
the Disclosure Schedule lists (i) all types of Taxes paid, and all types of Tax
Returns filed by or on behalf of Company or any Subsidiary, and (ii) all of the
jurisdictions that impose such Taxes or with respect to which the Company or any
Subsidiary has a duty to file such Tax Returns.  No claim has been
made by a Taxing Authority in a jurisdiction where the Company or any Subsidiary
does not file Tax Returns such that it is or may be subject to taxation by that
jurisdiction.

     

     

    
      
        
        

      

      
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    (e)  All
deficiencies asserted or assessments made as a result of any examinations by any
Taxing Authority of the Tax Returns of, or including, the Company or any
Subsidiary have been fully paid, and there are no other audits or investigations
by any Taxing Authority in progress, nor has the Selling Stockholders, the
Company or any of the Subsidiaries received any notice from any Taxing Authority
that it intends to conduct such an audit or investigation.  No issue
has been raised by a Taxing Authority in any prior examination of the Company or
any Subsidiary which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.

     

    (f)  Neither
the Company nor any Subsidiary nor any other Person on their behalf has (i)
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
such Subsidiary, (ii) agreed to or is required to make any adjustments pursuant
to Section 481(a) of the Code or any similar provision of Law or has any
knowledge that any Taxing Authority has proposed any such adjustment, or has any
application pending with any Taxing Authority requesting permission for any
changes in accounting methods that relate to the Company or any Subsidiary,
(iii) executed or entered into a closing agreement pursuant to Section 7121 of
the Code or any similar provision of Law with respect to the Company or any
Subsidiary, (iv) requested any extension of time within which to file any Tax
Return, which Tax Return has since not been filed, (v) granted any extension for
the assessment or collection of Taxes, which Taxes have not since been paid, or
(vi) granted to any Person any power of attorney that is currently in force with
respect to any Tax matter.

     

    (g)  No
property owned by the Company or any Subsidiary is (i) property required to be
treated as being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
“tax-exempt use property” within the meaning of Section 168(h)(1) of the Code or
(iii) “tax-exempt bond financed property” within the meaning of Section 168(g)
of the Code, (iv) “limited use property” within the meaning of Rev. Proc. 76-30,
(v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to any
provision of state, local or foreign Law comparable to any of the provisions
listed above.

     

    (h)  No
Selling Stockholder is a foreign person within the meaning of Section 1445
of the Code.

     

    (i)  Neither
the Company nor any Subsidiary is a party to any tax sharing, allocation,
indemnity or similar agreement or arrangement (whether or not written) pursuant
to which it will have any obligation to make any payments after the
Closing.

     

    (j)  There
is no contract, agreement, plan or arrangement covering any person that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible by Purchaser, the Company or any of their respective
Affiliates by reason of Section 280G of the Code.

     

    
      
        
        

      

      
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    (k)  Neither
the Company nor any Subsidiary is subject to any private letter ruling of the
IRS or comparable rulings of any Taxing Authority.

     

    (l)  There
are no Liens as a result of any unpaid Taxes upon any of the assets of the
Company or any Subsidiary.

     

    (m)  Neither
the Company nor any of the Subsidiaries has ever been a member of any
consolidated, combined, affiliated or unitary group of corporations for any Tax
purposes other than a group in which the Company is the common
parent.

     

    (n)  Except
as set forth in Section 4.10(n) of
the Disclosure Schedule, neither the Company nor any of the Subsidiaries has
constituted either a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (A) in the
two years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a “plan” or “series of related transactions”
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.

     

    (o)  There
is no taxable income of the Company or any of the Subsidiaries that will be
required under applicable Tax Law to be reported by the Purchaser or any of its
Affiliates, including the Company or any of the Subsidiaries, for a taxable
period beginning after the Closing Date which taxable income was realized (and
reflects economic income) arising prior to the Closing Date.

     

    (p)  Neither
the Company nor any Subsidiary has (i) engaged in any “intercompany
transactions” in respect of which gain was and continues to be deferred pursuant
to Treasury Regulations Section 1.1502-13 or any analogous or similar provision
of Law or (ii) has any “excess loss accounts” in respect of the stock of any
Subsidiary pursuant to Treasury Regulations Section 1.1502-19, or any analogous
or similar provision of Law.

     

    (q)  The
Selling Stockholders, the Company and the Subsidiaries are members of a “selling
consolidated group” within the meaning of Treasury Regulation Section
1.338(h)(10)-1(b)(2).

     

    (r)  The
Company and the Subsidiaries have disclosed on their federal income Tax Returns
all positions taken therein that could give rise to substantial understatement
of federal income tax within the meaning of Section 6662 of the
Code.

     

    (s)  Neither
the Company nor any of the Subsidiaries has, or has ever had, a permanent
establishment in any country other than the United States, or has engaged in a
trade or business in any country other than the United States that subjected it
to tax in such country.

     

    (t)  The
Company has no potential liability for any Tax under Section 1374 of the
Code.  Neither the Company nor any Subsidiary has, in the past ten
years, (i) acquired assets from another corporation in a transaction in which
such entity’s tax basis for the acquired asset was determined, in whole, or in
part, by reference to the Tax basis of the acquired assets (or any other
property) in the hands of the transferor or (ii) acquired the stock of any
corporation which is a Qualified Subchapter S Subsidiary, within the meaning of
Section 1361(b)(3) of the Code.

     

    
      
        
        

      

      
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    4.11          Real
Property.


     

    (a)  Schedule 4.11(a) sets
forth a complete list of (i) all real property and interests in real property,
including improvements thereon and easements appurtenant thereto owned in fee by
the Company and the Subsidiaries (individually, an “Owned
Property” and collectively, the “Owned
Properties”), (ii) all real property and interests in real property
leased by the Company and the Subsidiaries (individually, a “Real
Property Lease” and collectively, the “Real
Property Leases” and, together with the Owned Properties, being referred
to herein individually as a “Company
Property” and collectively as the “Company
Properties”) as lessee or lessor, including a description of each such
Real Property Lease (including the name of the third party lessor or lessee and
the date of the lease or sublease and all amendments thereto).  The
Company and the Subsidiaries have good and marketable fee title to all Owned
Property, free and clear of all Liens of any nature whatsoever, except Permitted
Exceptions.  The Company Properties constitute all interests in real
property currently used, occupied or currently held for use in connection with
the business of the Company and the Subsidiaries and which are necessary for the
continued operation of the business of the Company and the Subsidiaries as the
business is currently conducted.  All of the Company Properties and
buildings, fixtures and improvements thereon (i) are in good operating condition
without structural defects, and all mechanical and other systems located thereon
are in good operating condition, and no condition exists requiring material
repairs, alterations or corrections and (ii) are suitable, sufficient and
appropriate in all respects for their current and contemplated
uses.  None of the improvements located on the Company Properties
constitute a legal non-conforming use or otherwise require any special
dispensation, variance or special permit under any Laws.  The Company
has delivered to Purchaser true, correct and complete copies of (i) all deeds,
title reports and surveys for the Owned Properties and (ii) the Real Property
Leases, together with all amendments, modifications or supplements, if any,
thereto.  The Company Properties are not subject to any leases, rights
of first refusal, options to purchase or rights of occupancy, except the Real
Property Leases set forth in Section 4.11(a) of
the Disclosure Schedule.

     

    (b)  Each
of the Company and the Subsidiaries, as applicable, has a valid, binding and
enforceable leasehold interest under each of the Real Property Leases under
which it is a lessee, free and clear of all Liens other than Permitted
Exceptions.  Each of the Real Property Leases is in full force and
effect.  Neither the Company nor any Subsidiary is in default under
any Real Property Lease, and no event has occurred and no circumstance exists
which, if not remedied, and whether with or without notice or the passage of
time or both, would result in such a default.  Neither the Company nor
any Subsidiary has received or given any notice of any default or event that
with notice or lapse of time, or both, would constitute a default by the Company
or any Subsidiary under any of the Real Property Leases and, to the Knowledge of
the Company and the Selling Stockholders, no other party is in default thereof,
and no party to any Real Property Lease has exercised any termination rights
with respect thereto.

     

    (c)  The
Company and the Subsidiaries have all certificates of occupancy and Permits of
any Governmental Body necessary or useful for the current use and operation of
each Company Property, and the Company and the Subsidiaries have fully complied
with all material conditions of the Permits applicable to them.  No
default or violation, or event that with the lapse of time or giving of notice
or both would become a default or violation, has occurred in the due observance
of any Permit.

     

    
      
        
        

      

      
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    (d)  There
does not exist any actual or, to the Knowledge of the Company and the Selling
Stockholders, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and none of
the Company, any Subsidiary or any Selling Stockholder has received any notice,
oral or written, of the intention of any Governmental Body or other Person to
take or use all or any part thereof.

     

    (e)  None
of the Selling Stockholders, the Company or any Subsidiary has received any
notice from any insurance company that has issued a policy with respect to any
Company Property requiring performance of any structural or other repairs or
alterations to such Company Property.

     

    (f)  Neither
the Company nor any Subsidiary owns, holds, is obligated under or is a party to,
any option, right of first refusal or other contractual right to purchase,
acquire, sell, assign or dispose of any real estate or any portion thereof or
interest therein.

     

    4.12           Tangible Personal
Property.

     

    (a)  The
Company and the Subsidiaries have good and marketable title to all of the items
of tangible personal property used in the business of the Company and the
Subsidiaries (except as sold or disposed of subsequent to the date hereof in the
Ordinary Course of Business and not in violation of this Agreement), free and
clear of any and all Liens, other than the Permitted Exceptions.  All
such items of tangible personal property which, individually or in the
aggregate, are material to the operation of the business of the Company and the
Subsidiaries are in good condition and in a state of good maintenance and repair
(ordinary wear and tear excepted) and are suitable for the purposes
used.

     

    (b)  Section 4.12(b) of
the Disclosure Schedule sets forth all leases of personal property (“Personal
Property Leases”) involving annual payments in excess of $50,000 relating
to personal property used in the business of the Company or any of the
Subsidiaries or to which the Company or any of the Subsidiaries is a party or by
which the properties or assets of the Company or any of the Subsidiaries is
bound.  All of the items of personal property under the Personal
Property Leases are in good condition and repair (ordinary wear and tear
excepted) and are suitable for the purposes used, and such property is in all
material respects in the condition required of such property by the terms of the
lease applicable thereto during the term of the lease.  The Company
has delivered to Purchaser true, correct and complete copies of the Personal
Property Leases, together with all amendments, modifications or supplements
thereto.

     

    (c)   The
Company and each of the Subsidiaries has a valid and enforceable leasehold
interest under each of the Personal Property Leases under which it is a
lessee.  Each of the Personal Property Leases is in full force and
effect and neither the Company nor any Subsidiary has received or given any
notice of any default or event that with notice or lapse of time, or both, would
constitute a default by the Company or any Subsidiary under any of the Personal
Property Leases and, to the Knowledge of the Company and the Selling
Stockholders, no other party is in default thereof, and no party to the Personal
Property Leases has exercised any termination rights with respect
thereto.

     

    
      
        
        

      

      
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    4.13           Technology and Intellectual
Property.


     

    (a)  Section 4.13(a) of
the Disclosure Schedule sets forth a complete and accurate list, as of the date
of this Agreement, of (i) each issued patent owned by the Company or any of its
Subsidiaries, (ii) each pending patent application filed by or on behalf of the
Company or any of its Subsidiaries, (iii) each trademark registration, service
mark registration, and copyright registration owned by the Company or any of its
Subsidiaries, (iv) each application for trademark registration, service mark
registration, and copyright registration made by or on behalf of the Company or
any of its Subsidiaries, (v) each domain name registered by or on behalf of the
Company or any of its Subsidiaries and (vi) each material trade name, d/b/a,
unregistered trademark, and unregistered service mark used by the Company or any
of its Subsidiaries in connection with its business. Section 4.13(a)
of the Disclosure Schedule lists, for each such item of Intellectual Property
owned by the Company or any of its Subsidiaries, the item, the jurisdiction, the
filing and, if issued, issuance dates and any serial or registration
numbers.

     

    (b)  Except
as disclosed in Section 4.13(b) of
the Disclosure Schedule, the Company and its Subsidiaries own all right, title
and interest in and to all Intellectual Property required to be set forth on
Section 4.13(a)
of the Disclosure Schedule.  All such Intellectual Property is
subsisting, and all necessary registration, maintenance, renewal, and other
relevant filing fees due through the date hereof in connection therewith have
been timely paid and all necessary documents and certificates in connection
therewith have been timely filed with the relevant patent, copyright, trademark,
or other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such registered Intellectual Property in
full force and effect. Except as set forth in
Section 4.13(a)
of the Disclosure Schedule, there are, as of the date of this Agreement, no
filings, payments or similar actions that must be taken by the Company within
120 days following the Closing Date for the purposes of obtaining, maintaining,
perfecting or renewing any such registrations and applications.

     

    (c)  Except
as set forth in Section 4.13(c) of
the Disclosure Schedule, the Company and its Subsidiaries own all right, title
and interest in and to, or have valid and continuing rights to use, sell and
license, all Intellectual Property, Software and other Technology used in the
conduct of the business and operations of the Company and its Subsidiaries as
presently conducted and as currently proposed to be conducted, free and clear of
all Liens or obligations to others. The business and operations of the Company
and its Subsidiaries, their Technology, their products and services and the
designing, development, manufacturing, reproduction, use, marketing, sale,
distribution, maintenance and modification of any of the foregoing as presently
performed and as currently contemplated to be performed does not infringe upon,
misappropriate or otherwise violate any Intellectual Property of any third
party.

     

    
      
        
        

      

      
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    (d)  Except
with respect to licenses of Software (i) generally available for an annual or
one-time license fee of no more than $20,000 in the aggregate, (ii) distributed
as “freeware” or (iii) distributed via Internet access without charge and for
use without charge, Section 4.13(d) of
the Disclosure Schedule sets forth a list, complete and accurate as of the date
of this Agreement, of all agreements pursuant to which the Company or any of its
Subsidiaries licenses in or otherwise is authorized to use all Intellectual
Property, Software and other Technology used in the conduct of the business and
operations of the Company and its Subsidiaries as presently conducted and as
currently contemplated to be conducted.  The Company has delivered to
Purchaser correct, complete and current copies of all such
agreements.  Except pursuant to the agreements described in clause (i)
above or identified in Section 4.13(d) of
the Disclosure Schedule, neither the Company nor any of its Subsidiaries is
required, obligated, or under any liability whatsoever to make any payments in
excess of $20,000 per year by way of royalties, fees or other payments described
in the applicable agreements, to any third party with respect to any
Intellectual Property, Software and other Technology used in the conduct the
business and operations of the Company and its Subsidiaries as presently
conducted.

     

    (e)  Except
as set forth in Section 4.13(e) of
the Disclosure Schedule, neither the execution of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the conduct
of the business and operations of the Company and its Subsidiaries as presently
conducted and as currently proposed to be conducted will result in: (i) the
Company or any of its Subsidiaries granting to any third party any right to any
Technology or Intellectual Property owned by, or licensed to, the Company and
its Subsidiaries, or (ii) the Company or any of its Subsidiaries being bound by,
or subject to, any non-compete or other restriction on the operation or scope of
its business.  Following the Closing, the Company and its Subsidiaries
will have the right to exercise all of their current rights under agreements
granting rights to the Company or any of its Subsidiaries with respect to
Intellectual Property, Software and other Technology of a third party to the
same extent and in the same manner they would have been able to had the
transaction contemplated by this Agreement not occurred, and without the payment
of any additional consideration as a result of such transaction and without the
necessity of any third party consent as a result of such
transaction.

     

    (f)  Section 4.13(f) of
the Disclosure Schedule sets forth a complete and accurate list of all
agreements pursuant to which the Company or any of its Subsidiaries has licensed
a third party for any purpose any Intellectual Property, Software or other
Technology owned by or exclusively licensed to the Company or any of its
Subsidiaries.  Section 4.13(f) of
the Disclosure Schedule further sets forth a complete and accurate list of all
agreements to which the Company or any Subsidiary is a party (i) containing
a covenant not to compete or otherwise limiting its ability to use or exploit
fully any Intellectual Property owned by the Company or any of its Subsidiaries
or (ii) containing an agreement to indemnify any other Person against any claim
of infringement, violation, misappropriation or unauthorized use of any
Intellectual Property of a third party.  The Company has delivered to
Purchaser true, correct and complete copies of each agreement set forth in Section 4.13(f) of
the Disclosure Schedule, together with all amendments, modifications or
supplements thereto.

     

    (g)  The
Company and its Subsidiaries have not in the last ten years (i) transferred
ownership of, (ii) granted any exclusive license of or right to use, (iii)
authorized the retention of any exclusive rights to use, or (iv) authorized
joint ownership of, any Intellectual Property, Software or other Technology
owned by the Company or any of its Subsidiaries.

     

    
      
        
        

      

      
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    (h)  Section 4.13(h) of
the Disclosure Schedule sets forth a complete and accurate list of (i) all
Software that is owned exclusively by the Company or any Subsidiary that is
material to the operation of the business of the Company and the Subsidiaries
and (ii) all Software that is used by the Company or any Subsidiary in the
business of the Company and the Subsidiaries that is not exclusively owned by
the Company or any Subsidiary, excluding Software available on reasonable terms
through commercial distributors or in consumer retail stores for a license fee
of no more than $20,000.

     

    (i)  All
of the material Intellectual Property owned by the Company or any of its
Subsidiaries is valid and enforceable.  Except as set forth in Section 4.13(i) of
the Disclosure Schedule, since January 1, 2005 neither the Company nor any of
its Subsidiaries has brought any action, suit or proceeding or asserted any
claim (other than claims that have been resolved to the Company’s satisfaction)
against any Person for infringing or misappropriating any Technology or, to the
Company’s Knowledge, Intellectual Property owned by the Company or any of its
Subsidiaries, nor is there any basis for any such action, suit or
proceeding.

     

    (j)  Except
as set forth in Section 4.13(j) of
the Disclosure Schedule, there is no action, suit, proceeding, hearing,
investigation, notice or complaint pending or, to the Company’s Knowledge,
threatened, by any third party before any court or tribunal (including, without
limitation, the United States Patent and Trademark Office or equivalent
authority anywhere in the world) relating to any of Company’s or any of its
Subsidiaries’ Intellectual Property or Technology, nor has any claim or demand
been made by any third party that (i) challenges the validity, enforceability,
use or exclusive ownership of any Intellectual Property or Technology owned by
the Company or any of its Subsidiaries or (ii) alleges any infringement,
misappropriation, violation, or unfair competition or trade practices by the
Company or any of its Subsidiaries of any Intellectual Property or Technology of
any third party, nor is the Company aware of any basis for any such claim or
demand.

     

    (k) 
Section 4.13(k)
of the Disclosure Schedule sets forth a complete and accurate list of (i) all
Software and computer hardware (other than “off the shelf” hardware that is
generally commercially available) that is owned exclusively by, and is used in
the business of, the Company and its Subsidiaries and (ii) all Software and
computer hardware (other than “off the shelf” hardware that is generally
commercially available) that is not exclusively owned by the Company or its
Subsidiaries and is used in the business of the Company and its Subsidiaries,
excluding Software generally available for an annual license fee of no more than
$20,000.  After the Closing, (x) all Software and computer hardware
(other than “off the shelf” hardware that is generally commercially available)
currently owned exclusively by the Company and its Subsidiaries will continue to
be owned exclusively by the Company and its Subsidiaries, (y) the Company and
its Subsidiaries will have the same continuing rights to use all Software and
computer hardware (other than “off the shelf” hardware that is generally
commercially available) that is not currently exclusively owned by the Company
or its Subsidiaries and is currently used in the business of the Company and its
Subsidiaries, and (z) the Software and computer hardware currently owned
exclusively by the Company and its Subsidiaries are sufficient for the conduct
of the business of the Company and its Subsidiaries as presently conducted and
as proposed to be conducted.

     

    
      
        
        

      

      
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    (l)   There
are no agreements between the Company or any of its Subsidiaries and any third
party relating to any Intellectual Property of the Company or any of its
Subsidiaries or any third party under which there is, as of the date of this
Agreement, or, to the Company’s Knowledge, is expected, as of the date of this
Agreement, to be, any material dispute regarding the scope or performance of
such agreement.

     

    (m)  None
of the Company’s or any of its Subsidiaries’ Technology or Intellectual Property
are subject to any outstanding injunction, decree, order, judgment, agreement or
stipulation that restricts in any manner the use, transfer or licensing thereof
by the Company or any of its Subsidiaries or affects the validity, use or
enforceability of any such Technology or Intellectual Property.

     

    (n)  The
Company and the Subsidiaries have taken reasonable measures to protect the
confidentiality of all trade secrets owned by the Company or any of its
Subsidiaries that are material to their businesses as currently conducted and as
proposed to be conducted.   No employee, consultant or
independent contractor of the Company or any Subsidiary is, as a result of or in
the course of such employee’s, consultant’s or independent contractor’s
engagement by the Company or any Subsidiary, in default or breach of any
material term of any employment agreement, non-disclosure agreement, assignment
of invention agreement or similar agreement.

     

    (o)  Except
as set forth in Section 4.13(o) of
the Disclosure Schedule, no government funding and no facilities of a
university, college, other educational institution or research center were used
in the development of any Intellectual Property owned by the Company or any of
its Subsidiaries where, as a result of such funding or the use of such
facilities, the government or any university, college, other educational
institution or research center has any rights in such Intellectual
Property.  Except as set forth in Section 4.13(o) of
the Disclosure Schedule, no current or former employee, consultant or
independent contractor of the Company or any of its Subsidiaries who contributed
to the creation or development of any Intellectual Property owned by the Company
or any of its Subsidiaries has performed services for the government or a
university, college, other educational institution or research center during a
period of time during which such employee, consultant or independent contractor
was also performing services for the Company or any of its
Subsidiaries.

     

    (p)  Except
as set forth in Section 4.13(p) of
the Disclosure Schedule, no open source or public library Software, including,
but not limited to, any version of any Software licensed pursuant to any GNU
public license, was used in the development or modification of any Software
owned by the Company or its Subsidiaries that is incorporated into or utilized
by any products of the Company or any of its Subsidiaries where, as a result of
the use of such open source or public library Software, the Company or any of
its Subsidiaries is obligated to make available to third parties other than its
customers the source code for the proprietary Software owned by the Company or
its Subsidiaries that is incorporated into such products.

     

    
      
        
        

      

      
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    (q)  None
of the Software owned by the Company and its Subsidiaries contains any program
routine, device, or other undisclosed feature, including, without limitation, a
time bomb, virus, drop-dead device, malicious logic, worm, trojan horse, bug,
error, defect or trap door, that is designed to delete, disable, deactivate,
interfere with, or otherwise harm the Software or the hardware, data, or
computer programs or codes of a user of such Software, or that is designed to
provide access or produce modifications not authorized by such
user.

     

    (r)  The
information technology systems of the Company and its Subsidiaries, including
the relevant Software and hardware, are adequate for the business as presently
conducted and as currently proposed to be conducted, including with respect to
expected increases in business volume.  The information technology
systems of the Company and its Subsidiaries have not suffered any material
failure within the past two years.

     

    (s)  The
information technology systems of the Company and its Subsidiaries are
reasonably secure against intrusion.  The Company and its Subsidiaries
have not suffered any security breaches within the past two years that have
resulted in a third party obtaining access to any confidential information of
the Company, its Subsidiaries or any of their customers or
suppliers.

     

    (t)  The
Company and its Subsidiaries are in compliance with any posted privacy policies
and any laws or regulations relating to personally identifiable
information.

     

    4.14           Material
Contracts.

     

    (a)  Section 4.14(a) of
the Disclosure Schedule sets forth, by reference to the applicable subsection of
this Section
4.14(a), all of the following Contracts to which the Company or any of
the Subsidiaries is a party or by which any of them or their respective assets
of properties are bound (collectively, the “Material
Contracts”):

     

    (i)  Contracts
with any Selling Stockholder or Affiliate thereof or any current or former
officer, director, stockholder or Affiliate of the Company or any of the
Subsidiaries;

     

    (ii) Contracts
with any labor union or association representing any employee of the Company or
any of the Subsidiaries;

     

    (iii)  Contracts
for the sale of any of the assets of the Company or any of the Subsidiaries
other than in the Ordinary Course of Business or for the grant to any Person of
any preferential rights to purchase any of its assets;

     

    (iv)  Contracts
for joint ventures, strategic alliances, partnerships, licensing arrangements,
or sharing of profits or proprietary information;

     

    (v)  Contracts
containing covenants of the Company or any of the Subsidiaries not to compete in
any line of business or with any Person in any geographical area or not to
solicit or hire any person with respect to employment or covenants of any other
Person not to compete with the Company or any of the Subsidiaries in any line of
business or in any geographical area or not to solicit or hire any person with
respect to employment;

     

    
      
        
        

      

      
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    (vi)  Contracts
relating to the acquisition (by merger, purchase of stock or assets or
otherwise) by the Company or any of the Subsidiaries of any operating business
or material assets or the capital stock of any other Person;

     

    (vii)  Contracts
relating to the incurrence, assumption or guarantee of any Indebtedness or
imposing a Lien on any of the assets of the Company or any Subsidiary, including
indentures, guarantees, loan or credit agreements, sale and leaseback
agreements, purchase money obligations incurred in connection with the
acquisition of property, mortgages, pledge agreements, security agreements, or
conditional sale or title retention agreements;

     

    (viii)  purchase
Contracts giving rise to Liabilities of the Company or any of the Subsidiaries
in excess of $150,000;

     

    (ix)  all
Contracts providing for payments by or to the Company or any of the Subsidiaries
in excess of $150,000 in any fiscal year or $300,000 in the aggregate during the
term thereof;

     

    (x)  all
Contracts obligating the Company or any of the Subsidiaries to provide or obtain
products of services for a period of one year or more or requiring the Company
to purchase or sell a stated portion of its requirements or
outputs;

     

    (xi)  Contracts
under which the Company or any of the Subsidiaries has made advances or loans to
any other Person;

     

    (xii)  Contracts
providing for severance, retention, change in control or other similar
payments;

     

    (xiii)  Contracts
for the employment of any individual on a full-time, part-time or consulting or
other basis providing annual compensation in excess of $50,000;

     

    (xiv)  material
management Contracts and Contracts with independent contractors or consultants
(or similar arrangements) that are not cancelable without penalty or further
payment and without more than thirty (30) days’ notice; and

     

    (xv)  outstanding
Contracts of guaranty, surety or indemnification, direct or indirect, by the
Company or any of the Subsidiaries.

     

    (b)  Each
of the Material Contracts is in full force and effect and is the legal, valid
and binding obligation of the Company or any Subsidiary which is party thereto
and of the other parties thereto, enforceable against each of them in accordance
with its terms and, upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without penalty or other
adverse consequence.  Neither the Company nor any Subsidiary is in
default under any Material Contract, nor, to the Knowledge of the Company or the
Selling Stockholders, is any other party to any Material Contract in breach of
or default thereunder, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a breach or default on the
Company, any Subsidiary or any other party thereunder.  No party to
any of the Material Contracts has exercised any termination rights with respect
thereto, and no party has given notice of any significant dispute with respect
to any Material Contract.  The Company has delivered to Purchaser
true, correct and complete copies of all of the Material Contracts, together
with all amendments, modifications or supplements thereto.

     

    
      
        
        

      

      
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    4.15           Employee Benefits
Plans.

     

    (a)  Section 4.15(a) of
the Disclosure Schedule sets forth a correct and complete list
of:  (i) all “employee benefit plans” (as defined in Section 3(3) of
ERISA), and all other employee benefit plans, programs, agreements, policies,
arrangements or payroll practices, including bonus plans, employment, consulting
or other compensation agreements, collective bargaining agreements, incentive,
equity or equity-based compensation, or deferred compensation arrangements,
change in control, termination or severance plans or arrangements, stock
purchase, severance pay, sick leave, vacation pay, salary continuation for
disability, hospitalization, medical insurance, life insurance and scholarship
plans and programs maintained by the Company or any of its Subsidiaries or to
which the Company or any of the Subsidiaries contributed or is obligated to
contribute thereunder for current or former employees of the Company or any of
the Subsidiaries (the “Employees”)
(collectively, the “Company
Plans”), and (ii) all “employee pension plans” (as defined in
Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of the Code),
maintained by the Company or any of its Affiliates and any trade or business
(whether or not incorporated) that is or has ever been under common control, or
that is or has ever been treated as a single employer, with any of them under
Section 414(b), (c), (m) or (o) of the Code (each, an “ERISA
Affiliate”) or to which the Company or any ERISA Affiliate contributed or
has ever been obligated to contribute thereunder (the “Title IV
Plans”).  Section 4.15(a) of
the Disclosure Schedule sets forth each Company Plan and Title IV Plan that is a
“multiemployer plan” (as defined in Section 3(37) of ERISA (a “Multiemployer
Plan”)), or is or has been subject to Sections 4063 or 4064 of
ERISA.

     

    (b)  Correct
and complete copies of the following documents, with respect to each of the
Company Plans (other than a Multiemployer Plan), have been made available or
delivered to Purchaser by the Company, to the extent
applicable:  (i) any plans, all amendments thereto and related
trust documents, insurance contracts or other funding arrangements, and
amendments thereto; (ii) the most recent Forms 5500 and all schedules
thereto and the most recent actuarial report, if any; (iii) the most recent
IRS determination letter; (iv) summary plan descriptions; (v) written
communications to employees relating to the Company Plans; and (vi) written
descriptions of all non-written agreements relating to the Company
Plans.

     

    (c)   The
Company Plans have been maintained in all material respects in accordance with
their terms and with all provisions of ERISA, the Code (including rules and
regulations thereunder) and other applicable Federal and state Laws and
regulations, and neither the Company (or any of the Subsidiaries) nor any “party
in interest” or “disqualified person” with respect to the Company Plans has
engaged in a non-exempt “prohibited transaction” within the meaning of Section
4975 of the Code or Section 406 of ERISA.  No fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any Company
Plan.

     

    
      
        
        

      

      
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    (d)  The
Company Plans intended to qualify under Section 401 of the Code are so qualified
and any trusts intended to be exempt from Federal income taxation under Section
501 of the Code are so exempt, and nothing has occurred with respect to the
operation of the Company Plans that could cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under ERISA or
the Code.

     

    (e)  Each
Company Plan that is intended to meet the requirements for tax-favored treatment
under Subchapter B of Chapter 1 of Subtitle A of the Code meets such
requirements.

     

    (f)   Neither
the Company nor any ERISA Affiliate has withdrawn in a complete or partial
withdrawal from any Multiemployer Plan prior to the Closing Date, nor have any
of them incurred any liability due to the termination or reorganization of a
Multiemployer Plan.  Purchaser will not have (i) any obligation
to make any contribution to any Multiemployer Plan or (ii) any withdrawal
liability from any Multiemployer Plan under Section 4201 of ERISA, which it
would not have had but for the consummation of the transactions contemplated by
this Agreement.

     

    (g)  Section 4.15(g) of
the Disclosure Schedule sets forth on a plan by plan basis, the present value of
benefits payable presently or in the future to Employees under each unfunded
Company Plan.

     

    (h)  All
contributions (including all employer contributions and employee salary
reduction contributions) required to have been made under any of the Company
Plans (including workers compensation) or Title IV Plans or by Law (without
regard to any waivers granted under Section 412 of the Code), to any funds or
trusts established thereunder or in connection therewith have been made by the
due date thereof (including any valid extension), and all contributions for any
period ending on or before the Closing Date that are not yet due will have been
paid or sufficient accruals for such contributions and other payments in
accordance with GAAP are duly and fully provided for on the Balance
Sheet.  No accumulated funding deficiencies exist in any of the
Company Plans or Title IV Plans subject to Section 412 of the Code.

     

    (i)   There
is no “amount of unfunded benefit liabilities” (as defined in Section
4001(a)(18) of ERISA) in any of the Title IV Plans.  Each of the Title
IV Plans are fully funded in accordance with the actuarial assumptions used by
the Pension Benefit Guaranty Corporation (“PBGC”)
to determine the level of funding required in the event of the termination of a
Title IV Plan and the “benefit liabilities” (as defined in Section 4001(a)(16)
of ERISA) of such Title IV Plan using such PBGC assumptions do not exceed the
assets of such Title IV Plan.

     

    
      
        
        

      

      
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    (j)   There
has been no “reportable event” (as defined in Section 4043 of ERISA) with
respect to the Title IV Plans that would require the giving of notice or any
event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of
ERISA.

     

    (k)  Neither
the Company nor any ERISA Affiliate has terminated any Title IV Plan, or
incurred any outstanding liability under Section 4062 of ERISA to the PBGC or to
a trustee appointed under Section 4042 of ERISA.  All premiums due the
PBGC with respect to the Title IV Plans have been paid.

     

    (l)   No
liability under any Company Plan or Title IV Plan has been funded nor has any
such obligation been satisfied with the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor’s Corporation or the
equivalent by any other nationally recognized rating agency.

     

    (m)  None
of the Company, any ERISA Affiliate nor any organization to which the Company or
any ERISA Affiliate is a successor or parent corporation within the meaning of
Section 4069(b) of ERISA has engaged in any transaction within the meaning of
Section 4069 or 4212(c) of ERISA.

     

    (n)   There
are no pending actions, claims or lawsuits that have been asserted or instituted
against the Company Plans, the assets of any of the trusts under the Company
Plans or the sponsor or administrator of any of the Company Plans, or against
any fiduciary of the Company Plans with respect to the operation of any of the
Company Plans (other than routine benefit claims), nor does the Company or the
Selling Stockholders have any Knowledge of facts that could form the basis for
any such claim or lawsuit.

     

    (o)  There
is no material violation of ERISA or the Code with respect to the filing of
applicable reports, documents and notices regarding the Company Plans with the
Secretary of Labor or the Secretary of the Treasury or the furnishing of such
documents to the participants in or beneficiaries of the Company
Plans.  All amendments and actions required to bring the Company Plans
into conformity in all material respects with all of the applicable provisions
of the Code, ERISA and other applicable Laws have been made or
taken.  Any bonding required with respect to the Company Plans in
accordance with applicable provisions of ERISA has been obtained and is in full
force and effect.

     

    (p)  None
of the Company Plans provides for post-employment life or health insurance,
benefits or coverage for any participant or any beneficiary of a participant,
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”),
and at the expense of the participant or the participant’s
beneficiary.  Each of the Company and any ERISA Affiliate which
maintains a “group health plan” within the meaning Section 5000(b)(1) of the
Code has complied with the notice and continuation requirements of Section 4980B
of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder.

     

    (q)  Except
as set forth in Section 4.15(q) of
the Disclosure Schedule, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment becoming due to any Employee, (ii) increase any benefits otherwise
payable under any Company Plan or Title IV Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits under any
Company Plan or Title IV Plan.

     

    
      
        
        

      

      
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    (r)   Neither
the Company nor any of the Subsidiaries has a contract, plan or commitment,
whether legally binding or not, to create any additional Company Plan or to
modify any existing Company Plan.

     

    (s)   No
stock or other security issued by the Company or any of the Subsidiaries forms
or has formed a material part of the assets of any Company Plan.

     

    (t)   Any
individual who performs services for the Company or any of the Subsidiaries
(other than through a contract with an organization other than such individual)
and who is not treated as an employee of the Company or any of the Subsidiaries
for Federal income tax purposes by the Company or any of the Subsidiaries is not
an employee for such purposes.

     

    4.16           Labor.

     

    (a)  Except
as set forth in Section 4.16(a) of
the Disclosure Schedule, neither the Company nor any of the Subsidiaries is a
party to any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company or
any of the Subsidiaries.  The Company has delivered or otherwise made
available to Purchaser true, correct and complete copies of the labor or
collective bargaining agreements listed in Section 4.16(a)
of the Disclosure Schedule, together with all amendments, modifications or
supplements thereto.

     

    (b)  No
Employees are represented by any labor organization.  Except as set
forth in Section
4.16(b) of the Disclosure Schedule, no labor organization or group of
Employees has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the Knowledge of the Company or the Selling
Stockholders, threatened to be brought or filed, with the National Labor
Relations Board or other labor relations tribunal.  There is no
organizing activity involving the Company or any of the Subsidiaries pending or,
to the Knowledge of the Company or the Selling Stockholders, threatened by any
labor organization or group of Employees.

     

    (c)  There
are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or
(ii) material grievances or other labor disputes pending or, to the
Knowledge of the Company or the Selling Stockholders, threatened against or
involving the Company or any of the Subsidiaries.  There are no unfair
labor practice charges, grievances or complaints pending or, to the Knowledge of
the Company or the Selling Stockholders, threatened by or on behalf of any
Employee or group of Employees.

     

    (d)  There
are no complaints, charges or claims against the Company or any of the
Subsidiaries pending or, to Knowledge of the Company or the Selling
Stockholders, threatened that could be brought or filed, with any Governmental
Body based on, arising out of, in connection with or otherwise relating to the
employment or termination of employment of or failure to employ, any
individual.  Each of the Company and the Subsidiaries is in compliance
with all Laws relating to the employment of labor, including all such Laws
relating to wages, hours, WARN and any similar state or local “mass layoff” or
“plant closing” Law, collective bargaining, discrimination, civil rights, safety
and health, workers’ compensation and the collection and payment of withholding
and/or social security taxes and any similar tax except for immaterial
non-compliance.  There has been no “mass layoff” or “plant closing”
(as defined by WARN) with respect to the Company or any of the Subsidiaries
within the six (6) months prior to Closing.

     

    
      
        
        

      

      
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    4.17           Litigation. Except
as set forth in Section 4.17 of the
Disclosure Schedule, there is no Legal Proceeding pending or, to the Knowledge
of the Company or the Selling Stockholders, threatened against the Company or
any of the Subsidiaries (or to the Knowledge of the Company or the Selling
Stockholders, pending or threatened, against any of the officers, directors or
employees of the Company or any of the Subsidiaries with respect to their
business activities on behalf of the Company), or to which the Company or any of
the Subsidiaries is otherwise a party before any Governmental Body, nor to the
Knowledge of the Company or the Selling Stockholders is there any reasonable
basis for any such Legal Proceeding.  Except as set forth in Section 4.17 of the
Disclosure Schedule, neither the Company nor any Subsidiary is subject to any
Order, and neither the Company nor any Subsidiary is in breach or violation of
any Order.  Except as set forth in Section 4.17 of the
Disclosure Schedule, neither the Company nor any Subsidiary is engaged in any
legal action to recover monies due it or for damages sustained by it. There are
no Legal Proceedings pending or, to the Knowledge of the Company or the Selling
Stockholders, threatened against the Company or to which the Company is
otherwise a party relating to this Agreement or, any Company Document or the
transactions contemplated hereby or thereby.

     

    4.18           Compliance with Laws;
Permits.

     

    (a)  Except
as set forth in Section 4.18(a) of
the Disclosure Schedule, the Company and the Subsidiaries are in compliance in
all material respects with all Laws applicable to its business, operations or
assets.  Neither the Company nor any Subsidiary has received any
notice of or been charged with the violation of any Laws.  To the
Knowledge of the Company or the Selling Stockholders, neither the Company nor
any Subsidiary is under investigation with respect to the violation of any Laws
and there are no facts or circumstances which could form the basis for any such
violation.

     

    (b)  Section 4.18(b)
of the Disclosure Schedule contains a list of all Permits which are required for
the operation of the business of the Company and the Subsidiaries as presently
conducted and as presently intended to be conducted (“Company
Permits”), other than those the failure of which to possess is
immaterial.  The Company and the Subsidiaries currently have all
Permits which are required for the operation of their respective businesses as
presently conducted and as presently intended to be conducted, other than those
the failure of which to possess is immaterial.  Neither the Company
nor any Subsidiary is in default or violation, and no event has occurred which,
with notice or the lapse of time or both, would constitute a default or
violation, in any material respect of any term, condition or provision of any
Company Permit, and to the Knowledge of the Company or the Selling Stockholders,
there are no facts or circumstances which could form the basis for any such
default or violation.  There are no Legal Proceedings pending or, to
the Knowledge of the Company or the Selling Stockholders, threatened, relating
to the suspension, revocation or modification of any Company
Permit.  None of the Company Permits will be impaired or in any way
affected by the consummation of the transactions contemplated by this
Agreement.

     

    
      
        
        

      

      
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    4.19           Environmental
Matters.  Except
as set forth in Section 4.19 of
the Disclosure Schedule hereto:

     

    (a)  the
operations of the Company and each of the Subsidiaries are and have been in
compliance with all applicable Environmental Laws, which compliance includes
obtaining, maintaining in good standing and complying with all Environmental
Permits and no action or proceeding is pending or, to the Knowledge of the
Company or the Selling Stockholders, threatened to revoke, modify or terminate
any such Environmental Permit, and, to the Knowledge of the Company or the
Selling Stockholders, no facts, circumstances or conditions currently exist that
could adversely affect such continued compliance with Environmental Laws and
Environmental Permits or require currently unbudgeted capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits;

     

    (b)  neither
the Company nor any of the Subsidiaries is the subject of any outstanding
written Order or Contract with any Governmental Body or Person with respect to
(i) Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened
Release of a Hazardous Material;

     

    (c)  no
claim has been made or is pending, or to the Knowledge of the Company or the
Selling Stockholders, threatened against the Company or any Subsidiary alleging
either or both that the Company or any of the Subsidiaries may be in violation
of any Environmental Law or Environmental Permit, or may have any liability
under any Environmental Law;

     

    (d)  to
the Knowledge of the Company or the Selling Stockholders, no facts,
circumstances or conditions exist with respect to the Company or any of the
Subsidiaries or any property currently or formerly owned, operated or leased by
the Company or any of the Subsidiaries or any property to which the Company or
any of the Subsidiaries arranged for the disposal or treatment of Hazardous
Materials that could reasonably be expected to result in the Company or any of
the Subsidiaries incurring material unbudgeted Environmental Costs and
Liabilities;

     

    (e)   there
are no investigations of the business, operations or properties currently or, to
the Knowledge of the Company or the Selling Stockholders, previously owned,
operated or leased property of the Company or any of the Subsidiaries pending
or, to the Knowledge of the Company or the Selling Stockholders, threatened
which could lead to the imposition of any Environmental Costs and Liabilities or
Liens under Environmental Law;

     

    
      
        
        

      

      
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    (f)   the
transactions contemplated hereunder do not require the consent of or filings
with any Governmental Body with jurisdiction over the Company or any Subsidiary
with respect to environmental matters, and none of the Owned Property or Real
Property Leases is located in New Jersey, Indiana or Connecticut;

     

    (g)  there
is not located at any of the properties currently or (while owned, operated or
leased by the Company or any Subsidiary) previously owned, operated or leased by
the Company or any of the Subsidiaries any (i) underground storage tanks, (ii)
landfill, (iii) surface impoundment, (iii) asbestos-containing material or (iv)
equipment containing polychlorinated biphenyls; and

     

    (h)  the
Company has provided to Purchaser all environmentally related audits, studies,
reports, analyses, and results of investigations that have been performed with
respect to the currently or previously owned, leased or operated properties of
the Company or any of the Subsidiaries.

     

    4.20           Insurance.  The
Company and the Subsidiaries have insurance policies in full force and effect
(a) for such amounts as are sufficient for all requirements of Law and all
agreements to which the Company or any of the Subsidiaries is a party or by
which it is bound, and (b) which are in such amounts, with such deductibles and
against such risks and losses, as are reasonable for the business, assets and
properties of the Company and the Subsidiaries.  Set forth in Section 4.20 of the
Disclosure Schedule is a list of all insurance policies and all fidelity bonds
held by or applicable to the Company or any of the Subsidiaries setting forth,
in respect of each such policy, the policy name, policy number, carrier, term,
type and amount of coverage and annual premium, whether the policies may be
terminated upon consummation of the transactions contemplated hereby and if, and
to what extent, events being notified to the insurer after the Closing Date are
generally excluded from the scope of the respective policy.  Except as
set forth in Section
4.20 of the Disclosure Schedule, no event relating to the Company or any
of the Subsidiaries has occurred which could reasonably be expected to result in
a retroactive upward adjustment in premiums under any such insurance policies or
which could reasonably be expected to result in a prospective upward adjustment
in such premiums.  Excluding insurance policies that have expired and
been replaced in the Ordinary Course of Business, no insurance policy has been
cancelled within the last two years and, to the Knowledge of the Company or the
Selling Stockholders, no threat has been made to cancel any insurance policy of
the Company or any of the Subsidiaries during such period.  Except as
noted in Section
4.20 of the Disclosure Schedule, all such insurance will remain in full
force and effect immediately following the consummation of the transactions
contemplated hereby.  No event has occurred, including the failure by
the Company or any of the Subsidiaries to give any notice or information or the
Company or any of the Subsidiaries giving any inaccurate or erroneous notice or
information, which limits or impairs the rights of the Company or any of the
Subsidiaries under any such insurance policies.

     

    4.21           Inventories.  The
inventories of the Company and the Subsidiaries are in good and marketable
condition, and are usable and of a quantity and quality saleable in the Ordinary
Course of Business.  The inventories of the Company and the
Subsidiaries set forth in the Balance Sheet were valued at the lower of cost (on
a FIFO/LIFO basis) or market and were properly stated therein in accordance with
GAAP consistently applied.  Adequate reserves have been reflected in
the Balance Sheet for obsolete, excess, damaged, slow-moving, or otherwise
unusable inventory, which reserves were calculated in a manner consistent with
past practice and in accordance with GAAP consistently applied.  The
inventories of the Company and the Subsidiaries constitute sufficient quantities
for the normal operation of business in accordance with past
practice.

     

    
      
        
        

      

      
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    4.22           Accounts and Notes
Receivable and Payable.

     

    (a)  All
accounts and notes receivable of the Company and the Subsidiaries have arisen
from bona fide transactions in the Ordinary Course of Business consistent with
past practice and are payable on ordinary trade terms.  All accounts
and notes receivable of the Company and the Subsidiaries reflected on the
Balance Sheet are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts
reflected thereon, which reserves are adequate and were calculated in a manner
consistent with past practice and in accordance with GAAP consistently
applied.  All accounts and notes receivable arising after the Balance
Sheet Date are good and collectible at the aggregate recorded amounts thereof,
net of any applicable reserve for returns or doubtful accounts, which reserves
are adequate and were calculated in a manner consistent with past practice and
in accordance with GAAP consistently applied.  None of the accounts or
the notes receivable of the Company or any of the Subsidiaries (i) are subject
to any setoffs or counterclaims or (ii) represent obligations for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement.

     

    (b)  All
accounts payable of the Company and the Subsidiaries reflected in the Balance
Sheet or arising after the date thereof are the result of bona fide transactions
in the Ordinary Course of Business and have been paid or are not yet due and
payable.

     

    4.23           Related Party
Transactions.  Except
as set forth in Section 4.23 of the
Disclosure Schedule, no employee, officer, director, stockholder, partner or
member of the Company or any of the Subsidiaries, any member of his or her
immediate family or any of their respective Affiliates (“Related
Persons”) (i) owes any amount to the Company or any of the Subsidiaries
nor does the Company or any of the Subsidiaries owe any amount to, or has the
Company or any of the Subsidiaries committed to make any loan or extend or
guarantee credit to or for the benefit of, any Related Person, (ii) is involved
in any business arrangement or other relationship with the Company or any of the
Subsidiaries (whether written or oral), (iii) owns any property or right,
tangible or intangible, that is used by the Company or any of the Subsidiaries,
(iv) has any claim or cause of action against the Company or any of the
Subsidiaries or (v) owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee or partner of, or consultant to, or
lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant, creditor
or debtor of the Company or any Subsidiary.

     

    4.24           Customers and
Suppliers.

     

    
      
        
        

      

      
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    (a)  Section 4.24 of the
Disclosure Schedule sets forth a list of the ten (10) largest customers and the
ten (10) largest suppliers of the Company and the Subsidiaries, as measured by
the dollar amount of purchases therefrom or thereby, during each of the fiscal
years ended December 31, 2008 and 2009, showing the approximate total sales by
the Company and the Subsidiaries to each such customer and the approximate total
purchases by the Company and the Subsidiaries from each such supplier, during
such period.

     

    (b)  Since
the Balance Sheet Date, no customer or supplier listed on Section 4.24 of
the Disclosure Schedule has terminated its relationship with the Company or any
of the Subsidiaries or materially reduced or changed the pricing or other terms
of its business with the Company or any of the Subsidiaries and, to the
Knowledge of the Company or the Selling Stockholders, and, except as set forth
in Section 4.24
of the Disclosure Schedule, no customer or supplier listed on Section 4.24 of the
Disclosure Schedule has notified the Company or the Subsidiaries that it intends
to terminate or materially reduce or change the pricing or other terms of its
business with the Company or any of the Subsidiaries.

     

    4.25           Product Warranty; Product
Liability.

     

    (a)  Except
as set forth in Section 4.25 of the
Disclosure Schedule, each product manufactured, sold or delivered by the Company
or any of the Subsidiaries in conducting its business has been in conformity
with all product specifications, all express and implied warranties and all
applicable Laws.  Except as set forth in Section 4.25 of the
Disclosure Schedule, neither the Company nor any of the Subsidiaries has any
liability for replacement or repair of any such products or other damages in
connection therewith or any other customer or product obligations not reserved
against on the Balance Sheet.  Section 4.25 of the
Disclosure Schedule provides an itemized list of the products the Company has
under warranty and the length of each warranty.

     

    (b)  Neither
the Company nor any of the Subsidiaries has any liability arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product designed, manufactured, assembled, repaired, maintained,
delivered, sold or installed, or services rendered, by or on behalf of the
Company or any of the Subsidiaries.  Neither the Company nor any of
the Subsidiaries has committed any act or failed to commit any act, which would
result in, and there has been no occurrence which would give rise to or form the
basis of, any material product liability or liability for breach of warranty
(whether covered by insurance or not) on the part of the Company or any of the
Subsidiaries with respect to products designed, manufactured, assembled,
repaired, maintained, delivered, sold or installed or services rendered by or an
behalf of the Company or any of the Subsidiaries.

     

    4.26           Banks; Power of
Attorney.  Section 4.26 of the
Disclosure Schedule contains a complete and correct list of the names and
locations of all banks in which Company or any Subsidiary has accounts or safe
deposit boxes and the names of all persons authorized to draw thereon or to have
access thereto.  Except as set forth in Section 4.26 of the
Disclosure Schedule, no person holds a power of attorney to act on behalf of the
Company or any Subsidiary.

     

    
      
        
        

      

      
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    4.27           Certain
Payments. None of
the Company, any Subsidiary or any Selling Stockholder nor, to the Knowledge of
the Company or the Selling Stockholders, any director, officer, employee, or
other Person associated with or acting on behalf of any of them, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business for the Company or any Subsidiary, (ii) to pay
for favorable treatment for business secured by the Company or any Subsidiary,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any Subsidiary, or (iv) in violation of any
Law, or (b) established or maintained any fund or asset with respect to the
Company or any Subsidiary that has not be recorded in the books and records of
the Company and the Subsidiaries.

     

    4.28           Certain Governmental
Matters.  Neither
the Company nor any Subsidiary has received from any U.S. Governmental Body or
any prime contractor or subcontractor from a U.S. Governmental Body any special,
preferential or advantageous treatment in the award of a Government Contract, or
in any other manner, including as a “small business concern,” “small
disadvantaged business” (or “minority-owned business”), “women-owned” concern,
or any other socially and economically disadvantaged classification, as defined
in the Small Business Act (15 U.S.C. Sec. 631, et. seq.), the Federal Property
and Administrative Services Act (41 U.S.C. Sec. 252), section 7102 of the
Federal Acquisition Streamlining Act of 1994 (Public Law 103-355), 10 U.S.C. Sec
2323, Executive Order 12138, May 18, 1979, or regulations implementing these
requirements, including the Federal Acquisition Regulations.  “Government
Contract” means any prime contract with a U.S. Governmental Body and any
subcontract with a prime contractor or higher tier subcontractor under a prime
contract with a U.S. Governmental Body.

     

    4.29           Financial
Advisors.  Except
as set forth in Section 4.29 of the
Disclosure Schedule, no Person has acted, directly or indirectly, as a broker,
finder or financial advisor for the Selling Stockholders, the Company or any
Subsidiary in connection with the transactions contemplated by this Agreement
and no Person is or will be entitled to any fee or commission or like payment in
respect thereof.

     

    4.30           Full
Disclosure.  No
representation or warranty or other statement made by or on behalf of the
Company or a Selling Stockholder to Purchaser or any of its Affiliates pursuant
to this Agreement, any of the Company Documents or Selling Stockholder Documents
or otherwise contains an untrue statement of a material fact or omits to state a
material fact necessary to make such statements, in light of the circumstances
in which it was made or omitted, not misleading.

     

    ARTICLE
V


     

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

     

    Purchaser
hereby represents and warrants to the Selling Stockholders that:

     

    5.1           Organization and Good
Standing.  Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and authority
to own, lease and operate properties and carry on its
business.  Purchaser is duly qualified or authorized to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each jurisdiction in
which the conduct of its business or ownership of its properties requires such
qualification or authorization.

     

    
      
        
        

      

      
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    5.2           Authorization of
Agreement.  Purchaser
has full corporate power and authority to execute and deliver this Agreement and
each other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by Purchaser in connection with the consummation of
the transactions contemplated hereby and thereby (the “Purchaser
Documents”), and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by Purchaser of this
Agreement and each Purchaser Document have been duly authorized by all necessary
corporate action on behalf of Purchaser.  This Agreement has been, and
each Purchaser Document will be at or prior to the Closing, duly executed
and delivered by Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each Purchaser Document when so executed and delivered will constitute, the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its respective terms.

     

    5.3           Conflicts; Consents of Third
Parties.

     

    (a)  Except
as set forth in Section 5.3(b) of the
Disclosure Schedule, none of the execution and delivery by Purchaser of this
Agreement and of the Purchaser Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by Purchaser with any of the
provisions hereof or thereof will conflict with, or result in violation or
breach of, conflict with or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation  or
acceleration of any obligation under any provision of (i) the certificate
of incorporation and by-laws or comparable organizational documents of such
Purchaser; (ii) any Contract or Permit to which Purchaser is a party or by
which any of the properties or assets of Purchaser are bound; (iii) any Order of
any Governmental Body applicable to Purchaser or by which any of the properties
or assets of Purchaser are bound; or (iv) any applicable Law.

     

    (b)  No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by Purchaser with any of
the provisions hereof or thereof, except for those set forth in Section 5.3(b) of the
Disclosure Schedule.

     

    5.4           Litigation.  There
are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened
against Purchaser or to which Purchaser is otherwise a party relating to this
Agreement, the Purchaser Documents or the transactions contemplated hereby and
thereby.

     

    5.5           Investment
Intention.  Purchaser
is acquiring the Shares for its own account, for investment purposes only and
not with a view to the distribution (as such term is used in Section 2(11) of
the Securities Act).  Purchaser understands that the Shares have not
been registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

     

    
      
        
        

      

      
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    5.6           Financial
Advisors.  Except
as set forth in Section 5.6 of the
Disclosure Schedule, no Person has acted, directly or indirectly, as a broker,
finder or financial advisor for Purchaser in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof.

     

    5.7           Purchaser Common
Stock.

     

    (a)  Upon issuance thereof by
the Purchaser to each of the Selling Stockholders, the Purchaser Common Stock
will have been duly authorized, and will be validly issued, fully paid and
nonasessable and will not be subject to any Liens.

     

    (b)  Purchaser
is in compliance with, and has fulfilled its obligations under, the filing
requirements found within Sections 13 and 15(d) of the Securities Exchange Act
of 1934, as amended.

     

    ARTICLE
VI


     

    COVENANTS

     

    6.1           Access to Information;
Confidentiality.  The
Company shall, and the Company shall cause the Subsidiaries to, afford to
Purchaser and its accountants, counsel, financial advisors and other
representatives, and to prospective lenders and other financing sources and each
of their respective representatives, full access, during normal business hours
upon reasonable notice throughout the period prior to the Closing, to the
Company’s and the Subsidiaries’ respective properties and facilities (including
all owned or leased real property and the buildings, structures, fixtures,
appurtenances and improvements erected, attached or located thereon), books,
financial information (including working papers and data in the possession of
the Company’s or the Subsidiaries’ or their respective independent public
accountants, internal audit reports, and “management letters” from such
accountants with respect to the Company’s or any of the Subsidiaries’ systems of
internal control), Contracts and records of the Company and the Subsidiaries to
the extent necessary to enable Purchaser to make a thorough investigation of the
Company’s business, properties, assets and operations, and, during such period,
shall furnish promptly such information concerning the businesses, properties
and personnel of the Company and the Subsidiaries as Purchaser shall reasonably
request; provided, however, such
investigation shall not unreasonably disrupt the Company’s operations or
interfere with the conduct of its business.  Prior to the Closing, the
Company shall generally keep Purchaser informed as to all material matters
involving the operations and businesses of the Company and each of the
Subsidiaries.  The Company shall authorize and direct the appropriate
directors, managers and employees of each such Subsidiary to discuss matters
involving the operations and business of the Company or such Subsidiary, as the
case may be, with representatives of Purchaser and its prospective lenders and
other financial sources.  All nonpublic information provided to, or
obtained by, Purchaser in connection with the transactions contemplated hereby
shall be “Information” for purposes of the Confidentiality Agreement dated
February 25, 2009 among Purchaser, the Company and the Selling Stockholders (the
“Confidentiality
Agreement”), the terms of which shall continue in force until the
Closing; provided that
Purchaser and the Company may disclose such information as may be necessary in
connection with seeking necessary consents and approvals as contemplated
hereby.  If the parties hereto shall fail to consummate the
transactions contemplated hereby, the terms of the Confidentiality Agreement
shall, notwithstanding any contrary term thereof, remain in full force and
effect for a period of two (2) years from the date of this
Agreement.  Purchaser’s employees, agents, accountants, counsel,
financial advisors and representatives, prospective lenders and other financial
sources shall comply with all of the Company’s regulations made known to them
when present at the Company’s facilities.

     

    
      
        
        

      

      
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    6.2           Conduct of the Business
Pending the Closing.

     

    (a)  Except
as otherwise expressly provided in this Agreement or with the prior written
consent of Purchaser, between the date hereof and the Closing, the Selling
Stockholders and the Company shall, and the Company shall cause the Subsidiaries
to:

     

    (i)  conduct
the respective businesses of the Company and the Subsidiaries only in the
Ordinary Course of Business;

     

    (ii)  use
their commercially reasonable efforts to (A) preserve the present business
operations, organization (including officers and employees) and goodwill of the
Company and the Subsidiaries and (B) preserve the present relationships with
Persons having business dealings with the Company and the Subsidiaries
(including customers and suppliers);

     

    (iii) 
maintain (A) all of the assets and properties of, or used by, the Company and
the Subsidiaries in their current condition, ordinary wear and tear excepted,
and (B) insurance upon all of the properties and assets of the Company and the
Subsidiaries in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;

     

    (iv)  (A)
maintain the books, accounts and records of the Company and the Subsidiaries in
the Ordinary Course of Business, (B) continue to collect accounts
receivable and pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts, and (C) comply with all
contractual and other obligations of the Company and the Subsidiaries;
and

     

    (v)   comply
in all material respects with all applicable Laws.

     

    (b)   Without
limiting the generality of the foregoing, except as otherwise expressly provided
in this Agreement or with the prior written consent of Purchaser, the Selling
Stockholders and the Company shall not, and the Company shall cause the
Subsidiaries not to:

     

    (i)  declare,
set aside, make or pay any dividend or other distribution in respect of the
capital stock of, or other ownership interests in, the Company or any of the
Subsidiaries or repurchase, redeem or otherwise acquire any outstanding shares
of the capital stock or other securities of, or other ownership interests in,
the Company or any of the Subsidiaries;

     

     

    
      
        
        

      

      
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    (ii)  transfer,
issue, sell, pledge, encumber or dispose of any shares of capital stock or other
securities of, or other ownership interests in, the Company or any of the
Subsidiaries or grant options, warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock or other securities of, or other
ownership interests in,  the Company or any of the
Subsidiaries;

     

    (iii)  effect
any recapitalization, reclassification, stock split, combination or like change
in the capitalization of the Company or any of the Subsidiaries, or amend the
terms of any outstanding securities of the Company or any
Subsidiary;

     

    (iv)  amend
the certificate of incorporation or by-laws or equivalent organizational or
governing documents of the Company or any of the Subsidiaries;

     

    (v)  (A)
increase the salary or other compensation of any director or, except in the
Ordinary Course of Business, any officer or employee of the Company or any of
the Subsidiaries, (B) grant any unusual or extraordinary bonus, benefit or other
direct or indirect compensation to any director, officer, employee or
consultant, (C) except in the Ordinary Course of Business, increase the coverage
or benefits available under any (or create any new) severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan or arrangement made to, for, or with any
of the directors, officers, employees, agents or representatives of the Company
or any of the Subsidiaries or otherwise modify or amend or terminate any such
plan or arrangement or (D) enter into any employment, deferred
compensation, severance, special pay, consulting, non-competition or similar
agreement or arrangement with any directors or officers of the Company or any
Subsidiary (or amend any such agreement to which the Company or any of the
Subsidiaries is a party);

     

    (vi) 
issue, create, incur, assume, guarantee, endorse or otherwise become liable or
responsible with respect to (whether directly, contingently or otherwise) any
Indebtedness; pay, repay, discharge, purchase, repurchase or satisfy any
Indebtedness of the Company or any of the Subsidiaries, except in the Ordinary
Course of Business; or modify the terms of any Indebtedness or other
Liability;

     

    (vii)  subject
to any Lien or otherwise encumber or, except for Permitted Exceptions, permit,
allow or suffer to be encumbered, any of the properties or assets (whether
tangible or intangible) of, or used by, the Company or any of the
Subsidiaries;

     

    (viii)  except
for acquisition of title to certain equipment and fixtures attached to or
located within the real property located at 225 Bodwell Avenue, Avon, MA and
currently owned by 225 Bodwell Corporation, as more particularly described in
Section
6.2(b)(viii) of the Disclosure Schedule, acquire any material properties
or assets or sell, assign, license, transfer, convey, lease or otherwise dispose
of any of the material properties or assets of, or used by, the Company and the
Subsidiaries, other than in the Ordinary Course of Business;

     

     

    
      
        
        

      

      
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    (ix)  enter
into or agree to enter into any merger or consolidation with any corporation or
other entity; or engage in any new business or invest in, make a loan, advance
or capital contribution to, or otherwise acquire the securities, of any other
Person;

     

    (x)  cancel
or compromise any debt or claim or waive or release any material right of the
Company or any of the Subsidiaries, except in the Ordinary Course of
Business;

     

    (xi)  except
for capital expenditures relating to expansion of the Company facility at 225
Bodwell Street, Avon, MA (the “Facility”)
to increase production capacity for flotation buoyancy products, as previously
disclosed to Purchaser (the “Phase III
Project”) enter into any commitment for capital expenditures of the
Company and the Subsidiaries in excess of $100,000 for any individual commitment
and $250,000 for all commitments in the aggregate;

     

    (xii)  enter
into, modify or terminate any labor or collective bargaining agreement of the
Company or any of the Subsidiaries or, through negotiation or otherwise, make
any commitment or incur any liability to any labor organization with respect to
the Company or any of the Subsidiaries;

     

    (xiii)  introduce
any material change with respect to the operation of the Company or any of the
Subsidiaries, including any material change in the types, nature, composition or
quality of its products or services, or, other than in the Ordinary Course of
Business, make any change in product specifications or prices or terms of
distributions of such products or change its pricing, discount, allowance or
return policies or grant any pricing, discount, allowance or return terms for
any customer or supplier not in accordance with such policies;

     

    (xiv)  except
for transfers of Cash pursuant to normal cash management practices in the
Ordinary Course of Business, make any investments in or loans to, or pay any
fees or expenses to, or enter into or modify any Contract with any Related
Persons;

     

    (xv)   make
a change in its accounting or Tax reporting principles, methods or
policies;

     

    (xvi)  (A)
make, change or revoke any Tax election, settle or compromise any Tax claim or
liability or enter into a settlement or compromise, or change (or make a request
to any taxing authority to change) any material aspect of its method of
accounting for Tax purposes, or (B) prepare or file any Tax Return (or any
amendment thereof) unless such Tax Return shall have been prepared in a manner
consistent with past practice and the Company shall have provided Purchaser a
copy thereof (together with supporting papers) at least three (3) Business Days
prior to the due date thereof for Purchaser to review and approve (such approval
not to be unreasonably withheld or delayed);

     

    
      
        
        

      

      
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    (xvii)  enter
into any Contract, understanding or commitment that restrains, restricts, limits
or impedes the ability of the Company or any Subsidiary to compete with or
conduct any business or line of business in any geographic area or solicit the
employment of any persons;

     

    (xviii)  terminate,
amend, restate, supplement or waive any rights under any (A) Material Contract,
Real Property Lease, Personal Property Lease or Intellectual Property license,
other than in the Ordinary Course of Business or (B) Permit;

     

    (xix)  except
as described in Section 6.2(b)(xix)
of the Disclosure Schedule, settle or compromise any pending or threatened Legal
Proceeding or any claim or claims for, or that would result in a loss of revenue
of, an amount that could, individually or in the aggregate, reasonably be
expected to be greater than $100,000;

     

    (xx)  change
or modify its credit, collection or payment policies, procedures or practices,
including acceleration of collections or receivables (whether or not past due)
or fail to pay or delay payment of payables or other liabilities;

     

    (xxi)  take
any action which would adversely affect the ability of the parties to consummate
the transactions contemplated by this Agreement;

     

    (xxii) 
agree to do anything (A) prohibited by this Section 6.2, (B)
which would make any of the representations and warranties of the Selling
Stockholders in this Agreement or any of the Selling Stockholder Documents or
Company Documents untrue or incorrect in any material respect or could result in
any of the conditions to the Closing not being satisfied or (C) that would be
reasonably expected to have a Material Adverse Effect; and

     

    (xxiii)  fail
to pay any required maintenance or other similar fees or otherwise fail to make
required filings or payments required to maintain and further prosecute any
applications for registration of Intellectual Property.

     

    6.3           Third Party
Consents.  The
Selling Stockholders and the Company shall use, and the Company shall cause the
Subsidiaries to use, their commercially reasonable efforts to obtain at the
earliest practicable date all consents, waivers and approvals from, and provide
all notices to, all Persons that are not a Governmental Body, which consents,
waivers, approvals and notices are required to consummate, or in connection
with, the transactions contemplated by this Agreement, including the consents,
waivers, approvals and notices, if any, referred to in Sections 3.3(b) and
4.3(b) hereof
(except for such matters covered by Section
6.4).  All such consents, waivers, approvals and notices shall
be in writing and in form and substance satisfactory to Purchaser, and executed
counterparts of such consents, waivers and approvals shall be delivered to
Purchaser promptly after receipt thereof, and copies of such notices shall be
delivered to Purchaser promptly after the making
thereof.  Notwithstanding anything to the contrary in this Agreement,
neither Purchaser nor any of its Affiliates (which for purposes of this sentence
shall include the Company) shall be required to pay any amounts in connection
with obtaining any such consent, waiver or approval.

     

    
      
        
        

      

      
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    6.4           Governmental Consents and
Approvals.  Each
of the Purchaser, the Selling Stockholders and the Company shall use its
commercially reasonable efforts to obtain at the earliest practical date all
consents, waivers, approvals, Orders, Permits, authorizations and declarations
from, make all filings with, and provide all notices to, all Governmental Bodies
which are required to consummate, or in connection with, the transactions
contemplated by this Agreement, including the consents, waivers, approvals,
Orders, Permits, authorizations, declarations, filings and notices, if any,
referred to in Sections 3.3(b) and
4.3(b).

     

    6.5           Further
Assurances

    .  Subject
to, and not in limitation of, Section 6.4,
each of the Selling Stockholders, the Company and Purchaser shall use its
commercially reasonable efforts to (a) take, or cause to be taken, all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement and (b) cause the fulfillment at the earliest practicable date of all
of the conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.

     

    6.6           No Shop.

     

    (a)  The
Selling Stockholders and the Company shall not, and shall not permit the
Subsidiaries or any of the Affiliates, directors, officers, employees,
representatives or agents of the Selling Stockholders, the Company or any of the
Subsidiaries (collectively, the “Representatives”)
to, directly or indirectly, (i) discuss, encourage, negotiate, undertake,
initiate, authorize, recommend, propose or enter into, whether as the proposed
surviving, merged, acquiring or acquired corporation or otherwise, any
transaction involving a merger, consolidation, business combination, purchase or
disposition of any material amount of the assets of the Company or any of the
Subsidiaries or any capital stock or other ownership interests of the Company or
any of the Subsidiaries other than the transactions contemplated by this
Agreement (an “Acquisition
Transaction”), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any
Person, any information concerning the business, operations, properties or
assets of the Company or the Subsidiaries in connection with an Acquisition
Transaction, or (iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing.

     

    (b)  The
Selling Stockholders and the Company shall notify Purchaser orally and in
writing promptly (but in no event later than 24 hours) after receipt by any of
the Selling Stockholders, the Company, the Subsidiaries or any of the
Representatives thereof of any proposal or offer received after the date hereof
from any Person other than Purchaser to effect an Acquisition Transaction or,
other than in the Ordinary Course of Business, any request for non-public
information relating to the Company or any of the Subsidiaries or for access to
the properties, books or records of the Company or any Subsidiary by any Person
other than Purchaser.  Such notice shall indicate the identity of the
Person making the proposal or offer, or intending to make a proposal or offer or
requesting non-public information or access to the books and records of the
Company, the material terms of any such proposal or offer, or modification or
amendment to such proposal or offer and copies of any written proposals or
offers or amendments or supplements thereto.  The Selling Stockholders
and the Company shall keep Purchaser informed, on a current basis, of any
material changes in the status and any material changes or modifications in the
material terms of any such proposal, offer, indication or request.

     

    
      
        
        

      

      
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    (c)  The
Selling Stockholders and the Company shall (and the Selling Stockholders and the
Company shall cause their Representatives to, and the Company shall cause the
Subsidiaries and their Representatives to) immediately cease and cause to be
terminated any existing discussions or negotiations with any Persons (other than
Purchaser) conducted heretofore with respect to any Acquisition
Transaction.  The Selling Stockholders and the Company agree not to
(and the Company agrees to cause the Subsidiaries not to) release any third
party from the confidentiality and standstill provisions of any agreement to
which the Company or any of the Subsidiaries is a party.

     

    6.7           Non-Competition;
Non-Solicitation; Confidentiality.

     

    (a)   For
a period of five (5) years from and after the Closing Date, the Selling
Stockholders shall not, and shall cause their Affiliates not to, directly or
indirectly, own, manage, engage in, operate, control, work for, consult with,
render services for, do business with, maintain any interest in (proprietary,
financial or otherwise) or participate in the ownership, management, operation
or control of, any business, whether in corporate, proprietorship or partnership
form or otherwise, engaging in a business the same or similar to that, or that
otherwise competes with, the Company or any of the Subsidiaries (a “Restricted
Business”); provided, however, that the
restrictions contained in this Section 6.7(a)
shall not restrict the acquisition by the Selling Stockholders, directly or
indirectly, of less than two percent (2%) of the outstanding capital stock of
any publicly traded company engaged in a Restricted Business.

     

    (b)   For
a period of five (5) years from and after the Closing Date, the Selling
Stockholders shall not, and shall cause their directors, officers, employees and
Affiliates not to, directly or indirectly:  (i) cause, solicit,
induce or encourage any employees of the Company or the Subsidiaries to leave
such employment or hire, employ or otherwise engage such individual, except for
employees offered employment by an Excluded Affiliate in connection with
separation of the respective businesses and work forces of the Company and the
Excluded Affiliates, as more particularly described in Section 6.7(b) of the
Disclosure Schedule; or (ii) cause, induce or encourage any material actual
or prospective client, customer, supplier, or licensor of the Company or any of
the Subsidiaries (including any existing or former customer of the Company or
the Subsidiaries and any Person that becomes a client or customer of the Company
or any of the Subsidiaries after the Closing) or any other Person who has a
material business relationship with the Company or any of the Subsidiaries, to
terminate or modify any such actual or prospective relationship.

     

    (c)   From
and after the Closing Date, the Selling Stockholders shall not and shall cause
their directors, officers, employees and Affiliates not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person other than
authorized officers, directors and employees of Purchaser or use or otherwise
exploit for its own benefit or for the benefit of anyone other than Purchaser,
any Confidential Information (as defined below).  The Selling
Stockholders shall not have any obligation to keep confidential (or cause its
officers, directors or Affiliates to keep confidential) any Confidential
Information if and to the extent disclosure thereof is specifically required by
applicable Law; provided, however, that in the
event disclosure is required by applicable Law, the Selling Stockholders shall,
to the extent reasonably possible, provide Purchaser with prompt notice of such
requirement prior to making any disclosure so that Purchaser may seek an
appropriate protective order.  For purposes of this Section 6.7(c),
“Confidential
Information” means any information with respect to the Company or any of
the Subsidiaries, including methods of operation, customer lists, products,
prices, fees, costs, Technology, inventions, trade secrets, know-how, Software,
marketing methods, plans, personnel, suppliers, competitors, markets or other
specialized information or proprietary matters.  Confidential
Information does not include, and there shall be no obligation hereunder with
respect to, information that (i) is generally available to the public on the
date of this Agreement or (ii) becomes generally available to the public other
than as a result of a disclosure not otherwise permissible
hereunder.

     

    
      
        
        

      

      
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    (d)  The
covenants and undertakings contained in this Section 6.7
relate to matters which are of a special, unique and extraordinary character and
a violation of any of the terms of this Section 6.7 will
cause irreparable injury to Purchaser, the amount of which will be impossible to
estimate or determine and which cannot be adequately compensated. Accordingly,
the remedy at law for any breach of this Section 6.7 will be
inadequate. Therefore, Purchaser will be entitled to a temporary and permanent
injunction, restraining order or other equitable relief from any court of
competent jurisdiction in the event of any breach of this Section 6.7
without the necessity of proving actual damage or posting any bond
whatsoever.  The rights and remedies provided by this Section 6.7 are
cumulative and in addition to any other rights and remedies which Purchaser may
have hereunder or at law or in equity.  In the event that Purchaser
were to seek damages for any breach of this Section 6.7, the
portion of the consideration delivered to the Selling Stockholders hereunder
which is allocated by the parties to the foregoing covenant shall not be
considered a measure of or limit on such damages.

     

    (e)  The
parties hereto agree that, if any court of competent jurisdiction determines
that a specified time period, a specified geographical area, a specified
business limitation or any other relevant feature of this Section 6.7 is
unreasonable, arbitrary or against public policy, then a lesser period of time,
geographical area, business limitation or other relevant feature which is
determined by such court to be reasonable, not arbitrary and not against public
policy may be enforced against the applicable party.

     

    6.8           Preservation of
Records.  Subject
to any retention requirements relating to the preservation of Tax records, the
Selling Stockholders and Purchaser agree that each of them shall (and shall
cause the Company and the Subsidiaries to) preserve and keep the records held by
them relating to the respective businesses of the Company and the Subsidiaries
for a period of seven years from the Closing Date and shall make such records
and personnel available to the other for inspection and copying as may be
reasonably required by such party in connection with, among other things, any
insurance claims by, legal proceedings against or governmental investigations
(including, without limitation, in respect of matters of compliance with
Environmental Law or applicable Law) of the Selling Stockholders, the Company,
the Subsidiaries or Purchaser or any of their respective Affiliates, preparation
of financial information and Tax Returns for the Company and its Subsidiaries,
or in order to enable the Selling Stockholders or Purchaser to otherwise comply
with their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or
thereby.  Notwithstanding the foregoing provisions of this Section 6.8 to the
contrary, Purchaser and the Selling Stockholders agree that (i) any such access
or availability shall be had or done in such a manner as to not unreasonably
interfere with the normal conduct of the business of the Company and its
Subsidiaries or the business of Purchaser and its Affiliates nor any Selling
Stockholder and their respective Affiliates (as the case may be), (ii) neither
Purchaser, the Company and its Subsidiaries and their respective Affiliates nor
the Selling Stockholders and their respective Affiliates shall be required to
provide access to any confidential record(s), the disclosure of which would
violate any Law, and (iii) neither Purchaser, the Company and its Subsidiaries
and their respective Affiliates nor the Selling Stockholders and their
respective Affiliates shall be required to provide access to any confidential
record(s), the disclosure of which would cause it or any of their respective
Affiliates to waive its attorney-client privilege or attorney work product
privilege.

     

    
      
        
        

      

      
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    6.9           Publicity. 
None of the Purchaser, Selling Stockholders or the Company shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of the  party intending to make such
release, disclosure is otherwise required by applicable Law or, in the sole
judgment of the Purchaser disclosure is required by the applicable rules of any
stock exchange on which the Purchaser or its Affiliates lists securities, provided that, to the
extent required by applicable Law, the party intending to make such release
shall use its commercially reasonable efforts consistent with such applicable
Law to consult with the other party with respect to the text
thereof.

     

    6.10           Cooperation with
Financing.  In
order to assist Purchaser with obtaining financing, the Selling Stockholders and
the Company shall provide such assistance and cooperation as Purchaser and its
Affiliates may reasonably request, including (i) cooperating with prospective
lenders, underwriters, placement agents or initial purchasers and their
respective advisors (including for purposes of performing their due diligence)
and (ii) helping procure  reasonably requested certificates or
documents, customary certificates (including a certificate of the chief
financial officer of the Company with respect to solvency matters), legal
opinions and real estate title documentation in connection with definitive
financing or offering documents.  All documented fees, costs and
expenses incurred by the Selling Stockholders and the Company in providing such
assistance and cooperation shall be promptly paid by Purchaser upon
request.

     

    6.11           Related-Party Transactions
with Non-Management Affiliates.  On
or prior to the Closing Date, the Company and the Subsidiaries shall (a)
terminate all Contracts with any of the Selling Stockholders or their respective
Affiliates (other than (i) those Contracts set forth in Section 6.11 of the
Disclosure Schedule and (ii) Contracts between the Company and the Subsidiaries,
Contracts between the Company and the Subsidiaries and their respective officers
and employees and Contracts the continuation of which Purchaser has approved in
writing) and (b) deliver releases (substantially in the form of Exhibit
E hereto) executed by such Affiliates with whom the Company has
terminated such Contracts pursuant to this Section 6.11
providing that no further payments are due, or may become due, under or in
respect of any such terminated Contacts; provided that in no
event shall the Company or any of the Subsidiaries pay any fee or otherwise
incur any expense or financial exposure with respect to any such termination or
release.

     

    
      
        
        

      

      
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    6.12           Monthly Financial
Statements.  As
soon as reasonably practicable, but in no event later than ninety (90) days
after the end of each calendar month during the period from the date hereof to
the Closing, the Company shall provide Purchaser with (a) unaudited monthly
financial statements and (b) operating or management reports (such reports to be
in the form prepared by the Company in the Ordinary Course of Business) of the
Company for such preceding month.  As soon as reasonably practicable,
but in no event later than ninety (90) days after the end of each calendar
month, during the period from the date hereof to the Closing, the Company shall
provide Purchaser with (i) unaudited monthly financial statements and (ii)
operating or management reports (such reports to be in the form prepared by the
Company and the Subsidiaries in the Ordinary Course of Business) of each of the
Subsidiaries for which financial statements are prepared (to the extent the same
are prepared in the Ordinary Course of Business) for such preceding
month.

     

    6.13           Fees and
Expenses.  No
later than two (2) Business Days prior to the Closing Date, the Company shall
deliver to Purchaser (i) pay-off letters or final invoices (in a form reasonably
acceptable to the Purchaser) in respect of the Company Transaction Expenses from
third-party service providers to whom payments are required to be made by the
Company or any of the Subsidiaries, and (ii) a certificate of the Company
setting forth an estimate of the unpaid balance of all Company Transaction
Expenses as of the close of business on the day immediately preceding the
Closing.  On the Closing Date prior to the Closing, the Company shall
deliver to Purchaser a certificate of the Company setting forth the unpaid
balance of all Company Transaction Expenses as of the close of business on the
day immediately preceding the Closing. All pay-off letters or final invoices
shall provide that the amounts set forth therein represent payment in full for
all fees and expenses payable by the Company in connection with the transactions
contemplated by this Agreement.

     

    6.14           Notification of Certain
Matters.  The
Selling Stockholders shall give notice to Purchaser and Purchaser shall give
notice to the Selling Stockholders, as promptly as reasonably practicable upon
becoming aware of (a) any fact, change, condition, circumstance, event,
occurrence or non-occurrence that has caused or is reasonably likely to cause
any representation or warranty in this Agreement made by it to be untrue or
inaccurate in any respect at any time after the date hereof and prior to the
Closing, (b) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (c) the institution of or the threat of institution of any Legal
Proceeding against any of the Selling Stockholders, the Company or any of the
Subsidiaries related to this Agreement or the transactions contemplated hereby;
provided that
the delivery of any notice pursuant to this Section 6.14 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice, or the representations or warranties of, or the
conditions to the obligations of, the parties hereto.

     

    
      
        
        

      

      
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    6.15           Indebtedness.  No
later than two (2) Business Days prior to the Closing Date, the Company shall
provide Purchaser with (i) a certificate of the Company setting forth an
estimate of the balance of all Indebtedness of the Company and the Subsidiaries
as of the close of business on the day immediately preceding the Closing Date
and a statement of the full repurchase and redemption price for the Preferred
Stock from the holders thereof as of or prior to the Closing,  (ii)
customary pay-off letters (in a form reasonably acceptable to the Purchaser)
from all holders of Indebtedness to be repaid as of or prior to the Closing and
(iii) documentation satisfactory to the Purchaser in its
reasonable  discretion providing for the repurchase and redemption in
full, for all outstanding shares of Preferred Stock and the full release of the
Company from and against any claims relating to the Preferred Stock as of the
Closing.  The Company shall also make arrangements reasonably
satisfactory to Purchaser for such holders to provide to Purchaser recordable
form mortgage and lien releases, canceled notes and shares of Preferred Stock
and other documents reasonably requested by the Purchaser prior to the Closing
such that all Liens on the assets or properties of the Company or any of the
Subsidiaries that are not Permitted Exceptions shall be satisfied, terminated
and discharged on or prior to the Closing Date.  On the Closing Date
prior to the Closing, the Company shall deliver to Purchaser a certificate of
the Company setting forth all Indebtedness of the Company and the Subsidiaries
as of the close of business on the day immediately preceding the Closing Date
and a statement of the full repurchase and redemption price for the Preferred
Stock from the holders thereof as of or prior to the Closing.

     

    6.16           Resignation of
Directors. Seller
shall cause each of the directors of the Company and the Subsidiaries set forth
on Section 6.16
of the Disclosure Schedule to submit a letter of resignation effective on or
before the Closing Date.

     

    6.17           Use of
Name.  The
Selling Stockholders hereby agree that upon the Closing, and except as otherwise
expressly provided in this Agreement, Purchaser and the Company shall have the
sole right to the use of the name “Cuming Corporation” or similar names and any
service marks, trademarks, trade names, d/b/a names, fictitious names,
identifying symbols, logos, emblems, signs or insignia related thereto or
containing or comprising the foregoing, or otherwise used in the business of the
Company, including any name or mark confusingly similar thereto and the
trademarks and service marks listed on Section 4.13(a) of
the Disclosure Schedule (collectively, the “Company
Marks”). Except as otherwise expressly provided in this Agreement, the
Selling Stockholders shall not, and shall not permit their respective Affiliates
to, use such name or any variation or simulation thereof or any of the Company
Marks.  Anything in the foregoing to the contrary notwithstanding, the
Purchaser acknowledges and agrees that the Selling Stockholders and the Excluded
Affiliates shall have the right (i) to continue to use the names “Cuming
Microwave Corporation” and “Cuming Lehman Chambers, Inc.” or similar names and
service marks, trademarks, trade names, d/b/a names, fictitious names,
identifying symbols, logos, emblems, signs or insignia related thereto or
containing or comprising the foregoing in connection with operation of their
businesses in compliance with the terms and conditions of Section 6.7 of this
Agreement; and (ii) to use the name “Cuming” and related marks in connection
with the conduct and operation of a business in compliance with the terms and
conditions of Section
6.7 of this Agreement.  Each of the Selling Stockholders shall,
and shall cause each its Affiliates to, immediately after the Closing, cease to
hold itself out as having any affiliation with the Company or any of its
Affiliates.

     

    
      
        
        

      

      
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    6.18           Registration Rights for
Purchaser Common Stock.  Purchaser
hereby covenants and agrees that, with respect to the Purchaser Common Stock
delivered as part of the Purchase Price hereunder, to the extent Purchaser
issues and sells shares of its capital stock for purposes of financing the
payment of the Cash Price hereunder, Purchaser shall (to the extent that
registration rights in connection therewith are provided) provide for
“piggyback” registration of the Purchaser Common Stock under the Securities Act
in connection with any registration statement and registration under the
Securities Act of such capital stock issued and sold for such financing
purpose.  Purchaser will pay costs as is customary with respect to any
such registration of the Purchaser Common Stock.

     

    6.19           Environmental
Matters. The
Company shall cooperate with and permit Purchaser and Purchaser's environmental
consultant, to conduct such investigations as Purchaser in its sole discretion
may deem appropriate (including investigations known as “Phase I” and, if
indicated as a result of a Phase I or for other reasons in Purchaser’s
reasonable discretion, “Phase II”) of environmental conditions of that certain
real property located at 1 Ledin Avenue, Avon, MA, 225 Bodwell, Avon, MA, 230
Bodwell, Avon, MA, 264 Bodwell, Avon, MA, 21 Parker Drive, Avon, MA and 101
Wales Avenue, Avon, MA, and the activities thereon (subject to any limitations
contained in valid, previously executed leases as Purchaser, in its sole
discretion, shall deem necessary or prudent) (“Environmental
Assessment”).  The
Environmental Assessment shall be conducted at Purchaser’s sole expense by a
qualified environmental consulting firm, possessing reasonable levels of
insurance, in compliance with applicable Laws and in a manner that minimizes the
disruption of the operations of the Company.

     

    ARTICLE
VII


     

    CONDITIONS
TO CLOSING

     

    7.1           Conditions Precedent to
Obligations of Purchaser.  The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions precedent (any or all of which may be waived by
Purchaser in whole or in part to the extent permitted by applicable
Law):

     

    (a)  the
representations and warranties of the Selling Stockholders qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects (other than the representations and
warranties contained in (i) Sections 3.2, 3.4, 3.6, the first
sentence of Section
4.1 (Organization), (ii) Section 4.2
(Authorization of Agreement); (iii) Section 4.4
(Capitalization), (iv) Section 4.5
(Subsidiaries), and (v) Section 4.29
(Financial Advisors), which representations and warranties shall be true and
correct), in each case, as of the date of this Agreement and as of the Closing
as though made at and as of the Closing, except to the extent such
representations and warranties expressly speak as of an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date);

     

    
      
        
        

      

      
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    (b)  the
Selling Stockholders and the Company shall have performed and complied in all
material respects with all obligations and agreements required in this Agreement
to be performed or complied with by them on or prior to the Closing
Date;

     

    (c)  there
shall not have been or occurred any event, change, occurrence or circumstance
that, individually or in the aggregate with any such other events, changes,
occurrences or circumstances, has had or could reasonably be expected to have a
Material Adverse Effect since the Balance Sheet Date;

     

    (d)  no
Legal Proceedings shall have been instituted or threatened or claim or demand
made against the Selling Stockholders, the Company or any of the Subsidiaries,
or Purchaser, seeking to restrain or prohibit, or to obtain substantial damages
with respect to, the consummation of the transactions contemplated hereby, and
there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby;

     

    (e)   Purchaser
shall have received a certificate signed by each Selling Stockholder and by each
of the President and Chief Financial Officer of the Company, each in form and
substance reasonably satisfactory to Purchaser, dated the Closing Date, to the
effect that each of the conditions specified above in Sections 7.1(a)-(d)
have been satisfied in all respects; provided that with
respect to Section
7.1(a), the President and Chief Financial Officer of the Company shall
only be required to certify as to the representations and warranties contained
in Article
IV;

     

    (f)   the
Selling Stockholders, the Company or the Subsidiaries shall have
obtained  any consent, approval, order or authorization of, or made
any registration, declaration or filing with, any Person or Governmental
Body  set forth in Sections 3.3(b) and
4.3(b) hereof
in a form satisfactory to Purchaser;

     

    (g)  the
Selling Stockholders and the Company shall have obtained those consents, if any,
listed on Section
7.1(g) of the Disclosure Schedule in a form satisfactory to Purchaser and
copies thereof shall have been delivered to Purchaser;

     

    (h)  Purchaser
shall have received the written resignations and release of claims to fees or
expenses of each of the directors and officers of the Company and the
Subsidiaries identified by Purchaser prior to Closing, each in form and
substance reasonably satisfactory to Purchaser;

     

    (i)  each
of the persons listed in Section 7.1(i) of the
Disclosure Schedule shall have entered into an employment/consulting agreement
on terms satisfactory to Purchaser (including, without limitation, provisions
relating to confidentiality, proprietary rights, non-competition and
non-solicitation), and such agreements shall be in full force and effect and all
of such persons shall be willing and able to perform in accordance with such
agreements;

     

    (j)  Purchaser
shall have obtained financing sufficient for it to consummate the transactions
contemplated by this Agreement on terms and conditions satisfactory to Purchaser
(in its sole and absolute discretion) and Purchaser shall have been satisfied
with its examination and diligence investigation of the Company, and its
business, assets, financial condition and results of operations;

     

    
      
        
        

      

      
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    (k) 
the Company shall have obtained the issuance, reissuance or transfer of all
Permits required under Law for Purchaser to conduct the operations of the
Company’s business as of the Closing Date, and the Company shall have satisfied
all property transfer requirements arising under Law;

     

    (l)  the
Company and 225 Bodwell Corporation shall have entered into and executed a lease
(and other necessary lease documentation) for the facility located at 225
Bodwell Street, Avon, MA 02322 substantially in the form as set forth on Exhibit
G, attached hereto, and the Company and/or Subsidiaries that lease the
above described real property shall have executed and delivered a form of
termination and release document, dated as of the Closing Date and substantially
in the form as set forth on Exhibit
B, attached hereto, with respect to termination of any existing lease or
leases affecting said real property located at 225 Bodwell Street, Avon,
Massachusetts 02322;

     

    (m)  the
Selling Stockholders shall have paid or made arrangements satisfactory (to
Purchaser, in its sole discretion) for payment and full discharge of all Company
Transaction Expenses and shall have provided written evidence, satisfactory to
Purchaser in its sole discretion thereof;

     

    (n)  The
Company shall have paid or made arrangements satisfactory to Purchaser in its
sole discretion for payment and full discharge of all Indebtedness of the
Company and its Subsidiaries existing immediately prior to Closing and shall
have completed the repurchase and redemption in full of all outstanding shares
of Preferred Stock as of the Closing, and shall have provided written evidence
thereof satisfactory to Purchaser in its sole discretion;

     

    (o)  Purchaser
shall have received the items listed in Sections 2.6 and 2.7;

     

    (p)  each
of the Selling Stockholders and the Escrow Agent shall have entered into and
executed the Escrow Agreement, substantially in the form of Exhibit
C hereto;

     

    (q)  each
of the Selling Stockholders and the Excluded Affiliates shall have entered into
and executed that certain Side Letter Agreement, substantially in the form of
Exhibit
D hereto;

     

    (r)  Each
of the Selling Stockholders and their Affiliates shall have executed and
delivered a form of waiver and release document dated as of the Closing Date and
substantially in the form as set forth in Exhibit
E attached hereto with respect to the unconditional release of the
Company and the Subsidiaries from any and all Liabilities to the Selling
Stockholders and their Affiliates;

     

    (s)  The
sale, transfer, assignment or conveyance or other delivery by 225 Bodwell
Corporation to the Company of certain equipment and fixtures located at 225
Bodwell Avenue, Avon, MA in accordance with Sections 4.12(b) and
6.2(b)(viii) of
the Disclosure Schedules shall have occurred pursuant to agreements, instruments
and other documentation in form and substance reasonably acceptable to
Purchaser;

     

    
      
        
        

      

      
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    (t)  The
Environmental Assessment at 225 Bodwell Street and 230 Bodwell Street shall not
have revealed any circumstances which could reasonably be expected to result in
(1) the criminal prosecution of the Company or any Subsidiary or any director,
officer or employee of the Company or any Subsidiary under Environmental Laws,
or (2) any suspension or closure of operations at 225 Bodwell Street or 230
Bodwell Street or the revocation or termination of any Environmental
Permits.

     

    7.2           Conditions Precedent to
Obligations of the Selling Stockholders.  The
obligations of the Selling Stockholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions precedent (any or all of
which may be waived by the Selling Stockholders in whole or in part to the
extent permitted by applicable Law):

     

    (a)  the
representations and warranties of Purchaser set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects (other than Sections 5.1
(Organization), 5.2 (Authorization of
Agreement), 5.6
(Financial Advisors) and 5.7 (Purchaser Common
Stock), which representation and warranties shall be true and correct), in each
case, as of the date of this Agreement and as of the Closing as though made at
and as of the Closing, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date);

     

    (b)  Purchaser
shall have performed and complied in all material respects with all obligations
and agreements required by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date;

     

    (c)  No
Legal Proceedings shall have been instituted or threatened or claim or demand
made against the Selling Stockholders, the Company or any of the Subsidiaries,
or Purchaser, seeking to restrain or prohibit or to obtain substantial damages
with respect to the consummation of the transactions contemplated hereby, and
there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby;

     

    (d)  The
Selling Stockholders shall have received a certificate signed by the President
of the Purchaser, in form and substance reasonably satisfactory to the Selling
Stockholders, dated the Closing Date, to the effect that each of the conditions
specified above in Sections 7.2(a)-(c)
have been satisfied in all respects;

     

    (e)  Purchaser shall have
obtained any consent, approval, order or authorization of, or made any
registration, declaration or filing with, any Person or Governmental Body set
forth in Section
5.3(b) hereof in a form satisfactory to the Selling
Stockholders;

     

    
      
        
        

      

      
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    (f)  Purchaser and the Escrow
Agent shall have entered into and executed the Escrow Agreement, substantially
in the form of Exhibit
C hereto;

     

    (g)  Purchaser shall have
entered into and executed that certain Side Letter Agreement, substantially in
the form of Exhibit
D hereto; and

     

    (h)  Each of the Company and
Cuming Microwave Corporation shall have entered into and executed that certain
transition services agreement substantially in the form of Exhibit
F hereto.


     

     

    ARTICLE
VIII

     

    INDEMNIFICATION

     

    8.1           Survival of Representations
and Warranties.  The
representations and warranties of the parties contained in this Agreement, any
certificate delivered pursuant hereto or any Selling Stockholder Document,
Company Document or Purchaser Document shall survive the Closing for a period of
eighteen (18) months following  the Closing Date; provided, however, that the
representations and warranties (a) of the Selling Stockholders set forth in
Sections 3.1
(Organization), 3.2 (Authorization),
3.4
(Ownership), 3.6 (Financial
Advisors), 4.1
(Organization), 4.2 (Authorization),
4.4
(Capitalization), 4.5 (Subsidiaries),
and 4.29
(Financial Advisors), shall survive the Closing indefinitely, (b) of the Selling
Stockholders set forth in Sections 4.10
(Taxes), 4.15
(Employee Benefit Plans) and 4.19 (Environmental)
shall survive the Closing until sixty (60) days following the expiration of the
applicable statute of limitations with respect to the particular matter that is
the subject matter thereof and (c) of Purchaser set forth in Sections 5.1
(Organization), 5.2 (Authorization),
5.6 (Financial
Advisors) and 5.7 (Purchaser Common
Stock) shall survive the Closing indefinitely (in each case, the “Survival
Period”); provided, further, however, that any
obligations hereunder shall not terminate with respect to any Losses as to which
the Person to be indemnified shall have given notice (stating in reasonable
detail the basis of the claim for indemnification) to the indemnifying party in
accordance with Section 8.3(a)
before the termination of the applicable Survival Period.

     

    8.2           Indemnification.

     

    (a)  Subject
to Sections
8.1, 8.4
and 8.5 hereof,
the Selling Stockholders hereby agree, jointly and severally, (except with
respect to Section
8.2(a)(ii), in which case it shall be severally but not jointly) to
indemnify and hold Purchaser, the Company, and their respective directors,
officers, employees, Affiliates, stockholders, agents, attorneys,
representatives, successors and assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against, and pay to the
applicable Purchaser Indemnified Parties the amount of, any and all losses,
liabilities, claims, obligations, deficiencies, demands, judgments, damages,
interest, fines, penalties, claims, suits, actions, causes of action,
assessments, awards, costs and expenses (including costs of investigation and
defense and reasonable attorneys’ and other professionals’ fees), or any
diminution in value, whether or not involving a third party claim (individually,
a “Loss”
and, collectively, “Losses”):

     

    
      
        
        

      

      
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    (i)  based
upon, attributable to or resulting from the failure of any of the
representations or warranties made by the Selling Stockholders in this
Agreement  or in any Selling Stockholder Document or Company Document
to be true and correct in all respects at and as of the date hereof and at and
as of the Closing Date;

     

    (ii)  based
upon, attributable to or resulting from the breach of any covenant or other
agreement on the part of the Selling Stockholders or (prior to the Closing) the
Company under this Agreement or any Selling Stockholder Document or Company
Document;

     

    (iii)  imposed
under or pursuant to any Environmental Laws (including any loss of use of
Company Property or any tangible personal property of the Company or any of the
Subsidiaries) arising from or related to any condition, act or omission by the
Company or any Subsidiary or any predecessor thereof or related to the
operations of the Company or any Subsidiary or any predecessor thereof at any
real property currently or formerly owned, operated or leased by the Company or
any Subsidiary or any predecessor thereof, whether known or unknown, accrued or
contingent, to the extent existing on or prior to the Closing Date, including
any Environmental Costs and Liabilities and any liabilities imposed pursuant to
common law associated with a Release of Hazardous Materials; and

     

    (iv)  arising
from or related to any Company Transaction Expenses, Indebtedness, repurchase or
redemption of all outstanding shares of Preferred Stock or other fees, and/or
like payments, including, without limitation those of any Person having acted or
claiming to have acted, directly or indirectly, as a broker, finder or financial
advisor for the Selling Stockholders or the Company or the Subsidiaries in
connection with the transactions contemplated by this Agreement.

     

    (b)  Subject
to Sections 8.1
and 8.4,
Purchaser hereby agrees to indemnify and hold the Selling Stockholders and their
respective Affiliates, stockholders, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Selling
Stockholder Indemnified Parties”) harmless from and against, and pay to
the applicable Selling Stockholder Indemnified Parties the amount of any and all
Losses:

     

    (i)  based
upon, attributable to or resulting from the failure of any of the
representations or warranties made by Purchaser in this Agreement or in any
Purchaser Document to be true and correct in all respects at the date hereof and
as of the Closing Date;

     

    (ii)  based
upon, attributable to or resulting from the breach of any covenant or other
agreement on the part of Purchaser under this Agreement or any Purchaser
Document;

     

    (iii)  arising from or
related to any claim for payment of fees and/or like payments, including,
without limitation those of any person having acted or claiming to have acted,
directly or indirectly, as a broker, finder or financial advisor for Purchaser
in connection with the transactions contemplated hereby or the consummation of
the transactions contemplated by this Agreement; and

     

    
      
        
        

      

      
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    (iv)  based
upon, attributable to or resulting from the operation and conduct of the
business of the Company or any of its Subsidiaries following the Closing Date,
including, without limitations, any Loss based upon, attributable to or
resulting from any breach of contract, breach of warranty, tort, infringement,
violation of Environmental Laws or other legal requirement, claim, or lawsuit to
the extent that such matter solely originates and occurs after the Closing Date,
subject to any provision hereof assigning responsibility for specific items to
the Selling Stockholders.  The foregoing terms of this subsection
(b)(iv) shall not apply to any Losses based upon, attributable to or resulting
from  facts, events, transactions, actions, omissions or inactions
which occur or originate on or prior to the Closing Date or which occur or
originate based upon, attributable to or resulting from facts, events,
transactions, actions, omissions or inactions that may continue following the
Closing Date or that may occur or originate following the Closing Date due to
operations, practice(s) or conduct of the Company or any of its Subsidiaries
established, formulated or begun prior to the Closing Date.

     

    (c)  The
right to indemnification or any other remedy based on representations,
warranties, covenants and agreements in this Agreement, or any Selling
Stockholder Documents, Company Document or Purchaser Document shall not be
affected by any investigation conducted at any time, or any knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of, or compliance with, any such representation,
warranty, covenant or agreement.  The waiver of any condition based on
the accuracy of any such representation or warranty, or on the performance of or
compliance with any such covenant or agreements, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.

     

    8.3           Indemnification
Procedures.

     

    (a)  A
claim for indemnification for any matter not involving a third party claim may
be asserted by notice to the party from whom indemnification is sought; provided, however, that failure
to so notify the indemnifying party shall not preclude the indemnified party
from any indemnification which it may claim in accordance with this Article VIII, except
to the extent the indemnifying party can demonstrate actual loss and prejudice
as a result of such failure to notify.

     

    
      
        
        

      

      
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    (b)  In
the event that any Legal Proceedings shall be instituted or that any claim or
demand shall be asserted by any third party in respect of which indemnification
may be sought under Section 8.2 hereof
(regardless of the limitations set forth in Section 8.4) (a
“Third
Party Claim”), the indemnified party shall promptly cause written notice
of the assertion of any Third Party Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying
party.  The failure of the indemnified party to give reasonably prompt
notice of any Third Party Claim shall not release, waive or otherwise affect the
indemnifying party’s obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.  Subject to the provisions of this Section 8.3, the
indemnifying party shall have the right, at its sole expense, to be represented
by counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise deal
with any Third Party Claim which relates to any Losses indemnified against
hereunder; provided that the
indemnifying party shall have acknowledged in writing to the indemnified party
its unqualified obligation to indemnify the indemnified party with respect to
such Third Party Claim as provided hereunder.  If the indemnifying
party elects to defend against, negotiate, settle or otherwise deal with any
Third Party Claim which relates to any Losses indemnified by it hereunder, it
shall within five days of the indemnified party’s written notice of the
assertion of such Third Party Claim (or sooner, if the nature of the Third Party
Claim so requires) notify the indemnified party of its intent to do so; provided, that the
indemnifying party must conduct the defense of the Third Party Claim actively
and diligently thereafter in order to preserve its rights in this
regard.  If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Third Party Claim which relates to
any Losses indemnified against hereunder, fails to notify the indemnified party
of its election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Third Party
Claim.  If the indemnified party defends any Third Party Claim, then
the indemnifying party shall reimburse the indemnified party for the expenses of
defending such Third Party Claim upon submission of periodic
bills.  If the indemnifying party shall assume the defense of any
Third Party Claim, the indemnified party may participate, at his or its own
expense, in the defense of such Third Party Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if (i) so requested by
the indemnifying party to participate or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and provided, further, that the
indemnifying party shall not be required to pay for more than one such counsel
for all indemnified parties in connection with any Third Party
Claim.  The parties hereto agree to provide reasonable access to the
other to such documents and information as may be reasonably requested in
connection with the defense, negotiation or settlement of any such Third Party
Claim.  Notwithstanding anything in this Section 8.3 to the
contrary, neither the indemnifying party nor the indemnified party shall,
without the written consent of the other party, settle or compromise any Third
Party Claim or permit a default or consent to entry of any judgment unless the
claimant or claimants and such party provide to such other party an unqualified
release from all liability in respect of the Third Party Claim.  If
the indemnifying party makes any payment on any Third Party Claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such Third Party
Claim.

     

    (c)  After
any final decision, judgment or award shall have been rendered by a Governmental
Body of competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the indemnified party
and the indemnifying party shall have arrived at a mutually binding agreement,
in each case with respect to a Third Party Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such matter
and the indemnifying party shall pay all of such remaining sums so due and owing
to the indemnified party by wire transfer of immediately available funds within
five Business Days after the date of such notice.

     

    
      
        
        

      

      
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    8.4           Limitations on
Indemnification for Breaches of Representations and
Warranties.

     

    (a)  An
indemnifying party shall not have any liability under Section 8.2(a)(i) or
Section
8.2(b)(i) hereof unless the aggregate amount of Losses incurred by the
indemnified parties and indemnifiable thereunder based upon, attributable to or
resulting from the failure of any of the representations or warranties to be
true and correct exceeds $500,000 (the “Basket”)
in which case  the indemnifying party shall be required to pay only to
the extent of Losses in excess of such amount; provided that the
Basket limitation shall not apply to Losses related to the failure to be true
and correct of any of the representations and warranties set forth in Sections 3.1
(Organization), 3.2 (Authorization),
3.4
(Ownership), 3.6 (Financial
Advisors), 4.1
(Organization), 4.2 (Authorization),
4.4
(Capitalization), 4.5 (Subsidiaries),
4.10 (Taxes),
4.15 (Employee
Benefit Plans), 4.19 (Environmental),
4.29 (Financial
Advisors),  5.1 (Organization),
5.2
(Authorization) and 5.6 (Financial
Advisors) hereof.  The Selling Stockholders obligations in respect of
Section 8.2(a)(v) shall be as described (including the limitations thereto) in
Section
8.2(a)(v) of the Disclosure Schedule.

     

    (b)  Neither
the Selling Stockholders nor Purchaser shall be required to indemnify any Person
under Section
8.2(a)(i) or 8.2(b)(i) for an
aggregate amount of Losses exceeding an amount equal to $25,000,000 (the “Cap”)
in connection with Losses related to the failure to be true and correct of any
of the representations or warranties of the Selling Stockholders or Purchaser in
Articles III,
IV and V, respectively;
provided that
there shall be no Cap with respect to Losses related to the failure to be true
and correct of any of the representations or warranties contained in Sections 3.1
(Organization), 3.2 (Authorization),
3.4
(Ownership), 3.6 (Financial
Advisors), 4.1
(Organization), 4.2 (Authorization),
4.4
(Capitalization), 4.5 (Subsidiaries),
4.10 (Taxes),
4.15 (Employee
Benefit Plans), 4.19 (Environmental),
4.29 (Financial
Advisors), and 5.1 (Organization),
5.2
(Authorization), 5.6 (Financial
Advisors), and 5.7 (Purchaser Common
Stock) of this Agreement.

     

    (c)  For
purposes of the failure of any representations or warranties to be true and
correct and the calculation of Losses hereunder, any materiality or Material
Adverse Effect qualifications in the representations, warranties, covenants and
agreements shall be disregarded.

     

    (d) 
The Selling Stockholders shall have no right of contribution or other recourse
against the Company or the Subsidiaries or their respective directors, officers,
employees, Affiliates, agents, attorneys, representatives, assigns or successors
for any Third Party Claims asserted by Purchaser Indemnified Parties, it being
acknowledged and agreed that the covenants and agreements of the Company are
solely for the benefit of the Purchaser Indemnified Parties.

     

    8.5           Tax
Matters.

     

    
      
        
        

      

      
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    (a) Tax
Indemnification.  The Selling Stockholders hereby agree,
jointly and severally, to be liable for and to indemnify and hold the Purchaser
Indemnified Parties harmless from and against, and pay to the Purchaser
Indemnified Parties the amount of, any and all Losses in respect of (i) all
Taxes of the Company and the Subsidiaries (or any predecessor thereof), except
to the extent such Taxes are accrued as Included Current Liabilities in the
Closing Balance Sheet and taken into account in determining the Final Closing
Working Capital (A) for any taxable period ending on or before the Closing Date,
and (B) for the portion of any Straddle Period ending at the close of business
on the Closing Date (determined as provided in Section 8.5(d)); (ii)
any and all Taxes imposed on any member of a consolidated, combined or unitary
group of which the Company or any Subsidiary (or any predecessor thereof) is or
was a member on or prior to the Closing Date, by reason of the liability of the
Company or any Subsidiary (or any predecessor thereof), pursuant to Treasury
Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any
analogous or similar provision under state, local or foreign Law); (iii) the
failure of any of the representations and warranties contained in Section 4.10 to be
true and correct in all respects (determined without regard to any qualification
related to materiality contained therein) or the failure to perform any covenant
contained in this Agreement with respect to Taxes; (iv) any failure by the
Selling Stockholders to timely pay any and all Taxes required to be borne by the
Selling Stockholders pursuant to Section
8.5(b)(iii).

     

    (b)  Filing of Tax Returns;
Payment of Taxes.

     

    (i)  The
Company shall (and shall cause the Subsidiaries to) timely file all Tax Returns
required to be filed by it on or prior to the Closing Date and shall pay or
cause to be paid all Taxes shown due thereon.  All such Tax Returns
shall be prepared in a manner consistent with prior practice.  The
Company shall provide Purchaser with copies of such completed Tax Returns at
least twenty (20) days prior to the due date for filing thereof, along with
supporting workpapers, for Purchaser’s review and approval.  The
Selling Stockholders and Purchaser shall attempt in good faith to resolve any
disagreements regarding such Tax Returns prior to the due date for
filing.  In the event that the Selling Stockholders and the Purchaser
are unable to resolve any dispute with respect to such Tax Return at least ten
days prior to the due date for filing, such dispute shall be resolved pursuant
to Section
8.5(g), which resolution shall be binding on the parties.

     

    (ii)  Following
the Closing, Purchaser shall cause to be timely filed all Tax Returns required
to be filed by the Company and the Subsidiaries after the Closing Date and,
subject to the rights to payment from the Selling Stockholders under Section 8.5(b)(iii),
pay or cause to be paid all Taxes shown due thereon.  The Company
shall provide the Selling Stockholders with copies of such completed Tax Returns
required to be filed by the Company and/or the Subsidiaries for any period
ending on or before the Closing Date at least twenty (20) days prior to the due
date for filing thereof, along with supporting workpapers, for Selling
Stockholder’s review and approval.  The Selling Stockholders and
Purchaser shall attempt in good faith to resolve any disagreements regarding
such Tax Returns prior to the due date for filing.  In the event that
the Selling Stockholders and the Purchaser are unable to resolve any dispute
with respect to such Tax Return at least ten (10) days prior to the due date for
filing, such dispute shall be resolved pursuant to Section 8.5(f), which
resolution shall be binding on the parties.  Purchaser shall work with
the Stockholder Representative for purposes of resolving any dispute as set
forth herein.  Notwithstanding any dispute as set forth herein,
Purchaser will be allowed to file Tax Returns by the due date.

     

    
      
        
        

      

      
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    (iii)  Not
later than ten (10) days prior to the due date for the payment of Taxes on any
Tax Returns which Purchaser has the responsibility to cause to be filed pursuant
to Section
8.5(c)(ii), the Selling Stockholders shall pay to Purchaser the amount of
Taxes, as reasonably determined by Purchaser, owed by the Selling Stockholders
pursuant to the provisions of Section
8.5(a).  No payment pursuant to this Section 8.5(c)(iii)
shall excuse the Selling Stockholders from its indemnification obligations
pursuant to Section
8.5(a) if the amount of Taxes as ultimately determined (on audit or
otherwise) for the periods covered by such Tax Returns exceeds the amount of the
Selling Stockholders’ payment under this Section
8.5(c)(iii).

     

    (iv)  The
Purchaser shall pay the Selling Stockholders the amount of any refund of Taxes
for any period ending on or before the Closing Date which is received by the
Company or the Purchaser after the Closing Date, and subject to resolution of
any dispute with respect thereto pursuant to Section
8.5(f).

     

    (c)  Straddle Period Tax
Allocation.  The Company will, unless prohibited by applicable
Law, close the taxable period of the Company and the Subsidiaries as of the
close of business on the Closing Date.  If applicable Law does not
permit the Company or a Subsidiary to close its taxable year on the Closing Date
or in any case in which a Tax is assessed with respect to a taxable period which
includes the Closing Date (but does not begin or end on that day) (a “Straddle
Period”), the Taxes, if any, attributable to a Straddle Period shall be
allocated (i) to the Selling Stockholders for the period up to and including the
close of business on the Closing Date and (ii) to Purchaser for the period
subsequent to the Closing Date.  Any allocation of income or
deductions required to determine any Taxes attributable to a Straddle Period
shall be made by means of a closing of the books and records of the Company and
the Subsidiaries as of the close of the Closing Date, provided that Taxes
other than those based upon or related to income and receipts and exemptions,
allowances or deductions that are calculated on an annual basis (including, but
not limited to, depreciation and amortization deductions) shall be allocated
between the period ending on the Closing Date and the period after the Closing
Date in proportion to the number of days in each such period.

     

    (d) 
Tax
Audits.

     

    (i)  If
notice of any Legal Proceeding with respect to Taxes of the Company or any of
the Subsidiaries (a “Tax
Claim”) shall be received by either party for which the other party may
reasonably be expected to be liable pursuant to Section 8.5(a), the
notified party shall notify such other party in writing of such Tax Claim; provided, however, that the
failure of the notified party to give the other party notice as provided herein
shall not relieve such failing party of its obligations under this Section 8.5 except to
the extent that the other party is actually and materially prejudiced
thereby.

     

    
      
        
        

      

      
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    (ii)  Purchaser
shall have the right, at the expense of the Selling Stockholders to the extent
such Tax Claim is subject to indemnification by the Selling Stockholders
pursuant to Section
8.5(a) hereof, to represent the interests of the Company and the
Subsidiaries in any Tax Claim, provided that with
respect to a Tax Claim relating exclusively to taxable periods ending on or
before the Closing Date, Purchaser shall not settle such claim without the
consent of the Selling Stockholders, which consent shall not be unreasonably
withheld.

     

    (e)  Transfer
Taxes.  Purchaser shall be liable for and shall pay (and shall
indemnify and hold harmless the Selling Stockholder Indemnified Parties against)
all sales, use, stamp, documentary, filing, recording, transfer or similar fees
or taxes or governmental charges as levied by any Governmental Body including
any interest and penalties) in connection with the transactions contemplated by
this Agreement.

     

    (f)  Disputes.  Any
dispute as to any matter covered by this Section 8.5 shall be resolved by an
independent accounting firm mutually acceptable to the Selling Stockholders and
the Purchaser.  The fees and expenses of such accounting firm shall be
borne equally by the Selling Stockholders, on the one hand, and the Purchaser on
the other.  If any dispute with respect to a Tax Return is not
resolved prior to the due date of such Tax Return, upon applicable extension,
such Tax Return shall be filed in the manner which the party responsible for
preparing such Tax Return deems correct, subject to the other party’s right to
require filing of an appropriate amendment of such Tax Return upon resolution of
such dispute.

     

    (g)  Time
Limits.  Any claim for indemnity under this Section 8.5 may be
made at any time prior to sixty (60) days after the expiration of the applicable
Tax statute of limitations with respect to the relevant taxable period
(including all periods of extension, whether automatic or
permissive).

     

    (h)  Exclusivity.  The
indemnification provided for in this Section 8.5 shall be
the sole remedy for any claim in respect of Taxes, including any claim arising
out of or relating to a breach of Section
4.10.  In the event of a conflict between the provisions of
this Section
8.5, on the one hand, and the provisions of Sections 8.1 through
8.4, on the
other, the provisions of this Section 8.5 shall
control.

     

    8.6           Indemnity
Escrow.  Any
payment the Selling Stockholders are obligated to make to any Purchaser
Indemnified Parties pursuant to this Article VIII shall be
paid first, to the extent there are sufficient funds in the Indemnity Escrow
Account, by release of funds to the Purchaser Indemnified Parties from the
Indemnity Escrow Account by the Escrow Agent in accordance with the terms of the
Escrow Agreement.  To the extent the Indemnity Escrow Amount is
insufficient to pay any remaining sums due, then the Selling Stockholders shall
be required to jointly and severally pay all of such additional sums due and
owing to the applicable Purchaser Indemnified Party by wire transfer of
immediately available funds within five (5) Business Days after the date of such
notice.  Eighteen (18) months following the  Closing Date,
the Escrow Agent shall release the Indemnity Escrow Amount (to the extent not
utilized to pay any Purchaser Indemnified Parties for any indemnification claim)
to the Stockholder Representative (for distribution to the Selling Stockholders
in accordance with their respective pro rata portion of the
Purchase Price), except that the Escrow Agent shall retain an amount (up to the
total amount then held by the Escrow Agent) equal to the amount of claims for
indemnification under this Article VIII asserted
within eighteen (18) months following the Closing Date but not yet resolved
(“Unresolved
Claims”).  The Indemnity Escrow Amount retained for Unresolved
Claims shall be released by the Escrow Agent (to the extent no utilized to pay
Purchaser Indemnified Parties for any such claims resolved in favor thereof)
upon their resolution in accordance with this Article VIII and the
terms of the Escrow Agreement.

     

    
      
        
        

      

      
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    8.7           Tax Treatment of Indemnity
Payments.

     

     The
Selling Stockholders and the Purchaser agree to treat any indemnity payment made
pursuant to this Article VIII as an
adjustment to the Purchase Price for all income tax purposes.  If,
notwithstanding the treatment required by the preceding sentence, any
indemnification payment under Article VIII
(including Section
8.5) is determined to be taxable to the party receiving such payment by
any Taxing Authority, the party paying such indemnity payment shall also
indemnify the party receiving such payment for any Taxes incurred by reason of
the receipt of such payment, it being agreed that calculation of any such Taxes
shall reflect the amount of any Losses incurred by the party receiving such
payment in connection with such Taxes (or any asserted deficiency, claim,
demand, action, suit, proceeding, judgment or assessment, including the defense
or settlement thereof, relating to such Taxes).

     

    ARTICLE
IX


     

    TERMINATION

     

    9.1           Termination of
Agreement. This
Agreement may be terminated prior to the Closing as follows:

     

    (a)  At
the election of the Stockholder Representative or Purchaser on or after June 30,
2010 (such date, as it may be extended under this Section 9.1(a), the
“Termination
Date”), if the Closing shall not have occurred by the close of business
on such date (as may be extended pursuant hereto), provided that the
terminating party is not in material default of any of its obligations
hereunder.

     

    (b)  by
mutual written consent of the Stockholder Representative and
Purchaser;

     

    (c)  by
written notice from Purchaser to the Stockholder Representative that there has
been an event, change, occurrence or circumstance, individually or in the
aggregate with any such events, changes, occurrences or circumstances that has
had or could reasonably be expected to have a Material Adverse
Effect;

     

    (d)  by
the Stockholder Representative or Purchaser if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; provided, however, that the
right to terminate this Agreement under this Section 9.1(d) shall
not be available to a party if such Order was primarily due to the failure of
such party to perform any of its obligations under this Agreement;

     

    
      
        
        

      

      
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    (e)  by
Purchaser if any Selling Stockholder or the Company shall have breached or
failed to perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, or if any representation or warranty of
any Selling Stockholder or the Company shall have become untrue, in either case
such that the conditions set forth in Sections 7.1(a)
or 7.1(b) would
not be satisfied and such breach is incapable of being cured or, if capable of
being cured, shall not have been cured within ten (10) days following receipt by
the Stockholder Representative of notice of such breach from the Purchaser;
or

     

    (f)  by
the Stockholder Representative if Purchaser shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, or if any representation or warranty of Purchaser shall
have become untrue, in either case such that the conditions set forth in Sections 7.2(a) or
7.2(b) would
not be satisfied and such breach is incapable of being cured or, if capable of
being cured, shall not have been cured within ten (10) days following receipt by
Purchaser of notice of such breach from the Stockholder
Representative.

     

    9.2           Procedure Upon
Termination.  In
the event of termination and abandonment by Purchaser or the Stockholder
Representative, or both, pursuant to Section 9.1, written
notice thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Shares hereunder shall be
abandoned, without further action by Purchaser, the Company or the Selling
Stockholders; provided, however, that the
obligations of the parties under Section 6.9, Section 9.3 and Article X shall
remain in full force and effect.

     

    9.3           Effect of
Termination.  In
the event that this Agreement is validly terminated as provided herein, then
each of the parties shall be relieved of their duties and obligations arising
under this Agreement after the date of such termination and such termination
shall be without liability to Purchaser, any Selling Stockholder or the Company;
provided, however, that (a) in
the event that this Agreement is terminated by Purchaser pursuant to Sections 9.1(c) or
9.1(e),  then
the Company and the Selling Stockholders agree, jointly and severally, to pay to
Purchaser an amount equal to all out-of-pocket fees and expenses related to the
transactions contemplated by this Agreement (provided that such obligation shall
not be for an amount in excess of $275,000) (including all fees and expenses of
counsel, accountants and financial advisors of Purchaser and its Affiliates and
filing and other fees, collectively, “Purchaser Expenses”)
and (b) in the event that this Agreement is terminated by the Stockholder
Representative pursuant to Section 9.1(f), or in
the event this Agreement is terminated by either Stockholder Representative or
the Purchaser pursuant to Section 9.1(a) due to
Purchaser’s failure to obtain financing sufficient to pay the Cash Price and to
consummate the transactions contemplated by this Agreement, then the Purchaser
agrees to pay the Selling Stockholders an amount equal to all out of pocket fees
and expenses related to the transactions contemplated by this Agreement
(provided that such obligation shall not be for an amount in excess of $275,000)
(including all fees and expense of counsel, accountants and financial advisors
of the Selling Stockholders, the Company and the Subsidiaries and Affiliates and
filing and other fees, collectively “Seller
Expenses”).  Any payment is
to be made within five (5) Business Days after such applicable
termination.

     

    
      
        
        

      

      
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    9.4           Deposit. 
Upon the
execution of this Agreement, Purchaser shall deposit with Casner & Edwards,
LLP, in its capacity as escrow agent for purposes of a portion of the Purchaser
Common Stock (“Purchaser
Common Stock Escrow Agent”), pursuant to that certain Purchaser Common
Stock Escrow Agreement (“Purchaser
Common Stock Escrow Agreement”), dated as of even date herewith, by and
among Purchaser, the Stockholder Representative and the Purchaser Common Stock
Escrow Agent, 8,333,333 shares of common stock, par value $0.001 per share,
representing $1,000,000 of the Purchase Price, issued to the Selling
Stockholders (the “Escrowed
Stock”).  The Escrowed
Stock, pursuant to the Purchaser Common Stock Escrow Agreement, shall either (i)
be applied as a deposit towards the Purchase Price as provided in Section 2.2 or (ii)
be retained by the Selling Stockholders in the event that this Agreement is
terminated by the Stockholder Representative pursuant to Section 9.1(f), or in
the event this Agreement is terminated by either the Stockholder Representative
or Purchaser pursuant to Section 9.1(a) due to
Purchaser’s failure to obtain financing sufficient to pay the Cash Price and to
consummate the transactions contemplated by this Agreement.

     

    ARTICLE
X


     

    MISCELLANEOUS

     

    10.1           Expenses.  Except
as otherwise provided in this Agreement, the Selling Stockholders and Purchaser
shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby, it being understood that in no event shall the
Company bear any of such costs and expenses.  Notwithstanding the
foregoing, the Selling Stockholders shall be responsible for, and shall pay
directly or promptly reimburse Purchaser for amounts paid by or on behalf of
Purchaser, all filing fees lawfully payable to or at the request of any
Governmental Body in connection with this Agreement, the Selling Stockholder
Documents, the Purchaser Documents and the consummation of the transactions
contemplated hereby and thereby.

     

    10.2           Stockholder
Representative.

     

    (a)  Each
Selling Stockholder hereby irrevocably appoints John W. Cuming (the “Stockholder
Representative”) as such Selling Stockholder’s representative,
attorney-in-fact and agent, with full power of substitution to act in the name,
place and stead of such Selling Stockholder with respect to the transfer of such
Selling Stockholder’s Shares to Purchaser in accordance with the terms and
provisions of this Agreement and to act on behalf of such Selling Stockholder in
any amendment of or litigation or arbitration involving this Agreement and to do
or refrain from doing all such further acts and things, and to execute all such
documents, as such Stockholder Representative shall deem necessary or
appropriate in conjunction with any of the transactions contemplated by this
Agreement, including the power:

     

    
      
        
        

      

      
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    (i)  to
take all action necessary or desirable in connection with the waiver of any
condition to the obligations of the Selling Stockholders to consummate the
transactions contemplated by this Agreement;

     

    (ii)  to
negotiate, execute and deliver all ancillary agreements, statements,
certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to be given in connection
with the consummation of the transactions contemplated by this Agreement (it
being understood that such Selling Stockholder shall execute and deliver any
such documents which the Stockholder Representative agrees to
execute);

     

    (iii)  to
terminate this Agreement if the Selling Stockholders are entitled to do
so;

     

    (iv)  to
give and receive all notices and communications to be given or received under
this Agreement and to receive service of process in connection with the any
claims under this Agreement, including service of process in connection with
arbitration; and

     

    (v)  to
take all actions which under this Agreement may be taken by the Selling
Stockholders and to do or refrain from doing any further act or deed on behalf
of the Selling Stockholder which the Stockholder Representative deems necessary
or appropriate in his sole discretion relating to the subject matter of this
Agreement as fully and completely as such Selling Stockholder could do if
personally present.

     

    (b)  If
John W. Cuming becomes unable to serve as Stockholder Representative, Pamela A.
Cuming, or such other Person or Persons as may be designated by a majority of
the Selling Stockholders, shall succeed as the Stockholder
Representative.

     

    10.3           Submission to Jurisdiction;
Consent to Service of Process; Waiver of Jury Trial.

     

    (a)  Except
as otherwise specifically provided under Section 2.4, the
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of
any federal or state court located within the State of Texas over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts.  The parties hereby irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute.  Each of the parties hereto agrees that a judgment in
any such dispute may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

     

    (b)  Each
of the parties hereto hereby consents to process being served by any party to
this Agreement in any suit, action or proceeding by delivery of a copy thereof
in accordance with the provisions of Section
10.7.

     

    
      
        
        

      

      
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    (c)   THE
PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
(i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR
ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR
OTHERWISE.  THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

     

    10.4           Entire Agreement; Amendments
and Waivers.  This
Agreement (including the schedules and exhibits hereto), the Selling Stockholder
Documents and the Purchaser Documents represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought.  No action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained
herein.  The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.

     

    10.5           Governing
Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas applicable to contracts made and performed in such
state.

     

    10.6           Notices.  All
notices and other communications under this Agreement shall be in writing and
shall be deemed given (i) when delivered personally by hand (with written
confirmation of receipt), (ii) when sent by facsimile (with written confirmation
of transmission) or (iii) one Business Day following the day sent by overnight
courier (with written confirmation of receipt), in each case at the following
addresses and facsimile numbers (or to such other address or facsimile number as
a party may have specified by notice given to the other party pursuant to this
provision):

     

    If to any
Selling Stockholder, to:

     

    c/o
Cuming Corporation

    225
Bodwell Street

    Avon, MA
02322

    Facsimile:  (508)
580-0960

    Attention:
John W. Cuming, Chairman

     

    
      
        
        

      

      
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    With a
copy to: Casner & Edwards, LLP

    303
Congress Street

    Boston,
MA 02210

    Facsimile:
(617) 426-8810

    Attention:
David J. Chavolla

    


    If to
Purchaser, to:

     

    Deep
Down, Inc.

    8827 W.
Sam Houston Parkway N., Suite 100

    Houston,
TX 77040

    Facsimile:  (281)-517-5001

    Attention:  Eugene
L. Butler, Executive Chairman

     

    With a
copy to:

     

    Looper
Reed & McGraw, P.C.

    1300 Post
Oak Blvd., Suite 2000

    Houston,
Texas 77056

    Facsimile:  (713)
986-7100

    Attention:  Jeffrey
D. Hopkins

     

    10.7           Severability.  If
any term or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by any law or public policy, all other terms or provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

     

    10.8           Binding Effect;
Assignment.  This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.  Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided
below.  No assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Selling Stockholders or
Purchaser (by operation of law or otherwise) without the prior written consent
of the other parties hereto and any attempted assignment without the required
consents shall be void; provided, however, that
Purchaser may assign this Agreement and any or all rights or obligations
hereunder (including Purchaser’s rights to purchase the Shares and Purchaser’s
rights to seek indemnification hereunder) to any Affiliate of Purchaser, any
Person from which it has borrowed money or any Person to which Purchaser or any
of its Affiliates proposes to sell all or substantially all of the assets
relating to the business.  Upon any such permitted assignment, the
references in this Agreement to Purchaser shall also apply to any such assignee
unless the context otherwise requires.

     

    
      
        
        

      

      
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    10.9           Non-Recourse.  No
past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of Purchaser
shall have any liability for any obligations or liabilities of Purchaser under
this Agreement or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby.

     

    10.10           Counterparts.  This
Agreement may be executed in one or more counterparts (including by facsimile),
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.

    
 

     

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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

     

    
       

      
        	 	
                DEEP
      DOWN, INC.

              
	 	 	 
	 	By:	/s/ Eugene L.
      Butler
	 	 	Eugene L. Butler,
      Executive Chairman
	 	 	 
	 	 	 
	 	 	 
	 	Cuming
      Corporation
	 	 	 
	 	By:	/s/ John W.
      Cuming
	 	 	John W. Cuming,
      Chairman
	 	 	 
	 	 	 
	 	 	 
	 	
                SELLING
      STOCKHOLDERS:

              
	 	 	 
	 	/s/ John W.
      Cuming
	 	
                John
      W. Cuming

              
	 	 	 
	 	 	 
	 	 	 
	 	/s/ Ruth D. Cuming
      and Jon E. Steffensen
	 	Ruth D. Cuming and
      Jon E. Steffensen, Executors for the Estate of William R. Cuming under
      will dated March 31, 2003, as amended


      

       

    

     

     

    
      
        
        

      

      
        75

        
          

        

      

      
        
        

      

    

    


     

    EXHIBIT
A

    


    Selling Stockholder
Information

    


    
      	
              Selling Stockholder
      Name and Address

            	
              Number of Shares
      of

              Common
      Stock

            	
              Percentage of Purchase
      Price

            	 
      
	 	 	 	 
	
              John
      W. Cuming

              32
      Union Park

              Boston,
      MA 02118

            	
              8,250

            	
              82.50%

            	 
      
	 
      	 
      	 
      	 
      
	
              Ruth
      D. Cuming and Jon E.

              Steffensen,

              Executors
      for the Estate of

              William
      R. Cuming under will dated

              March
      31, 2003, as amended

            	
              1,750

            	
              17.50%

            	 
      
	
              c/o
      Jon E. Steffensen, Esq.

            	 
      	 
      	 
      
	
              Steffensen,
      Herman & Doggett, LLC

            	 
      	 
      	 
      
	
              45
      School Street

            	 
      	 
      	 
      
	
              Boston,
      MA 02108

            	 
      	 
      	 
      


    

    


    
      	
              
 

              Stockholder

            	
              Number of Shares
      of

              Class A Preferred
      Stock

            
	 
      	 
      
	
              Ruth
      D. Cuming and Jon E. Steffensen,

              Executors
      for the Estate of William R. Cuming

              under
      will dated March 31, 2003, as amended

            	
              7,500

            
	
               

              Stockholder

            	
              Number of Shares
      of

              Class B Preferred
      Stock

            
	 
      	 
      
	
              Ruth
      D. Cuming and Jon E. Steffensen,

              Executors
      for the Estate of William R. Cuming

              under
      will dated March 31, 2003, as amended

            	
              1,600

            


    

    
 

     

    
      
        
        

      

      
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