Exhibit
4.2


 


Execution
Copy


 


PURCHASE AND SALE AGREEMENT


 


among


 


UNOVA, INC.


 


UNOVA INDUSTRIAL
AUTOMATION SYSTEMS, INC.


 


UNOVA IP CORP.


 


UNOVA UK LIMITED


 


and


 


COMPAGNIE DE FIVES-LILLE


 


CINETIC LANDIS GRINDING CORP.


 


CINETIC LANDIS GRINDING LIMITED


 


Dated:  October 27,
2005


 





















 


INDEX OF DEFINED
TERMS


 


	
  A

  	
   

  
	
   

  	
   

  
	
  Accounts

  	
   

  
	
  Accounts Date

  	
   

  
	
  Acquisition Proposal

  	
   

  
	
  Acquisition Proposals

  	
   

  
	
  Actual Completion Date

  	
   

  
	
  Affiliate

  	
   

  
	
  Affiliated Group

  	
   

  
	
  Agreement

  	
   

  
	
  Agreement Adjustments

  	
   

  
	
  Agreement Date

  	
   

  
	
  Approved

  	
   

  
	
  Assets Held for Sale

  	
   

  
	
  Assumed Liabilities

  	
   

  
	
  Assurances

  	
   

  
	
   

  	
   

  
	
  B

  	
   

  
	
   

  	
   

  
	
  Business

  	
   

  
	
  Buyer UK

  	
   

  
	
  Buyer US

  	
   

  
	
  Buyer US’s 401(k) Plan

  	
   

  
	
  Buying Indemnified Parties

  	
   

  
	
   

  	
   

  
	
  C

  	
   

  
	
   

  	
   

  
	
  Cap

  	
   

  
	
  CFL

  	
   

  
	
  Claim Threshold

  	
   

  
	
  Closing

  	
   

  
	
  Closing Balance Sheet

  	
   

  
	
  COBRA

  	
   

  
	
  Code

  	
   

  
	
  Company

  	
   

  
	
  Competitive Business

  	
   

  
	
  Confidentiality Agreement

  	
   

  
	
  consultants

  	
   

  
	
  Contaminants

  	
   

  
	
  Continuing Employees

  	
   

  
	
  Contracts

  	
   

  
	
  Contribution Rate

  	
   

  
	
   

  	
   

  
	
  D

  	
   

  
	
   

  	
   

  
	
  De Minimis Settlement

  	
   

  
	
  Deadline Date

  	
   

  
	
  December Balance Sheet

  	
   

  
	
  December Financials

  	
   

  
	
  Direct Litigation Option

  	
   

  
	
  DOJ

  	
   

  
	
  Downward Net Working Asset Adjustment

  	
   

  
	
   

  	
   

  
	
  E

  	
   

  
	
   

  	
   

  
	
  Election

  	
   

  
	
  employee benefit plan

  	
   

  
	
  Employee Benefit Plans

  	
   

  
	
  Employees

  	
   

  
	
  Employment Liabilities

  	
   

  
	
  Environmental Laws

  	
   

  
	
  Environmental Liabilities

  	
   

  
	
  Environmental Permits

  	
   

  
	
  ERISA

  	
   

  
	
  ERISA Plan

  	
   

  
	
  Estimated Net Working Asset Adjustment

  	
   

  
	
  Excluded Assets

  	
   

  
	
  Excluded Contracts

  	
   

  
	
  Excluded Liabilities

  	
   

  
	
  Extended Deadline Date

  	
   

  
	
   

  	
   

  
	
  F

  	
   

  
	
   

  	
   

  
	
  Financial Statements

  	
   

  
	
  Freehold Property

  	
   

  
	
  FSSP

  	
   

  
	
  FSSP/UPP Transition Period

  	
   

  
	
  FTC

  	
   

  
	
   

  	
   

  
	
  G

  	
   

  
	
   

  	
   

  
	
  GAAP

  	
   

  
	
  Governmental Body

  	
   

  
	
   

  	
   

  
	
  H

  	
   

  
	
   

  	
   

  
	
  Hazardous Substance

  	
   

  
	
  HSR Act

  	
   

  
	
  HSR Filing

  	
   

  
	
   

  	
   

  
	
  I

  	
   

  
	
   

  	
   

  
	
  ICC

  	
   

  
	
  Indebtedness

  	
   

  
	
  Indemnified Party

  	
   

  
	
  Indemnifying Party

  	
   

  
	
  Indemnifying Purchasing Entities

  	
   

  
	
  Indemnifying Selling Entities

  	
   

  
	
  independent contractors

  	
   

  
	
  Independent Firm

  	
   

  
	
  Intellectual Property

  	
   

  
	
  Interested Person

  	
   

  



 


i





















 


	
  Investigation Period

  	
   

  
	
  IRS

  	
   

  
	
  IT System

  	
   

  
	
   

  	
   

  
	
  J

  	
   

  
	
   

  	
   

  
	
  June Balance Sheet

  	
   

  
	
  June Balance Sheet Date

  	
   

  
	
  June Financials

  	
   

  
	
   

  	
   

  
	
  K

  	
   

  
	
   

  	
   

  
	
  knowledge

  	
   

  
	
   

  	
   

  
	
  L

  	
   

  
	
   

  	
   

  
	
  Landis Group

  	
   

  
	
  Landis Pension Plan

  	
   

  
	
  Landlord’s Consent

  	
   

  
	
  Law

  	
   

  
	
  Leased Personal Property

  	
   

  
	
  Leased Real Property

  	
   

  
	
  Leasehold Property

  	
   

  
	
  Legally Required Statement

  	
   

  
	
  LIBOR

  	
   

  
	
  Lien

  	
   

  
	
  Liens

  	
   

  
	
  Loss

  	
   

  
	
  Losses

  	
   

  
	
   

  	
   

  
	
  M

  	
   

  
	
   

  	
   

  
	
  MAG

  	
   

  
	
  material adverse change

  	
   

  
	
  material adverse effect

  	
   

  
	
  multiemployer plan

  	
   

  
	
   

  	
   

  
	
  N

  	
   

  
	
   

  	
   

  
	
  Net Working Asset Target

  	
   

  
	
  Net Working Assets

  	
   

  
	
  Non-Compete Term

  	
   

  
	
  Note

  	
   

  
	
  Note Claim

  	
   

  
	
  NPL

  	
   

  
	
   

  	
   

  
	
  O

  	
   

  
	
   

  	
   

  
	
  operating lease

  	
   

  
	
  Owned Real Property

  	
   

  
	
   

  	
   

  
	
  P

  	
   

  
	
   

  	
   

  
	
  Parties

  	
   

  
	
  Party

  	
   

  
	
  Performance Bonds

  	
   

  
	
  Permit

  	
   

  
	
  Permitted Lien

  	
   

  
	
  Permitted Liens

  	
   

  
	
  Person

  	
   

  
	
  Phase 1 Report

  	
   

  
	
  Preliminary Closing Balance Sheet

  	
   

  
	
  Product Liability

  	
   

  
	
  Purchase Orders

  	
   

  
	
  Purchase Price

  	
   

  
	
  Purchased Assets

  	
   

  
	
  Purchased Contracts

  	
   

  
	
  Purchasing Entities

  	
   

  
	
   

  	
   

  
	
  R

  	
   

  
	
   

  	
   

  
	
  Real Property

  	
   

  
	
  reasonable endeavors

  	
   

  
	
  Registered Properties

  	
   

  
	
  Related Agreements

  	
   

  
	
  Required Consents

  	
   

  
	
  Retiree Medical Plan

  	
   

  
	
   

  	
   

  
	
  Review Period

  	
   

  
	
   

  	
   

  
	
  S

  	
   

  
	
   

  	
   

  
	
  Sales Order

  	
   

  
	
  Sales Orders

  	
   

  
	
  Schedule of Contributions

  	
   

  
	
  Section 1060 Allocation

  	
   

  
	
  Securities Act

  	
   

  
	
  Seller Names

  	
   

  
	
  Selling Entities

  	
   

  
	
  Selling Indemnified Parties

  	
   

  
	
  South Beloit Facility

  	
   

  
	
  Statement of Objections

  	
   

  
	
   

  	
   

  
	
  T

  	
   

  
	
   

  	
   

  
	
  Tax Returns

  	
   

  
	
  Taxes

  	
   

  
	
  Third Party Claim

  	
   

  
	
  Threshold

  	
   

  
	
  transaction

  	
   

  
	
  Transactions

  	
   

  
	
  Transfer Date

  	
   

  
	
  Transfer Regulations

  	
   

  
	
  Transferring Members

  	
   

  
	
  Transition Services Agreement

  	
   

  
	
  TUPE Transfer

  	
   

  
	
   

  	
   

  
	
  U

  	
   

  
	
   

  	
   

  
	
  U.K. Properties

  	
   

  
	
  UIASI

  	
   

  
	
  UK Asset Sale

  	
   

  
	
  UK Employee

  	
   

  
	
  UK Landis Group

  	
   

  
	
  UK Pension Plan

  	
   

  
	
  UK Purchased Assets

  	
   

  
	
  UNOVA

  	
   

  
	
  UNOVA IP

  	
   

  



 


ii





















 


	
  UNOVA UK

  	
   

  
	
  UNOVA’s Broker

  	
   

  
	
  UPP

  	
   

  
	
  Upward Net Working Asset Adjustment

  	
   

  
	
  US Asset Sale

  	
   

  
	
  US Employees

  	
   

  
	
  US Landis Group

  	
   

  
	
  US Purchased Assets

  	
   

  
	
   

  	
   

  
	
  V

  	
   

  
	
   

  	
   

  
	
  Valuation

  	
   

  
	
  VAT

  	
   

  
	
  VATA

  	
   

  
	
   

  	
   

  
	
  W

  	
   

  
	
   

  	
   

  
	
  WARN Act

  	
   

  
	
  Waynesboro Facility

  	
   

  
	
  WSJ RATE

  	
   

  



 


iii





















 


CONTENTS


 


	
  ARTICLE 1.
  The Transactions

  	
   

  
	
   

  	
  1.1

  	
  Transfer of
  Assets

  	
   

  
	
   

  	
  1.2

  	
  Excluded Assets

  	
   

  
	
   

  	
  1.3

  	
  [Reserved]

  	
   

  
	
   

  	
  1.4

  	
  Consideration

  	
   

  
	
   

  	
  1.5

  	
  Purchase
  Price and Payment; Deliveries at the Closing

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Payment of
  Purchase Price

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Deliveries
  at the Closing

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Purchase
  Price Allocation

  	
   

  
	
   

  	
  1.6

  	
  Assumed
  Liabilities

  	
   

  
	
   

  	
  1.7

  	
  Excluded
  Liabilities

  	
   

  
	
   

  	
  1.8

  	
  Transfer
  of English Owned Real Property and Obtaining English Reversioner’s Consent

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Matters
  Affecting the U.K. Properties

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Landlord’s
  Consents

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Completion

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Further
  Completion

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Assurances

  	
   

  
	
   

  	
  1.9

  	
  Closing
  Balance Sheet

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Definition
  of Closing Balance Sheets

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Preliminary
  Closing Balance Sheets

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Review
  of Preliminary Closing Balance Sheet

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Finalization
  of Closing Balance Sheet

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Net
  Working Asset Payment

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Limitations
  on Certain Claims

  	
   

  
	
   

  	
  1.10

  	
  Right to
  Contest

  	
   

  
	
   

  	
  1.11

  	
  Nonassignable
  Contracts and Rights

  	
   

  
	
   

  	
  1.12

  	
  Value Added Tax

  	
   

  
	
   

  	
  1.13

  	
  UK Employees

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.
  Closing and Transfer Date

  	
   

  
	
   

  	
  2.1

  	
  Closing

  	
   

  
	
   

  	
  2.2

  	
  Notice
  and Right to Cure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.
  Representations and Warranties of the Selling Entities

  	
   

  
	
   

  	
  3.1

  	
  Corporate Matters

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Due
  Organization, Good Standing and Qualification

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Corporate
  Authority to Conduct Business

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Corporate
  Power and Authority to Enter Into Agreements

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Due Execution
  and Enforceability

  	
   

  
	
   

  	
   

  	
  (e)

  	
  No
  Conflict

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Subsidiaries
  and Other Equity Investments

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Certain Additional
  Matters

  	
   

  



 


i





















 


	
   

  	
   

  	
  (h)

  	
  UNOVA UK Insolvency
  Matters

  	
   

  
	
   

  	
  3.2

  	
  Financial
  Statements; Undisclosed Liabilities

  	
   

  
	
   

  	
   

  	
  (a)

  	
  December Financials

  	
   

  
	
   

  	
   

  	
  (b)

  	
  June Financials

  	
   

  
	
   

  	
   

  	
  (c)

  	
  UNOVA
  UK’s Accounts

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Undisclosed
  Liabilities

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Events
  Subsequent to June Balance Sheet

  	
   

  
	
   

  	
  3.3

  	
  Accounts Receivable

  	
   

  
	
   

  	
  3.4

  	
  Inventories and
  Assets

  	
   

  
	
   

  	
  3.5

  	
  Absence of
  Liens and Encumbrances

  	
   

  
	
   

  	
  3.6

  	
  Real
  Property

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Real
  Property

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Realty Leases (as
  Lessor)

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Realty Leases (as
  Lessee)

  	
   

  
	
   

  	
   

  	
  (d)

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Violation
  of Laws or Restrictive Covenants

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Environmental Matters

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Real Estate
  Liens or Encumbrances

  	
   

  
	
   

  	
  3.7

  	
  Right to
  Use Properties and Assets

  	
   

  
	
   

  	
  3.8

  	
  Contracts and
  Commitments

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Sales Orders,
  Bids and Proposals

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Purchase
  Orders

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Sales
  Representative, Distributor and Dealer Agreements

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Personal
  Property Leases (As Lessee)

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Noncompetition
  Agreements or Covenants

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Confidential
  Nondisclosure Agreements

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Consultants
  and Consultant Agreements

  	
   

  
	
   

  	
   

  	
  (h)

  	
  Indebtedness;
  Guarantees

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Powers of Attorney,
  Proxies

  	
   

  
	
   

  	
   

  	
  (j)

  	
  Letters of
  Credit, Surety, Bid and Performance Bonds

  	
   

  
	
   

  	
   

  	
  (k)

  	
  Joint Venture
  Agreements

  	
   

  
	
   

  	
   

  	
  (l)

  	
  Other Material
  Contracts

  	
   

  
	
   

  	
   

  	
  (m)

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
  (n)

  	
  Restrictive Contracts

  	
   

  
	
   

  	
  3.9

  	
  Patents,
  Trade Names, Trademarks, Service Marks, Copyrights and Chip Registrations

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Intellectual
  Property Rights

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Licenses of
  Intellectual Property Rights To or From Third Parties

  	
   

  
	
   

  	
   

  	
  (c)

  	
  No
  Infringement

  	
   

  
	
   

  	
  3.10

  	
  Patent,
  Trade Name, Trademark, Service Mark, Copyright or Chip Registration
  Indemnification

  	
   

  
	
   

  	
  3.11

  	
  Confidential
  Information or Trade Secrets

  	
   

  
	
   

  	
  3.12

  	
  Products
  and Service Warranties

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Products

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Service
  Warranties

  	
   

  



 


ii





















 


	
   

  	
  3.13

  	
  Employees;
  Employee Benefits

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Employees

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Employment Contracts

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Severance

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Indebtedness to
  Employees

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Loans or Advances
  to Employees

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Collective
  Bargaining Agreements

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Independent
  Contractors

  	
   

  
	
   

  	
   

  	
  (h)

  	
  Commitments

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Employment
  history

  	
   

  
	
   

  	
   

  	
  (j)

  	
  Other
  Labor Matters

  	
   

  
	
   

  	
   

  	
  (k)

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
  (l)

  	
  ERISA
  Plans

  	
   

  
	
   

  	
   

  	
  (m)

  	
  UK
  Pension Plans

  	
   

  
	
   

  	
  3.14

  	
  Pending or
  Threatened Claims, Litigation and Governmental Proceedings

  	
   

  
	
   

  	
  3.15

  	
  Judgments,
  Orders and Consent Decrees

  	
   

  
	
   

  	
  3.16

  	
  Compliance With Laws

  	
   

  
	
   

  	
  3.17

  	
  Franchises,
  Permits, Etc.

  	
   

  
	
   

  	
  3.18

  	
  Taxes

  	
   

  
	
   

  	
  3.19

  	
  Governmental
  Authorizations; Consents

  	
   

  
	
   

  	
  3.20

  	
  No Breach of
  Statute or Contract

  	
   

  
	
   

  	
  3.21

  	
  Insurance

  	
   

  
	
   

  	
  3.22

  	
  Customers and
  Suppliers

  	
   

  
	
   

  	
  3.23

  	
  Transactions
  with Affiliates; Intercompany Arrangements

  	
   

  
	
   

  	
  3.24

  	
  Broker’s or
  Finder’s Fees

  	
   

  
	
   

  	
  3.25

  	
  Grants and
  Allowances

  	
   

  
	
   

  	
  3.26

  	
  Sufficiency
  of Purchased Assets

  	
   

  
	
   

  	
  3.27

  	
  No Other
  Representations

  	
   

  
	
   

  	
  3.28

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.
  Representations and Warranties of Purchasing Entities

  	
   

  
	
   

  	
  4.1

  	
  Corporate Matters

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Due
  Organization

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Corporate
  Power and Authority to Enter Into Agreement

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Due Execution
  and Enforceability

  	
   

  
	
   

  	
   

  	
  (d)

  	
  No
  Conflict

  	
   

  
	
   

  	
  4.2

  	
  Required Consents

  	
   

  
	
   

  	
  4.3

  	
  Claims,
  Litigation and Governmental Proceedings

  	
   

  
	
   

  	
  4.4

  	
  Broker’s or Finder’s
  Fees

  	
   

  
	
   

  	
  4.5

  	
  Available
  Funds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.
  Certain Covenants Pending the Closing

  	
   

  
	
   

  	
  5.1

  	
  Full
  Access

  	
   

  
	
   

  	
  5.2

  	
  Carry On In
  Regular Course

  	
   

  
	
   

  	
  5.3

  	
  Consents;
  HSR

  	
   

  



 


iii





















 


	
   

  	
  5.4

  	
  Notices of
  Certain Events; Continuing Disclosure

  	
   

  
	
   

  	
  5.5

  	
  Supplements to
  Disclosure

  	
   

  
	
   

  	
  5.6

  	
  Conditions Precedent

  	
   

  
	
   

  	
  5.7

  	
  Nondisclosure

  	
   

  
	
   

  	
  5.8

  	
  Reorganization
  of U.K. Pension Plans

  	
   

  
	
   

  	
  5.9

  	
  Assumption
  of Retiree Medical Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
  6.1

  	
  Representations
  and Warranties True

  	
   

  
	
   

  	
  6.2

  	
  Compliance With
  Agreement

  	
   

  
	
   

  	
  6.3

  	
  No Material
  Adverse Change

  	
   

  
	
   

  	
  6.4

  	
  No
  Litigation

  	
   

  
	
   

  	
  6.5

  	
  [Reserved]

  	
   

  
	
   

  	
  6.6

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  6.7

  	
  Instruments of
  Transfer

  	
   

  
	
   

  	
  6.8

  	
  [Reserved]

  	
   

  
	
   

  	
  6.9

  	
  Opinion of Counsel

  	
   

  
	
   

  	
  6.10

  	
  Amendment
  to MAG Transition Services Agreement

  	
   

  
	
   

  	
  6.11

  	
  Transition
  Services Agreement

  	
   

  
	
   

  	
  6.12

  	
  Title

  	
   

  
	
   

  	
  6.13

  	
  Leases

  	
   

  
	
   

  	
  6.14

  	
  Discharge
  of Indebtedness; Release of Liens

  	
   

  
	
   

  	
  6.15

  	
  [Reserved]

  	
   

  
	
   

  	
  6.16

  	
  [Reserved]

  	
   

  
	
   

  	
  6.17

  	
  UK Pension Plans

  	
   

  
	
   

  	
  6.18

  	
  Other

  	
   

  
	
   

  	
  6.19

  	
  Closing
  Conditions for UNOVA UK

  	
   

  
	
   

  	
  6.20

  	
  Benefit of
  Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
  7.1

  	
  Representations
  and Warranties True

  	
   

  
	
   

  	
  7.2

  	
  Compliance With
  Agreement

  	
   

  
	
   

  	
  7.3

  	
  No
  Litigation

  	
   

  
	
   

  	
  7.4

  	
  [Reserved]

  	
   

  
	
   

  	
  7.5

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  7.6

  	
  Purchase
  Price

  	
   

  
	
   

  	
  7.7

  	
  Note

  	
   

  
	
   

  	
  7.8

  	
  Instruments of
  Assumption

  	
   

  
	
   

  	
  7.9

  	
  Performance Bonds

  	
   

  
	
   

  	
  7.10

  	
  Leases

  	
   

  
	
   

  	
  7.11

  	
  Other

  	
   

  
	
   

  	
  7.12

  	
  Transition Services Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8.
  Further Requirements

  	
   

  
	
   

  	
  8.1

  	
  Access to Books
  and Records

  	
   

  



 


iv





















 


	
   

  	
  8.2

  	
  Further
  Instruments and Assurances

  	
   

  
	
   

  	
  8.3

  	
  Litigation
  Cooperation

  	
   

  
	
   

  	
  8.4

  	
  Certain Employee
  Matters

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Employment

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Certain Employee Benefits

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  Past
  Service Credit

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  Benefits
  under the Selling Entities’ Plans

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  U.S. Medical and
  Health Plan

  	
   

  
	
   

  	
   

  	
   

  	
  (iv)

  	
  Buyer
  US’s 401(k) Plan

  	
   

  
	
   

  	
   

  	
  (c)

  	
  WARN Act

  	
   

  
	
   

  	
  8.5

  	
  Use of UNOVA Name
  and Mark

  	
   

  
	
   

  	
  8.6

  	
  Exclusivity

  	
   

  
	
   

  	
  8.7

  	
  Taxes

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Taxes
  Relating to the Business and UNOVA UK

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Transfer
  Taxes

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Employment
  Taxes

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Stock
  Options

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Tax
  Treatment

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Interpretation

  	
   

  
	
   

  	
  8.8

  	
  Settlement
  of Intercompany Accounts

  	
   

  
	
   

  	
  8.9

  	
  Intellectual Property Registrations

  	
   

  
	
   

  	
  8.10

  	
  Authorization; Mail

  	
   

  
	
   

  	
  8.11

  	
  Post-Closing
  Cooperation

  	
   

  
	
   

  	
  8.12

  	
  Purchased
  Assets Not Transferred

  	
   

  
	
   

  	
  8.13

  	
  Confidentiality

  	
   

  
	
   

  	
  8.14

  	
  Performance Bonds

  	
   

  
	
   

  	
  8.15

  	
  Claim Cooperation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9.
  Noncompetition Agreement

  	
   

  
	
   

  	
  9.1

  	
  Noncompetition
  Agreement

  	
   

  
	
   

  	
  9.2

  	
  Limitations
  on Noncompetition Agreement

  	
   

  
	
   

  	
  9.3

  	
  Definition
  of Competitive Business

  	
   

  
	
   

  	
  9.4

  	
  Nonsolicitation

  	
   

  
	
   

  	
  9.5

  	
  Injunctive
  and Equitable Relief

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.
  Termination

  	
   

  
	
   

  	
  10.1

  	
  Termination

  	
   

  
	
   

  	
  10.2

  	
  Notice of
  Termination

  	
   

  
	
   

  	
  10.3

  	
  Effect of
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11.
  Indemnification

  	
   

  
	
   

  	
  11.1

  	
  Indemnification
  by the Selling Entities

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Misrepresentation
  or Breach of Warranty

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Breach of
  Covenant or Agreement

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Excluded Liabilities

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Pension Liabilities

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Bulk
  Sales

  	
   

  



 


v





















 


	
   

  	
   

  	
  (f)

  	
  UK
  Employees

  	
   

  
	
   

  	
  11.2

  	
  Indemnification
  by Purchasing Entities

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Misrepresentation
  or Breach of Warranty

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Breach of
  Covenant or Agreement

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Assumed Liabilities

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Operations of the
  Business

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Performance
  Bonds; Letters of Credit

  	
   

  
	
   

  	
   

  	
  (f)

  	
  UK
  Employees

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Pension Liabilities

  	
   

  
	
   

  	
  11.3

  	
  Claims for
  Reimbursement

  	
   

  
	
   

  	
  11.4

  	
  Defense and
  Settlement of Third Party Claims

  	
   

  
	
   

  	
  11.5

  	
  [Reserved]

  	
   

  
	
   

  	
  11.6

  	
  Limitations
  on Indemnification

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Duration

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  Basket

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  Cap

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  No Limitation
  on Certain Claims

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Other
  Limitations

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Duty to Mitigate
  Damages

  	
   

  
	
   

  	
   

  	
  (e)

  	
  No
  Double Recovery

  	
   

  
	
   

  	
   

  	
  (f)

  	
  No
  Waiver

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Set-Off
  Against Note

  	
   

  
	
   

  	
  11.7

  	
  Exclusive Remedy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12.
  Miscellaneous Provisions

  	
   

  
	
   

  	
  12.1

  	
  Public
  Statements and Press Releases

  	
   

  
	
   

  	
  12.2

  	
  Costs and Expenses

  	
   

  
	
   

  	
  12.3

  	
  Amendment and
  Modification

  	
   

  
	
   

  	
  12.4

  	
  No
  Assignment

  	
   

  
	
   

  	
  12.5

  	
  Notices

  	
   

  
	
   

  	
   

  	
  (a)

  	
  The Selling Entities

  	
   

  
	
   

  	
   

  	
  (b)

  	
  A
  Purchasing Entity

  	
   

  
	
   

  	
  12.6

  	
  Counterparts
  and Facsimile

  	
   

  
	
   

  	
  12.7

  	
  Captions

  	
   

  
	
   

  	
  12.8

  	
  Schedules and
  Exhibits

  	
   

  
	
   

  	
  12.9

  	
  Waiver; Remedies

  	
   

  
	
   

  	
  12.10

  	
  Governing
  Law and Jurisdiction

  	
   

  
	
   

  	
  12.11

  	
  Resolution of
  Disputes

  	
   

  
	
   

  	
  12.12

  	
  Severability

  	
   

  
	
   

  	
  12.13

  	
  No Third
  Party Beneficiaries

  	
   

  
	
   

  	
  12.14

  	
  Construction

  	
   

  
	
   

  	
  12.15

  	
  Entire Agreement

  	
   

  
	
   

  	
  12.16

  	
  Currency

  	
   

  



 


vi





















 


PURCHASE AND SALE AGREEMENT


 


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


 


W I T
N E S S E T H:


 


WHEREAS, the “Landis Group“
is comprised of the following operating divisions of UNOVA:  the Landis Grinding Systems, Gardner
Abrasives, and CITCO divisions of UIASI (the “US
Landis Group“); and the Landis Lund and Cranfield Precision
divisions of UNOVA UK (the “UK Landis Group“);


 


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


 


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


 


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


 


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


 





















 


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


 


ARTICLE 1.

The Transactions


 


1.1                               Transfer
of Assets


 


Except as otherwise provided in Section 1.2,
effective as of the “Transfer Date“
(as defined in Article 2), the Selling Entities shall sell, transfer,
assign, grant, convey and deliver as legal and beneficial owner to Buyer US in
respect of the US Purchased Assets and to Buyer UK in respect of the UK
Purchased Assets, free and clear of all “Liens“
other than “Permitted Liens“ (as such
terms are defined in Section 3.5), all of their right, title and interest
in and to their properties, rights and assets of every kind, nature and
description, whether real or personal, tangible or intangible, and wherever
situated, to the extent the same are used or held for use primarily or
exclusively in the operation of the Business, including all assets shown on the
June Balance Sheet (as defined in Section 3.2(b)) and not disposed of
in the ordinary course of business since June 30, 2005 (the “June Balance Sheet Date“), and
all assets of the Business acquired by the Selling Entities between the June Balance
Sheet Date and the Transfer Date, (such properties, rights and assets are
referred to as the “Purchased Assets“).  In the case of any of the Purchased Assets
which are capable of transfer by delivery, title to that Purchased Asset shall
pass to the relevant Purchasing Entity by delivery.  Except as otherwise provided in Section 1.2,
the Purchased Assets shall include, without limitation, all of the following
property, rights and assets of the Selling Entities used primarily or
exclusively in the Business:


 


(a)                                  All
billed and unbilled accounts receivable, including without limitation, all
trade accounts receivable, notes receivable from customers, supplier credits
and all other obligations from customers with respect to sale of goods or
services, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto, and any security or collateral therefor,
including recoverable advances and deposits;


 


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


 


(c)                                  All
machinery and equipment, including test equipment and fully depreciated
equipment;


 


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


 


2





















 


(e)                                  All
supplies and other consumables on hand;


 


(f)                                    All
inventory, including raw materials, work-in-process, finished goods, spare
parts, replacement and component parts, and samples;


 


(g)                                 All
rights, if any, in any customer furnished materials;


 


(h)                                 All
motor vehicles;


 


(i)                                     All
transportation and packing and delivery equipment, materials and supplies;


 


(j)                                     All
office equipment and supplies;


 


(k)                                  All
office furniture and furnishings;


 


(l)                                     All
indemnity, fidelity and contract bonds issued by third parties in favor of the Selling
Entities, and which are set forth on Schedule 1.1(l);


 


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


 


(n)                                 All
transferable franchises, licenses, approvals, permits and other authorizations
issued or granted by any “Governmental Body“
(as defined in Section 3.1(e));


 


(o)                                 All
computer equipment, including all hardware and software, and communications
equipment (including, without limitation, the transfer of Autocad without cost
to the Purchasing Entities);


 


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


 


(q)                                 All
lists and information pertaining to customers, suppliers, distributors, sales
and purchasing agents and personnel;


 


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


 


(s)                                  All
manufacturer and seller warranties on any goods, fixtures, or services provided
to the Selling Entities;


 


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


 


3





















 


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


 


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


 


(w)                               [Reserved];


 


(x)                                   All
utility, lease and similar deposits;


 


(y)                                 All
medical, safety and health supplies;


 


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


 


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


 


1.2                               Excluded
Assets


 


Notwithstanding anything in this Agreement to the
contrary, the Purchased Assets shall not include any right, title or interest
in or to any of the following properties, rights or assets of the Selling
Entities (collectively, the “Excluded Assets“):


 


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


 


(b)                                 Any
and all claims for refunds, carry backs or carry forwards of the Selling
Entities in connection with “Taxes“ (as
defined in Section 3.18) and all Tax Returns and other documents filed by
the Selling Entities with any taxing authority;


 


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


 


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


 


4





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


5





















 


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


 


1.3                               [Reserved]


 


1.4                               Consideration


 


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


 


1.5                               Purchase
Price and Payment; Deliveries at the Closing


 


(a)                                  Purchase
Price


 


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


 


(b)                                  Payment
of Purchase Price


 


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


 


(c)                                  Deliveries
at the Closing


 


At the Closing,


 


(i)                                     the
Selling Entities will deliver to the Purchasing Entities the various
certificates, instruments, and documents referred to in Article 6; and


 


6





















 


(ii)                                  the
Purchasing Entities will deliver to the Selling Entities the various
certificates, instruments, and documents referred to in Article 7.


 


(d)                                  Purchase
Price Allocation


 


(i)                                     Allocation
to UK and US Assets


 


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


 


(ii)                                  Section 1060
Allocation


 


Within six (6) months after the Transfer Date,
Buyer US (on behalf of itself and the other Purchasing Entities) shall prepare
and deliver to UNOVA an allocation of the Purchase Price and the Assumed
Liabilities among the US Purchased Assets and the UK Purchased Assets sold to
the Purchasing Entities in accordance with Section 1060 of the Internal
Revenue Code of 1986, as amended (the “Code“), and
the regulations thereunder (the “Section 1060
Allocation“).  If UNOVA
does not object to the Section 1060 Allocation prepared by Buyer US within
30 days after receipt thereof, such allocations shall be final for
purposes of this Agreement.  If UNOVA
objects to the Section 1060 Allocation within 30 days after receipt
thereof, Buyer US and UNOVA shall meet promptly and in a good faith attempt to
resolve any objections of UNOVA and to use their best efforts to agree upon the
allocation.  In the event Buyer US and
UNOVA are unable to resolve their differences over the Section 1060
Allocation, such differences shall be resolved by the Independent Firm (as
defined in Section 1.9(d) in accordance with Section 1.9(d).  The Parties shall cooperate fully with each
other and make available to each other such Tax data and other information as
may be reasonably required in order to timely complete the Section 1060
Allocation and any other required statements or schedules.  Except as required pursuant to applicable Law
or a determination (as defined in Section 1313 of the Code or any similar
provision of Law), the Parties and their Affiliates (as defined below) shall
report the Transactions for all Tax purposes consistently with the Section 1060
Allocation.  For purposes of this
Agreement, “Affiliate“ means a Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the first mentioned Person.  To the extent that the parties require
allocations of the Purchase Price and the Assumed Liabilities at or prior to
Closing, including for United Kingdom Law purposes, then the parties shall
endeavor to cooperate fully with each other to agree upon such allocations on
or prior to the Transfer Date


 


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1.6                               Assumed
Liabilities


 


Upon the terms and subject to the conditions of this
Agreement and in reliance upon the representations, warranties and agreements
herein set forth, the Purchasing Entities shall, effective at the time of the
Transfer Date, assume, perform and discharge all of the following debts, liabilities
or obligations of the Selling Entities (collectively, the “Assumed
Liabilities“):


 


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


 


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


 


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


 


(d)                                 Accrued
payroll and vacation pay for “Continuing Employees“
(as defined in Section 8.4(a)) but only to the extent of the reserve
therefor shown on the Closing Balance Sheet, excluding any accrued amounts that
are required by Law to be paid by the Selling Entities on or prior to the
Transfer Date;


 


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


 


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


 


8





















 


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


 


(h)                                 Any
claim, debt, liability or obligation for product liability claims, including
bodily injury, death or property damage arising from the use or operation of
products manufactured, sold or serviced in whole or in part in the Business (“Product Liability“) to the extent
such claims arise from events, actions or occurrences following the Transfer
Date;


 


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


 


(j)                                     Any
claim, debt, liability or obligation relating to the Landis Pension Plan (as
defined in Section 5.8), including, without limitation, in respect of (i) benefits
transferred to the Landis Pension Plan from the UNOVA Pension Fund, whether
before, on or after the Transfer Date (which transferred benefits shall include
any claim, debt, liability or obligation in respect of the provision of those
benefits in a manner complying with Article 141 (formerly Article 119)
of the Treaty of Rome and Section 62 of the Pensions Act 1995), (ii) any
liability in respect of the levy to fund the Pension Protection Fund payable
pursuant to the Pensions Act 2004 and (iii) contributions in respect of
the period prior to the Transfer Date which have not become due and payable
before the Transfer Date other than contributions deducted by UNOVA UK from
members’ salaries before the Transfer Date and not paid to the Landis Pension
Plan by that date;


 


(k)                                  Any
claim, debt, liability or obligation arising from any progress payment, down
payment or advance payment received from any customer of the Business to the
extent of the reserve therefor on the Closing Balance Sheet;


 


9





















 


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


 


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


 


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


 


1.7                               Excluded
Liabilities


 


Notwithstanding any provision in this Agreement or any
other writing to the contrary, the Purchasing Entities are assuming only the
Assumed Liabilities and are not assuming any other liability or obligation of
the Selling Entities (or any predecessor owner of all or part of its business
and assets) of whatever nature whether presently in existence or arising or
asserted hereafter.  All such other
liabilities and obligations shall be retained by and remain obligations and
liabilities of the Selling Entities (collectively, the “Excluded
Liabilities“).  Without
limiting the foregoing, none of the following shall be Assumed Liabilities for
the purposes of this Agreement:


 


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


 


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


 


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


 


10





















 


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


 


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


 


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


 


(g)                                 Any
claim, debt, liability or obligation under Employee Benefit Plans other than
the Assumed Liabilities set forth in Sections 1.6(d), 1.6(e), 1.6(j) and
1.6(n);


 


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


 


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


 


(j)                                     Environmental
Liabilities arising from or relating in any way to (i) actions occurring
or conditions, whether known or unknown, existing on or before the Transfer
Date, where such actions or conditions constitute a violation of Environmental
Laws, or (ii) with respect to the Waynesboro Facility and South Beloit
Facility, which the Purchasing Entities will be leasing from the Selling
Entities after the Transfer Date, actions occurring or conditions coming into
existence after the Transfer Date to the extent such actions or conditions are
not caused by the Purchasing Entities. 
For purposes of this Section 1.7(j), the known contamination on the
Waynesboro Facility, including both the contamination being addressed by the
Selling Entities in accordance with Pennsylvania’s Act 2 voluntary cleanup
program and the chlorinated volatile organic compound contamination that has
migrated onto the Waynesboro Facility from the adjacent Teledyne facility,
shall be deemed a condition existing before the Transfer Date and to constitute
an Excluded Liability;


 


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


 


11





















 


(l)                                     Those
pending or threatened litigation matters identified on Schedule 3.14;


 


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


 


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


 


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


 


1.8                               Transfer
of English Owned Real Property and Obtaining English Reversioner’s Consent


 


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


 


(i)                                     “Actual Completion Date“ means in
relation to each of the U.K. Properties the date on which that property is
transferred, conveyed or assigned to the Purchasing Entity.


 


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


 


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


 


(iv)                              “Landlord’s Consent“ means any
reversioner’s consent to an assignment required under the terms of the lease
relating to the Leasehold Property.


 


(v)                                 “Leasehold Property“ means the
leasehold property located in the United Kingdom occupied by the Selling
Entities as described (including the particular of the current rent provided)
in Schedule 3.6(c) and “Leasehold Property“ means any one of
them.


 


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


 


12





















 


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


 


(a)                                  Matters
Affecting the U.K. Properties


 


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


 


(i)                                     In
the case of the Registered Properties, the exceptions, reservations and
covenants (except charges to secure the repayment of money) contained or
referred to in the charges register of their respective title numbers;


 


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


 


(iii)                               All
local land charges; and


 


(iv)                              All
notices served and ordered, demand, proposals or requirements made, by any
local or other public authorities.


 


(b)                                  Landlord’s
Consents


 


(i)                                     The
sale of the Leasehold Property is subject to the relevant Selling Entity which
occupies the relevant Leasehold Property obtaining Landlord’s Consent in
respect of that property.


 


(ii)                                  The
relevant Selling Entities shall as soon as reasonably practicable and at it’s
own cost apply for and use all reasonable endeavours to obtain Landlord’s
Consent as soon as possible.


 


(iii)                               The
Purchasing Entity and the Buyer UK (as appropriate) shall use all reasonable
efforts to assist the relevant Selling Entity in obtaining Landlord’s Consent
and in particular shall promptly provide all such information and references as
the relevant Selling Entity may reasonably require in relation to the obtaining
of Landlord’s Consent and such other information as the landlord may be
entitled to request under the terms of the relevant property lease.


 


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


 


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


 


(A)                              Buyer
UK shall be entitled to receive all profit and other income from the Leasehold
Property;


 


13





















 


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


 


(C)                                The
Purchasing Entity and Buyer UK shall observe and perform all the covenants and
conditions (excluding any alienation covenants) contained or referred to in the
property lease relating to the Leasehold Property (save that in respect of any
covenants relating to the repair of the Relevant Property Buyer UK’s liability
shall be limited to keeping the Relevant Property in as good repair as when
Buyer UK went into occupation) and indemnify the relevant Selling Entity for
any costs or liabilities as a result of a breach or non-observance or non-performance
and such covenants and conditions;


 


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


 


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


 


(c)                                  Completion


 


(i)                                     If
the Landlord’s Consent is refused or has not been obtained within
12 months of the Transfer Date then both parties consider that the
relevant landlord is acting unreasonably in refusing or withholding consent the
relevant Selling Entity shall at the request of the Purchasing Entity and at
the joint expense of the relevant Selling Entity and Purchasing Entity seek the
opinion of a leading Counsel specializing in landlord and tenant law on whether
the landlord is unreasonably withholding or has unreasonably refused consent to
the assignment.


 


(ii)                                  If
such leading Counsel advises that the landlord is unreasonably withholding or
has unreasonably refused consent the relevant Selling Entity shall at the joint
expense of both parties apply to a court of competent jurisdiction for a
declaration that the landlord is acting unreasonably.


 


(iii)                               If
the declaration is obtained the assignment of the Relevant Property shall be
completed five business days thereafter.


 


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


 


14





















 


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


 


(d)                                  Further
Completion


 


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


 


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


 


(B)                                In
the case of the Leasehold Property in respect of which Landlord’s Consent is
necessary but has not been obtained by the Transfer Date, by the date five
business days after Landlord’s Consent has been obtained.


 


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


 


(e)                                  Assurances


 


The Assurances will contain (where applicable):


 


(i)                                     A
covenant by way of indemnity (but not further or otherwise) by the Purchasing
Entity with the relevant Selling Entity that the Purchasing Entity and its
successors in title will observe and perform:


 


(A)                              The
exceptions, reservations and covenants contained or referred to in the case of
each of the Registered Properties, the entries (except those relating to
charges to secure the repayment of money) appearing in the charges registers of
their respective title numbers;


 


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


 


(ii)                                  (In
the case of the Leasehold Properties) an agreement and declaration to the
effect that the Selling Entity shall not be liable under any of the covenants
set out in Sections 3 or 4 of the Law of Property (Miscellaneous
Provisions) Act 1994 for the consequences of any breach of the terms of the
property leases relating to their state and condition.


 


15





















 


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


 


1.9                               Closing
Balance Sheet


 


(a)                                  Definition
of Closing Balance Sheets


 


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


 


(b)                                  Preliminary
Closing Balance Sheets


 


Within 60 days following the Transfer Date, Buyer
US, with the assistance and cooperation of the Selling Entities, shall prepare
and deliver to UNOVA a balance sheet reflecting the US Purchased Assets
and Assumed Liabilities relating to the US Landis Group calculated in US
dollars and the UK Purchased Assets and Assumed Liabilities relating to
the UK Landis Group calculated in US dollars (converting UK pounds
in US dollars at the WSJ Rate on the Transfer Date), prepared as
provided in paragraph 1.9(a) above (the “Preliminary
Closing Balance Sheet“). 
Buyer US shall also prepare and deliver to UNOVA, within six
business days following the Transfer Date, the month-end financial and related
business data for the Business reasonably necessary to allow the Selling
Entities to prepare their financial reports consistent with the Selling
Entities’ customary practices.  After
delivery of the Preliminary Closing Balance Sheet, the Purchasing Entities
shall provide UNOVA and its accountants reasonable access during normal
business hours to materials used in the preparation of the Preliminary Closing
Balance Sheet.


 


(c)                                  Review
of Preliminary Closing Balance Sheet


 


UNOVA shall have 30 days following its receipt of
the Preliminary Closing Balance Sheet (the “Review
Period“) to review the same for compliance with GAAP and the
Agreement Adjustments.  On or before the
expiration of the Review Period, UNOVA shall deliver to Buyer US a written
statement accepting or objecting to the Preliminary Closing Balance Sheet.  In the event that UNOVA shall object to the
Preliminary Closing Balance Sheet, such statement (the “Statement
of Objections“) shall include a detailed itemization of UNOVA’s
objections and the reasons therefor.  If
UNOVA does not deliver to Buyer US the Statement of Objections within the
Review Period, the Selling Entities shall be deemed to


 


16





















 


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


 


(d)                                  Finalization
of Closing Balance Sheet


 


In the event that UNOVA shall accept or shall be
deemed to have accepted the Preliminary Closing Balance Sheet as prepared and
delivered by Buyer US, the Preliminary Closing Balance Sheet shall
constitute the Closing Balance Sheet for purposes of this Agreement.  In the event, however, that UNOVA shall
object to the Preliminary Closing Balance Sheet, UNOVA and Buyer US shall
promptly meet and in good faith attempt to resolve the issues that are in
dispute.  In the event that the issues in
dispute shall not have been resolved within 30 days following Buyer US’s
receipt of UNOVA’s Statement of Objections, such disputed issues shall be
resolved by KPMG LLP, or another independent certified accounting firm jointly
selected by UNOVA and Buyer US (the “Independent Firm“),
provided the Parties shall attempt to reach a final resolution of any matters
which remain in dispute at the earliest practicable date.  The decision of the Independent Firm shall be
final and binding on the Parties.  The
costs and expenses of the Independent Firm in reviewing the issues in dispute
shall be borne fifty percent (50%) by Buyer US and fifty percent (50%) by
UNOVA.  The Preliminary Closing Balance
Sheet, as adjusted to reflect the adjustments agreed upon by such Parties or
determined by the Independent Firm, shall constitute the Closing Balance Sheet
for purposes of this Agreement.


 


(e)                                  Net
Working Asset Payment


 


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


 


17





















 


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


 


(f)                                    Limitations on
Certain Claims


 


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


 


1.10                        Right
to Contest


 


The assumption and agreement by the Purchasing
Entities to pay, perform and discharge the Assumed Liabilities shall not
prohibit the Purchasing Entities from contesting with a third party, in good
faith and at the expense of the Purchasing Entities, the amount, validity or
enforceability of any thereof; provided, however, that the Purchasing Entities shall indemnify the
Selling Entities for any Loss (as defined in Section 11.1) arising from
such contest, other than in circumstances where the Purchasing Entities are
entitled to indemnification for the Loss arising from such contest pursuant to Section 11.


 


1.11                        Nonassignable
Contracts and Rights


 


To the extent that the assignment by the Selling
Entities of any contract, property, right or asset to be assigned to the
Purchasing Entities pursuant to this Agreement shall require the consent or
approval of any other party, and such consent or approval shall not have been
obtained on or prior to the Transfer Date, this Agreement shall not constitute
a contract to assign the same if an attempted assignment would constitute a
breach thereof or would in any way adversely affect the rights of the Selling
Entities (or any Purchasing Entity, as assignee) thereunder.  If any such consent or approval is required
but not obtained on or prior to the Transfer Date, the Parties covenant and
agree that in such case, the applicable Selling Entity shall continue to deal
as instructed by the Purchasing Entities with the other contracting party or
parties, with the benefits of such contract, property, right or asset after the
Transfer Date accruing to the benefit of the applicable Purchasing Entity and
the liabilities and obligations thereunder being performed by the applicable
Purchasing Entity on such Selling Entity’s behalf; such Selling Entity shall
hold all moneys received thereunder for the benefit of the applicable
Purchasing Entity and shall pay the same to the applicable Purchasing Entity
within one business day after receipt thereof; and the Parties shall use


 


18





















 


reasonable best efforts (but without payment of any penalty or fee by
any Party other than by the Selling Entities as set forth in Schedule 1.11) to obtain and secure any and all
consents and approvals that may be necessary to effect the valid sale, transfer
or assignment of the same to the applicable Purchasing Entity without change in
any of the material terms or conditions thereof, including without limitation
the formal assignment or novation of any of the same, if so required by the
Purchasing Entities.  The Parties further
covenant and agree to make or complete such transfers as soon as reasonably
possible and to cooperate with each other in any other reasonable arrangement
designed to provide for the applicable Purchasing Entity the benefits of and to
such properties, rights or assets and to provide for the performance by the
applicable Purchasing Entity of the liabilities and obligations related
thereto.


 


1.12                        Value
Added Tax


 


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


 


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


 


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


 


(d)                                  Buyer
UK warrants to UNOVA UK that:


 


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


 


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


 


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


 


19





















 


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


 


(e)                                  Subject
to Section 1.12(f), if HM Revenue and Customs determine in writing that
VAT is payable on all or part of the consideration payable for the UK Purchased
Assets pursuant to this Agreement, Buyer UK shall pay the amount of any VAT
which may properly be chargeable on the sale of the UK Purchased Assets
pursuant to this Agreement on the later of:


 


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


 


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


 


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


 


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


 


(ii)                                  If
UNOVA UK has already accounted for such amount in respect of VAT at the time it
receives such determination, UNOVA UK shall reclaim such amount from HM Revenue
and Customs and repay such amount to Buyer UK on receiving repayment of or
obtaining credit in respect thereof.


 


(g)                                 If
HM Revenue and Customs determines in writing that VAT is payable on all or part
of the consideration payable for the UK Purchased Assets pursuant to this
Agreement:


 


20





















 


(i)                                     UNOVA
UK shall as soon as reasonably practicable notify Buyer UK of such written
determination.  Buyer UK may within
10 business days of receipt of such notification from UNOVA UK request
that UNOVA UK contest, at Buyer UK’s cost, in writing such written
determination from HM Revenue and Customs. 
UNOVA UK shall give Buyer UK a reasonable opportunity to comment on any
relevant communication proposed to be sent to HM Revenue and Customs in this
regard (making available any information and documents in its control required
to establish to HM Revenue and Customs and any tribunal or court that no
liability, or a reduced liability, arises on the Buyer UK or any other company
under section 44 of VATA 1994 as a result of the sale of the UK Purchased
Assets.  Until such reasonable
opportunity to comment has been given UNOVA UK may not, without Buyer UK’s
written agreement not to be unreasonably withheld, agree, compromise, settle or
make any other arrangement with HM Revenue and Customs which would result in
Buyer UK incurring any liability under Section 1.12(b) above in
respect of VAT; and


 


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


 


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


 


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


 


(h)                                 UNOVA
UK shall apply to HM Revenue and Customs and endeavor to obtain
a direction that all records referred to in Section 49 of the Value
Added Tax Act 1994 may be obtained by UNOVA UK. 
If such direction is obtained, UNOVA UK will preserve the records for
such period as may be required by law, and shall allow Buyer UK, on reasonable
notice, to inspect the records and take copies thereof.  If such direction is refused by
HM Revenue and Customs, then UNOVA UK shall within 10 business days
after receipt of notification of such refusal (or, if later, Closing) deliver
to Buyer UK the VAT business records relating to the UK Purchased Assets.


 


(i)                                    UNOVA
UK is registered for VAT under registration number 011-80110-14659.


 


(j)                                    Pursuant
to paragraphs 2 and 3 of Schedule 10 VATA 1994 UNOVA UK has made an
effective election to waive exemption in relation to the English Owned Real
Property (an “Election“), has notified HM
Revenue & Customs of such Election within the prescribed time limits
for the Election to be valid and neither it nor any relevant associate as


 


21





















 


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


 


(k)                                All
VAT payable in respect of goods and services supplied or deemed to be supplied
by UNOVA UK in connection with the UK Purchased Assets prior to Closing and all
interest payable thereon and penalties attributable thereto shall be paid to HM
Revenue and Customs by UNOVA UK.  UNOVA
UK shall be entitled to receive and to retain for its own benefit all
reimbursement or credit from HM Revenue and Customs for VAT borne by UNOVA UK
on goods and services supplied to UNOVA UK prior to Closing and any payments
received in respect of VAT overpaid to HM Revenue and Customs prior thereto.


 


(l)                                    In
this Section 1.12:


 


(i)                                     “VAT“ means Value Added Tax
chargeable pursuant to the VATA; and


 


(ii)                                  “VATA“ means the Value Added Tax Act
1994 and any legislation additional or supplemental thereto or amending or
replacing it from time to time.


 


1.13                        UK
Employees


 


UNOVA UK and Buyer UK acknowledge that:


 


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


 


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


 


(Article 2 follows)


 


22





















 


ARTICLE 2.

Closing and Transfer Date


 


2.1                               Closing


 


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


 


2.2                               Notice
and Right to Cure


 


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


 


(Article 3 follows)


 


23





















 


ARTICLE 3.  

Representations and Warranties of the Selling Entities


 


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


 


3.1                               Corporate
Matters


 


(a)                                  Due
Organization, Good Standing and Qualification


 


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


 


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


 


24





















 


(b)                                  Corporate
Authority to Conduct Business


 


Each of the Selling Entities has the
corporate power and authority to own, lease and operate its properties and
assets and to carry on the portion of the Business attributable to it as it is
now being conducted.


 


(c)                                  Corporate
Power and Authority to Enter Into Agreements


 


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


 


(d)                                  Due
Execution and Enforceability


 


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


 


(e)                                  No Conflict


 


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


 


(i)            conflict
with or violate its certificate of incorporation, bylaws or other constituent
documents;


 


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


 


25





















 


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


 


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


 


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


 


(f)                                    Subsidiaries
and Other Equity Investments


 


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


 


(g)                                 Certain
Additional Matters


 


With respect to each of the Selling Entities
other than UNOVA UK:


 


(i)            No
order has been made or petition presented or resolution passed for its winding
up or liquidation;


 


(ii)           No
administrative or other receiver under any bankruptcy or similar law has been
appointed by any person over the whole or any part of its business or assets;
and


 


(iii)          No
order has been made or petition presented under any bankruptcy or similar law
for the appointment of an administrator or other receiver.


 


(h)                                 UNOVA UK
Insolvency Matters


 


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


 


26





















 


3.2                               Financial
Statements; Undisclosed Liabilities


 


(a)                                  December Financials


 


Set forth on Schedule 3.2(a) is
the combined balance sheet of the Landis Group as of December 31, 2004
(the “December Balance Sheet“),
and the related combined statement of operations for the year then ended, as
prepared by UNOVA (collectively, the “December Financials“).  Except as otherwise disclosed on Schedule 3.2(a), the December Financials have been
prepared in conformity with GAAP consistently applied throughout the periods
covered, except as may be indicated in the notes thereto, and present fairly in
all material respects the combined financial position and the combined results
of the Landis Group operations for the year then ended, excluding
reclassifications required at the corporate level because of discontinued operations
status and excluding allocated costs related to restricted stock and pensions
allocated to the Landis Group in UNOVA’s consolidation level adjustments to its
reported financial statements.


 


(b)                                  June Financials


 


(i)            Set
forth on Schedule 3.2(b)(i) is the
combined balance sheet of the Landis Group as of June 30, 2005 (the “June Balance Sheet“) and the
related combined statement of operations for the period then ended, as prepared
by UNOVA (collectively, the “June Financials“).  Except as otherwise disclosed on Schedule 3.2(b)(i), the June Financials (including
the notes thereto) have been prepared in conformity with GAAP consistently
applied throughout the period covered, except as may be indicated in the notes
thereto, and present fairly in all material respects the combined financial
position and the combined results of their operations for the period then
ended, excluding reclassifications required at the corporate level because of
discontinued operations status and excluding allocated costs related to
restricted stock and pensions allocated to the Landis Group in UNOVA’s
consolidation level adjustments to its reported financial statements.


 


(ii)           The
aggregate amount of all FAS 106 liabilities for post-retirement medical
benefits with respect to the Business reflected in the June Balance Sheet
has been calculated in accordance with GAAP using the method and assumptions
set forth on Schedule 3.2(b)(ii).  Since June 30, 2005, none of the Selling
Entities has exercised any discretion or power to increase the benefits payable
under the Retiree Medical Plan.


 


(c)                                  UNOVA UK’s
Accounts


 


Set forth on Schedule 3.2(c) are
the audited balance sheet as of December 31, 2004 (the “Accounts Date“) and the audited
profit and loss account for the financial year ended December 31, 2004 of
UNOVA UK (the “Accounts“).  With respect to the Accounts, UNOVA UK has
received an opinion from the independent accounting firm that audited the
Accounts that the audited balance sheet presents fairly, in all material
respects, the financial position of UNOVA UK as of the Accounts Date.


 


27





















 


(d)                                  Undisclosed
Liabilities


 


Except as disclosed in the June Financials,
the December Financials and the Accounts (the “Financial
Statements“) or set forth on Schedule 3.2(d),
there are no liabilities of the Business of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than liabilities
incurred in the ordinary course of business consistent with past practices
since the June Balance Sheet (excluding liabilities arising from the
events listed in Schedule 3.2(d) and
those Assumed Liabilities not required under GAAP to be reflected in the
Financial Statements) which in the aggregate are not material to the Business,
taken as a whole.


 


(e)                                  Events
Subsequent to June Balance Sheet


 


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


 


(i)            Any
material adverse change or any event, occurrence, development or state of
circumstances or facts which could reasonably be expected to result in a
material adverse change;


 


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


 


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


 


(iv)          Any
increase in the wage, salary, bonus (including bonuses contingent upon or
related to the Transactions), commission or other compensation (other than increases
granted in the ordinary course of business and consistent with past practice)
payable or to become payable by any of the Landis Group to any of the “Employees“ (as defined in Section 3.13(a)),
other than the change in retirement benefits disclosed to CFL in a letter from
UNOVA dated October 4, 2005, or any change in any existing, or creation of
any new, insurance or other plan, other than the Landis Pension Plan, under
which any of the Landis Group provides benefits to such Employees;


 


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


 


28





















 


(vi)          Any
labor dispute, other than routine individual grievances, or any activity or proceeding
by a labor union or representative thereof to organize any Employees or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such Employees or;


 


(vii)         Any
Employee terminations (other than for poor performance or for cause) and/or
layoffs, and the Landis Group has preserved intact and kept available the
services of present Employees and, in each case in accordance with past
practice;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(xiv)        Disposed
of or permitted to lapse any rights to the use of any material trademark, trade
name, patent or copyright currently used in the conduct of the Business, or
disposed of or disclosed to any Person (other than representatives of the
Purchasing Entities or any other Person subject to a confidentiality agreement
or non-disclosure obligation) any material trade secret, formula, process or
know-how not theretofore a matter of public knowledge, which was used in the
conduct of the Business;


 


29





















 


(xv)         Made
any single capital expenditure or commitment in excess of $50,000 for additions
to property, plant, equipment or intangible capital assets of the Business or
made aggregate capital expenditures in excess of $100,000 for additions to
property, plant, equipment or intangible capital assets of the Business; or


 


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


 


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


 


3.3                               Accounts
Receivable


 


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


 


3.4                               Inventories
and Assets


 


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


 


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


 


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


 


30





















 


(d)           Each item of plant and machinery
owned or used by the Selling Entities in the operation of the Business is in
working order (reasonable wear and tear excepted) and has been, and through the
Closing will be, maintained in a manner consistent with the past maintenance
practices of the Selling Entities.


 


3.5                               Absence of
Liens and Encumbrances


 


(a)           For purposes of this Agreement, a “Lien“ shall mean any lien,
encumbrance, mortgage, pledge, hypothecation, charge, security interest, title
retention or restriction or security agreement or arrangement of any kind.  “Permitted Lien“
shall mean, collectively, any (i) Liens for Taxes, assessments or
governmental charges or levies not yet due or, as disclosed on Schedule 3.5, being contested in good faith and any
Liens for Taxes disclosed on Schedule 3.18,
(ii) statutory Liens of carriers, warehousemen, mechanics, materialmen and
the like arising in the ordinary course of business that do not impair in any
material respect the conduct of the Business or the use of any of the Purchased
Assets in the manner currently conducted or used, disclosed on Schedule 3.5, (iii) easements, restrictive
covenants, rights of way and other similar restrictions of record that do not
impair in any material respect the conduct of the Business or the use of any of
the Purchased Assets in the manner currently conducted or used, (iv) zoning,
building and other similar restrictions that do not impair in any material
respect the conduct of the Business or the use of any of the Purchased Assets
in the manner currently conducted or used, (v) easements, encroachments
and other minor imperfections of title that do not impair in any material respect
the value of the Purchased Assets or the continued conduct of the Business or
the continued use of any of the Purchased Assets in the manner currently
conducted or used, (vi) in the case of leased property, all matters,
whether or not of record, affecting the title of the lessor (and any underlying
lessor) of the leased property so long as such matters do not impair in any
material respect the conduct of the Business or the use of any of the Purchased
Assets in the manner currently conducted or used, (vii) any Lien created
by a Purchasing Entity in connection with this Agreement, (viii) other
Liens set forth on Schedule 3.5,
(ix) Liens relating to deposits made in the ordinary course of business in
connection with workers’ compensation, employment insurance and other types of
social security, (x) Liens to secure the performance of leases, trade
contracts or other similar agreements and securing executory obligations under
any lease that constitutes an “operating lease“
under GAAP, and (xi) Liens to secure payment obligations in connection
with purchased property in the ordinary course of business.  Except as set forth on Schedule 3.5,
each of the applicable Selling Entities has good, and in the case of the
US Assets, marketable title to or, in the case of leased properties and
assets, valid leasehold interests in, all of the Purchased Assets free and
clear of all Liens other than Permitted Liens. 
The Selling Entities own all of the assets primarily or exclusively used
by them in the operation and conduct of the Business, or required by them for
the normal conduct of the Business, and those assets are the absolute legal and
beneficial property of the relevant Selling Entity, except for those assets
leased by them under leases specifically identified on Schedule 3.6(c) and
Schedule 3.8(d) hereto.  Except as described on Schedule 3.6(c) and
Schedule 3.8(d) hereto, no
financing statement with respect to any of the Purchased Assets is active in
any jurisdiction.


 


31





















 


(b)           Upon consummation of the transactions
contemplated hereby, the Purchasing Entities will acquire good and marketable
title in and to, or a valid leasehold interest in each of the Purchased Assets
free and clear of all Liens (other than Permitted Liens).


 


3.6                               Real
Property


 


(a)                                  Real
Property


 


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


 


(b)                                  Realty
Leases (as Lessor)


 


Except as set forth on Schedule 3.6(b),
no portion of the Owned Real Property has been leased.  UNOVA has previously furnished to Buyer US
true, correct and complete copies of the leases or similar contracts governing
the Owned Real Property that has been leased and any guaranties related
thereto.  Each such lease is in full
force and effect, no default or breach has occurred on the part of the Selling
Entities or, to the knowledge of the Selling Entities, any other party
thereto.  Except as set forth on Schedule 3.6(b), no consent of any party is required
under any such lease in order to assign all rights and benefits in each such
lease to the applicable Purchasing Entity (or its designee) and to keep such
lease in full force and effect after the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.


 


32





















 


(c)                                  Realty
Leases (as Lessee)


 


Set forth on Schedule 3.6(c) is
a list and description of all real property with respect to which any of the
Selling Entities is a lessee, guarantor or sublessee or other occupant (or in
which the Selling Entities have any actual liability either as previous
licensee or guarantor) and that is used primarily or exclusively in the
Business (the “Leased Real Property,” and,
along with the Owned Real Property, the “Real Property“).  UNOVA has previously furnished to Buyer US
and Buyer UK true, correct and complete copies of the leases or similar
contracts governing the Leased Real Property and any guaranties related
thereto.  Each such lease is in full
force and effect, no default or breach has occurred on the part of the Selling
Entities or, to the knowledge of the Selling Entities, any other party
thereto.  Except as set forth on Schedule 3.6(c), no consent of any landlord or any
other party is required under any such lease in order to assign all rights and
benefits in each such lease to the applicable Purchasing Entity (or its
designee) and to keep such lease in full force and effect after the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.


 


(d)                                  [Reserved]


 


(e)                                  Violation of
Laws or Restrictive Covenants


 


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


 


(f)                                    Environmental
Matters


 


Except as otherwise disclosed on Schedule 3.6(f):


 


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


 


33





















 


Substance“ shall
mean any toxic or hazardous constituents, pollutants, waste waters, byproducts,
contaminants, chemicals, compounds, substances (whether in solid or liquid form
or in the form of a gas or vapor and whether alone or in combination with any
other substance), materials or wastes, including without limitation asbestos,
polychlorinated biphenyls, toxic mold, mildew, or fungi, petroleum or any
petroleum products or other constituents or petroleum-based derivatives or urea
formaldehyde.  None of the Selling
Entities has been notified by any Governmental Body that any of the
Environmental Permits will be materially modified or suspended or revoked, and
the Selling Entities have no reason to believe that the Environmental Permits
cannot be transferred or reissued to the applicable Purchasing Entity or
renewed upon their expiration upon the same or similar terms and conditions as
the current permits, subject to requirements of applicable Environmental Laws
governing such Environmental Permits. 
Each of the Selling Entities is currently and has been since January 1,
2004 in material compliance with the terms and conditions of the Environmental
Permits and all such permits are in full force and effect and are disclosed in Schedule 3.6(f);


 


(ii)           Each
of the Selling Entities is, and has been since January 1, 2002, in
material compliance with and has no actual or contingent liability under all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables imposed or required by
Environmental Laws.  To the Selling
Entities’ knowledge, there are no circumstances that may prevent or interfere
with such compliance in the future;


 


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


 


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


 


(v)           No
underground storage tanks (as defined by 42 U.S.C. § 6991(1)) active
or abandoned, are or have been present at any real property now or formerly
owned, occupied, operated or leased by any of the Selling Entities in respect
of the Business;


 


34





















 


(vi)          None
of the Selling Entities in respect of the Business has transported or disposed
of, or allowed or arranged for any third party to transport or dispose of, any
Hazardous Substance to or at any location that is listed or proposed for
listing on the National Priorities List (the “NPL“)
promulgated pursuant to CERCLA, CERCLIS, or any equivalent list of sites for
cleanup under any analogous state program, excepting those locations where the
Selling Entities were de minimis responsible parties and have resolved any
potential liabilities through a “De Minimis Settlement,”
as that term is defined by 42 U.S.C. Section 9622(g), with the United
States Environmental Protection Agency or an analogous state agency;


 


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


 


(viii)        None
of the Selling Entities in respect of the Business is or has been a party to or
otherwise accept or have accepted the burden of an indemnity or other
contractual provision or arrangement concerning liabilities, losses, damages,
fines, penalties, charges, costs or expenses under Environmental Laws.


 


(g)                                 Real Estate
Liens or Encumbrances


 


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


 


3.7                               Right to Use
Properties and Assets


 


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


 


3.8                               Contracts
and Commitments


 


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


 


(a)                                  Sales
Orders, Bids and Proposals


 


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


 


35





















 


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


 


(b)                                  Purchase
Orders


 


Set forth on Schedule 3.8(b) is
a list and description of each individual outstanding purchase order and
purchase commitment of any of the Selling Entities relating to the Business in
excess of $100,000 (the “Purchase Orders“).  UNOVA has provided Buyer US with access
to copies of all Purchase Orders.  Except
as otherwise indicated on Schedule 3.8(b),
all Purchase Orders have been incurred in the ordinary course of business and
at arm’s length.


 


(c)                                  Sales
Representative, Distributor and Dealer Agreements


 


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


 


(d)                                  Personal
Property Leases (As Lessee)


 


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


 


(e)                                  Noncompetition
Agreements or Covenants


 


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


 


(f)                                    Confidential
Nondisclosure Agreements


 


Set forth on Schedule 3.8(f) is
a list and description of all written agreements between any of the Selling
Entities and any third party in respect of the Business which contain
provisions for the nondisclosure by any of the Selling Entities of confidential
or proprietary information (excluding standard confidentiality provisions in product
sales or service agreements and excluding confidentiality agreements with
potential purchasers of all or any portion of the Landis Group).


 


36





















 


(g)                                 Consultants
and Consultant Agreements


 


Schedule 3.8(g) lists
all Persons who are currently performing services for the Business who are
classified as “consultants” or “independent contractors” that receive an annual
compensation in excess of $50,000, the compensation of each such Person and
whether any Selling Entity is party to an agreement with such Person (whether
or not in writing).  Set forth on Schedule 3.8(g) is a list and description of all
outstanding consultant agreements of any of the Selling Entities in respect of
the Business.  For purposes of this Section 3.8(g) the
term “consultants“ and “independent contractors“ shall not
be deemed to include attorneys, accountants and other similar professional
advisors.


 


(h)                                 Indebtedness;
Guarantees


 


Set forth on Schedule 3.8(h) is
a list and description of any Indebtedness of any Selling Entity in respect of
the Business.  “Indebtedness“
means (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise, (iv) any commitment by which a Person assures a creditor
against loss (including, without limitation, contingent reimbursement liability
with respect to letters of credit), (v) any indebtedness guaranteed in any
manner by a Person (including, without limitation, guarantees in the form of an
agreement to repurchase or reimburse), (vi) any liabilities under leases
recorded for accounting purposes by the applicable Person as capitalized leases
with respect to which a Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, (vii) any indebtedness secured by a Lien
on a Person’s assets, (viii) any unsatisfied obligation for “withdrawal
liability” to a “multiemployer plan” as such terms are defined under ERISA, (ix) any
amounts owed to any Person under any noncompetition, severance or similar
arrangements, (x) any change-of-control or similar payment which is
triggered by the transactions contemplated by this Agreement, (xi) any
liability of the Selling Entities under deferred compensation plans, phantom
stock plans, severance or bonus plans, or similar arrangements made payable in
whole or in part as a result of the Transactions contemplated herein,
(xii) any off-balance sheet financing of a Person (but excluding all
leases recorded for accounting purposes by the applicable Person as operating
leases), and (xiii) any accrued and unpaid interest on, and any prepayment
premiums, penalties or similar contractual charges in respect of, any of the
foregoing obligations computed as though payments is being made in respect
thereof on the Transfer Date.


 


(i)                                    Powers of
Attorney, Proxies


 


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


 


37





















 


(j)                                    Letters of
Credit, Surety, Bid and Performance Bonds


 


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


 


(k)                                Joint
Venture Agreements


 


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


 


(l)                                    Other
Material Contracts


 


(i)            Set
forth on Schedule 3.8(l) is a list and
description of any other contract or commitment of any of the Selling Entities
in respect of the Business that is material to the Business and which is not of
the type required to be disclosed in any other Schedule to this Agreement
pursuant to the provisions hereof.  For
purpose of this Section 3.8(l), a contract or commitment shall be deemed
material if the consideration paid or to be paid thereunder exceeds $100,000 or
the contract or commitment is not terminable upon not more than 90 days
notice without penalty or other adverse consequences.  Except as otherwise disclosed in this Section 3.8,
all Purchased Contracts are valid and in full force and effect, the applicable
Selling Entity has performed all material obligations required to be performed
thereunder, and there are not any defaults or events of default on the part of
any of the Selling Entities, or, to their knowledge, the other parties
thereto.  Except as otherwise disclosed
in this Section 3.8, none of the Selling Entities has received notice that
any party to any such Purchased Contract intends to cancel, terminate or refuse
to renew such Purchased Contract or to exercise or decline to exercise any
option or right thereunder.  Assuming
receipt of all the Required Consents (including but not limited to the consents
in Schedule 6.6 to be obtained prior
to Closing), upon consummation of the transactions contemplated by this
Agreement, each such Purchased Contract shall continue in full force and effect
in accordance with its respective terms without penalty or other adverse
consequences, including, without limitation termination or cancellation.


 


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


 


(A)          was
entered into otherwise than on an arm’s length basis or in the ordinary course
of business; or


 


38





















 


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


 


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


 


(D)          is
incapable of termination in accordance with its terms by the Selling Entities
on six months’ notice or less; or


 


(E)           has
a term that exceeds 12 months or more.


 


(m)                              [Reserved]


 


(n)                                 Restrictive
Contracts


 


There are no contracts to which the Selling
Entities are a party in connection with the Business which infringe or which
have been or which were required to be registered or notified under the
Restrictive Trade Practices Act, the Resale Prices Act, the Competition Act
1980, the Competition Act 1998 or the EC Treaty; and the Selling Entities have
not in relation to the Business received any process, notice or communication
by or on behalf of the Office of Fair Trading, the Competition Commission, the
European Commission or any other authority in any country which has
jurisdiction in anti-trust, monopoly, competition or consumer protection
matters.


 


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


 


(a)                                  Intellectual
Property Rights


 


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


 


39





















 


to any Lien other than Permitted Liens.  No claim is pending or, to the Selling
Entities’ knowledge, threatened against any of the Selling Entities and/or
their officers, employees or consultants that challenges the Selling Entities’
rights in the Intellectual Property or otherwise adversely affects the
aforesaid right, title and interest in and to the Intellectual Property, nor
have there have been any clams, disputes or proceedings in respect of the use
or ownership of the Intellectual Property in the two years before the date of
this Agreement or the Transfer Date.  Except
as disclosed on Schedule 3.9(a), there are no
past or pending opposition proceedings, cancellation actions, reexaminations,
reissues, interference proceedings or revocation actions related to any of the
Intellectual Property.  Except as
disclosed on Schedule 3.9(a), all patents
or patent applications and trademarks, servicemarks, registered designs,
copyright registrations, domain names and applications constituting
Intellectual Property are in compliance with applicable Law (including without
limitation, payment of filing, examination and maintenance fees,) and are valid
and, to the knowledge of the Selling Entities, nothing has been done or omitted
to be done (and the Selling Entities are not aware of anything) which may cause
any of them to cease to be so, and are not subject to any maintenance fees,
taxes or actions falling due within ninety (90) days after the date of
Closing, assuming a Closing Date of December 9, 2005.  The UK Purchased Assets do not trade
under any name, other than “Landis Lund” and “Cranfield Precision” and no
person, form or company other than UNOVA UK has any rights in relation to the
names “Landis Lund” or “Cranfield Precision” or has requested or required UNOVA
UK to refrain from using such name or attempted to prevent such use by UNOVA
UK.


 


(b)                                  Licenses of
Intellectual Property Rights To or From Third Parties


 


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


 


(ii)           To
the knowledge of the Selling Entities, the information and communications
technology infrastructure and systems including software, hardware, firmware
and networks which is or has been used in the Business by any of the Selling
Entities (the “IT System“) has not
experienced a material failure in the year prior to the Transfer Date.  The IT System, together with the Purchased
Assets, comprises all of the information technology material and necessary to
operate the Business.


 


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(c)                                  No
Infringement


 


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


 


3.10                        Patent,
Trade Name, Trademark, Service Mark, Copyright or Chip Registration
Indemnification


 


Except as set forth on Schedule 3.10,
there are no pending or, to the knowledge of the Selling Entities, threatened
indemnification claims or demands against any of the Selling Entities relating
to the Intellectual Property.  Except as
set forth on Schedule 3.10, none of the
propriety information or trade secrets of any of the Selling Entities relating
to the Business of any proprietary or confidential information or trade secrets
now the subject to a patent or patent application has been disclosed to any
other Person except pursuant to confidentiality agreements between the Selling
Entities and such Person.


 


3.11                        Confidential
Information or Trade Secrets


 


(a)           Except as set forth on Schedule 3.9(a), none of the proprietary or confidential
information or trade secrets of any of the Selling Entities relating to the
Business or any proprietary or confidential information or trade secrets now
the subject of a patent or patent application, has been disclosed to any other
Person except pursuant to valid and binding confidentiality agreements between
the Selling Entities and such Person. 
Except as set forth on Schedule 3.11,
there are no pending or, to the knowledge of the Selling Entities threatened
proceedings which challenge the rights of any of the Selling Entities in
respect of any proprietary or confidential information or trade secrets used in
the Business.


 


(b)           In respect of all and any Personal
Data (as defined in the Data Protection Act 1998) processed by any of the
Selling Entities, the applicable Selling Entity has made all necessary
registrations and notifications of its particulars in accordance with the Data
Protection Legislation (being all legislation relating to data protection and
to the recording, interception and monitoring of communications and privacy
including without limitation the Data Protection Acts of 1984 and 1998, and the
EU Data Protection Directive 95/46/EC, the Privacy and Electronic
Communications (EC Directive) Regulations 2003, Part 1 of the
Regulation of Investigatory Powers Act 2000 as amended and any analogous
legislation in any part of the world), and have otherwise complied with the
Data Protection Legislation.


 


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3.12                        Products and
Service Warranties


 


(a)                                  Products


 


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


 


(b)                                  Service
Warranties


 


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


 


3.13                        Employees;
Employee Benefits


 


(a)                                  Employees


 


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


 


42





















 


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


 


(b)                                  Employment
Contracts


 


Schedule 3.13(b) lists
all current employee manuals and handbooks and employment agreements relating
to the employment of the Employees.  To
the extent permitted by law, UNOVA has provided the Purchasing Entities with
access to all employment policy statements material records relating to health
and safety issues (including, without limitation, accident at work records,
claim details, insurance records, policy and guidance documents and training
and monitoring records) and other materials of material nature relating to the
employment of the current Employees of the Business.  All Employees are employed on the terms set
out in the documents included on Schedule 3.13(b).  Except as disclosed on Schedule 3.13(b),
(i) none of the Employees of the Business is a party to any employment,
bonus, commission or other compensation agreement with any of the Selling
Entities, (ii) none of the Employees of the Business has notified or
otherwise indicated to the Selling Entities that he or she intends to terminate
his or her employment with the Selling Entities, (iii) the Selling
Entities do not have a present intention to terminate the employment of any
Employee of the Business, except as contemplated by Section 8.4 of the
Agreement; (iv) to the knowledge of the Selling Entities, no Employee at
management level in relation to the Business has since July 1, 2005
received an offer of employment from any other Person, (v) all employees
of the Business have executed the Selling Entities’ standard form of
noncompetition, nondisclosure and developments agreement; (vi) to the
knowledge of the Selling Entities, no Employee of the Business is a party to or
is bound by any employment contract, patent disclosure agreement,
noncompetition agreement or other restrictive covenant or other contract with
any third party that would be likely to affect in any way (A) the
performance by such Employee of any of his or her duties or responsibilities as
a Employee, or (B) the business or operations of the Business; (vii) to
the knowledge of the Selling Entities, no Employee employed at a management
level in relation to the Business is in violation of any term of any employment
contract, patent disclosure agreement, noncompetition agreement, or any other
restrictive covenant with any third party relating to the right of any such
Employee to be employed by the Selling Entities in respect of the Business and (viii) the
Selling Entities are not and have never been engaged in any dispute or
litigation with an Employee of the Business or former Employee of the Business
regarding Intellectual Property matters.


 


(c)                                  Severance


 


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


 


43





















 


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


 


(d)                                  Indebtedness
to Employees


 


Except as otherwise disclosed on Schedule 3.13(d), none of the Selling Entities in
respect of the Business is indebted to any of the present or former Employees
in any amount whatsoever, other than for accrued wages, bonuses and related
benefits and reasonable reimbursable business expenses incurred in the ordinary
course of business.


 


(e)                                  Loans or
Advances to Employees


 


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


 


(f)                                    Collective
Bargaining Agreements


 


(i)            Set
forth on Schedule 3.13(f) is a list
and description of all collective bargaining or similar agreements between any
of the Selling Entities and any group of Employees, union or labor organization
representing any Employees including any works agreement.  Except as otherwise disclosed on Schedule 3.13(f), no such agreement or understanding is
presently proposed or under discussion by the Selling Entities with Employees.  The Selling Entities in respect of the
Business do not have a duty to bargain with any other union or labor
organization.


 


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


 


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


 


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(g)                                 Independent
Contractors


 


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


 


(h)                                 Commitments


 


(A)          The
Selling Entities are not obliged to increase, nor have they made provision to
increase, the total annual remuneration payable to the Employees by more than
five per cent.


 


(B)           Except
as set forth in Schedule 3.13(h)(B), no
remuneration reviews or negotiations for an increase in the remuneration or
benefits of an officer or Employee are current or due to take place within the
next six months.


 


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


 


(i)                                    Employment
history


 


(A)          Except
as otherwise disclosed on Schedule 3.13(i) within the period of one
year ending on the date of this Agreement the Selling Entities in respect of
the Business have not:


 


(1)           made
or started implementation of any collective dismissals that have required or
will require notification to any state authority or notification to or
consultation with any trade union, works council, staff association or other
body representing employees; or


 


45





















 


(2)           been
a party to any transfer of a business or undertaking other than the
transactions contemplated by this Agreement that has required or will require
notification to or consulting with any trade union, works council, staff
association or other body representing employees.


 


(B)           Except
as set forth on Schedule 3.13(i), UNOVA UK has no obligation to make any
payment on the redundancy of any Employee in excess of the statutory redundancy
payment and has not in the two years preceding the date of this Agreement
operated any discretionary practice of making any such excess payments to any
of its Employees.  UNOVA UK has no
obligation to follow any contractual redundancy procedure.


 


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


 


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


 


(j)                                    Other Labor
Matters


 


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


 


46





















 


Entities’ knowledge, threatened against or
effecting the Business, and (ix) UNOVA UK has maintained materially up-to-date
records regarding the service of each of its Employees (including, without
limitation, details of terms of employments, payments of statutory sick pay,
statutory maternity pay, disciplinary and health and safety matters, income tax
and social security contributions, records for the purposes of the Working Time
Regulations 1998) and termination of employment.


 


(k)                                Employee
Benefit Plans


 


Set forth on Schedule 3.13(k)
is a list of all employee benefit plans and commitments under which liability
remains maintained or contributed to by the Selling Entities for the benefit of
the present or former employees of the Landis Group or any group of such
employees, or for the benefit of dependents of any of them (collectively, the “Employee Benefit Plans“), including
without limitation any pension, life and dependent life, accidental death and
health insurance (including medical, dental and vision), hospitalization,
medical examination, savings, bonus, deferred compensation, incentive
compensation, holiday, vacation, severance pay, tax preparation assistance and
equalization, estate planning, pay-in-lieu, sick pay, sick leave, disability,
tuition refund, service award, company car, car allowance, scholarship,
relocation, patent award, living allowances, housing allowances, annual home
leave costs, employee assistance, travel, accident, dependent schooling and
supplements, fringe benefit and other employee benefit plans, contracts,
policies or practices providing employee or executive compensation or
benefits.  None of the Selling Entities in
respect of the Business has committed to establish any agreement or arrangement
of the type required to be disclosed on Schedule 3.13(k),
except as otherwise indicated on such Schedule. 
Except as otherwise disclosed on Schedule 3.13(k),
each of the Employee Benefit Plans complies, and has complied since January 1,
2002, and has been administered in compliance in all material respects, with
all applicable Laws.


 


(l)                                    ERISA Plans


 


(A)          UNOVA
has provided Buyer US with access to copies of (1) each Employee Benefit
Plan that is an “employee benefit plan“ as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA“),
including amendments thereto but excluding any such plan applying to Employees
of UNOVA UK (each, an “ERISA Plan“),
or, in the case of any unwritten ERISA Plan, a description thereof, (2) if
applicable, the current trust agreement for each ERISA Plan, including
amendments thereto, (3) if applicable, the most recent summary plan
description for each ERISA Plan and all modifications thereto, (4) if applicable,
the most recent Form 5500 filed for each ERISA Plan, (5) if
applicable, the most recent actuarial valuation report prepared in connection
with any ERISA Plan, and (6) if applicable, the most recent determination
letter received from the Internal Revenue Service with respect to such ERISA
Plan.


 


47





















 


(B)           Except
as otherwise disclosed on Schedule 3.13(l),
no ERISA Plan is a “multiemployer plan“ (as
defined in Section 3(37) or Section 4001(a)(3) of ERISA) and,
during the last five years, no Selling Entity has incurred any withdrawal
liability under Section 4201 of ERISA to any multiemployer plan that
covered employees of the US division of the Landis Group.


 


(C)           With
respect to each ERISA Plan (1) all payments due from any such plan (or
from the applicable Selling Entity with respect to any such plan) have been
made, (2) the applicable Selling Entity has complied in all material
respects with, and each such ERISA Plan conforms in all material respects in
form and operation to, all applicable Laws, including without limitation ERISA
and the Code and all material reports and information relating to such ERISA
Plan required to be filed with any Governmental Body have been timely filed, (3) all
material reports and information required to be disclosed or provided to
participants or their beneficiaries have been timely disclosed or provided, (4) there
have been no prohibited transactions within the meaning of Section 406 of
ERISA or Section 4975 of the Code with respect to any ERISA Plan, (5) each
such ERISA Plan which is intended to qualify under Section 401(a) of
the Code (i) has received a favorable determination letter from the
Internal Revenue Service (the “IRS “) with
respect to such qualification  under the
Code as amended by those laws commonly referred to as “GUST” or has timely
filed for such a determination letter, or (ii) is a prototype or volume
submitter plan that is entitled to rely on the favorable GUST opinion or
advisory letter issued by the IRS to the prototype or volume submitter plan
sponsor of such ERISA Plan, and to the knowledge of the Selling Entities,
nothing has occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption, and (6) there are no
actions by any Governmental Body, suits or claims pending (other than routine
claims for benefits) or to the knowledge of the Selling Entities, threatened
with respect to any ERISA Plan or against the assets of such ERISA Plan.


 


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


 


(m)                              UK Pension
Plans


 


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


 


48





















 


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


 


(B)           UNOVA
UK has duly complied with all applicable legal and administrative requirements
relating to stakeholder pension schemes (as defined in Section 1(1) of
the Welfare Reform and Pensions Act 1999).


 


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


 


(D)          Materially full and accurate details
of the UNOVA Pension Fund insofar as applicable to the UK Employees and of the
Landis Pension Plan have been made available to Buyer UK, including (i) a
copy of all trust deeds and rules of current effect in relation to the UK
Employees, (ii) a copy of all members’ booklets and announcements of
current effect in relation to the UK Employees (whether issued by UNOVA UK or
otherwise) (including for the avoidance of doubt any announcement in respect of
any improvement of a benefit or other amendment not yet incorporated into the
documentation) issued to a UK Employee who is or may become a member of either
of them, (iii) a list of all the UK Employees who are members of either of
the UK Pension Plans, (iv) a copy of each investment management agreement
in force in relation to the management of Landis Pension Plan’s assets, (v) copies
of the HM Revenue and Customs approval letter or interim approval letter for
each of the UK Pension Plans and the contracting-out certificate issued in
respect of each of the UK Pension Plans and the contracting-out certificates
issued in respect of each of the UK Pension Plans and (vi) all data
relating to the benefits payable under each UK Pension Plan necessary, when
read with the documents referred to in (i) and (ii) above, to enable
Buyer UK to quantify the liabilities in respect of the UK Employees under each
of the UK Pension Plans at the date of his Agreement (other than the liability
in respect of the levy to fund the Pension Protection Fund payable pursuant to
the Pensions Act 2004).


 


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


 


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


 


49





















 


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


 


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


 


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


 


(J)            Except as set forth in Schedule 3.13(m), each UK Pension Plan has, in relation
to the UK Employees, been designed to comply with and has been administered
materially in accordance with, all applicable legal and administrative
requirements.


 


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


 


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


 


3.14                        Pending or
Threatened Claims, Litigation and Governmental Proceedings


 


Set forth on Schedule 3.14
is a list and description of every complaint, suit, action, judgment or court
order, arbitration or regulatory, administrative or governmental proceeding or
investigation or any other proceeding or investigation which is pending or, to
the knowledge of the Selling Entities threatened against any of the Selling
Entities in respect of the Business.  Save
for the Pension Regulator’s proceedings and except as set forth in Schedule 3.14, no investigation, suit, action or other
judicial or governmental proceeding is pending or, to the knowledge of the
Selling Entities threatened before any court or Governmental Body which may
result in the restraint or prohibition of, or the obtaining of substantial
damages in connection with, this Agreement or the consummation of the
transactions provided for in this Agreement.


 


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3.15                        Judgments,
Orders and Consent Decrees


 


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


 


3.16                        Compliance
With Laws


 


Except as set forth on Schedule 3.16,
none of the Selling Entities in respect of the Business is currently in
violation of or has since January 1, 2002 violated any applicable
provisions of any Laws in any material respects, including for the avoidance of
doubt the Business Names Act 1985.  Save
in relation to the Pensions Regulator, none of the Selling Entities is under
investigation with respect to and, to the knowledge of the Selling Entities,
has not been threatened to be charged with or been given notice of any
violation of, any law, rule, ordinance or regulation applicable to the
Purchased Assets or the conduct of the Business


 


3.17                        Franchises,
Permits, Etc.


 


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


 


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3.18                        Taxes


 


Except as otherwise disclosed on Schedule 3.18, each of the Selling Entities, and any
affiliated group within the meaning of Section 1504 of the Code (or
comparable provision of state, local or foreign Law) (“Affiliated
Group“) of which each such Selling Entity is or has been a
member (but only for the taxable period during which the Selling Entity has
been a member thereof), (a) has filed or caused to be filed all federal,
state, local and foreign Tax returns, notices, reports, statements or other
information or documentation (“Tax Returns“)
required to be filed by it with a Tax authority under applicable federal,
state, local or foreign Law, and (b) has timely paid or caused to be paid
in full all Taxes owed (whether or not shown or required to be shown on such
Tax Returns).  All such Tax Returns were
at the time they were filed true, complete and correct in all material
respects.  There are no Liens for Taxes
on any of the Purchased Assets except for Permitted Liens.  Except as otherwise disclosed on Schedule 3.18, all deficiencies asserted or assessments
made by any Tax authority against each of the Selling Entities, and any
Affiliated Group of which each such Selling Entity is or has been a member (but
only for the taxable period during which the Selling Entity has been a member
thereof), have been fully paid, and there are no audits, investigations or
examinations by any Tax authority with respect to Taxes relating to the
Business in progress, pending or, to the knowledge of or the applicable Selling
Entity, threatened.  None of the Selling
Entities in respect of the Business is currently the beneficiary of any extension
of time within which to file any Tax Return (other than any income Tax Return
of an Affiliated Group of which such entity currently is a member, but not the
parent corporation), and none of the Selling Entities in respect of the
Business has waived any statute of limitation with respect to any Tax or agreed
to any extension of time with respect to a Tax assessment or deficiency.  In respect of the Business, to the knowledge
of the applicable Selling Entity, no claim has ever been made by a Tax authority
in any jurisdiction where a Selling Entity does not file Tax Returns that such
Selling Entity is or may be subject to taxation by that jurisdiction.  None of the Selling Entities has any
liability for the Taxes of any Person (other than such Selling Entity or
another member of the Affiliated Group of which such entity is or has been a
member, but only for the taxable periods during which the Selling Entity has
been a member thereof) under Treasury Regulation Section 1.1502-6
(or any corresponding provision of state, local or foreign Law), or as a
transferee or successor, or by contract, or otherwise.  Each of the Selling Entities in respect of
the Business has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, stockholder,
independent contractor, creditor or other third party.  None of the Assumed Liabilities is an
obligation to make a payment that as a result of the Transactions will not be
deductible under Section 280G of the Code.


 


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


 


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(a)           Proper
records have been maintained by UNOVA UK and UNOVA UK has complied in all
material respects with all statutory provisions, rules, regulations, orders and
directions in relation to the UK Purchased Assets concerning VAT, PAYE and
National Insurance Contributions including the making on time of accurate
returns and payments and the proper maintenance and preservation of records,
and UNOVA UK has not been given any penalty, notice or warning regarding the
same.


 


(b)           UNOVA
UK is not involved in any dispute, or the subject of any enquiries, with HM
Revenue & Customs or any other taxation authority, concerning any
matter likely to affect the UK Purchased Assets in any way other than routine
inquiries of a minor nature following the submission of computations and
returns.


 


(c)           UNOVA
UK has duly made all returns, given all notices and supplied all other
information required to be supplied to HM Revenue & Customs or to any
other governmental authority in relation to or otherwise affecting the UK
Purchased Assets and all such returns, notices and information were and remain
complete and accurate in all material respect and were made on the proper
basis.


 


(d)           UNOVA
UK is duly registered for Value Added Tax and all proper records have been kept
and all proper returns and payments made as required by law for the enactments
relating to Value Added Tax in connection with the Business.


 


(e)           None
of the UK Purchased Assets is a capital item, the input tax on which could be
subject to adjustment in accordance with the provisions of Part XV of the
Value Added Tax Regulations 1995.


 


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


 


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


 


3.19                        Governmental
Authorizations; Consents


 


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


 


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3.20                        No Breach of
Statute or Contract


 


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


 


3.21                        Insurance


 


Schedule 3.21(a) lists
all of the insurance policies (including the terms of any self-insurance
programs) and bonds (excluding instruments referred to in Section 3.8(j))
in force for the current policy year with respect to the Business and its
Employees and any pending claims or claims made under the insurance policies in
the last three years.  The Selling
Entities have, with respect to the Business, maintained adequate insurance
protection against all liabilities against which it is customary for
corporations engaged in the same or a similar business similarly situated to
insure.  Such insurance polices remain in
full force and effect.  None of the
Selling Entities knows of any threatened termination of any of such policies or
bonds.  None of the Selling Entities has
any pending insurance claims or unpaid proceeds of such claims relating to the
operations or former operations of the Business or any asset used or formerly
used in the Business.


 


3.22                        Customers
and Suppliers


 


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


 


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


 


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


 


3.23                        Transactions
with Affiliates; Intercompany Arrangements


 


Except as set forth on Schedule 3.23,
(a) since January 1, 2002, there have been no transactions (as
defined below) between any of the Selling Entities in respect of the Business
and any Interested Person (as defined below) and (b) there are no
agreements, loans, leases, commitments or other continuing transactions between
any of the Selling Entities in respect of the Business and any Interested
Person.  As used in the preceding
sentence, the term “transaction“ includes, but is
not limited to, any sale or transfer of property or assets, the lease or other
use of the property or assets, the provision of services and the furnishing of
personnel, whether or not for consideration. 
Except as set forth on Schedule 3.23,
(i) no Interested Person has any interest in any property of any of the
Selling Entities in respect of the Business (ii) no Interested Person is
indebted to any of the Selling Entities in respect of the Business and (iii) none
of the Selling Entities in respect of the Business is indebted to any
Interested Person.  For purposes of this
Agreement,  “Interested
Person“ means (A) any officer, director or stockholder of
any of the Selling Entities or any of their respective affiliates or (B) any
member of any such officer, director or stockholder’s family or any of their
respective affiliates.  To the knowledge
of the Selling Entities, no Interested Person (x) has any material direct
or indirect interest in any entity that does business in an amount exceeding
$50,000 with any of the Selling Entities or (y) has any direct or indirect
interest in any property, asset or right that is used by any of the Selling
Entities in the conduct of the Business.


 


3.24                        Broker’s or
Finder’s Fees


 


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


 


3.25                        Grants and
Allowances


 


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


 


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3.26                        Sufficiency
of Purchased Assets


 


As of the date of this Agreement, the
Purchased Assets, the Excluded Assets, and the assets used to provide the
services pursuant to the Transition Services Agreement (as defined in Section 6.11)
constitute, and on the Transfer Date will constitute, all of the assets or
property used or held for use in or otherwise necessary for the operation of
the Business as of each such date.  On
the Transfer Date, the Purchased Assets, the assets of the Landis Pension Plan
and the assets used to provide the services pursuant to the Transition Services
Agreement, will constitute all of the assets necessary for the Purchasing
Entities to continue to operate the Business as it has been operated prior to
the Transfer Date.


 


3.27                        No Other
Representations


 


Except for the representations and warranties
expressly made by the Selling Entities in this Agreement (including the
Exhibits and Schedules), none of the Selling Entities or any other Person makes
any express or implied representation or warranty concerning the Business on
behalf of the Selling Entities.  Without
limiting the generality of the foregoing, and notwithstanding any otherwise
express representations and warranties made in this Article 3, the Selling
Entities make no representation or warranty to the Purchasing Entities with
respect to (a) any projections, estimates or budgets delivered to or made
available to the Purchasing Entities of future revenues, expenses or
expenditures or future results of operations or (b) except as expressly
covered by a representation and warranty contained in this Article 3, any
other information or documents (financial or otherwise) made available to the
Purchasing Entities or their counsel, accountants or advisers with respect to
the Business.


 


3.28                        Disclosure


 


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


 


(Article 4 follows)


 


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ARTICLE 4.  

Representations and Warranties of Purchasing Entities


 


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


 


4.1                               Corporate
Matters


 


(a)                                  Due
Organization


 


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


 


(b)                                  Corporate
Power and Authority to Enter Into Agreement


 


Each of the Purchasing Entities has the
corporate power and authority to enter into this Agreement and the Related
Agreements to which it is a Party and to perform its obligations hereunder and
thereunder.


 


(c)                                  Due
Execution and Enforceability


 


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


 


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(d)                                  No Conflict


 


With respect to each of the Purchasing
Entities, the execution and delivery of this Agreement and the Related
Agreements to which such Purchasing Entity is a party do not, and the
consummation by it of any of the transactions contemplated hereby or thereby
will not:


 


(i)            conflict
with or violate its articles of incorporation, bylaws or other constituent
documents;


 


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


 


(iii)          violate,
conflict with, result in any breach of, or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under
any contract or judgment to which it is a party or by which it is bound, except
as would not be reasonably likely to have a material adverse effect on such
Purchasing Entity.


 


4.2                               Required
Consents


 


Set forth on Schedule 4.2
is a list and description of any consent, approval or authorization of, or
exemption by, or filing with (a) any Governmental Body and (b) any
Person (other than any Governmental Body referred to in clause (a) which
is required in connection with the execution, delivery and performance of this
Agreement and the Related Agreements by the Purchasing Entities, except for
governmental and business franchises, permits, reports, licenses and other
authorizations necessary to conduct the Business on the Transfer Date.


 


4.3                               Claims,
Litigation and Governmental Proceedings


 


No investigation, suit, action or other
judicial or governmental proceeding is pending or, to the knowledge of the
Purchasing Entities, threatened before any court or Governmental Body which is
likely to result in the restraint or prohibition of, or the obtaining of
substantial damages in connection with, this Agreement or the consummation of
the transactions provided for in this Agreement.


 


4.4                               Broker’s or
Finder’s Fees


 


Except for BNP Paribas Corporate Finance, no
Person or firm other than Buyer US and its Affiliates (and their respective
directors, officers and employees), has arranged, or participated in arranging,
on behalf of the Purchasing Entities or their Affiliates, the transactions
provided for in this Agreement.  There
are no broker’s or finder’s fees to be paid by the Purchasing Entities or their
Affiliates in connection with the transactions provided for in this
Agreement.  Neither of the Purchasing
Entities nor any of their Affiliates has any knowledge of, and has taken no
action which would give rise to, any claim for a broker’s or finder’s fee to be
paid by any of the Selling Entities in connection with the consummation of the
transactions provided for in this Agreement.


 


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4.5                               Available
Funds


 


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


 


(Article 5 follows)


 


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ARTICLE 5.  

Certain Covenants Pending the Closing


 


5.1                               Full Access


 


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


 


5.2                               Carry On In
Regular Course


 


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


 


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


 


(b)           without
the prior consent of Buyer US, which consent shall not be unreasonably withheld
or delayed, make any capital expenditures relating to the Business unless such
expenditure is made pursuant to a purchase order set forth on Schedule 3.8(b) or the aggregate of any such
capital expenditures is less than $100,000;


 


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(c)           without
restricting the exercise of any power or discretion under the Landis Pension
Plan, and otherwise without the prior consent of Buyer US, which consent shall
not be unreasonably withheld or delayed (i) terminate or otherwise layoff
any Employees of the Business, and will preserve intact and keep available the
services of all Employees of the Business, (ii) hire or employ any new
salaried personnel of the Business, (iii) grant any increase in the rates
of pay of any Employee (other than routine increases granted in the ordinary
course of business and consistent with past practice), or (iv) by means of
any new or existing compensation or employee benefit plan increase the
compensation or amount or level of benefits of any Employee, other than, in
each case, any Employee whom the Parties agree will not be a Continuing
Employee, but without prejudice to Section 5.8; and


 


(d)           take
any decision or exercise any power or discretion in relation to the Landis
Pension Plan without consulting Buyer UK.


 


5.3                               Consents;
HSR


 


(a)           The Parties, in cooperation and after
consultation and mutual agreement, shall take all reasonable action (without
payment of any penalty or fee) required to obtain all consents, approvals and
agreements of, and to give all notices and make all filings with, any third
parties, including Governmental Bodies, necessary to authorize, approve or
permit the transfer to the Purchasing Entities of the Purchased Assets, the
Shares and the Assumed Liabilities as provided for in this Agreement.


 


(b)           Without limiting the foregoing, the
Parties shall promptly respond to any requests for information in connection
with the Pre-merger Notification and Report Form (“HSR
Filing“) required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act“)
in connection with the transactions contemplated hereby.  In connection with the efforts referenced
herein, each of the Purchasing Entities on the one hand, and each of the
Selling Entities on the other hand, shall (i) use its reasonable best
efforts to cooperate in all respects with the other Parties hereto in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, regarding the transactions contemplated hereby, (ii) keep the other
Parties, including their counsel, as the case may be, informed of any material
communication by or to such party or its counsel from or to the Federal Trade
Commission (the “FTC“), the Antitrust Division
of the Department of Justice (the “DOJ“) or
any other Governmental Body and of any material communication received or given
in connection with any proceeding by a private party, in each case regarding
any of the transactions contemplated hereby, (iii) permit the other
Parties and their legal counsel to review, consult with each other in advance
of and consider in good faith the views of the other in connection with any
correspondence, filings or communications given by it to, or between it and,
the FTC, the DOJ or any other Governmental Body or in connection with any
proceeding by a private party, regarding the transactions contemplated hereby,
and (iv) permit the other Parties and their legal counsel to attend and
participate in, any meeting or conference with, the FTC, the DOJ or any such
other Governmental Body or, in


 


61





















 


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


 


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


 


5.4                               Notices of
Certain Events; Continuing Disclosure


 


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


 


(i)            any
notice or other communication from any Person alleging the consent of such
Person is or may be required in connection with the transactions contemplated
by this Agreement;


 


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


 


(iii)          any
actions, suits, claims, investigations or proceedings commenced or, to
threatened against, or relating to or involving or otherwise affecting any of
the Selling Entities that could reasonably be expected to have a material
adverse effect on the Business or that relate to the consummation of the
transactions contemplated by this Agreement, or any material developments
relating to any actions, suits, claims, investigations or proceedings disclosed
pursuant to Section 3.14; and


 


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


 


(b)           Until the Transfer Date, the Selling
Entities shall have the continuing obligation promptly to advise Buyer US and
Buyer UK with respect to any matter hereafter arising or discovered that
constitutes a breach or prospective breach of this Agreement by the Selling
Entities.


 


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


 


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5.5                               Supplements
to Disclosure


 


From time to time prior to, and in any case,
at the Closing, the Selling Entities shall amend or supplement the Schedules
attached to this Agreement with respect to any matter that, if existing on the
date hereof or occurring at or prior to the Transfer Date, would have been
required to be set forth or described on such a Schedule or that is
necessary to complete or correct any information in any representation or
warranty contained in Article 3.  No
such supplement or amendment to any Schedule pursuant to this Section 5.5
shall have any effect for the purpose of determining satisfaction of any of the
conditions set forth in Article 6 or the Purchasing Entities’ rights under
this Agreement, including, without limitation, Articles 10 and 11.


 


5.6                               Conditions
Precedent


 


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


 


5.7                               Nondisclosure


 


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


 


(b)           In the event that this Agreement is
terminated and the transactions provided for in this Agreement are abandoned as
contemplated by Section 10.1, the terms of that certain Confidentiality
Agreement, dated July 8, 2005, between CFL and UNOVA (the “Confidentiality Agreement“), shall
remain in full force and effect, and each of the Purchasing Entities confirms
that it will comply with the obligations thereunder as if it were a party
thereto.


 


5.8                               Reorganization
of U.K. Pension Plans


 


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


 


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


 


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


 


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


 


(d)           [Reserved]


 


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


 


5.9                               Assumption
of Retiree Medical Plan


 


(a)           Effective
as of the Transfer Date, the Selling Entities shall transfer and assign to
Buyer US, and Buyer US shall assume sponsorship of, and all obligations,
liabilities and rights of the Selling Entities (other than any rights of the
Selling Entities under non-transferable contracts and contracts that also cover
active employees of the Selling Entities) with respect to, the retiree medical
benefit programs made available to employees of the


 


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


 


(b)           At
the request of Buyer US, the Selling Entities shall use reasonable efforts to
cooperate with Buyer US in dealing with an insurance company or companies
selected by Buyer US in connection with the establishment of an insurance
contract or contracts to be entered into by Buyer US that are substantially
similar to the insurance contracts maintained by the Selling Entities in
connection with the Retiree Medical Plan immediately prior to the Transfer
Date.  The Selling Entities shall take
all other actions as may be reasonably necessary or, in the reasonable opinion
of Buyer US, desirable to effect the assumption by Buyer US of the Retiree
Medical Plan as described herein.


 


(Article 6 follows)


 


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ARTICLE 6.  

Conditions Precedent to the Obligations of the Purchasing Entities to Close


 


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


 


6.1                               Representations
and Warranties True


 


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


 


6.2                               Compliance
With Agreement


 


The Selling Entities shall have performed and
complied in all material respects with all of the obligations under this
Agreement which are to be performed or complied with by them on or prior to the
Transfer Date.  The Purchasing Entities
shall have received a certificate signed by a duly authorized officer of UNOVA
to the foregoing effect.


 


6.3                               No Material
Adverse Change


 


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


 


6.4                               No
Litigation


 


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


 


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6.5                               [Reserved]


 


6.6                               Consents and
Approvals


 


The Parties shall have obtained all necessary
and material authorizations, consents and approvals required for the valid
consummation of the transactions provided for in this Agreement, provided,
however, that only those Required Consents listed on Schedule 6.6
shall be required to have been obtained as of Closing under this Section 6.6,
and each of such authorizations, consents and approvals shall be in full force
and effect.  Without limiting the
generality of the foregoing, if applicable, (i) the time period under the
HSR Act shall have expired or early termination shall have been granted, and no
adverse action shall have been threatened or instituted in connection
therewith, and (ii) the European Commission, or any national relevant anti-trust
authority, shall have made an express or implied decision which, in accordance
with the relevant applicable anti-trust laws, unconditionally authorizes
(without any request for the Purchasing Entities to comply with certain
undertakings) or does not prevent the Transactions from being implemented under
the terms and conditions contemplated under this Agreement.


 


6.7                               Instruments
of Transfer


 


The applicable Selling Entities shall have
executed and delivered to the Purchasing Entities bills of sale meeting all
necessary requirements of United States and foreign Laws sufficient to transfer
to the Purchasing Entities the Purchased Assets as well as deeds conveying the
Owned Real Property (other than the South Beloit Facility and the Waynesboro
Facility) to the Purchasing Entities. 
The Selling Entities shall also deliver the following:


 


(a)           A
certificate of the Secretary or an Assistant Secretary (or local equivalent) of
each of the Selling Entities setting forth a copy of the resolutions duly
adopted by its Board of Directors and, in the case of Selling Entities other
than UNOVA, stockholders authorizing and approving the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby;


 


(b)           Appropriate
instruments authorizing Buyer US and Buyer UK to endorse in the name of the
Selling Entities all checks, drafts, notes and other instruments for the
payment of money and to receive for the account of the Purchasing Entities all
proceeds thereof to which the Purchasing Entities are entitled under this
Agreement; and


 


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


 


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


 


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


 


6.8                               [Reserved]


 


6.9                               Opinion of
Counsel


 


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


 


6.10                        Amendment to
MAG Transition Services Agreement


 


The
Transition Services Agreement dated as of April 3, 2005 between UIASI and
MAG Industrial Automation Systems, Inc. (“MAG“) shall be amended in a form
reasonably satisfactory to the Purchasing Entities pursuant to which MAG shall
have agreed to provide IT Services to the Landis Group until March 31,
2007.


 


6.11                        Transition
Services Agreement


 


The Selling Entities shall have executed and
delivered to the Purchasing Entities an agreement in substantially the form of Exhibit C (the “Transition Services
Agreement“) pursuant to which (i) the Selling Entities
Group shall continue to provide certain services to the Landis Group, and (ii) the
Purchasing Entities in respect of the Landis Group shall provide certain
services to the Selling Entities.


 


6.12                        Title


 


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


 


68





















 


title insurance company, or to use reasonable
efforts to deliver such other documents, in each case, as may be reasonably
required to vest in the Purchasing Entities good and marketable title in fee
simple to such Owned Real Property, free and clear as described above and to
enable the title insurer to issue a title insurance policy to the Purchasing
Entities in accordance with the foregoing on the Transfer Date.  For purposes of this Section 6.12, Owned
Real Property shall not include the South Beloit Facility and the Waynesboro
Facility and the UK Freehold Property at Keighly, England.


 


6.13                        Leases


 


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


 


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


 


6.14                        Discharge of
Indebtedness; Release of Liens


 


(a)           The Purchasing Entities shall have
received evidence reasonably satisfactory to the Purchasing Entities of the
discharge of:


 


(i)            all
Liens (other than Permitted Liens excluding, for the avoidance of doubt, the Liens
listed in Schedule 3.5) on the Purchased
Assets; and


 


(ii)           all
Liens on the Purchased Assets securing UNOVA’s revolving credit facility and
UNOVA U.K.’s credit facility.


 


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


 


6.15                        [Reserved]


 


6.16                        [Reserved]


 


6.17                        UK Pension
Plans


 


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


 


69





















 


and the Pension Regulator shall have raised
no objection to the Valuation or the Schedule of Contributions on or
before Closing in relation to the Landis Pension Plan.


 


6.18                        Other


 


Except as required by Law, any condition
specified in this Article 6 may be waived by the Purchasing Entities;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Purchasing Entities or unless the Purchasing Entities
agree in writing to consummate the transactions contemplated by this Agreement
without fulfillment of such condition. 
No waiver of a closing condition by the Purchasing Entities shall limit
their rights under Article 11.


 


6.19                        Closing
Conditions for UNOVA UK


 


(a)           A resolution in the agreed form shall
have been passed at a duly convened and constituted annual meeting or
extraordinary general meeting of UNOVA UK approving the transaction
contemplated by this Agreement and any agreements referred to herein.


 


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


 


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


 


6.20                        Benefit of
Letters of Credit


 


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


 


(Article 7 follows)


 


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ARTICLE 7.  

Conditions Precedent to the Obligations of the Selling Entities to Close


 


Each and every obligation of the Selling
Entities to be performed at Closing shall be subject to the satisfaction of
each of the following conditions:


 


7.1                               Representations
and Warranties True


 


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


 


7.2                               Compliance
With Agreement


 


Each of the Purchasing Entities shall have
performed and complied in all material respects with all of the obligations
under this Agreement which are to be performed or complied with by it on or
prior to the Transfer Date.  The Selling
Entities shall have received a certificate signed by a duly authorized officer
of Buyer US to the foregoing effect.


 


7.3                               No
Litigation


 


No investigation, suit, action or other
judicial or governmental proceeding shall be pending or threatened before any
court or Governmental Body which is reasonably likely to result in the
restraint or prohibition, or the obtaining of substantial damages in connection
with this Agreement or the consummation of the transactions provided for in
this Agreement, and the Pensions Regulator in the United Kingdom shall not have
indicated that he intends to issue a contribution notice or financial support
direction under Part 1 of the Pensions Act 2004 with respect to or
affecting the UNOVA Pension Fund.


 


7.4                               [Reserved]


 


7.5                               Consents and
Approvals


 


The Parties shall have obtained all necessary
and material authorizations, consents and approvals required for the valid
consummation of the transactions provided for in this Agreement, and each of
such authorizations, consents and approvals shall be in full force and effect,
provided, however, that (a) only those Required Consents listed on Schedule 6.6 shall be required to have been obtained as
of Closing under this Section 7.5, and (b)  if the Purchasing
Entities (i) waive receipt of a Required Consent listed in Schedule 6.6
in connection with Closing, and (ii) waive any claim for indemnification
under Article 11 in


 


71





















 


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


 


7.6                               Purchase
Price


 


The Purchasing Entities shall have delivered
to UNOVA the Purchase Price.


 


7.7                               Note


 


The Note substantially in the form of Exhibit A shall have been delivered on the Transfer
Date.


 


7.8                               Instruments
of Assumption


 


The applicable Purchasing Entities shall have
executed and delivered to the applicable Selling Entities instruments of
assumption sufficient for the applicable Purchasing Entities to assume the
Assumed Liabilities applicable to the Purchased Assets acquired by it
including, without limitation, a Deed of Change of Principal Employer and
Trustees in the form set forth in Exhibit 5.8(a).  The Purchasing Entities shall also deliver a
certificate of the Secretary or an Assistant Secretary (or local equivalent) of
each of such Persons setting forth a copy of the resolutions duly adopted by
its Board of Directors authorizing and approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.


 


7.9                               Performance
Bonds


 


The Purchasing Entities shall have in place
financial instruments, including the issuance of a back-up letter of credit, if
necessary, in a form and manner acceptable to UNOVA and Barclays Bank to secure
the obligations of the Landis Group under those executory contracts, set forth
on Schedules 3.8(j) (the “Performance Bonds“).


 


7.10                        Leases


 


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


 


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


 


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7.11                        Other


 


Except as required by Law, any condition
specified in this Article 7 may be waived by the Selling Entities;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Selling Entities or unless the Selling Entities agree
in writing to consummate the transactions contemplated by this Agreement
without fulfillment of such condition. 
No waiver of a closing condition by the Selling Entities shall limit
their rights under Article 11.


 


7.12                        Transition
Services Agreement


 


The Purchasing Entities shall have executed
and delivered to the Selling Entities the Transition Services Agreement
pursuant to which (i) the Selling Entities Group shall continue to provide
certain services to the Landis Group, and (ii) the Purchasing Entities in
respect of the Landis Group shall provide certain services to the Selling
Entities.


 


(Article 8 follows)


 


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ARTICLE 8.  

Further Requirements


 


8.1                               Access to
Books and Records


 


From and after the Transfer Date, (a) the
Selling Entities and their authorized representatives shall have reasonable
access, during normal business hours and upon reasonable notice, to inspect and
examine and the right to photocopy all books of account and records transferred
to the Purchasing Entities pursuant to this Agreement that relate to the
affairs and business of the Landis Group conducted on or prior to the Transfer
Date, and (b) the Purchasing Entities will cooperate with the Selling
Entities as may be reasonably necessary to permit the Selling Entities to close
their books with respect to the Business as of the Transfer Date and to prepare
their customary financial reports, including but not limited to furnishing to
the Selling Entities and their authorized representatives with existing
financial and operating data and other information with respect to the affairs
and business of the Landis Group necessary to prepare such financial reports;
provided that such inspection, examination, photocopying and requests for
cooperation shall be conducted so as not to unreasonably interfere with the
Business.  To the extent that any books
and records that constitute Excluded Assets pursuant to Section 1.2(h) are
commingled with the books and records transferred to the Purchasing Entities
hereunder, the Purchasing Entities shall notify the applicable Selling Entities
before destroying any of such books and records and shall afford the Selling
Entities a reasonable opportunity to photocopy or take possession of the same.


 


8.2                               Further
Instruments and Assurances


 


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


 


8.3                               Litigation
Cooperation


 


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


 


8.4                               Certain
Employee Matters


 


(a)                                  Employment


 


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


 


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Schedule 8.4(a) and that in the
aggregate are comparable to those that such Employees currently receive, in
each case, for a period of 12 months. 
Notwithstanding the foregoing and except as is required to discharge the
Assumed Liabilities under Sections 1.6(j) and 1.6(n), Buyer US will not be
required to provide any defined pension plan or retiree medical benefits to
Continuing Employees.  Those Employees
who accept such offer are referred to collectively as the “Continuing
Employees“ (which, for the avoidance of doubt, includes all
those Employees of UNOVA UK who become employees of Buyer UK on Closing
pursuant to the Transfer Regulations). 
Nothing in this Agreement creates any third-party beneficiary rights
with respect to employment of any Employee.


 


(b)                                  Certain
Employee Benefits


 


(i)                                    Past Service
Credit


 


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


 


(ii)                                Benefits
under the Selling Entities’ Plans


 


The Selling Entities shall cease accrual of
benefits as of the Transfer Date with respect to any Continuing Employee under
any of their employee benefit plans that are not assumed by any Purchasing
Entity.


 


(iii)                            U.S. Medical
and Health Plan


 


Buyer US will have in effect in the United
States within 90 days of the Transfer Date a group insurance program under
which Continuing Employees of the Landis US division (the “US Employees“) will be
permitted to participate in benefits consisting of medical, hospital, life and
dental insurance benefits.  Eligibility
for, the benefits of (including the reservation by Buyer US of the right
to terminate or amend such program in whole or in part at any time), and the
amount, if any, of employee contributions toward, such group insurance program
will be determined by Buyer US except that Buyer US’s group insurance with
respect to US Employees will:


 


(A)          Waive
application of its pre-existing conditions provision to any US Employee or
covered dependent for any medical condition such US Employee or covered
dependent has as of the Transfer Date unless such condition was or would have
been excluded from coverage as a pre-existing condition under the applicable
Selling Entity’s group insurance program covering such US Employee or
covered dependent as of the Transfer Date; and


 


(B)           Credit
each US Employee in Buyer US’s program plan year with eligible expenses
incurred by, and claims paid on behalf of, such US Employee in the current
program plan year of the Selling Entity’s group insurance program applicable to
such Employee for purposes of satisfying the deductible provisions, the out-of-pocket
maximum


 


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


 


(C)           UNOVA
will provide the benefits transition services, participation in health plans
and COBRA continuation coverage as set forth in the Transition Services
Agreement.


 


(iv)                               Buyer US’s
401(k) Plan


 


Buyer US shall offer all Continuing Employees
the opportunity to enroll in Buyer US’s 401(k) plan (the “Buyer US’s 401(k) Plan“)
subject to the enrollment requirements of Buyer US’s 401(k) Plan.  Except as otherwise provided below with
respect to the “FSSP/UPP Transition Period“
(as defined below), as soon as Buyer US shall have reasonably concluded that
UNOVA’s 401(k) plan (the “FSSP“) is
tax-qualified, it shall cause Buyer US’s 401(k) Plan to accept the direct
rollover of the pre-tax account balance under the FSSP of any Continuing
Employee who elects to enroll as an active participant in Buyer US’s
401(k) Plan and to have such account balance transferred to Buyer US’s
401(k) Plan.  UNOVA shall cause the
Plan Administrator designated under the FSSP to extend the repayment period of
a loan of any Continuing Employee from 30 days to 90 days following
the Transfer Date, it being understood that any such loan that is not repaid by
the end of the calendar quarter after the calendar quarter when the most recent
installment was due will be deemed to be in default.  If mutually acceptable to Buyer US and UNOVA
and if legally permissible, UNOVA shall permit the employees of the Landis US
division who become Continuing Employees to continue to participate in the FSSP
and the UNOVA Pension Plan (the “UPP“) for a
period of up to six months following the Transfer Date (the “FSSP/UPP Transition Period“);
provided that in such event, Buyer US shall pay to UNOVA (or, in the sole
discretion of UNOVA, directly to the FSSP or the UPP, as the case may be) the
contributions, costs and administrative charges relative to the benefits earned
by such employees while participating in the FSSP and UPP during the FSSP/UPP
Transition Period.  The payments of
contributions, costs and administrative charges described in the preceding sentence
shall be made promptly after each payroll period.  In the case of contributions relative to
benefits earned by Continuing Employees under the FSSP, payments for each
payroll period shall include all employee contributions and related employer
matching contributions for such payroll period. 
In the case of contributions relative to benefits earned by Continuing
Employees under the UPP, payments for each payroll period shall include a pro-rata
portion of the required annual employer contribution to the UPP, determined by
dividing the projected annual employer contribution to the UPP for Continuing
Employees (as determined by the actuary for the UPP) by the number of payroll
periods over which Continuing Employees accrue benefits in the UPP during the
year.  In the event that Buyer US fails to
make such payments as required, UNOVA shall be entitled to immediately
terminate the participation of such employees in the FSSP and UPP.  Buyer US shall take all steps required
to maintain the tax-qualified status of the FSSP and the UPP (as determined by
UNOVA in its sole discretion, and including, if necessary, adopting the FSSP


 


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


 


(c)                                  WARN Act


 


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


 


8.5                               Use of UNOVA
Name and Mark


 


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


 


(b)           The Purchasing Entities shall not be
obligated to change Seller Names on goods in the hands of dealers, distributors
and customers.


 


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


 


8.6                               Exclusivity


 


Until the earlier of the Closing or
termination of this Agreement, the Selling Entities shall not, and shall not
permit or authorize any of their officers, directors, agents or representatives
to, directly or indirectly, solicit or encourage any “Acquisition
Proposals“ (as defined below) or participate in any discussions
or negotiations relating to an Acquisition Proposal relating, directly or
indirectly, to the Landis Group.  Until
the earlier of the Closing or termination of this Agreement, UNOVA shall
promptly notify Buyer US in writing of any such Acquisition Proposal or
any communication or indication from any person that it or any other person is
considering making such an Acquisition Proposal, whether oral or written.  The term “Acquisition
Proposal“ shall mean any proposal for any business combination
involving the Landis Group or the acquisition, directly or indirectly, of all
or a portion of the Purchased Assets.


 


8.7                               Taxes


 


(a)                                  Taxes
Relating to the Business and UNOVA UK


 


Subject to the provisions of Section 8.7(d),
the Selling Entities shall pay all Taxes with respect to the ownership, use or
operation of the Purchased Assets on or prior to the Transfer Date and Buyer
US, Buyer UK or their Affiliates shall pay all such Taxes with respect to the
Business and the ownership, use or operation of the Purchased Assets after the
Transfer Date.  Any and all real property
Taxes, personal property Taxes, assessments, utilities, lease rentals, fuel and
other charges applicable to the Purchased Assets that are payable in the year
that includes the Transfer Date shall be pro-rated to the Transfer Date based
on the percentage of the year prior to the Transfer Date, and such Taxes and
other pro-rated
amounts shall be allocated between the Parties by adjustment to the Purchase
Price at the Closing.


 


(b)                                  Transfer
Taxes


 


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


 


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(c)                                  Employment
Taxes


 


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


 


(d)                                  Stock
Options


 


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


 


(e)                                  Tax
Treatment


 


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


 


(f)                                    Interpretation


 


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


 


8.8                               Settlement
of Intercompany Accounts


 


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


 


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8.9                               Intellectual
Property Registrations


 


On or prior to the Transfer Date, the Selling
Entities shall execute the assignment documents prepared by the Purchasing
Entities in the form set out as Exhibit E
to transfer and assign all Intellectual Property applications and registrations
for the Intellectual Property which form part of the Purchased Assets and shall
provide such assignment documents to the Purchasing Entities for filing with
the relevant Governmental Body.  The Parties
hereto agree to cooperate fully for an orderly transfer of such applications
and registrations.


 


8.10                        Authorization;
Mail


 


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


 


8.11                        Post-Closing
Cooperation


 


To the extent not already provided for under
this Agreement, each of the Parties shall cooperate fully, as and to the extent
reasonably requested by the other Parties, in providing information that may be
required by such Parties in connection with their respective audit, securities
compliance and reporting and similar post-Closing activities related to the
transactions contemplated by this Agreement.


 


8.12                        Purchased
Assets Not Transferred


 


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


 


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


 


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


 


8.13                        Confidentiality


 


The Selling Entities and their Affiliates
will hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Purchasing Entities that have been furnished to the
Selling Entities or their Affiliates in connection with the transactions
contemplated by this Agreement, and, after the Transfer Date, all confidential
documents and information concerning the Business, except to the extent that
such information can be shown to have been (i) previously known on a
nonconfidential basis by the Selling Entities, (ii) in the public domain
through no fault of the Selling Entities or (iii) later lawfully acquired
by the Selling Entities from sources other than the Purchasing Entities;
provided that the Selling Entities may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by the Selling Entities of the confidential
nature of such information and are directed by the Selling Entities to treat
such information confidentially in accordance with this Agreement.  The obligation of the Selling Entities and
their Affiliates to hold any such information in confidence shall be satisfied
if they exercise the same care with respect to such information as they would
take to preserve the confidentiality of their own similar information.  If this Agreement is terminated, to the
extent permitted by applicable Law, the Selling Entities and their Affiliates
will, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to the Purchasing Entities, upon request, all documents
and other materials, and all copies thereof, obtained by the Selling Entities
or their Affiliates or on their behalf concerning the Purchasing Entities in
connection with this Agreement that are subject to such confidence.


 


8.14                        Performance
Bonds


 


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


 


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8.15                        Claim
Cooperation


 


If the representations and warranties made by
Enviros Consulting Limited to UNOVA in the report entitled “Phase 1 Environment
Review:  Landis Lund Skpton Road, Cross
Hills” dated June 2005 (ref: CAN UN0370007A) (the “Phase 1
Report“) have been breached and result in a Loss to the
Purchasing Entities, to the extent that UNOVA has a claim for breach under the
Phase 1 Report, UNOVA shall cooperate with the Purchasing Entities as may
be reasonably requested by the Purchasing Entities to pursue such claim at the
sole expense of the Purchasing Entities, including but not limited to assigning
UNOVA’s claim for such breach to the Purchasing Entities and paying over any
damages received by UNOVA as a result of such claim.


 


(Article 9 follows)


 


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ARTICLE 9.  

Noncompetition Agreement


 


9.1                               Noncompetition
Agreement


 


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


 


9.2                               Limitations
on Noncompetition Agreement


 


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


 


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


 


9.3                               Definition
of Competitive Business


 


As used in this Agreement, the term the “Competitive Business“ means the
design, manufacture, sale and service of grinding and abrasives systems for
camshaft, crankshaft, centerless and disc grinder machines and other special
high precision machine tools, including high speed grinding spindles, highly
engineered diamond and cBN® cutting tools, superabrasive wheels and dressing
products.


 


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9.4                               Nonsolicitation


 


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


 


9.5                               Injunctive
and Equitable Relief


 


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


 


(Article 10 follows)


 


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ARTICLE 10. 

Termination


 


10.1                        Termination


 


This Agreement may be terminated immediately
upon the receipt of notice of termination as provided for in Section 10.2,
and the transactions provided for in this Agreement may be abandoned, without
liability on the part of the Party effecting such termination except as
otherwise provided in Section 10.3:


 


(a)           By
mutual written consent of all of the Parties;


 


(b)           By
any Party, if (i) any court of competent jurisdiction or any Governmental
Body shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and such order, decree, ruling or other action
is or shall have become final and nonappealable, or (ii) the Closing shall
not have been consummated on or before December 9, 2005 (the “Deadline Date“); provided, that
(x) no party may terminate this Agreement pursuant to clause (b)(ii) if
such Party’s failure to fulfill any of its obligations under this Agreement
shall have been the reason that the Closing shall not have occurred on or
before the Deadline Date, and (y) if the Closing shall not have occurred
by the Deadline Date because either the time period under the HSR Act or any
similar Law shall not have expired or any adverse action shall have been
threatened or instituted in connection with the HSR Act or any similar Law, and
all other conditions precedent in Articles 6 and 7 have been
satisfied or are capable of being satisfied or, to the extent legally
permissible, have been waived, the Deadline Date shall be December 23,
2005 (the “Extended Deadline Date“);


 


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


 


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


 


(e)           By
any Purchasing Entity, if any of the Selling Entities files on or before the
Transfer Date a petition in bankruptcy, reorganization, liquidation or
receivership or a petition in bankruptcy, reorganization or receivership is
filed on or before the Transfer Date against any of the Selling Entities;


 


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(f)            By
UNOVA, if a Purchasing Entity files on or before the Transfer Date a petition
in bankruptcy, reorganization, liquidation or receivership or a petition in
bankruptcy, reorganization or receivership is filed on or before the Transfer
Date against a Purchasing Entity; or


 


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


 


10.2                        Notice of
Termination


 


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


 


10.3                        Effect of Termination


 


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


 


(Article 11 follows)


 


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ARTICLE 11. 

Indemnification


 


11.1                        Indemnification
by the Selling Entities


 


In order to induce the Purchasing Entities to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of the Selling Entities (collectively, the “Indemnifying
Selling Entities“) jointly and severally covenants and agrees to
and shall indemnify each of the Purchasing Entities and their respective
officers, directors and affiliates (collectively, the “Buying
Indemnified Parties“) and shall hold the Buying Indemnified
Parties harmless against and with respect to any and all losses, damages, costs
or expenses (including reasonable expenses of investigation and reasonable attorneys’
fees and costs) (“Losses“ or individually a “Loss“) suffered or incurred by the
Buying Indemnified Parties and resulting from or arising out of the matters
described below in this Section 11.1. 
The Buyer Indemnified Parties’ right to indemnification, payment of
damages or other remedies based on the Selling Entities’ covenants and
representations or warranties will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time by the Purchasing Entities, whether prior to or after the
execution and delivery of this Agreement or the Transfer Date.


 


(a)                                  Misrepresentation
or Breach of Warranty


 


Any misrepresentation or breach of any of the
representations and warranties of the Selling Entities set forth in this
Agreement (determined without regard to any materiality qualification contained
in any representation or warranty giving rise to any claim for indemnity
hereunder) or in any certificate delivered pursuant to hereto;


 


(b)                                  Breach of
Covenant or Agreement


 


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


 


(c)                                  Excluded
Liabilities


 


Any failure of the Selling Entities to
discharge the Excluded Liabilities when due;


 


(d)                                  Pension
Liabilities


 


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


 


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


 


(e)                                  Bulk Sales


 


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


 


(f)                                    UK Employees


 


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


 


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


 


(iii)          Any
Employment Liabilities Buyer UK incurs if any UK Employee or his or her
employee representative brings a claim arising from a failure by UNOVA UK to
carry out its duty to inform and consult under Regulation 10 of the
Transfer Regulations provided the Buyer UK complies with its obligations
arising under Regulation 10(3) of the Transfer Regulations.


 


11.2                        Indemnification
by Purchasing Entities


 


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


 


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Selling Entities and their respective
officers, directors and affiliates and additionally, in respect of Section 11.2(g),
the current and former trustees of the UNOVA Pension Fund and of the Landis
Pension Plan (collectively, the “Selling Indemnified
Parties“) and shall jointly and severally hold the Selling
Indemnified Parties harmless against and with respect to any and all Losses
suffered or incurred by the Selling Indemnified Parties and resulting from or
arising out of:


 


(a)                                  Misrepresentation
or Breach of Warranty


 


Any misrepresentation or breach of any of the
representations and warranties of the Purchasing Entities set forth in this
Agreement (determined without regard to any materiality qualification contained
in any representation or warranty giving rise to any claim for indemnity
hereunder) or in any certificate delivered pursuant hereto;


 


(b)                                  Breach of
Covenant or Agreement


 


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


 


(c)                                  Assumed
Liabilities


 


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


 


(d)                                  Operations
of the Business


 


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


 


(e)                                  Performance
Bonds; Letters of Credit


 


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


 


(f)                                    UK Employees


 


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


 


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


 


(ii)           Buyer
UK agrees to provide UNOVA UK with details of any measures it intends to take
in relation to the UK Employees (as required by Regulation 10(2)(d) of
the Transfer Regulations) and to indemnify UNOVA UK against any Employment
Liabilities it may incur as a result of any failure by Buyer UK to provide this
information to UNOVA UK.


 


(g)                                 Pension
Liabilities


 


(i)            Any
claims or liabilities in relation to the Landis Pension Plan (including,
without limitation, any claim or liability relating to a contribution notice
issued under Section 38 or Section 47 of the Pensions Act 2004 or a
financial support direction issued under Section 43 of that Act, whether
the notice or direction is issued before, on or after the Transfer Date, and
any claim or liability relating to the levy to fund the Pension Protection Fund
payable pursuant to the Pensions Act 2004); provided, however, that the
foregoing right to indemnity shall not exist with respect to claims and
liabilities for which the Purchasing Entities are entitled to indemnification
under Section 11.1;


 


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


 


11.3                        Claims for
Reimbursement


 


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


 


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


 


The Indemnifying Party shall have
30 days from the date of receipt of such notice (the “Investigation
Period“) to investigate and dispute the nature, validity or
amount of any such claim of Loss or Third Party Claim.  During the Investigation Period, the
Indemnified Party shall cooperate with the Indemnifying Party for the purpose
of such investigation and, without limitation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Indemnified Party’s claim and the
Indemnifying Party shall have reasonable access, during normal business hours,
to the books, records and other documents of the Indemnified Party relating to
such claim and shall have the right to take copies at its expense of such
relevant books, records and documents for the purpose of such investigation.  In the event that the Indemnifying Party
shall dispute the nature, validity or amount of a claim hereunder, the
Indemnifying Party shall give the Indemnified Party written notice of such
dispute within the Investigation Period, and the relevant Parties shall meet
promptly thereafter and in good faith attempt to resolve such dispute.  To the extent that such Parties cannot
resolve any dispute by agreement within 21 days following such notice of
dispute, such dispute shall be resolved pursuant to Section 12.11.


 


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


 


11.4                        Defense and
Settlement of Third Party Claims


 


(a)           In the event of a Third Party claim,
except for a claim involving a Governmental Body or a claim for injunctive
relief or non-monetary relief or a claim which may, in the reasonable opinion
of the Purchasing Entities, prejudice the legitimate business interests of the
Purchasing Entities or the Business, the Indemnifying Party shall have the
option to take control of the defense and investigation of such Third Party
Claim, and to employ and engage attorneys of its own choice to handle and
defend the same, at the Indemnifying Party’s sole cost, risk and expense,
provided that, upon assumption and control by the Indemnifying Party of such
defense, the Indemnifying Party shall be deemed to have acknowledged its
responsibility for all Losses relating to such claims, subject to the
limitations set forth in Section 11.6 (the “Direct
Litigation Option“).  The
Indemnifying Party may elect to exercise the Direct Litigation Option by giving
prior written notice to the


 


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


 


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


 


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


 


11.5                        [Reserved]


 


11.6                        Limitations
on Indemnification


 


(a)                                  Duration


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(b)                                  Amount


 


(i)                                    Basket


 


Notwithstanding anything to the contrary
contained in Section 11.1 and subject to the exceptions set forth in Section 11.6(b)(iii) and
Section 11.6(c)(i), neither the Indemnifying Selling Entities nor the
Indemnifying Buying Entities, as the case may be, shall be obligated to pay any
claims for indemnification pursuant to Section 11.1 until the aggregate of
all Losses exceeds $500,000 (the, “Threshold“),
with any individual claim below $50,000 forgiven (the, “Claim
Threshold“) whereupon the Buying Indemnified Parties and Selling
Indemnified Parties, as the case may be, shall be entitled to indemnification
for all Losses attributable to claims exceeding the Claim Threshold without
regard to the Threshold.  For purposes of
the Claim Threshold, a number of claims arising out of the same fact, event or
circumstance shall be aggregated and shall form a single claim.


 


(ii)                                Cap


 


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


 


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(iii)                            No
Limitation on Certain Claims


 


Notwithstanding anything herein to the
contrary, Buyer Indemnified Parties (i) shall be entitled to dollar-for-dollar
indemnification from the first dollar, (ii) shall not be subject to the
Threshold or Claim Threshold and (iii) shall not be subject to the Cap
with respect to:


 


(A)          Losses
involving a breach by the Selling Entities of any of the representations and
warranties contained in Section 3.1(c) (Corporate Power and Authority
to Enter Into Agreements), Section 3.13(l) (ERISA Plans), Section 3.18
(Taxes) and Section 3.23 (Transactions with Affiliates; Intercompany
Arrangements); provided, however,
that the maximum aggregate amount that the Indemnifying Selling Entities shall
be obligated to pay pursuant to this Section 11.6(b)(iii)(A) shall be
the Purchase Price;


 


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


 


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


 


(D)          Losses
arising from any breach or nonfulfillment by a Selling Entity of any of its
respective covenants set forth in this Agreement; and


 


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


 


(c)                                  Other
Limitations


 


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


 


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


 


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


 


(C)           Losses
arising from any breach or nonfulfillment by a Purchasing Entity of any of its
respective covenants set forth in this Agreement;


 


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


 


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


 


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(ii)           For
accounts receivable collectibility, inventory obsolescence, loss contracts for
which a reserve is reflected on the Closing Balance Sheet or warranty claims
following the final determination of the Closing Balance Sheet, (other than in
the case of fraud or willful misconduct and other than in respect of any claims
relating to a breach of the representations and warranties in Section 3.12;


 


(iii)          Any
matter subject to indemnification pursuant to Section 11.1, to the extent
such liability would not have arisen but for a change in legislation or
accounting policies made after the Transfer Date or a change in the
interpretation of a Law as determined by any court of competent jurisdiction or
pursuant to an administrative rule-making decision of a governmental authority
after the Transfer Date; or


 


(iv)          Any
matter subject to indemnification pursuant to Section 11.1, to the extent
such liability would not have arisen but for some act, omission, transaction or
arrangement carried out at the written request or with the written approval of
a Purchasing Entity or its authorized representatives prior to Closing or which
was expressly authorized by this Agreement other than in respect of any claims
for a breach of any representation and warranty.


 


(d)                                  Duty to
Mitigate Damages


 


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


 


(e)                                  No Double
Recovery


 


Any Party’s payment of an indemnification
claim shall to the extent of such payment satisfy and preclude any further
indemnification claim against such Party which is capable of being made in
respect of the same subject matter.


 


(f)                                    No Waiver


 


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


 


(g)                                 Set-Off
Against Note


 


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


 


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


 


11.7                        Exclusive
Remedy


 


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


 


(Article 12 follows)


 


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ARTICLE 12. 

Miscellaneous Provisions


 


12.1                        Public
Statements and Press Releases


 


No Party shall make, issue or release any
public announcement, press release, public statement or public acknowledgment
of the terms, conditions and status of, the transactions provided for in this
Agreement, without the prior written consent of the other Parties as to the
content and time of release and the media in which such statement or
announcement is to be made; provided, however, that in the case of announcements, statements or
acknowledgments or revelation which any Party, in the written opinion of such
Party’s counsel, is required by Law or regulations, including those of public
stock exchanges on which the securities of such Party or its affiliates are
traded, to make, issue or release (a “Legally Required Statement“),
the making, issuing or releasing of any such Legally Required Statement shall
not constitute a breach of this Agreement if such Party shall have given, to
the extent reasonably possible, three days prior notice to the other Party, and
shall have attempted, to the extent reasonably possible, to clear such
disclosure with the other Party.  Each
Party agrees that it will not unreasonably withhold or delay any such consent
or clearance.


 


12.2                        Costs and
Expenses


 


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


 


12.3                        Amendment
and Modification


 


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


 


12.4                        No
Assignment


 


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


 


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12.5                        Notices


 


All notices, requests, demands or other
communications hereunder must be in writing and executed by an authorized
representative of the Party responsible therefor, and must be given either by
hand or telecopy, telefax or other telecommunication device capable of creating
a written record which acknowledges receipt, as follows:


 


(a)                                  The Selling
Entities


 


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


 


(b)                                  A Purchasing
Entity


 


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


 


12.6                        Counterparts
and Facsimile


 


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


 


12.7                        Captions


 


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


 


12.8                        Schedules
and Exhibits


 


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


 


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12.9                        Waiver;
Remedies


 


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


 


12.10                 Governing
Law and Jurisdiction


 


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


 


12.11                 Resolution
of Disputes


 


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


 


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


 


The successful or prevailing party or parties
shall be entitled to recover reasonable attorney’s fees and other costs
incurred in arbitration proceedings and actions brought for the enforcement of
this Agreement.


 


12.12                 Severability


 


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


 


12.13                 No Third
Party Beneficiaries


 


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


 


99





















 


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


 


12.14                 Construction


 


This Agreement and the Related Agreements
shall be interpreted without regard to any presumption or rule requiring
construction against the Party causing such agreements to be drafted.


 


12.15                 Entire
Agreement


 


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


 


12.16                 Currency


 


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


 


(Signature pages follow)


 


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


 


 


	
  CINETIC
  LANDIS GRINDING CORP.

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Frédéric Sanchez

  	
   

  
	
  NAME:

  	
   Frédéric Sanchez

  	
   

  
	
  TITLE:

  	
   Chairman

  	
   

  
	
   

  
	
   

  
	
  CINETIC
  LANDIS GRINDING LIMITED

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Frédéric Sanchez

  	
   

  
	
  NAME:

  	
   Frédéric Sanchez

  	
   

  
	
  TITLE:

  	
   Chairman

  	
   

  
	
   

  
	
   

  
	
  COMPAGNIE DE FIVES-LILLE

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Frédéric Sanchez

  	
   

  
	
  NAME:

  	
   Frédéric Sanchez

  	
   

  
	
  TITLE:

  	
   President of the Executive Board

  	
   

  
	
   

  
	
   

  
	
  UNOVA,
  INC.

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Kenneth L. Cohen

  	
   

  
	
  NAME:

  	
   Kenneth L. Cohen

  	
   

  
	
  TITLE:

  	
   Vice President, Treasurer & Tax

  	
   

  
	
   

  
	
   

  
	
  UNOVA
  Industrial Automation Systems, Inc.

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Kenneth L. Cohen

  	
   

  
	
  NAME:

  	
   Kenneth L. Cohen

  	
   

  
	
  TITLE:

  	
   Vice President & Treasurer

  	
   

  
	
   

  
	
   

  
	
  UNOVA IP
  Corp.

  
	
   

  
	
   

  
	
  BY:

  	
   /s/ Kenneth L. Cohen

  	
   

  
	
  NAME:

  	
   Kenneth L. Cohen

  	
   

  
	
  TITLE:

  	
   Vice President & Treasurer

  	
   

  
					



 


101