Exhibit
10.8

    


    ASSET
PURCHASE AGREEMENT

    


    by
and among

    


    Fuel
Tech, Inc.,

    


    Advanced
Combustion Technology, Inc.

    


    and

    


    Peter
D. Marx, Robert W. Pickering and Charles E. Trippel

     

    
      

    

     

     December
5, 2008


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      TABLE
OF CONTENTS

       

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      	 
      	
                                Page

                              
	 
      	 
      	 
      	 
      
	
                                ARTICLE
      1

                              	
                                DEFINITIONS
      AND CONSTRUCTION

                              	
                                1

                              
	 
      	 
      	 
      	 
      
	
                                Section
      1.1

                              	
                                Definitions

                              	
                                1

                              
	
                                Section
      1.2

                              	
                                Additional
      Defined Terms

                              	
                                6

                              
	
                                Section
      1.3

                              	
                                Construction

                              	
                                8

                              
	 
      	 
      	 
      	 
      
	
                                ARTICLE
      2

                              	
                                THE
      TRANSACTION

                              	
                                8

                              
	 
      	 
      	 
      	 
      
	
                                Section
      2.1

                              	
                                Purchase
      and Sale of Purchased Assets

                              	
                                8

                              
	
                                Section
      2.2

                              	
                                Excluded
      Assets

                              	
                                9

                              
	
                                Section
      2.3

                              	
                                Assumed
      Liabilities

                              	
                                10

                              
	
                                Section
      2.4

                              	
                                Excluded
      Liabilities

                              	
                                11

                              
	
                                Section
      2.5

                              	
                                Consideration

                              	
                                12

                              
	
                                Section
      2.6

                              	
                                Pre-Closing
      Adjustment

                              	
                                12

                              
	
                                Section
      2.7

                              	
                                Post-Closing
      Adjustment

                              	
                                13

                              
	
                                Section
      2.8

                              	
                                Earn-out
      Provisions

                              	
                                14

                              
	
                                Section
      2.9

                              	
                                Accounting
      Disputes

                              	
                                17

                              
	
                                Section
      2.10

                              	
                                Allocation
      of Purchase Price and Assumed Liabilities

                              	
                                17

                              
	
                                Section
      2.11

                              	
                                Closing

                              	
                                17

                              
	
                                Section
      2.12

                              	
                                Closing
      Deliveries

                              	
                                18

                              
	
                                Section
      2.13

                              	
                                Consents

                              	
                                19

                              
	 
      	 
      	 
      	 
      
	
                                ARTICLE
      3

                              	
                                REPRESENTATIONS
      AND WARRANTIES OF THE SELLER AND THE SHAREHOLDERS

                              	
                                20

                              
	 
      	 
      	 
      	 
      
	
                                Section
      3.1

                              	
                                Organization
      and Good Standing

                              	
                                20

                              
	
                                Section
      3.2

                              	
                                Authority
      and Enforceability

                              	
                                21

                              
	
                                Section
      3.3

                              	
                                No
      Conflict

                              	
                                21

                              
	
                                Section
      3.4

                              	
                                Capitalization
      and Ownership

                              	
                                22

                              
	
                                Section
      3.5

                              	
                                Financial
      Statements

                              	
                                22

                              
	
                                Section
      3.6

                              	
                                Books
      and Records

                              	
                                23

                              
	
                                Section
      3.7

                              	
                                Accounts
      Receivable

                              	
                                23

                              
	
                                Section
      3.8

                              	
                                Inventories

                              	
                                23

                              
	
                                Section
      3.9

                              	
                                No
      Undisclosed Liabilities

                              	
                                23

                              
	
                                Section
      3.10

                              	
                                Absence
      of Certain Changes and Events

                              	
                                24

                              
	
                                Section
      3.11

                              	
                                Assets

                              	
                                25

                              
	
                                Section
      3.12

                              	
                                Leased
      Real Property

                              	
                                26

                              
	
                                Section
      3.13

                              	
                                Intellectual
      Property

                              	
                                26

                              
	
                                Section
      3.14

                              	
                                Contracts

                              	
                                28

                              
	
                                Section
      3.15

                              	
                                Tax
      Matters

                              	
                                30

                              
	
                                Section
      3.16

                              	
                                Employee
      Benefit Matters

                              	
                                32

                              
	
                                Section
      3.17

                              	
                                Employment
      and Labor Matters

                              	
                                33

                              
	
                                Section
      3.18

                              	
                                Environmental,
      Health and Safety Matters

                              	
                                34

                              
	
                                Section
      3.19

                              	
                                Compliance
      with Laws, Judgments and Governmental Authorizations

                              	
                                34

                              


                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
        -i-

        
          

        

      

      
         


      

    

    


    
      
        
          
            	
                    Section
      3.20

                  	
                    Legal
      Proceedings

                  	
                    35

                  
	
                    Section
      3.21

                  	
                    Customers
      and Suppliers

                  	
                    36

                  
	
                    Section
      3.22

                  	
                    Product
      Warranty

                  	
                    36

                  
	
                    Section
      3.23

                  	
                    Product
      Liability

                  	
                    37

                  
	
                    Section
      3.24

                  	
                    Insurance

                  	
                    37

                  
	
                    Section
      3.25

                  	
                    Foreign
      Corrupt Political Practices Act; Export Control

                  	
                    37

                  
	
                    Section
      3.26

                  	
                    Related
      Party Transactions

                  	
                    38

                  
	
                    Section
      3.27

                  	
                    No
      Guarantees

                  	
                    38

                  
	
                    Section
      3.28

                  	
                    Brokers
      or Finders

                  	
                    38

                  
	
                    Section
      3.29

                  	
                    Solvency

                  	
                    38

                  
	
                    Section
      3.30

                  	
                    Disclosure

                  	
                    38

                  
	 
      	 
      	 
      
	
                    ARTICLE
      4

                  	
                    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

                  	
                    39

                  
	 
      	 
      	 
      
	
                    Section
      4.1

                  	
                    Organization
      and Good Standing

                  	
                    39

                  
	
                    Section
      4.2

                  	
                    Authority
      and Enforceability

                  	
                    39

                  
	
                    Section
      4.3

                  	
                    No
      Conflict

                  	
                    39

                  
	
                    Section
      4.4

                  	
                    Legal
      Proceedings

                  	
                    40

                  
	
                    Section
      4.5

                  	
                    Brokers
      or Finders

                  	
                    40

                  
	 
      	 
      	 
      
	
                    ARTICLE
      5

                  	
                    PRE-CLOSING
      COVENANTS

                  	
                    40

                  
	 
      	 
      	 
      
	
                    Section
      5.1

                  	
                    Access
      and Investigation

                  	
                    40

                  
	
                    Section
      5.2

                  	
                    Operation
      of the Business of the Seller

                  	
                    41

                  
	
                    Section
      5.3

                  	
                    Consents
      and Filings; Reasonable Efforts

                  	
                    42

                  
	
                    Section
      5.4

                  	
                    Seller
      Notification

                  	
                    42

                  
	
                    Section
      5.5

                  	
                    No
      Negotiation

                  	
                    43

                  
	
                    Section
      5.6

                  	
                    Purchaser
      Notification

                  	
                    43

                  
	 
      	 
      	 
      	 
      
	
                    ARTICLE
      6

                  	
                    CONDITIONS
      PRECEDENT TO OBLIGATION TO CLOSE

                  	
                    43

                  
	 
      	 
      	 
      
	
                    Section
      6.1

                  	
                    Conditions
      to the Obligation of the Purchaser

                  	
                    43

                  
	
                    Section
      6.2

                  	
                    Conditions
      to the Obligation of the Seller

                  	
                    45

                  
	 
      	 
      	 
      
	
                    ARTICLE
      7

                  	
                    TERMINATION

                  	
                    45

                  
	 
      	 
      	 
      
	
                    Section
      7.1

                  	
                    Termination
      Events

                  	
                    45

                  
	
                    Section
      7.2

                  	
                    Effect
      of Termination

                  	
                    46

                  
	 
      	 
      	 
      
	
                    ARTICLE
      8

                  	
                    ADDITIONAL
      COVENANTS

                  	
                    47

                  
	 
      	 
      	 
      
	
                    Section
      8.1

                  	
                    Tax
      Matters

                  	
                    47

                  
	
                    Section
      8.2

                  	
                    Gross
      Up

                  	
                    47

                  
	
                    Section
      8.3

                  	
                    Tail
      Insurance

                  	
                    47

                  
	
                    Section
      8.4

                  	
                    Confidentiality

                  	
                    48

                  
	
                    Section
      8.5

                  	
                    Public
      Announcements

                  	
                    48

                  
	
                    Section
      8.6

                  	
                    Assistance
      in Proceedings

                  	
                    49

                  
	
                    Section
      8.7

                  	
                    Privileges

                  	
                    49

                  
	
                    Section
      8.8

                  	
                    Confidential
      Information, Noncompetition, Nonsolicitation and
      Nondisparagement

                  	
                    49

                  


          

        

      

    


    
      
         


      

      
        -ii-

        
          

        

      

      
         


      

    

    


    
      
        
          
            	
                    Section
      8.9

                  	
                    Use
      of Name

                  	
                    52

                  
	
                    Section
      8.10

                  	
                    Refunds
      and Remittances

                  	
                    52

                  
	
                    Section
      8.11

                  	
                    Access
      to Records

                  	
                    52

                  
	
                    Section
      8.12

                  	
                    Further
      Assurances

                  	
                    53

                  
	
                    Section
      8.13

                  	
                    Employees
      and Employee Benefits

                  	
                    53

                  
	 
      	 
      	 
      	 
      
	
                    ARTICLE
      9

                  	
                    INDEMNIFICATION

                  	
                    55

                  
	 
      	 
      	 
      
	
                    Section
      9.1

                  	
                    Indemnification
      by the Seller and each Shareholder

                  	
                    55

                  
	
                    Section
      9.2

                  	
                    Indemnification
      by the Purchaser

                  	
                    56

                  
	
                    Section
      9.3

                  	
                    Claim
      Procedure

                  	
                    56

                  
	
                    Section
      9.4

                  	
                    Third
      Party Claims

                  	
                    58

                  
	
                    Section
      9.5

                  	
                    Survival
      of Representations and Warranties

                  	
                    60

                  
	
                    Section
      9.6

                  	
                    Limitations
      on Liability

                  	
                    60

                  
	
                    Section
      9.7

                  	
                    Exercise
      of Remedies by Purchaser Indemnified Parties other than the
      Purchaser

                  	
                    62

                  
	 
      	 
      	 
      
	
                    ARTICLE
      10

                  	
                    GENERAL
      PROVISIONS

                  	
                    62

                  
	 
      	 
      	 
      
	
                    Section
      10.1

                  	
                    Selling
      Parties’ Representative

                  	
                    62

                  
	
                    Section
      10.2

                  	
                    Notices

                  	
                    63

                  
	
                    Section
      10.3

                  	
                    Amendment

                  	
                    64

                  
	
                    Section
      10.4

                  	
                    Waiver
      and Remedies

                  	
                    64

                  
	
                    Section
      10.5

                  	
                    Entire
      Agreement

                  	
                    65

                  
	
                    Section
      10.6

                  	
                    Assignment
      and Successors and No Third Party Rights

                  	
                    65

                  
	
                    Section
      10.7

                  	
                    Severability

                  	
                    65

                  
	
                    Section
      10.8

                  	
                    Exhibits
      and Schedules

                  	
                    65

                  
	
                    Section
      10.9

                  	
                    Interpretation

                  	
                    66

                  
	
                    Section
      10.10

                  	
                    Governing
      Law

                  	
                    66

                  
	
                    Section
      10.11

                  	
                    Specific
      Performance

                  	
                    66

                  
	
                    Section
      10.12

                  	
                    Jurisdiction
      and Service of Process

                  	
                    66

                  
	
                    Section
      10.13

                  	
                    Waiver
      of Jury Trial

                  	
                    66

                  
	
                    Section
      10.14

                  	
                    Expenses

                  	
                    67

                  
	
                    Section
      10.15

                  	
                    Counterparts

                  	
                    67

                  


          

        

      

    

    


    
      
        	
                Schedule
      2.1(e)

              	
                -

              	
                Contracts

              
	
                Schedule
      2.2(e)

              	
                -

              	
                Excluded
      Contracts

              
	
                Schedule
      2.2(g)

              	
                -

              	
                Excluded
      Assets

              
	
                Schedule
      2.3(a)

              	
                -

              	
                Current
      Liabilities

              
	
                Schedule
      2.6(e)

              	
                -

              	
                Seller
      Employees

              
	
                Schedule
      2.8(a)

              	
                -

              	
                Earn-out
      Calculation

              
	
                Exhibit
      A

              	
                -

              	
                Bill
      of Sale

              
	
                Exhibit
      B

              	
                -

              	
                Assignment
      and Assumption Agreement

              
	
                Exhibit
      C

              	
                -

              	
                IP
      Assignments

              


      

    


    
      
         


      

      
        -iii-

        
          

        

      

      
         


      

    

    


    
      
        	
                Exhibit D

              	
                -

              	
                Seller
      Bring-Down Certificate

              
	
                Exhibit
      E

              	
                -

              	
                Employment
      Agreement

              
	
                Exhibit F

              	
                -

              	
                Secretary’s
      Certificate

              
	
                Exhibit
      G

              	
                -

              	
                Purchaser
      Bring-Down Certificate

              


      

    

     

    
      
         


      

      
        -iv-

        
          

        

      

      
         


      

    


    ASSET
PURCHASE AGREEMENT

    


    This Asset Purchase Agreement (the
“Agreement”) is made as of December 5, 2008, by and among Fuel Tech, Inc., a
Delaware corporation (the “Purchaser”); Advanced Combustion Technology, Inc., a
New Hampshire corporation (the “Seller”); Peter Marx, an individual (“Marx”);
Robert Pickering, an individual (“Pickering”); and Charles Trippel, an
individual (“Trippel”).  Each of Marx, Pickering and Trippel are
sometimes individually referred  to as a “Shareholder,” or,
collectively, as the “Shareholders.”

    


    The Seller desires to sell, assign,
transfer, convey and deliver to the Purchaser, and the Purchaser desires to
purchase and acquire from the Seller substantially all of the assets of the
Seller, and the Purchaser has agreed to assume the Assumed Liabilities (as
defined below) in accordance with the provisions of this
Agreement.  The Shareholders own all of the issued and outstanding
capital stock of the Seller.

    


    NOW, THEREFORE, intending to be legally
bound and in consideration of the mutual provisions set forth in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

    


    ARTICLE
1

    DEFINITIONS
AND CONSTRUCTION

    


    Section
1.1      Definitions.  For the purposes of
this Agreement and the Ancillary Agreements:

    


    “Affiliate” means, with respect to a
specified Person, a Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with, the
specified Person.  In addition to the foregoing, if the specified
Person is an individual, the term “Affiliate” also includes (a) the individual’s
spouse, (b) the members of the immediate family (including parents, siblings and
children) of the individual or of the individual’s spouse and (c) any
corporation, limited liability company, general or limited partnership, trust,
association or other business or investment entity that directly or indirectly,
through one or more intermediaries controls, is controlled by or is under common
control with any of the foregoing individuals.  For purposes of this
definition, the term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.

    


    “Ancillary Agreements” means,
collectively, the Bill of Sale, the Assignment and Assumption Agreement, the
Lease Assignment, the IP Assignments, the Employment Agreements and the Escrow
Agreement.

    


    “Closing Net Working Capital” means (a)
all current assets of the Seller (including current prepaid assets, work in
process and current accounts net of allowances for doubtful accounts, but
excluding cash and cash equivalents) arising in the ordinary course of business
minus (b) all current Liabilities of the Seller, in each case calculated as of
the close of business on the Closing Date in accordance with GAAP, and
reflecting the exclusion of the Excluded Assets and the Excluded Liabilities.



    
      
         


      

      
        1

        
          

        

      

      
         


      

    

    


    “Code” means the Internal Revenue Code
of 1986.

     

    “Confidential Information” means any
information, in whatever form or medium, concerning the business or affairs of
the Seller, including, without limitation, any information (whether or not
specifically labeled or identified as “confidential”), in any form or medium,
that relates to the business, services, techniques, know-how, processes,
methods, formulations, investments, finances, operations, plans, research or
development of the Seller, and that is not generally known outside of the
Seller.  Confidential Information includes, but is not limited to: the
identity and information concerning the needs and preferences of current,
former, and prospective customers; performance, compensation, and other
personnel data concerning employees of the Seller; business plans and
strategies; plans for recruiting and hiring new personnel; trade secrets; and
pricing strategies and policies.  Confidential Information does not
include (i) the general skills, knowledge, and experience gained during any
Shareholder’s employment, (ii) the general skills and knowledge common to others
in the industry, (iii) information that is or becomes publicly available without
any breach of this Agreement (iv) information that is received in good faith
from a third party and is not subject to an obligation of confidentiality owed
by the third party or (v) is required by law, regulation, or judicial or
administrative process to be disclosed.

    


    “Consent” means any approval, consent,
ratification, waiver or other authorization.

    


    “Contract” means any contract,
agreement, lease, license, commitment, understanding, franchise, warranty,
guaranty, mortgage, note, bond, option, warrant, right or other instrument or
consensual obligation, whether written or oral.

    


    “Earn-out Lines of Business” means
those products and services the sale of which result in Qualifying Gross Margin
Dollars.

    


    “Encumbrance” means any charge, claim,
mortgage, servitude, easement, right of way, community or other marital property
interest, covenant, equitable interest, license, lease or other possessory
interest, lien, option, pledge, security interest, preference, priority, right
of first refusal, restriction (other than any restriction on transferability
imposed by federal or state securities Laws) or other encumbrance of any kind or
nature whatsoever (whether absolute or contingent).

    


    “Environmental Law” means any Law
relating to the environment, natural resources, pollutants, contaminants,
wastes, chemicals or public health and safety, including any Law pertaining to
(a) treatment, storage, disposal, generation and transportation of toxic or
hazardous substances or solid or hazardous waste, (b) air, water and noise
pollution, (c) groundwater or soil contamination, (d) the release or threatened
release into the environment of toxic or hazardous substances or solid or
hazardous waste, including emissions, discharges, injections, spills, escapes or
dumping of pollutants, contaminants or chemicals, (e) manufacture, processing,
use, distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste, (f) underground and
other storage tanks or vessels, abandoned, disposed or discarded barrels,
containers and other closed receptacles, (g) public health and safety or (h) the
protection of wildlife, marine sanctuaries and wetlands, including all
endangered and threatened species.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

    


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

    


    “ERISA Affiliate” means any other
Person that, together with the Seller, would be treated as a single employer
under Section 414 of the Code.

    


    “GAAP” means generally accepted
accounting principles in the United States as set forth in the opinions and
pronouncements of the Financial Accounting Standards Board, applied on a basis
consistent throughout the periods covered thereby.

    


    “Governmental Authority” means any (a)
nation, region, state, county, city, town, village, district or other
jurisdiction, (b) federal, state, local, municipal, foreign or other government,
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department or other entity and any court or other
tribunal), (d) multinational organization or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.

    


    “Governmental Authorization” means any
Consent, license, franchise, permit or registration issued, granted, given or
otherwise made available by or under the authority of any Governmental Authority
or pursuant to any Law.

    


    “Hazardous Material” means any waste or
other substance that is listed, defined, designated or classified as, or
otherwise determined to be, hazardous, radioactive or toxic or a pollutant or a
contaminant under any Environmental Law, including any admixture or solution
thereof, and including petroleum and all derivatives thereof or synthetic
substitutes therefor, asbestos or asbestos-containing materials in any form or
condition and polychlorinated biphenyls.

    


    “Indebtedness” means, with respect to
any Person, (a) all indebtedness of such Person, whether or not contingent, for
borrowed money, (b) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments or debt securities and warrants or other
rights to acquire any such instruments or securities and (c) all Indebtedness of
others referred to in clauses (a) and (b) hereof guaranteed, directly or
indirectly, in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered), (iv) to grant an Encumbrance on property owned or acquired by such
Person, whether or not the obligation secured thereby has been assumed, or (v)
otherwise to assure a creditor against loss.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

    


    “Intellectual Property” means all of
the following anywhere in the world and all legal rights, title or interest in,
under or in respect of the following arising under Law, whether or not filed,
perfected, registered or recorded and whether now or later existing, filed,
issued or acquired, including all renewals: (a) all patents and applications for
patents and all related reissues, reexaminations, divisions, renewals,
extensions, provisionals, continuations and continuations in part; (b) all
copyrights, copyright registrations and copyright applications, copyrightable
works and all other corresponding rights; (c) all mask works, mask work
registrations and mask work applications and all other corresponding rights; (d)
all trade dress and trade names, logos, Internet addresses and domain names,
trademarks and service marks and related registrations and applications,
including any intent to use applications, supplemental registrations and any
renewals or extensions, all other indicia of commercial source or origin and all
goodwill associated with any of the foregoing; (e) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), know how,
technology, technical data, trade secrets, confidential business information,
manufacturing and production processes and techniques, research and development
information, financial, marketing and business data, pricing and cost
information, business and marketing plans, advertising and promotional
materials, customer, distributor, reseller and supplier lists and information,
correspondence, records, and other documentation, and other proprietary
information of every kind; (f) all computer software (including source and
object code), firmware, development tools, algorithms, files, records, technical
drawings and related documentation, data and manuals; (g) all databases and data
collections; (h) all other proprietary rights; and (i) all copies and tangible
embodiments of any of the foregoing (in whatever form or medium).

    


    “Internally Used Shrinkwrap Software”
means software licensed to the Seller under generally available retail
shrinkwrap or clickwrap licenses and used in the Seller’s business, but not
incorporated into software, products or services licensed or sold, or
anticipated to be licensed or sold, by the Seller to customers or otherwise
resold or distributed by the Seller.

    


    “IRS” means the Internal Revenue
Service and, to the extent relevant, the Department of Treasury.

    


    “Judgment” means any order, injunction,
judgment, decree, ruling, assessment or arbitration award of any Governmental
Authority or arbitrator.

    


    “Knowledge”:  (a) a
Shareholder will be considered to have “Knowledge” of a fact or matter if the
individual is actually aware of the fact or matter after due and diligent
inquiry of such fact or matter with Seller’s employees; (b) the Seller will be
considered to have “Knowledge” of a fact or matter if the Seller or any
Shareholder has Knowledge of the fact or matter; and (c) Purchaser will be
considered to have “Knowledge” of a fact or matter if John P. Graham or John F.
Norris Jr. has actual knowledge of such fact or matter.

    


     “Law” means any federal, state,
local, municipal, foreign, international, multinational, or other constitution,
law, statute, treaty, rule, regulation, ordinance, or code.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

    


    “Liability” means liabilities, debts or
other obligations of any nature, whether known or unknown, absolute, accrued,
contingent, liquidated, unliquidated, due or to become due, and whether or not
required to be reflected on a balance sheet prepared in accordance with
GAAP.

    


    “Loss” means any loss, Proceeding,
Judgment, damage, fine, penalty, expense (including reasonable attorneys’ or
other professional fees and expenses and court costs), injury, diminution of
value, Liability, Tax, Encumbrance or other cost, expense or adverse effect
whatsoever, whether or not involving the claim of another Person; provided,
however, that for all purposes other than a determination of the Purchaser’s
Losses due to a breach of Section 8.8 hereof by the Seller or any Shareholder,
Losses shall not include any punitive, special, consequential, indirect or
incidental damages of any kind or nature, including lost profits.

    


    “Material Adverse Effect” means any
event, change, circumstance, effect or other matter that has, or could
reasonably be expected to have, either individually or in the aggregate with all
other events, changes, circumstances, effects or other matters, with or without
notice, lapse of time or both, a material adverse effect on (a) the business,
assets, Liabilities, properties, condition (financial or otherwise), operating
results, operations or prospects of the Seller or Purchaser, as the case may be
taken as a whole or (b) the ability of the Seller, Purchaser or any Shareholder
to perform its obligations under this Agreement or to consummate timely the
transactions contemplated by this Agreement; provided, however, that in no event
shall any of the following be deemed, either alone or in combination, to
constitute, nor shall any of the following be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any effect that results
from changes in general economic conditions or changes in securities markets in
general, or (ii) any effect that results from general changes in the industries
in which the Seller operates. 

    


     “Occupational Safety and Health
Law” means any Law designed to provide safe and healthful working conditions and
to reduce occupational safety and health hazards, and any program, whether
governmental or private (such as those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.

    


     “Person” means an individual or
an entity, including a corporation, limited liability company, general or
limited partnership, trust, association or other business or investment entity,
or any Governmental Authority.

    


    “Proceeding” means any action,
arbitration, audit, examination, investigation, hearing, litigation or suit
(whether civil, criminal, administrative, judicial or investigative, whether
formal or informal, and whether public or private) commenced, brought, conducted
or heard by or before, or otherwise involving, any Governmental Authority or
arbitrator.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    “Seller Plan” means any “employee
benefit plan” (as defined in Section 3(3) of ERISA) for the benefit of any
current or former director, officer, employee or consultant of the Seller or any
ERISA Affiliate, or with respect to which the Seller or any ERISA Affiliate has
or may have any Liability, including any “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA) and any other written or oral plan, Contract
or arrangement involving direct or indirect compensation or benefits, including
insurance coverage, severance or other termination pay or benefits, change in
control, retention, performance, holiday pay, vacation pay, fringe benefits,
disability benefits, pension, retirement plans, profit sharing, deferred
compensation, bonuses, stock options, stock purchase, restricted stock or stock
units, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation, maintained or contributed to by
the Seller or any ERISA Affiliate (or that has been maintained or contributed to
in the last six years by the Seller or any ERISA Affiliate) for the benefit of
any current or former director, officer, employee or consultant of the Seller or
any ERISA Affiliate, or with respect to which the Seller or any ERISA Affiliate
has or may have any Liability.

    


    “Tax” means (a) any federal, state,
local, foreign or other tax, charge, fee, duty (including customs duty), levy or
assessment, including any income, gross receipts, net proceeds, alternative or
add-on minimum, corporation, ad valorem, turnover, real property, personal
property (tangible or intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits, profits,
occupational, premium, interest equalization, windfall profits, severance,
license, registration, payroll, environmental (including taxes under Section 59A
of the Code), capital stock, capital duty, disability, estimated, gains, wealth,
welfare, employee’s income withholding, other withholding, unemployment or
social security or other tax of whatever kind (including any fee, assessment or
other charges in the nature of or in lieu of any tax) that is imposed by any
Governmental Authority, (b) any interest, fines, penalties or additions
resulting from, attributable to, or incurred in connection with any items
described in this paragraph or any related contest or dispute and (c) any items
described in this paragraph that are attributable to another Person but that the
Seller is liable to pay by Law, by Contract or otherwise, whether or not
disputed.

    


     “Tax Return” means any report,
return, declaration, claim for refund, or information return or statement
related to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

    


    Section
1.2      Additional Defined Terms.  For
purposes of this Agreement and the Ancillary Agreements, the following terms
have the meanings specified in the indicated Section of this
Agreement:

    


    
      
        	
                Defined
      Term

              	
                Section

              
	
                Adjustment
      Calculation

              	
                2.7(a)

              
	
                Adjustment
      Notice

              	
                2.7(a)

              
	
                Agreement

              	
                Preamble

              
	
                Annual
      Earn-out Payment

              	
                2.8(d)

              
	
                Annual
      Earn-out Period

              	
                2.8(a)

              
	
                Arbitrating
      Accountant

              	
                2.9(a)

              
	
                Assignment
      and Assumption Agreement

              	
                2.12(a)

              
	
                Associate

              	
                3.26

              
	
                Assumed
      Liabilities

              	
                2.3

              
	
                Balance
      Sheet

              	
                3.5(a)

              
	
                Bill
      of Sale

              	
                2.12(a)

              
	
                Claim
      Notice

              	
                9.3(a)

              


      

    

     

    
      
         


      

      
        6

        
          

        

      

      
         


      

    

    


    
      
        	
                Closing

              	
                2.11

              
	
                Closing
      Balance Sheet

              	
                2.7(a)

              
	
                Closing
      Date

              	
                2.11

              
	
                COBRA

              	
                8.13(d)

              
	
                Confidentiality
      Agreement

              	
                8.4(a)

              
	
                Controlling
      Party

              	
                9.4(c)

              
	
                Dispute
      Notice

              	
                2.7(b)

              
	
                Earn-out
      Calculation

              	
                2.8(a)

              
	
                Economically
      Neutral

              	
                2.13(b)

              
	
                Employment
      Agreements

              	
                2.12(a)

              
	
                Estimated
      Closing Balance Sheet

              	
                2.6(a)

              
	
                Estimated
      Closing Net Working Capital

              	
                2.6(a)

              
	
                Excluded
      Assets

              	
                2.2

              
	
                Excluded
      Liabilities

              	
                2.4

              
	
                Final
      Closing Net Working Capital

              	
                2.7(a)

              
	
                Financial
      Statements

              	
                3.5(a)

              
	
                Hired
      Employee

              	
                8.13(a)

              
	
                Indemnified
      Party

              	
                9.3(a)

              
	
                Indemnifying
      Party

              	
                9.3(a)

              
	
                Initial
      Purchase Price

              	
                2.5

              
	
                Interim
      Balance Sheet

              	
                3.5(a)

              
	
                IP
      Assignments

              	
                2.12(a)

              
	
                Leased
      Real Property

              	
                3.12(b)

              
	
                Noncontrolling
      Party

              	
                9.4(c)

              
	
                Objection
      Notice

              	
                9.3(b)

              
	
                Owned
      Intellectual Property

              	
                3.13(a)

              
	
                Purchase
      Price

              	
                2.5

              
	
                Purchased
      Assets

              	
                2.1

              
	
                Purchased
      Intellectual Property

              	
                2.1

              
	
                Purchaser

              	
                Preamble

              
	
                Purchaser
      Indemnified Parties

              	
                9.1

              
	
                Qualifying
      Gross Margin Dollars

              	
                Schedule
      2.8(g)

              
	
                Qualified
      Plan

              	
                3.16(e)

              
	
                Restrictive
      Period

              	
                8.8(d)

              
	
                Restricted
      Persons

              	
                8.4(b)

              
	
                Seller

              	
                Preamble

              
	
                Seller
      Disclosure Schedule

              	
                Article
      3

              
	
                Selling
      Parties’ Representative

              	
                10.1

              
	
                Shareholders

              	
                Preamble

              
	
                Special
      Claim

              	
                9.4(b)

              
	
                Third
      Party Claim

              	
                9.4(a)

              
	
                Third
      Party Intellectual Property

              	
                3.13(c)

              
	
                Transfer
      Taxes

              	
                8.1(a)

              


      

    

     

    
      
         


      

      
        7

        
          

        

      

      
         


      

    

    


    Section
1.3      Construction.  Any reference in this
Agreement to an “Article,” “Section,” “Exhibit” or “Schedule” refers to the
corresponding Article, Section, Exhibit or Schedule of or to this Agreement,
unless the context indicates otherwise.  The table of contents and the
headings of Articles and Sections are provided for convenience only and are not
intended to affect the construction or interpretation of this
Agreement.  All words used in this Agreement are to be construed to be
of such gender or number as the circumstances require.  The words
“including,” “includes,” or “include” are to be read as listing non-exclusive
examples of the matters referred to, whether or not words such as “without
limitation” or “but not limited to” are used in each instance.  Where
this Agreement states that a party “shall,” “will” or “must” perform in some
manner or otherwise act or omit to act, it means that the party is legally
obligated to do so in accordance with this Agreement.  Any reference
to a statute is deemed also to refer to any amendments or successor legislation
as in effect at the relevant time.  Any reference to a Contract or
other document as of a given date means the Contract or other document as
amended, supplemented and modified from time to time through such
date.

    


    ARTICLE
2

    THE
TRANSACTION

    


    Section
2.1      Purchase and Sale of Purchased
Assets.  In accordance with the provisions of this Agreement and
except as set forth in Section 2.2, at the Closing (as defined below), the
Seller will sell, convey, assign, transfer and deliver to the Purchaser, and the
Purchaser will purchase and acquire from the Seller, free and clear of all
Encumbrances, all of the Seller’s right, title and interest in and to all of the
Seller’s properties and assets of every kind and description existing on the
Closing Date, whether real, personal or mixed, tangible or intangible, and
wherever located (collectively, the “Purchased Assets”), including the
following:

    


    (a)      all
accounts receivable, including all trade accounts receivable and other rights to
payment from customers, and the full benefit of all security for such accounts
or rights to payment;

    


    (b)      all
inventories, wherever located, including all finished goods, work in process,
raw materials, spare parts and all other materials and supplies to be used in
the production of finished goods;

    


    (c)      all
rights, including Intellectual Property rights, in and to products sold or
leased (including products hereafter sold, returned or repossessed and all
rights of rescission, replevin, reclamation and rights to stoppage in
transit);

    


    (d)      all
rights, including Intellectual Property rights, in and to products under
research and development prior to the Closing;

    


    (e)      all
rights under all Contracts to which the Seller is a party, by which the Seller
or any of the Purchased Assets is bound or affected or pursuant to which the
Seller is an obligor or a beneficiary (including all outstanding offers,
proposals or solicitations made by or to the Seller to enter into any such
Contract), including those set forth on Schedule 2.1(e);

    


    (f)      all
machinery, equipment, furniture, furnishings, computer hardware, materials,
vehicles, tools, dies, molds and other items of tangible personal property of
every kind, and the full benefit of all express or implied warranties by the
manufacturers or sellers or lessors of any item or component part thereof to the
extent such warranties are transferable to the Purchaser; 


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

    


    (g)     
all rights in respect of the Leased Real Property;

    


    (h)      all
Intellectual Property owned by the Seller at the Closing Date (collectively, the
“Purchased Intellectual Property”), and all other intangible rights, including
all goodwill associated with the Seller’s business or the Purchased
Assets;

    


    (i)      all
Governmental Authorizations and all pending applications therefor or renewals
thereof, in each case to the extent transferable to the Purchaser;

    


    (j)     
all books, records, files, studies, manuals, reports and other materials (in any
form or medium), including all advertising materials, catalogues, price lists,
mailing lists, distribution lists, client and customer lists, referral sources,
supplier and vendor lists, purchase orders, sales and purchase invoices,
correspondence, production data, sales and promotional materials and records,
purchasing materials and records, research and development files, records, data,
Intellectual Property disclosures, manufacturing and quality control records and
procedures, service and warranty records, equipment logs, operating guides and
manuals, drawings, product specifications, engineering specifications,
blueprints, financial and accounting records, litigation files, personnel and
employee benefits records to the extent transferable under applicable Law, and
copies of all other personnel records described in Section 2.2(b) to the extent
the Seller is legally permitted to provide copies of such records to the
Purchaser;

     

    (k)     
all rights and interests under all certificates for insurance, binders for
insurance policies and insurance under which the Seller, its business or any of
the Purchased Assets is or has been insured to the extent such rights or
interests arise from or relate to any of the Assumed Liabilities or any casualty
or Liability affecting the Seller’s business or any of the Purchased
Assets;

     

    (l)     
all claims, rights, credits, causes of actions, defenses and rights of set-off
against third parties relating to or arising from the Purchased Assets or
Assumed Liabilities, in each case, whether accruing before or after the
Closing;
and

     

    (m)    all
rights relating to deposits and prepaid expenses, claims for refunds and rights
of offset that are not excluded under Section 2.2(f).

     

    Notwithstanding
the foregoing, the transfer of the Purchased Assets pursuant to this Agreement
does not include the assumption of any Liability related to the Purchased Assets
unless the Purchaser expressly assumes that Liability pursuant to Section
2.3.

     

    Section
2.2      Excluded
Assets.   Notwithstanding anything to the contrary in Section 2.1
or elsewhere in this Agreement, the following assets of the Seller
(collectively, the “Excluded Assets”) are excluded from the Purchased Assets,
and are to be retained by the Seller as of the Closing:

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    (a)     
all cash or cash equivalents of the Seller, including any notes or loans
receivable,  cash and cash equivalents held in any  bank or
brokerage accounts of the Seller;

     

    (b)     
the corporate charter of Seller, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Seller as a
corporation;

     

    (c)     
the shares of the capital stock of the Seller held in treasury;

     

    (d)     
all certificates for insurance, binders for insurance policies and insurance,
and claims and rights thereunder and proceeds thereof, other than as described
in Sections 2.1(k) and 2.1(l);

     

    (e)     
all of the Contracts set forth on Schedule 2.2(e);

     

    (f)     
all claims, deposits, refunds, causes of action, choses in action, rights of
recovery, rights of set off, and rights of recoupment respecting any asset,
obligation or liability of the Company which directly relate  to the
Excluded  Assets or  obligations or liabilites not assumed
by the Purchaser;

     

    (g)     
all claims arising out of or relating to former directors, officers, employees,
agents, advisors, consultants or other representatives of Seller;

     

    (h)     
all claims for refund of Taxes and other governmental charges of whatever nature
arising out of the Seller’s operation of its business or ownership of the
Purchased Assets prior to the Closing;

     

    (i)     
the assets, properties and rights specifically set forth on Schedule
2.2(g);

     

    (j)     
all rights of the Seller under this Agreement or any of the Ancillary Agreements
to which the Seller is a party; and

     

    (k)     
all assets of any Seller Plan.

     

    Section
2.3      Assumed Liabilities.  In accordance
with the provisions of this Agreement, at the Closing, the Purchaser will assume
and pay or perform when due only the following Liabilities of the Seller
(collectively, the “Assumed Liabilities”):

    


    (a)      all
current Liabilities of Seller, exclusive of Indebtedness, reflected in Schedule
2.3(a) attached or incurred by the Seller in the ordinary course of business and
in accordance with the provisions of this Agreement, including Section 5.2,
between the date of the Interim Balance Sheet and the Closing (other than
Liabilities payable to any Shareholder or any Affiliate of the Seller);
and

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    (b)      all
Liabilities of the Seller arising after the Closing under the Contracts included
in the Purchased Assets, including warranty commitments (except, in each case,
for any Liability arising out of or relating to (A) any breach of, or failure to
comply with, prior to the Closing, any covenant or obligation in any such
Contract other than a breach of warranty claim or (B) any event that occurred
prior to the Closing which, with or without notice, lapse of time or both, would
constitute such a breach or failure) other than a breach of warranty claim;
and

    


    (c)      all
bonding commitments of the Seller set forth on Schedule 2.3(c).

    


    Section
2.4      Excluded
Liabilities.  Notwithstanding any other provision of this Agreement or
any other writing to the contrary, and regardless of any information disclosed
to the Purchaser, the Purchaser does not assume and has no responsibility for
any Liabilities of the Seller other than the Assumed Liabilities specifically
listed in Section 2.3 (such unassumed Liabilities, the “Excluded
Liabilities”).  Without limiting the
preceding sentence, the following is a non-exclusive list of Excluded
Liabilities that the Purchaser does not assume and that the Seller will remain
bound by and liable for, and will pay, discharge or perform when
due:

    


    (a)      all
Liabilities arising out of or relating to any Excluded Asset;

    


    (b)      all
Liabilities under any Contract not assumed by the Purchaser under Section
2.3;

    


    (c)       all
Liabilities other than warranty commitments under any Contract assumed by the
Purchaser pursuant to Section 2.3(b) that arise after the Closing but that arise
out of or relate to (i) any breach of, or failure to comply with, prior to the
Closing, any covenant or obligation in any such Contract or (ii) any event that
occurred prior to the Closing which, with or without notice, lapse of time or
both, would constitute such a breach or failure;

    


    (d)      all
Liabilities arising out of or relating to Indebtedness incurred by the Seller,
including, without limitation, all of the Seller’s Indebtedness to any
Shareholder;

    


    (e)      all
Liabilities for Taxes arising as a result of the operation of the Seller’s
business or ownership of the Purchased Assets prior to the Closing, including
any Taxes that arise as a result of the sale of the Purchased Assets pursuant to
this Agreement and any deferred Taxes of any nature;

    


    (f)       all
Liabilities arising from or under any Environmental Law or Occupational Safety
and Health Law arising out of or relating to the operation of the Seller’s
business or the Seller’s leasing, ownership or operation of real property prior
to the Closing;

    


    (g)      all
Liabilities arising under claims by employees or former employees of the Seller
relating in any way to compensation, bonuses, incentive compensation, benefits
(including workers’ compensation and unemployment benefits), termination or
continuation of their employment, or lack or delay of any notice relating to
their employment with the Seller prior to the Closing;

    


    (h)      all
Liabilities arising under or in connection with any Seller Plan (including any
Seller Plan that may also be a Contract), or any termination, continuation,
amendment or other acts or omissions in connection with any Seller
Plan;


    
      
         


      

      
        11

        
          

        

      

      
         


      

    

    


    (i)       all
professional, financial advisory, broker, finder or other fees incurred by the
Seller; and

    


    (j)       all
Liabilities of the Seller arising out of or incurred in connection with this
Agreement, the transactions contemplated by this Agreement, or any other
document executed in connection with the transactions contemplated by this
Agreement, including the Seller’s disclosures to or negotiations with creditors
or Shareholders, or other legal obligations of the Seller.

    


    In the event of any conflict between
the second sentence of this Section 2.4 and Section 2.3 above, Section 2.3 will
be deemed to control.

    


    Section
2.5      Consideration.  The consideration
for the Purchased Assets consists of (a) the payment at the Closing of
$22,000,000, as adjusted immediately prior to Closing pursuant to Section 2.6
(the “Initial Purchase Price”), subject to further adjustment post-Closing in
accordance with Section 2.7, (b) the earn-out payments contemplated by Section
2.8 below (together with the Initial Purchase Price, the “Purchase Price”), and
(c) the assumption of the Assumed Liabilities.

    


    Section
2.6      Pre-Closing Adjustment.

    


    (a)      No
later than three business days prior to the Closing Date, the Seller will
prepare and deliver to the Purchaser an unaudited balance sheet of the Seller
prepared on an estimated basis as of the close of business on the Closing Date
(the “Estimated Closing Balance Sheet”).  The Estimated Closing
Balance Sheet will be prepared in accordance with the Purchaser’s current
accounting policies, including percentage of completion accounting, and
GAAP.   The Seller will deliver with the Estimated Closing
Balance Sheet (i) a statement setting forth the Seller’s calculation of the
Closing Net Working Capital based on the Estimated Closing Balance and
reflecting the exclusion of the Excluded Assets and Excluded Liabilities
(including, without limitation, Indebtedness) (the “Estimated Closing Net
Working Capital”) and (ii) a certification executed by the Shareholders that the
Estimated Closing Balance Sheet fairly presents the financial condition and
results of operations of the Seller as of the Closing
Date.  

    


    (b)      If
the Estimated Closing Net Working Capital is less than $2,000,000, the Initial
Purchase Price will be reduced by an amount equal to the sum obtained by
subtracting the Estimated Closing Net Working Capital from $2,000,000. If
the Estimated Closing Net Working Capital is greater than $4,000,000, the
Initial Purchase Price will be increased by an amount equal to the sum obtained
by subtracting $4,000,000 from the Estimated Closing Net Working
Capital.


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

    


    Section
2.7      Post-Closing Adjustment.

    


    (a)     
Within 180 days after the Closing Date, the Purchaser will prepare and deliver
to the Seller written notice (the “Adjustment Notice”) containing (i) an
unaudited balance sheet of the Seller as of the close of business on the Closing
Date (the “Closing Balance Sheet”), (ii) the Purchaser’s calculation of the
Closing Net Working Capital based on the Closing Balance Sheet and reflecting
the exclusion of the Excluded Assets and Excluded Liabilities (the “Final
Closing Net Working Capital”) and (iii) the Purchaser’s calculation of the
amount of any payments required pursuant to Section 2.7(e) (the “Adjustment
Calculation”).  The Closing Balance Sheet will be prepared in
accordance with GAAP, and the Purchaser shall have caused the Closing Balance
Sheet to have been reviewed or audited by its independent public accounting
firm.   Upon receipt of the Adjustment Calculation, the Seller
and/or its attorneys or accountants will have the right upon not less than two
(2) business days prior written notice and during normal business hours to
inspect and copy any or all of Purchaser’s records related to the Closing
Balance Sheet, the Final Closing Net Working Capital and the Adjustment
Calculation, including all accountant work papers.  Any inspection of
Purchaser’s records requested by the Seller Representative shall be conducted at
the expense of the Sellers, and Purchaser shall provide in advance (at no cost
to Sellers except for reasonable copying and mailing costs) copies of all
accounting reports of Purchaser bearing on the subject and related accountants
work papers. 

    


    (b)     
Within 30 days after delivery of the Adjustment Notice, the Seller will deliver
to the Purchaser a written response in which the Seller will
either:

    


    (i)      agree
in writing with the Adjustment Calculation, in which case such calculation will
be final and binding on the parties for purposes of Section 2.7(e);
or

    


    (ii)     
dispute the Adjustment Calculation by delivering to the Purchaser a written
notice (a “Dispute Notice”) setting forth in reasonable detail the basis for
each such disputed item and certifying that all such disputed items are being
disputed in good faith.

    


    (c)      If
the Seller fails to take either of the foregoing actions within 30 days after
delivery of the Adjustment Notice, then the Seller will be deemed to have
irrevocably accepted the Adjustment Calculation, in which case, the Adjustment
Calculation will be final and binding on the parties for purposes of Section
2.7(e).

    


    (d)      If
the Seller timely delivers a Dispute Notice to the Purchaser, then the Purchaser
and the Seller will attempt in good faith, for a period of 30 days, to agree on
the Adjustment Calculation for purposes of Section 2.7(e).  Any
resolution by the Purchaser and the Seller during such 30-day period as to any
disputed items will be final and binding on the parties for purposes of Section
2.7(e).  If the Purchaser and the Seller do not resolve all disputed
items by the end of 30 days after the date of delivery of the Dispute Notice,
then the Purchaser and the Seller will resolve the remaining items in dispute in
accordance with Section 2.9 below.

    


    (e)      If
the Final Closing Net Working Capital as finally determined pursuant to this
Section 2.7 is less than $3,000,000, then the Seller will pay to the Purchaser
the amount of such difference in cash less the amount, if any, of any reduction
in the Initial Purchase Price pursuant to Section 2.6(b) above.  If
the Final Closing Net Working Capital as finally determined pursuant to this
Section 2.7 is greater than $3,000,000, then the Purchaser will pay to the
Seller the amount of such difference in cash less the amount, if any, of any
increase in the Initial Purchase Price pursuant to Section 2.6(b)
above.


    
      
         


      

      
        13

        
          

        

      

      
         


      

    

    


    (f)      Any
payment to the Purchaser pursuant Section 2.7(e) may be satisfied in the first
instance by amounts deposited in escrow in connection with the determination of
the Estimated Closing Net Working Capital pursuant to Section 2.6(b) and, any
payment amount in excess of such escrow deposit shall be effected by wire
transfer of immediately available funds to an account designated by the
Purchaser.  Any payment to the Seller pursuant to Section 2.7(e) will
be effected by wire transfer of immediately available funds to an account
designated by the Seller.  Such payments will be made within five
business days following the final determination of the Final Closing Net Working
Capital in accordance with this Section 2.7.

    


    (g)      The
purpose of this Section 2.7 is to determine the final Initial Purchase Price to
be paid by the Purchaser under this Agreement.  Accordingly, any
adjustment pursuant hereto will neither be deemed to be an indemnification
pursuant to Article 9, nor preclude the Purchaser from exercising any
indemnification rights pursuant to Article 9; provided, however, that in no
event will the Seller or the Shareholders be obligated to indemnify any
Purchaser Indemnified Party for any Loss as a result of, or based upon or
arising from, any Liability, to the extent, but only to the extent, such
Liability is reflected in the calculation of the Final Closing Net Working
Capital as finally determined pursuant to this Section 2.7.  Any
payment made pursuant to this Section 2.7 will be treated by the parties for all
purposes as an adjustment to the Initial Purchase Price and will not be subject
to offset for any reason.

    


    Section
2.8      Earn-out Provisions. The Purchaser undertakes
to pay to the Seller, as additional consideration for the Purchased Assets, the
amounts contemplated by this Section 2.8 as follows:

    


    (a)     
Within ninety (90) days after the end of each of the three consecutive
twelve-month periods commencing on January 1, 2009 and ending December 31, 2011
(each, an “Annual Earn-out Period”), the Purchaser shall prepare and deliver to
the Selling Parties’ Representative an “earn-out” calculation in accordance with
Schedule 2.8(a) for each such prior Annual Earn-out Period (each, an “Earn-out
Calculation”), together with all relevant work papers and supporting
calculations and any other such information as Seller may reasonably request in
writing to able to assess the accuracy of the calculation.  The
Earn-out Calculation shall be accompanied by a statement certified by an officer
of the Purchaser that said Earn-out Calculation is true, accurate and
complete.  The Purchaser shall be entitled to defer the delivery of
each such Earn-out Calculation for up to thirty (30) days if Purchaser has not
received its audited annual financial statements and accompanying opinion letter
from its accountants for such Annual Earn-out Period. The Earn-out Calculation
shall be prepared in accordance with the Purchaser’s current accounting policies
in accordance with GAAP, including percentage of completion accounting and the
principles and terms described on Schedule 2.8(a) attached
hereto.



    
      
         


      

      
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    (b)     
Within forty-five (45) days after the Earn-out Calculation has been delivered to
the Selling Parties’ Representative pursuant to Section 2.8(a), the Selling
Parties’ Representative shall deliver to the Purchaser either (i) a written
acknowledgment accepting the Earn-out Calculation or (ii) a written report
setting forth in reasonable detail any proposed adjustments to the Earn-out
Calculation (the “Earn-out Adjustment Report”). If the Selling Parties’
Representative fails to respond to the Purchaser within such 45-day period, the
Seller shall be deemed to have accepted and agreed to the Earn-out Calculation
as delivered pursuant to Section 2.8(a). The Selling Parties’ Representative
and/or his attorneys and accountants shall have the right, upon not less than
two (2) business days prior written notice, to inspect and copy the books and
records, including the accountants work papers, of the Purchaser during normal
business hours in order to verify the accuracy of any Earn-out Calculation.


    


    (c)      In
the event that the Selling Parties’ Representative and the Purchaser fail to
agree on any of the Selling Parties’ Representative’s proposed adjustments set
forth in the Earn-out Adjustment Report within thirty (30) days after the
Purchaser receives the Earn-out Adjustment Report, the Seller and the Purchaser
agree that any such dispute shall be resolved the manner contemplated by Section
2.9 below.

    


    (d)      No
later than fifteen (15) days after the date on which each Earn-out Calculation
is finally determined pursuant to this Section 2.8 for each respective Annual
Earn-out Period, the Purchaser shall pay to the Seller the amount, if any,
specified in the Earn-out Calculation (each an “Annual Earn-out Payment”). Any
payment to the Seller pursuant to Section 2.8 will be effected by wire transfer
of immediately available funds to an account designated by the Seller together
with interest thereon for the period commencing ninety (90) days from the end of
the Earn-out Period until the date paid at a rate per annum equal to the “Prime
Rate” as published in the Midwestern Edition of the Wall Street Journal from
time to time.  

    


    (e)      The
Purchaser and the Seller agree that until the expiration of the final Earn-out
Period, the Purchaser shall require any successor (whether direct or indirect
and either by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Purchaser’s business and/or assets to assume
this Agreement and to agree expressly to perform this Agreement in the same
manner and to the same extent as the Purchaser would be required to perform it
in the absence of a succession.

    


    (f)     
Notwithstanding anything to the contrary contained in this Agreement, Annual
Earn-out Payments shall be subject to reduction as follows:

    


    (i)      If
any Shareholder’s employment with the Purchaser is terminated prior to the
expiration of the second Annual Earn-out Period by the Shareholder without “Good
Reason” or by the Purchaser for “Cause,” as defined in both instances by such
Shareholder’s Employment Agreement, (each, a “Leaving Shareholder”), then for
each such Leaving Shareholder, the Annual Earn-out Payment payable by the
Purchaser to the Seller for the Earn-out Period during which such termination
occurs (and all subsequent Earn-out Periods) will be reduced by an amount equal
to twenty-five percent (25%) of the Annual Earn-out Payment that would have
otherwise been payable for such period up to a maximum reduction of seventy-five
percent (75%) (not including any deductions for set-off amounts pursuant to
Section 2.8(g) below)  


    
      
         


      

      
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      (ii)           A
termination of a Shareholder’s employment for any reason whatsoever at any time
on or after January 1, 2011 shall not further reduce the amount of the Annual
Earn-out Payment, if any, to be paid for the third Annual Earn-out
Period.

      


      (g)   Notwithstanding anything to
the contrary contained in this Agreement, the Purchaser may, at its option,
deduct from the amounts of any Annual Earn-out Payment which may become payable
hereunder the amounts of any Losses for which any Purchaser Indemnified Party
has submitted a claim under Article 9 of this Agreement, other than a claim
pursuant to Section 9.1(b) with respect to a breach of Section
8.8.  In the event that it is ultimately determined in accordance with
the terms of this Agreement that such Purchaser Indemnified Person is not
entitled to indemnification for all or a portion of such Losses, the Purchaser
shall promptly pay to the Seller any amounts that had been deducted by the
Purchaser under the immediately preceding sentence in respect of the disallowed
Losses, to the extent not previously paid together
with interest thereon for the period commencing ninety (90) days from the end of
the Earn-out Period until the date paid at a rate per annum equal to the “Prime Rate” as published in
the Midwestern Edition of the Wall Street Journal from time to
time.  

      


      (h)   Purchaser
acknowledges and agrees that, from the Closing Date through the end of the final
Annual Earn-out Period, Purchaser shall use commercially reasonable efforts to
make all of its products, including those products included within the Earn-out
Lines of Business, available to its customers consistent with customer
preferences and without reference to whether the sale of such products would
affect the earn-out contemplated by this Section 2.8; provided, however, it is
further understood and agreed that: (i)  the decision whether to
purchase any particular product will be made by the Purchaser’s customer, and no
breach of this Section 2.8 will be deemed to have occurred based upon any such
customer decisions, and (ii) the Purchaser’s obligations set forth above shall
be subject, in all cases, to Purchaser’s fiduciary duties under Delaware
law.

      


      (i)    Purchaser shall conduct the Earn-out Lines of Business
post Closing in such a manner as to be able to track all financial matters and
related items necessary for calculating the Earn-out due hereunder and, in
connection therewith, shall keep true, complete and accurate books of account
and records, covering all transactions relating to the subject matter of this
Section 2.8 (“Records”).  Upon not less than two (2) business days
prior written notice, Seller and/or its representative may inspect and copy any
of all Records during normal business hours, including, but not limited to,
Seller's review of Purchaser’s Earn-out Calculation; provided, however, that the
Purchaser shall be entitled to require any of the Seller’s representatives to
enter into the Purchaser’s standard form of nondisclosure agreement prior to
providing any such Records. Purchaser shall maintain the Records for three (3)
years after the expiration of Calendar Year 2011.

       

      
        
          
          

        

        
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      Section
2.9            Accounting
Disputes.

      


      (a)    In the event the
parties dispute the determination of the Adjustment Calculation pursuant to
Section 2.7 above or any Earn-out Calculation pursuant to Section 2.8 above, as
the case may be, the parties shall jointly submit their dispute to a national accounting firm mutually selected by
them and with respect to which no party hereto has
had any relationship in the past three years (the “Arbitrating
Accountant”) for final determination, whose determination shall be made within
forty-five (45) days of the date the dispute is submitted to the Arbitrating
Accountant; provided, however, that the determination of the Arbitrating
Accountant shall be limited exclusively to either determination of (i) the
Adjustment Calculation, or (ii) the applicable Earn-out Calculation and related
accounting matters, as applicable, and shall not in any manner address the
interpretation or legal effect of any other provision of this Agreement. The Arbitrating Accountant shall be permitted to
conduct its own independent investigation of the disputed items as well as hear
presentations of the disputed items from Purchaser and Sellers’ Representative.
In the event of any such dispute, that portion of the Adjustment Calculation or
Earn Out Payment, as the case may be, that is not in dispute shall be paid to
the Seller at the time and  manner provided for
herein.  The fees and expenses of the Arbitrating Accountant
will be shared by the Purchaser and the Seller in proportion to the relative
amounts of the disputed amount determined to be for the account of the Purchaser
and the Seller, respectively.  The Arbitrating Accountant’s
determination as to the Adjustment Calculation or any Earn-out Calculation, as
the case may be, shall be final and binding on the Parties and shall be enforceable in a court of
law.

      


      (b)   For purposes of complying
with this Section 2.9, the Purchaser and the Seller will promptly furnish to each other and to the
Arbitrating Accountant such work papers and other documents and information
relating to the disputed items as the Arbitrating Accountant may request and are
available to that party and will be afforded the opportunity to present to the
Arbitrating Accountant any material related to the disputed items and to discuss
the items with the Arbitrating Accountant.  The Purchaser may require
that the Arbitrating Accountant enter into a customary form of confidentiality
agreement with respect to the work papers and other documents and information
relating to the Purchaser’s business provided to the Arbitrating Accountant
pursuant to this Section 2.9.

      


      Section
2.10          Allocation of Purchase
Price and Assumed Liabilities. The Purchase
Price and Assumed Liabilities will be allocated in accordance with a schedule to
be prepared by the Purchaser in accordance with applicable Law.  After
the Closing, the parties will make consistent use of the allocation, fair market
values and useful lives specified in such schedule for all Tax purposes and in
all filings, declarations and reports with the IRS in respect thereof, including
the reports required to be filed under Section 1060 of the
Code.  Within 45 days after the date the Purchase Price is determined,
the Purchaser will prepare and deliver IRS Form 8594 to the Seller to be filed
with the IRS.  Any adjustment to the Purchase Price will be allocated
in accordance with Section 1060 of the Code.  In any Proceeding
related to the determination of any Tax, neither the Purchaser, the Seller nor
any Shareholder will contend or represent that such allocation is not a correct
allocation.

      


      Section
2.11         
Closing.  The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place at the offices of Purchaser in Warrenville, Illinois (or such other location the
parties mutually agree upon in writing), at 10:00 a.m., local time, on
January 5, 2009, or, if all of the conditions set forth in Article 6 have not
been satisfied or waived on such date, on such later date as soon as
practicable, but in no event later than three business days after satisfaction
or waiver of such conditions, or at such other time and place as the Purchaser
and the Seller may agree in writing.  The date on which the Closing
actually occurs is referred to in this Agreement as the “Closing
Date.”

       

      
        
          
          

        

        
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      Section
2.12          Closing
Deliveries.

      


      (a)   At the Closing, the Seller
will deliver or cause to be delivered to the Purchaser:

      


      (i)    a bill of sale in the
form of Exhibit A (the “Bill of Sale”) executed by the Seller;

      


      (ii)          
an assignment and assumption agreement in the form of Exhibit B (the “Assignment
and Assumption Agreement”) executed by the Seller;

      


      (iii)          assignments
of all Purchased Intellectual Property in the forms of Exhibits C-1 and C-2
(collectively, the “IP Assignments”) executed by the Seller;

      


      (iv)         a
certificate in the form of Exhibit D, dated as of the Closing Date, executed by
the Seller and by each Shareholder confirming the satisfaction of the conditions
specified in Sections 6.1(a) – (e) (insofar as Section 6.1(d) relates to
Proceedings involving the Seller or any of its Shareholders);

      


      (v)          employment
agreements in the forms attached as Exhibit E executed by each Shareholder
(each, an “Employment Agreement”);

      


      (vi)         a
certificate in the form of Exhibit F of the secretary or assistant secretary of
the Seller dated as of the Closing Date and attaching (A) the Seller’s charter
and all amendments thereto, certified by the Secretary of State of the
jurisdiction of the Seller’s incorporation not more than five business days
prior to the Closing Date; (B) a certificate of good standing of the Seller
certified by the Secretary of State of the jurisdiction of the Seller’s
incorporation and each other jurisdiction where the Seller is authorized to do
business, each issued not more than five business days prior to the Closing
Date; (C) all resolutions of the Shareholders relating to this Agreement and the
transactions contemplated by this Agreement; and (D) incumbency and signatures
of the officers of the Seller executing this Agreement or any other agreement
contemplated by this Agreement;

      


      (vii)        
following confirmation of the wire transfer to
Seller, a receipt for the Initial Purchase Price in form reasonably
satisfactory to the Purchaser; and

      


      (viii)       
such other documents, instruments and agreements as the Purchaser reasonably
requests for the purpose of consummating the transactions contemplated by this
Agreement.

      


      (b)   At the Closing, the
Purchaser will deliver or cause to be delivered to the Seller:

       

      
        
          
          

        

        
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      (i)    the Initial Purchase
Price (as adjusted pursuant to Section 2.6) by wire transfer of immediately
available funds to the account(s) specified in writing by the Selling Parties’
Representative at least five days prior to Closing;

      


      (ii)   the Assignment and
Assumption Agreement executed by the Purchaser;

      


      (iii)          the
Bill of Sale and the IP Assignments, if any, that call for a signature by the
Purchaser;

      


      (iv)         executed
counterparts to the Employment Agreements;

      


      (v)          a
certificate in the form of Exhibit G, dated as of the Closing Date, executed by
the Purchaser confirming the satisfaction of the conditions specified in
Sections 6.2(a) – (d) (insofar as Section 6.2(d) relates to proceedings
involving the Purchaser); and

      


      (vi)         such
other documents, instruments and agreements as the Seller reasonably requests
for the purpose of consummating the transactions contemplated by this
Agreement.

      


      Section
2.13          Consents.

      


      (a)   Notwithstanding any other
provision of this Agreement, this Agreement does not constitute an agreement to
sell, convey, assign, assume, transfer or deliver any interest in any Purchased
Asset, or any claim, right, benefit or obligation arising thereunder or
resulting therefrom if a sale, conveyance, assignment, assumption, transfer or
delivery, or an attempt to make such a sale, conveyance, assignment, assumption,
transfer or delivery, without the Consent of a third party would (i) constitute
a breach or other contravention of the rights of such third party, (ii) would be
ineffective with respect to any party to a Contract concerning such Purchased
Asset or (iii) would, upon transfer, in any way adversely affect the rights of
the Purchaser under such Purchased Asset.  If the sale, conveyance,
assignment, transfer or delivery by the Seller to the Purchaser of any interest
in, or assumption by the Purchaser of any Liability under, any Purchased Asset
requires the Consent of a third party, then such sale, conveyance, assignment,
transfer, delivery or assumption will be subject to such Consent being
obtained.  Without limiting Section 2.13(b), if any Contract included
in the Purchased Assets may not be assigned to the Purchaser by reason of the
absence of any such Consent, the Purchaser will not be required to assume any
Assumed Liability arising under such Contract.

       

      
        
          
          

        

        
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      (b)   If any Consent in respect
of a Purchased Asset has not been obtained on or before the Closing Date, the
Seller will continue to use its best efforts to obtain such Consent as promptly
as practicable after the Closing until such time as such Consent has been
obtained, and to cooperate in any lawful and reasonable arrangement which will
provide the Purchaser the benefits of any such Purchased Asset, including
subcontracting, licensing or sublicensing to the Purchaser any or all of the
Seller’s rights with respect to such Purchased Asset and including the
enforcement for the benefit of the Purchaser of any and all rights of the Seller
against a third party thereunder; provided, however, that the amount that the
Seller shall compensate the Purchaser pursuant to any such subcontract, license
or sublicense shall be an “Economically Neutral” amount with respect to the
revenue, income, or commission, as the case may be, the Seller receives from the
contractual counterparty. “Economically Neutral” is intended to mean (i) the net amount the Purchaser would have
received from the contractual counterparty to such Contract if that Contract had
been assigned to Purchaser at Closing as contemplated by this Agreement, and (ii) that Seller shall have no out-of-pocket
expense in cooperating in such arrangement.   Once a
Consent for the sale, conveyance, assignment, assumption, transfer and delivery
of a Purchased Asset is obtained, the Seller will promptly assign, transfer,
convey and deliver such Purchased Asset to the Purchaser, and the Purchaser will
assume the obligations under such Purchased Asset assigned to the Purchaser from
and after the date of assignment to the Purchaser pursuant to an assignment and
assumption agreement substantially similar in terms to those of the Assignment
and Assumption Agreement, which assignment and assumption agreement the parties
will prepare, execute and deliver in good faith at the time of such transfer,
all at no additional cost to the Purchaser. If and when such Consents are
obtained or such other required actions have been taken, the transfer of such
Purchased Asset will be effected in accordance with the terms of this
Agreement.  

      


      (c)   Nothing in this Section
2.13 will be deemed a waiver by the Purchaser of its right to have received on
or before the Closing an effective assignment of all of the Purchased Assets or
of the covenant of the Seller to obtain all Consents, nor will this Section 2.13
be deemed to constitute an agreement to exclude from the Purchased Assets any of
the Assets described under Section 2.1.

      


      ARTICLE
3

      REPRESENTATIONS
AND WARRANTIES OF THE SELLER AND THE SHAREHOLDERS

      


      The Seller and each Shareholder jointly
and severally represents and warrants to the Purchaser that as of the date of
this Agreement and as of the Closing Date the statements set forth in this
Article 3 are true and correct, except as set forth on the disclosure schedule
delivered by the Seller to the Purchaser concurrently with the execution and
delivery of this Agreement and dated as of the date of this Agreement (the
“Seller Disclosure Schedule”):

      


      Section 3.1    Organization and Good
Standing.  The Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted.  The Seller is duly qualified or licensed to do business
and, where applicable as a legal concept, is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties it
owns, operates or leases or the nature of its activities makes such
qualification or licensure necessary.  Section 3.1 of the Seller
Disclosure Schedule sets forth an accurate and complete list of the Seller’s
jurisdiction of incorporation and the other jurisdictions in which it is
authorized to do business, and an accurate and complete list of the Seller’s
current directors and officers.  The Seller has delivered to the
Purchaser accurate and complete copies of the articles of incorporation and
bylaws of the Seller, as currently in effect, and the Seller is not in default
under or in violation of any provision thereof.

       

      
        
          
          

        

        
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      Section 3.2    Authority and
Enforceability.

      


      (a)   The Seller has all
requisite corporate power and authority to execute and deliver this Agreement
and each Ancillary Agreement to which the Seller is a party and to perform its
obligations under this Agreement and each such Ancillary
Agreement.  The execution, delivery and performance of this Agreement
and each Ancillary Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the shareholders of
Seller.  The Seller has duly and validly executed and delivered
this Agreement and, on or prior to the Closing, the Seller will have duly and
validly executed and delivered each Ancillary Agreement to which it is a
party.  This Agreement constitutes, and upon execution and delivery
each Ancillary Agreement to which the Seller is a party will constitute, the
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).

      


      (b)   Each Shareholder has all
requisite power, authority and legal
capacity to execute and deliver this Agreement and each Ancillary
Agreement to which such Shareholder is a party and to perform its respective
obligations under this Agreement and each such Ancillary Agreement. Each
Shareholder has duly and validly executed and delivered this Agreement and, on
or prior to the Closing, each Shareholder will have duly and validly executed
and delivered each Ancillary Agreement to which it is a party.  This
Agreement constitutes, and upon execution and delivery of each Ancillary
Agreement to which a Shareholder is a party will constitute, the valid and
binding obligation of the Shareholder that is party thereto, enforceable against
such Shareholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). 

      


      Section 3.3    No Conflict. Except as set forth in Section 3.3 of the Seller
Disclosure Schedule regarding required consents from third parties or
Governmental Authorities or required filings with Governmental Authorities,
neither the execution, delivery and performance of this Agreement or any
Ancillary Agreement by the Seller or any Shareholder, nor the consummation of
the transactions contemplated hereby or thereby, will (a) directly or indirectly
(with or without notice, lapse of time or both) conflict with, result in a
breach or violation of, constitute a default under, give rise to any right of
revocation, withdrawal, suspension, acceleration, cancellation, termination,
modification, imposition of additional obligations or loss of rights under,
result in any payment becoming due under, or result in the imposition of any
Encumbrances on any of the properties or assets of the Seller (including the
Purchased Assets) under, or otherwise give rise to any right on the part of any
Person to exercise any remedy or obtain any relief
against Seller or any Shareholder under (i) the articles of incorporation
or bylaws of the Seller or any resolution adopted by the board of directors or
Shareholders of the Seller, (ii) any Contract to which the Seller or any
Shareholder is a party, by which the Seller, any Shareholder or any of their
respective properties or assets (including the Purchased Assets) is bound or
affected or pursuant to which the Seller or any Shareholder is an obligor or a
beneficiary or (iii) any Law, Judgment or Governmental Authorization applicable
to the Seller or any Shareholder or any of their respective businesses,
properties or assets (including the Purchased Assets) ; or (b) require the
Seller or any Shareholder to obtain any Consent or Governmental Authorization
of, give any notice to, or make any filing or registration with, any
Governmental Authority or other Person, except with respect to clauses (a)(iii)
and (b) in any case that would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

       

      
        
          
          

        

        
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      Section 3.4    Capitalization and
Ownership.

      


      (a)    The authorized equity
securities of the Seller at the time of Closing will consist of 20,000 shares of
common stock, no par value, of which 16,500 shares are issued and
outstanding.  The Shareholders are and on the Closing Date will be the
sole record holders and beneficial owners, free and clear of all Encumbrances,
of all of the issued and outstanding equity securities of the
Seller.  Except as set forth in Section 3.4 of the Seller Disclosure
Schedule, there are no Contracts that bind the Seller or the Shareholders to
vote, offer, purchase, issue, sell or transfer any securities of the Seller
(including voting trusts, proxies, preemptive rights, rights of first refusal,
co-sale rights or “bring-along” rights). No holder of Indebtedness of the Seller
has any right to convert or exchange such Indebtedness for any equity securities
or other securities of the Seller.

      


      (b)    The Seller does not
own, control or have any rights to acquire, directly or indirectly, any capital
stock or other equity interests or debt instruments or securities of any
Person.  The Seller is not subject to any obligation or requirement to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any Person.

      


      Section 3.5    Financial
Statements.

      


      (a)    Attached as Section
3.5 of the Seller Disclosure Schedule are the following financial statements
(collectively, the “Financial Statements”):

      


      (i)    unaudited balance
sheets of the Seller as of December 31, 2006 and December 31, 2007 (the most
recent of which, the “Balance Sheet”) and the related unaudited statements of
income, changes in Shareholders’ equity and cash flows for each of the fiscal
years then ended; and

      


      (ii)          
an unaudited balance sheet of the Seller as of June 30, 2008 (the “Interim
Balance Sheet”) and the related year-to-date unaudited statements of income,
changes in Shareholders’ equity and cash flows for the period then
ended.

      


      (b)          
The Financial Statements (including the notes thereto) are correct and complete
in all material respects, are consistent with the books and records of the
Seller and have been prepared in accordance the past custom and practice of
Seller as described in Section 3.5(b) of the Seller Disclosure Schedule,
consistently applied throughout the periods involved.  The Financial
Statements fairly present the financial condition, results of operations,
changes in Shareholders’ equity and cash flows of the Seller as of the
respective dates and for the periods indicated therein provided, however, that the Interim Balance Sheet is
subject to normal year-end audit adjustments (which will not be materially
adverse, individually or in the aggregate) and lack footnotes required under
GAAP.

       

      
        
          
          

        

        
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      Section 3.6    Books and
Records.  The books of account, minute books, stock record books and
other records of the Seller, all of which have been made available to the
Purchaser, are accurate and complete in all material respects.

      


      Section 3.7    Accounts
Receivable.  All accounts receivable of Seller are reflected properly
on the Balance Sheet, the Interim Balance Sheet or the accounting records of the
Seller as of the
Closing Date and represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. Except as set
forth in Section 3.7 of the Seller Disclosure Schedule such accounts
receivable are current and collectible, net
of the respective reserve set forth in the corresponding line items on the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Seller as of the
Closing Date, as the case may be (which reserves have been calculated consistent
with the past custom and practice of the Seller).  Subject to such
reserves and reasonable efforts to collect
same, each such account receivable either has been or will be collected
in full, without any setoff, within 150 days after the date on which it first
becomes due and payable. Except as set forth in
Section 3.7 of the Seller Disclosure Schedule there is no contest, claim,
defense or right of setoff, other than returns in the ordinary course of
business, relating to the amount or validity of such note or account
receivable.  

      


      Section 3.8    Inventories.  All
inventories of the Seller are of a quality and quantity usable and, with respect
to finished goods, salable in the ordinary course of business.  None
of such inventory is slow-moving, obsolete, damaged, defective or of
below-standard quality, and all of which has been or will be written off or
written down to net realizable value on the Balance Sheet, the Interim Balance
Sheet or the accounting records of the Seller as of the Closing Date
in accordance with the past custom and practice of the Seller.  The
values at which such inventories are carried reflect an inventory valuation
policy in accordance with the past custom and practice of the
Seller.  The quantities of each item of inventory are not excessive,
but are reasonable in the present circumstances of the Seller’s
business.  Since the date of the Balance Sheet, the Seller has
continued to replenish inventories in the ordinary course of business and at a
cost not exceeding market prices prevailing at the time of
purchase.  All inventories are maintained at the facilities of the
Seller and no inventory is held on a consignment basis.  The Seller
does not have any commitments to purchase inventory other than in the ordinary
course of business.

      


      Section 3.9    No Undisclosed
Liabilities.  The Seller has no Liabilities except for (a) Liabilities
accrued or expressly reserved for in line items on the Balance Sheet,(b) Liabilities incurred in the ordinary course
of business after the date of the Balance Sheet, and (c)
Liabilities of the type not required to be reflected or disclosed on a balance
sheet prepared in accordance with GAAP (or the notes
thereto).  The Estimated Closing Balance Sheet, when delivered
under Section 2.6, will have been prepared
in accordance with GAAP, in a manner consistent with the methods and practices
used to prepare the Interim Balance Sheet, and correctly and fairly presents the
Estimated Closing Net Working Capital and the other information set forth
therein, all in compliance with the applicable provisions of Section
2.6.  

       

      
        
          
          

        

        
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      Section
3.10          Absence of Certain
Changes and Events.  Since the date of the Interim Balance Sheet, the
Seller has conducted its business only in the ordinary course of business and
 there has not been any Material
Adverse Effect.  Without limiting the generality of the foregoing,
since the date of the Balance Sheet, there has not been any:

      


      (a)   amendment or authorization
of any amendment to the Seller’s articles of incorporation, other than to
increase the authorized capital of the Seller;

      


      (b)          
other than as set forth in Section 3.10(a) above, change in the Seller’s
authorized or issued capital stock, or issuance, sale, grant, repurchase,
redemption, pledge or other disposition of or Encumbrance on any shares of the
Seller’s capital stock or other voting securities or any securities convertible,
exchangeable or redeemable for, or any options, warrants or other rights to
acquire, any such securities;

      


      (c)   split, combination or
reclassification of any of Seller’s capital stock;

      


      (d)   declaration, setting aside
or payment of any dividend or other distribution (whether in cash, securities or
other property) in respect of the Seller’s capital stock;

      


      (e)   other than loans from the
Shareholders, (i) issuance, incurrence, assumption, guarantee or amendment of
any Indebtedness, or  (ii)  loans, advances (other than
routine advances to the Seller’s employees in the ordinary course of business)
or capital contributions to, or investment in, any other Person, other than in
accordance with the Seller’s cash investment policy as described in Section
3.10(e) of the Seller Disclosure Schedule;

      


      (f)            sale,
lease, license, pledge or other disposition of, or Encumbrance on, any of the
Seller’s properties or assets (other than sales of inventory for fair
consideration or disposition of damaged or
obsolete items and in the ordinary course of business);

      


      (g)   acquisition (i) by merger
or consolidation with, or by purchase of all or a substantial portion of the
assets or any stock of, or by any other manner, any business or Person or (ii)
of any properties or assets that are material to the Seller individually or in
the aggregate, except purchases of inventory for fair consideration and in the
ordinary course of business;

      


      (h)   damage to, or destruction
or loss of, any of the Seller’s properties or assets with an aggregate value to
the Seller in excess of $10,000, whether or not covered by
insurance;

      


      (i)    entry into,
modification, acceleration, cancellation or termination of, or receipt of notice
of cancellation or termination of, any Contract (or series of related Contracts)
which involves a total remaining commitment by or to the Seller of at least
$25,000 outside the ordinary course of business;

       

      
        
          
          

        

        
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      (j)    (i)   except as required by Law,
adoption, entry into, termination or amendment of any Seller Plan, collective
bargaining agreement or employment, severance or similar Contract, (ii) increase
in the compensation or fringe benefits of, or payment of any bonus to, any
director, officer, employee or consultant or other independent contractor of the
Seller, (iii) amendment or acceleration by the Seller of the payment, right to
payment or vesting of any compensation or benefits, (iv) payment by the Seller
of any benefit not provided for as of the date of this Agreement under any
Seller Plan, (v) grant by the Seller of any awards under any bonus, incentive,
performance or other compensation plan or arrangement or benefit plan, including
the grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any Seller Plans or Contracts or awards made thereunder
or (vi) any action by the Seller other than in the ordinary course of business
to fund or in any other way secure the payment of compensation or benefits under
any Seller Plan;

      


      (k)   cancellation, compromise,
release or waiver of any claims or rights (or series of related claims or
rights) with a value to the Seller exceeding $10,000 or otherwise outside the
ordinary course of business;

      


      (l)    settlement or
compromise in connection with any Proceeding involving the Seller;

      


      (m)          capital
expenditure or other expenditure by the Seller with respect to property, plant
or equipment in excess of $10,000 in the aggregate; 

      


      (n)   change in the Seller’s
accounting principles, methods or practices;

      


      (o)   acceleration or delay in
the payment of accounts payable or other Liabilities or in the collection of
notes or accounts receivable;

      


      (p)   making or rescission by the
Seller of any Tax election, settlement or compromise of any Tax Liability or
amendment of any Tax Return; or

      


      (q)   agreement by the Seller,
whether in writing or otherwise, to do any of the foregoing.

      


      Section
3.11         
Assets.   The Seller has good and 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 any Encumbrances.  The Purchased
Assets constitute all of the properties and assets used in or necessary to
conduct the Seller’s business as conducted and as currently planned to be
conducted by the Seller.  None of the Excluded Assets is material to
the Seller’s business.

       

      
        
          
          

        

        
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      Section
3.12          Leased Real
Property.

      


      (a)   The Seller does not own any
real property, nor has the Seller ever owned any real property.

      


      (b)   Section 3.12(b) of the
Seller Disclosure Schedule sets forth an accurate and complete description (by
street address of the subject leased real property, the date and term of the
lease, sublease or other occupancy right, the name of the parties thereto, each
amendment thereto and the aggregate annual rent payable thereunder) of all land,
buildings, structures, fixtures, improvements and other interests in real
property that is leased or otherwise occupied by the Seller exclusive of any occupancy by the Seller of customer
sites during the course of installations (the “Leased Real
Property”).  The Seller holds valid leasehold interests in the Leased
Real Property, free and clear of any Encumbrances.
The Seller has delivered to the Purchaser accurate and complete copies of
all leases relating to the Leased Real Property.  With respect to each
such lease, the Seller has not exercised or given any notice of exercise of, nor
has any lessor or landlord exercised or given any notice of exercise by such
party of, any option to purchase, right of
first offer or right of first refusal to
purchase contained in any such lease.  The rental set forth in
each lease of the Leased Real Property is the actual rental being paid, and
there are no separate agreements or understandings with respect to the
same.  Each lease of the Leased Real Property grants the Seller the
exclusive right to use and occupy the demised premises thereunder.

      


      (c)   The Seller is in peaceful
and undisturbed possession of the Leased Real Property, and  there are no contractual or  legal restrictions that preclude or
restrict the ability of the Seller to use such Leased Real Property for the
purposes for which it is currently being used.  The Seller has not
subleased, licensed or otherwise granted to any Person the right to use or
occupy any portion of the Leased Real Property, and the Seller has not received
notice, and the Seller has no Knowledge, of any claim of any Person to the
contrary. 

      


      Section
3.13          Intellectual
Property. 

      


      (a)           The
Seller owns or otherwise possesses valid and legally enforceable rights to use
the Purchased Intellectual Property.  The Purchased Intellectual
Property constitutes all of the Intellectual Property used in or necessary to
conduct the Seller’s business as conducted by the Seller.  Section
3.13(a) of the Seller Disclosure Schedule sets forth an accurate and complete
list of all of the Purchased Intellectual Property, other than the Third Party
Intellectual Property listed in the Seller Disclosure Schedule pursuant to
Section 3.13(c), that is owned by the Seller (the “Owned Intellectual
Property”). The Seller is the sole and exclusive owner of the Owned Intellectual
Property, has the right to transfer the Owned Intellectual Property as
contemplated by this Agreement and has executed no agreement and taken no action
in conflict with this Agreement or in derogation of the rights transferred under
this Agreement. The transfer of the Owned Intellectual Property to the Purchaser
will vest solely and exclusively in the Purchaser valid title to the Owned
Intellectual Property, and the full right to use, license and transfer the
Purchased Intellectual Property in the same manner and on the same terms and
conditions that the Seller had immediately prior to the Closing.

       

      
        
          
          

        

        
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      (b)           With
respect to the Owned Intellectual Property, Section 3.13(b) of the Seller
Disclosure Schedule sets forth an accurate and complete list (by name and, where
applicable, registration number and jurisdiction of registration, application,
certification and filing) of (i) all patents and patent applications, registered
and unregistered trademarks and service marks (including Internet domain names)
and applications for the same, trade names, corporate names and copyright
registrations and applications, indicating for each, the applicable
jurisdiction, registration number (or application number) and date issued (or
date filed) and (ii) all computer software items (provided the Seller need not
separately list licenses of Internally Used Shrinkwrap Software), and identifies
all Contracts under which the Seller has licensed or otherwise granted rights in
any of the Owned Intellectual Property to any Person.

      


      (c)           Section
3.13(c) of the Seller Disclosure Schedule sets forth an accurate and complete
list of all Intellectual Property that any third party has licensed or
sublicensed to the Seller or otherwise authorized the Seller to use (the “Third
Party Intellectual Property”), including a list of the related Contracts
(provided the Seller need not separately list licenses of Internally Used
Shrinkwrap Software).  The Seller has not granted any sublicense or
similar right with respect to any such Third Party Intellectual
Property.

      


      (d)           The
Owned Intellectual Property is free of all payment obligations and other
Encumbrances and is not subject to any Judgments or limitations or restrictions
on use or otherwise.  No Person has any rights in the Owned
Intellectual Property that could cause any reversion or renewal of rights in
favor of that Person or termination of the Seller’s rights in the Owned
Intellectual Property.  There is no Proceeding, Judgment, Contract or
other arrangement that prohibits or restricts the Seller from carrying on the
Seller’s business, or any portion of it, anywhere in the world.

      


      (e)           All
patents and registered and unregistered trademarks, service marks and copyrights
included in the Purchased Intellectual Property are valid and subsisting under
applicable Law.  The Purchased Intellectual Property does not
infringe, misappropriate or otherwise conflict with or violate any Intellectual
Property rights of any Person, and to the extent the patents included therein
are issued, such patents are valid, lawfully issued and enforceable, and to the
extent pending, valid, not abandoned and patentable.  The Purchaser’s
exploitation of the Purchased Intellectual Property, including without
limitation, the manufacture, use, offer for sale, sale or importation of any
product containing the Purchased Intellectual Property, will not result in
infringement of any Intellectual Property Right of any Person, now or hereafter
existing, including, without limitation, any patent of any Person, all
applications from which such patents claim priority, all continuations,
divisions, reissues or other applications claiming priority to any of the
foregoing, all patents issuing from any of the foregoing, and all reissues,
reexaminations and extensions of the foregoing, in each case anywhere in the
world.  No event has occurred or circumstance exists that could render
any of the Purchased Intellectual Property invalid or
unenforceable.  The Seller has delivered to the Purchaser accurate and
complete copies of all patents, registrations and applications, each as amended
to date, included in the Owned Intellectual Property and all other written
documentation evidencing ownership and prosecution of each such
item.

       

      
        
          
          

        

        
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      (f)           
The Seller has not agreed to indemnify, defend or otherwise hold harmless any
other Person with respect to Losses resulting or arising from the Purchased
Intellectual Property, except under those Contracts summarized or described in
Section 3.13(c) of the Seller Disclosure Schedule.

      


      (g)           To
the Seller’s Knowledge, no Person has used, disclosed, infringed or
misappropriated any of the Purchased Intellectual Property, other than
authorized uses and disclosures in accordance with the Contracts described in
Sections 3.13(b) and 3.13(c) of the Seller Disclosure Schedule.  The
Seller has not commenced or threatened any Proceeding, or asserted any
allegation or claim, against any Person for infringement or misappropriation of
the Purchased Intellectual Property.

      


      (h)           The
Seller has not received notice of any pending or threatened Proceeding or any
allegation or claim in which any Person alleges that the Seller, its business or
the Purchased Intellectual Property has violated any Person’s Intellectual
Property rights. There are no pending disputes between the Seller and any other
Person relating to the Purchased Intellectual Property.

      


      (i)           
The Seller has taken all commercially reasonable steps necessary to comply with
all duties of the Seller to protect the confidentiality of information provided
to the Seller by any other Person.  Other than as set forth in
Schedule 3.13(i), the Seller has not obtained from any of its current and former
employees, consultants and other independent contractors with access to
Purchased Intellectual Property an executed proprietary information and
inventions assignment agreement.

      


      Section
3.14          Contracts. 

      


      (a)    Section 3.14(a) of
the Seller Disclosure Schedule sets forth an accurate and complete list of each
Contract (or group of related Contracts) to which the Seller is a party, by
which the Seller or any of the Purchased Assets is bound or affected or pursuant
to which the Seller is an obligor or a beneficiary, which:

      


      (i)    is for the purchase
or sale of materials, supplies, goods, services, equipment or other assets, the
performance of which extends over a period of more than one year or that
otherwise involves an amount or value in excess of $10,000;

      


      (ii)   is for capital expenditures
in excess of $10,000;

      


      (iii)         
is a mortgage, indenture, guarantee, loan or credit agreement, security
agreement or other Contract relating to Indebtedness, other than accounts
receivables and payables in the ordinary course of business;

      


      (iv)       
  is a lease or
sublease of any real or personal property, (other than personal property leases
and conditional sales agreements having a value per item or aggregate payments
of less than $10,000 and a term of less than one year);

       

      
        
          
          

        

        
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      (v)   is a license or other
Contract under which (A) the Seller has licensed or otherwise granted rights in
any Purchased Intellectual Property to any Person or (B) any Person has licensed
or sublicensed to the Seller, or otherwise authorized the Seller to use, any
Third Party Intellectual Property (other than licenses of Internally Used
Shrinkwrap Software);

      


      (vi)          is for the employment of, or
receipt of any services from, any director or officer of the Seller or any other
Person on a full-time, part-time, consulting or other basis (other than any such arrangements which are not in
writing and which are terminable without penalty to the Seller on not more than
30 days’ prior written notice);

      


      (vii)       
 provides for severance,
termination or similar pay to any of the Seller’s current or former directors,
officers, employees or consultants or other independent
contractors;

      


      (viii)     
  provides for a loan
or advance of any amount to any director or officer of the Seller, other than
advances for travel and other appropriate business expenses in the ordinary
course of business;

      


      (ix)   licenses any Person to
manufacture or reproduce any of the Seller’s products, services or
technology or any Contract to sell or distribute any of the Seller’s  products, services or
technology;

      


      (x)    is a joint venture,
partnership or other Contract involving any joint conduct or sharing of any
business, venture or enterprise, or a sharing of profits or losses or pursuant
to which the Seller has any ownership interest in any other Person or business
enterprise;

      


      (xi)   contains any covenant
limiting the right of the Seller to engage in any line of
business or to compete (geographically or otherwise) with any Person, granting
any exclusive rights to make, sell or distribute the Seller’s products, granting
any “most favored nations” or similar rights or otherwise prohibiting or
limiting the right of the Seller to make, sell or
distribute any products or services;

      


      (xii)       
  involves payments
based, in whole or in part, on profits, revenues, fee income or other financial
performance measures of the Seller;

      


      (xiii)        
is a power of attorney granted by or on behalf of the Seller;

      


      (xiv)        is
a written warranty, guaranty or other similar undertaking with respect to
contractual performance extended by the Seller other than in the ordinary course
of business;

      


      (xv)        
is a settlement agreement with respect to any pending or threatened Proceeding
entered into since Seller’s inception;
or

       

      
        
          
          

        

        
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      (xvi)        was
entered into other than in the ordinary course of business and that involves an
amount or value in excess of $10,000 or contains or provides for an express
undertaking by the Seller to be responsible for consequential damages. 

      


      (b)   The Seller has delivered to
the Purchaser an accurate and complete copy (in the case of each written
Contract) or an accurate and complete written summary (in the case of each oral
Contract) of each Contract required to be listed in Section 3.14(a) of the
Seller Disclosure Schedule.  With respect to each such Contract
required to be listed:

      


      (i)           
the Contract is  legal, valid,
binding, enforceable and in full force and effect except to the extent it has
previously expired in accordance with its terms; 

      


      (ii)   the Seller and, to the
Seller’s Knowledge, the other parties to the Contract have performed all of
their respective obligations required to be performed under the Contract as of the date hereof; and

      


      (iii)          Neither
the Seller nor, to the Seller’s Knowledge, any other party to the Contract is in
breach or default under the Contract
and no event has occurred or circumstance exists that (with or without notice,
lapse of time or both) would reasonably be
expected to constitute a breach or default by the Seller or, to the Seller’s
Knowledge, by any such other party, or give rise to any right of revocation,
withdrawal, suspension, acceleration, cancellation, termination, modification,
imposition of additional obligations or loss of rights under, result in any
payment becoming due under, result in the imposition of any Encumbrances on any
of the Purchased Assets under, the Contract, nor has the Seller given or
received notice or other communication alleging the same. 

      


      (c)   To the Seller’s Knowledge no director, agent,
employee or consultant or other independent contractor of the Seller is a party
to, or is otherwise bound by, any Contract, including any confidentiality,
noncompetition or proprietary rights agreement, with any other Person that in
any way adversely affects or will affect (i) the performance of his or her
duties for the Seller, (ii) his or her ability to assign to the Seller rights to
any invention, improvement, discovery or information relating to the Seller’s
business or (iii) the ability of the Seller to conduct its business as currently
conducted or as currently proposed to be conducted.  

      


      Section
3.15          Tax Matters. 


      


      (a)   The Seller has timely filed
all Tax Returns that it was required to file in accordance with applicable Laws,
and each such Tax Return is accurate and complete in all material
respects.  The Seller has timely paid all Taxes due with respect to
the taxable periods covered by such Tax Returns and all other Taxes (whether or
not shown on any Tax Return) which are due and
payable.  No claim has ever been made by a
Governmental Authority in a jurisdiction where the Seller does not file a Tax
Return that it is or may be subject to taxation by that jurisdiction. The Seller
has not requested an extension of time within which to file any Tax Return which
has not since been filed.  The Seller has delivered to the Purchaser
accurate and complete copies of all Tax Returns of the Seller (and its
predecessors) for the years ended 2005, 2006 and 2007. There are no liens on any
of the assets of Seller that arose in connection with any failure (or alleged
failure) to pay Taxes. 

       

      
        
          
          

        

        
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      (b)   All Taxes that the Seller is
required by Law to withhold or collect, including sales and use Taxes and
amounts required to be withheld or collected in connection with any amount paid
or owing to any employee, independent contractor, creditor, shareholder, or
other Person, have been duly withheld or collected.  To the extent
required by applicable Law, all such amounts have been paid over to the proper
Governmental Authority or, to the extent not yet due and payable, are held in
separate bank accounts for such purpose.

      


      (c)   To the Seller’s Knowledge,
no Governmental Authority will assess any additional Taxes  for any period for which
Tax Returns have been filed.  No federal, state, local or foreign
audits or other Proceedings are pending or being conducted, nor has the Seller
received any (i) notice from any Governmental Authority that any such audit or
other Proceeding is pending, threatened or contemplated, (ii) request for
information related to Tax matters or (iii) notice of deficiency or proposed
adjustment for any amount of Tax proposed, asserted or assessed by any
Governmental Authority against the Seller, with respect to any Taxes due from or
with respect to the Seller or any Tax Return filed by or with respect to the
Seller.  The Seller has not granted or been requested to grant any
waiver of any statutes of limitations applicable to any claim for Taxes or with
respect to any Tax assessment or deficiency.  The Seller has delivered
to the Purchaser accurate and complete copies of all examination reports and
statements of deficiencies assessed against or agreed to by the Seller since
2002.

      


      (d)   All Tax deficiencies that
have been claimed, proposed or asserted in writing against the Seller have been fully paid or
finally settled, and no issue has been raised in writing in any examination
which, by application of similar principles, could be expected to result in the
proposal or assertion of a Tax deficiency for any other year not so
examined.

      


      (e)   No position has been taken
on any Tax Return with respect to the business or operations of the Seller for a
taxable period for which the statute of limitations for the assessment of any
Taxes with respect thereto has not expired that is contrary to any publicly
announced position of a taxing authority or that is substantially similar to any
position which a taxing authority has successfully challenged in the course of
an examination of a Tax Return of the Seller. The Seller has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of income Tax under Section 6662 of the
Code.

      


      (f)    The Seller is not a
party to or bound by any Tax sharing agreement, Tax indemnity obligation or
similar Contract or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other Contract relating to Taxes with
any Governmental Authority).

      


      (g)   The Seller is not and has
not been a member of an affiliated group within the meaning of Section 1504(a)
of the Code (or any similar group defined under a similar provision of foreign,
state or local Law) and the Seller has no Liability for Taxes of any other
Person under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of foreign, state or local Law), as a transferee or successor, by
Contract or otherwise.

       

      
        
          
          

        

        
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      (h)   The Seller has not entered
into any transactions with respect to the Purchased Assets that require
disclosure under Section 6011 of the Code.

      


      (i)    The Seller is not a
“foreign person” as defined in Section 1445(f)(3) of the Code.

      


      Section
3.16          Employee Benefit
Matters.

      


      (a)   Section 3.16(a) of the
Seller Disclosure Schedule sets forth an accurate and complete list of all
Seller Plans.

      


      (b)   The Seller has delivered to
the Purchaser an accurate and complete copy of (i) each writing that sets forth
the terms of each Seller Plan, including plan documents, plan amendments, any
related trusts, all summary plan descriptions and other summaries and
descriptions furnished to participants and beneficiaries, (ii) all personnel,
payroll and employment manuals and policies of the Seller, (iii) a written
description of any Seller Plan that is not otherwise in writing, (iv) the Form
5500 filed in each of the most recent three plan years with respect to each
Seller Plan, including all schedules thereto, financial statements and the
opinions of independent accountants.

      


      (c)   Neither the Seller nor any
ERISA Affiliate has ever established, maintained or contributed to, or had an
obligation to maintain or contribute to, any (i) multiemployer plan as defined
in Section 3(37)(A) of ERISA, (ii) plan subject to Title IV of ERISA, (iii)
voluntary employees’ beneficiary association under Section 501(c)(9) of the
Code, (iv) organization or trust described in Section 501(c)(17) or 501(c)(20)
of the Code, (v) welfare benefit fund as defined in Section 419(e) of the Code,
or (vi) a Seller Plan that is an employee welfare plan described in Section 3(1)
of ERISA that has two or more contributing sponsors at least two of which are
not under common control within the meaning of Section 3(40) of
ERISA.

      


      (d)   Each Seller Plan is and at
all times has been maintained, funded, operated and administered, and the Seller
has performed all of its obligations under each Seller Plan, in each case in all
material respects in accordance with the terms of such Seller Plan and in
material compliance with all applicable Laws, including ERISA and the
Code.  All contributions required to be made to any Seller Plan by
applicable Law and the terms of such Seller Plan, and all premiums due or
payable with respect to insurance policies funding any Seller Plan, for any
period through the Closing Date, have been timely made or paid in full or, to
the extent not required to be made or paid on or before the Closing Date, have
been fully reflected in line items on the Interim Balance Sheet.

      


      (e)   Each Seller Plan that is a
pension plan that meets or purports to meet the requirements of Section 401(a)
of the Code (a “Qualified Plan”) has received a favorable determination or
opinion letter from the IRS that it is qualified under Section 401(a) of the
Code and that its related trust is exempt from federal income Tax under Section
501(a) of the Code, and each such Qualified Plan complies in form and in
operation in all material respects with the requirements of
the Code and meets the requirements of a “qualified plan” under Section 401(a)
of the Code.  No event has occurred or circumstance exists that could
reasonably be expected to give rise to disqualification or loss of Tax-exempt
status of any such Qualified Plan or trust.  

       

      
        
          
          

        

        
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      Section
3.17          Employment and Labor
Matters. 

      


      (a)   Section 3.17(a) of the
Seller Disclosure Schedule sets forth an accurate and complete list of all
employees and independent contractors currently performing services for the
Seller, including each employee on leave of absence or layoff status, along with
the position, date of hire, engagement or seniority, compensation and non-standard benefits, scheduled or contemplated
increases in compensation and benefits, scheduled or contemplated promotions,
accrued but unused sick and vacation leave or paid time off and service credited
for purposes of vesting and eligibility to participate under any Seller Plan
with respect to such Persons.  To the Seller’s Knowledge, no employee
of the Seller intends to terminate his or her employment with the
Seller.

      


      (b)   Except as set forth on
Section 3.17(b) of the Seller Disclosure Schedule: (i) Seller is not, and has
not been, a party to or bound by any collective bargaining, works council,
employee representative or other Contract with any labor union, works council or
representative of any employee group, nor is any such Contract being negotiated
by the Seller; (ii) the Seller has no Knowledge of any union organizing,
election or other activities made or threatened at any time within the past
three years by or on behalf of any union, works council, employee representative
or other labor organization or group of employees with respect to any employees
of the Seller; and (iii) there is no union, works council, employee
representative or other labor organization, which, pursuant to applicable Law,
must be notified, consulted or with which negotiations need to be conducted in
connection with the transactions contemplated by this Agreement.

      


      (c)   Since its inception, the
Seller has not experienced any labor strike, picketing, slowdown, lockout,
employee grievance process or other work stoppage or labor dispute, nor to the
Seller’s Knowledge is any such action threatened.  To the Seller’s
Knowledge, no event has occurred or circumstance exists that could reasonably be
expected to give rise to any such action, nor does the Seller contemplate a
lockout of any employees.

      


      (d)   The Seller has complied in
all material respects with all applicable
Laws and its own policies relating to labor and employment matters, including
fair employment practices, terms and conditions of employment, contractual
obligations, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, workers’ compensation, the payment of social security
and similar Taxes, occupational safety and plant closing.

      


      (e)   There is no Proceeding
pending or, to the Seller’s Knowledge, threatened against or affecting the
Seller relating to the alleged violation by the Seller (or its directors or
officers) of any Law pertaining to labor relations or employment
matters.  The Seller has not committed any unfair labor practice, nor
has there been any charge or complaint of unfair labor practice filed or, to the
Seller’s Knowledge, threatened against the Seller before any Governmental
Authority.  There has been no complaint, claim or charge of
discrimination filed or, to the Seller’s Knowledge, threatened, against the
Seller with any Governmental Authority.

       

      
        
          
          

        

        
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      Section
3.18          Environmental, Health
and Safety Matters.

      


      (a)   The Seller is, and at all
times has been, in compliance in all material
respects with all, and not subject to any Liability under any,
Environmental Laws and Occupational Safety and Health Laws.  Without
limiting the generality of the foregoing, the Seller and its Affiliates have
obtained and complied in all material
respects with all Governmental Authorizations that are required pursuant
to Environmental Laws and Occupational Safety and Health Laws for the occupation
of their facilities and the operation of their businesses.  An
accurate and complete list of all such Governmental Authorizations is set forth
in Section 3.18(a) of the Seller Disclosure Schedule.

      


      (b)   The Seller has not received
any notice, report or other written communication or information regarding (i)
any actual, alleged or potential violation of, or failure to comply with, any
Environmental Law or Occupational Safety and Health Law or (ii) any Liability or
potential Liability, including any investigatory, remedial or corrective
obligation, relating to the Seller or any Leased Real Property or other property
or facility currently or previously owned, leased, operated or controlled by the
Seller arising
under any Environmental Law or Occupational Safety and Health Law.

      


      (c)   The Seller has not treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, generated, manufactured, distributed, exposed any Person to or released
any substance, including any Hazardous Material, or owned or operated any
property or facility, in a manner that has given rise to, or could reasonably be
expected to give rise to, any Liability, including any Liability for fines,
penalties, response costs, corrective costs, personal injury, property damage,
natural resources damage or attorneys’ fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Solid Waste
Disposal Act, or any other Environmental Law or Occupational Safety and Health
Law.

      


      (d)   The Seller has not, either
expressly or by operation of Law, assumed, undertaken, provided an indemnity
with respect to or otherwise become subject to any Liability, including any
obligation for corrective or remedial action, of any other Person relating to
any Environmental Law. 

      


      (e)   No event has occurred or
circumstance exists relating to the operations of, or the properties or
facilities currently or previously owned, leased, operated or controlled by, the
Seller that could reasonably be expected to (i) prevent, hinder or limit
continued compliance in all respects with any Environmental Law or Occupational
Safety and Health Law, (ii) give rise to any investigatory, remedial or
corrective obligations pursuant to any Environmental Law or Occupational Safety
and Health Law or (iii) give rise to any other Liability pursuant to any
Environmental Law or Occupational Safety and Health Law, including any Liability
relating to onsite or offsite releases of, or exposure to, Hazardous Materials,
personal injury, property damage or natural resources damage.

       

      
        
          
          

        

        
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      Section
3.19          Compliance with Laws,
Judgments and Governmental Authorizations.

      


      (a)   Without limiting the scope
of any other representation in this Agreement, the Seller is in compliance in
all material respects and has complied in all material respects with all, and
has not violated in any material respects
any, Laws, Judgments or Governmental Authorizations applicable to it or
to the conduct of its business or the ownership or use
of any of its properties or assets.  The Seller has not received any
notice or other communication from any Governmental Authority or any other
Person regarding any actual, alleged or potential violation of, or failure to
comply with, any applicable Law, Judgment or Governmental Authorization, any
actual or threatened revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization, or any actual,
alleged or potential obligation on the part of the Seller to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature.

      


      (b)   Section 3.19(b) of the
Seller Disclosure Schedule sets forth an accurate and complete list of all
Governmental Authorizations held by the Seller or that otherwise relates to the
conduct of its business or the ownership or use by
the Seller of any of the Purchased Assets, all of which are valid and in
full force and effect.  The Governmental Authorizations listed in
Section 3.19(b) of the Seller Disclosure Schedule collectively constitute all of
the Governmental Authorizations necessary for the
Seller to conduct the Seller’s business lawfully in the manner in which
the Seller currently conducts its business and to permit the Seller to own and
use the Purchased Assets in the manner in which it currently owns and uses such
assets.

      


      (c)   Section 3.19(c) of the
Seller Disclosure Schedule sets forth an accurate and complete list of all
Judgments to which the Seller or any of its properties or assets, is or has been
subject.  To the Seller’s Knowledge, no director, officer, employee or
agent of the Seller is subject to any
Judgment that prohibits such director, officer, employee or agent from engaging
in or continuing any conduct, activity or practice relating to the Seller.


      


      Section
3.20          Legal
Proceedings.  Section 3.20 of the Seller Disclosure Schedule sets
forth an accurate and complete list of all pending Proceedings (a) by or against
the Seller, or to the Seller’s Knowledge, that otherwise relate to or could
reasonably be expected to affect the Seller’s business, properties or assets,
(b) to the Seller’s Knowledge, by or against any of the directors or officers of
the Seller in their capacities as such or (c) by
or against the Seller that challenge, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated by this Agreement.  To the Seller’s
Knowledge, no other such Proceeding has been threatened, and no event has
occurred or circumstance exists that could reasonably be expected to give rise
to or serve as a basis for the commencement of any such
Proceeding.  The Seller has delivered to the Purchaser accurate and
complete copies of all pleadings, correspondence, audit response letters and
other documents relating to such Proceedings. 


      
        
           


        

        
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    Section
3.21     Customers and Suppliers.

    


    (a)         
Section 3.21(a) of the Seller Disclosure Schedule sets forth an accurate and
complete list of (i) the names and addresses of all customers that ordered goods
and services from the Seller with an aggregate value for each such customer of
$25,000 or more during the 12-month period ended November 30, 2008 and (ii) the
amount for which each such customer was invoiced during such
period.  The Seller has not received any notice or has any reason to
believe that any customer of the Seller (A) has ceased, or will cease, to use
the products, goods or services of the Seller, (B) has substantially reduced, or
will substantially reduce, the use of products, goods or services of the Seller
or (C) has sought, or is seeking, to reduce the price it will pay for products,
goods or services of the Seller, including in each case after the consummation
of the transactions contemplated by this Agreement.  To the Seller’s
Knowledge, no customer described in clause (i) of the first sentence of this
subsection (a) has otherwise threatened to take any action described in the
preceding sentence as a result of the consummation of the transactions
contemplated by this Agreement.  No customer of the Seller has any
right to any credit or refund for products or goods sold or services rendered or
to be rendered by the Seller pursuant to any Contract with or practice of the
Seller other than pursuant to the terms of the
applicable Contract.

    


    (b)         
Section 3.21(b) of the Seller Disclosure Schedule sets forth an accurate and
complete list of (i) the names and addresses of all suppliers from which the
Seller ordered raw materials, supplies, merchandise and other goods and services
with an aggregate purchase price for each such supplier of $25,000 or more
during the 12-month period ended November 30, 2008 and (ii) the amount for which
each such supplier invoiced the Seller during such period.  The Seller
has not received any notice or has any reason to believe that there has been any
material adverse change in the price of such raw materials, supplies,
merchandise or other goods or services, or that any such supplier will not sell
raw materials, supplies, merchandise and other goods and services to the
Purchaser at any time after the Closing on terms and conditions similar to those
used in its current sales to the Seller, subject to general and customary price
increases.  To the Seller’s Knowledge, no supplier described in clause
(i) of the first sentence of this subsection (b) has otherwise threatened to
take any action described in the preceding sentence as a result of the
consummation of the transactions contemplated by this Agreement.

    


    Section
3.22     Product Warranty; Performance
Guarantees.

    


    (a)         
The Seller has no standard form of guaranty or warranty.  No product
manufactured, sold, licensed, leased or delivered by the Seller is subject to
any guaranty, warranty or other indemnity beyond those set forth in Schedule
2.1(e) under the heading “ACT Contracts, Guarantee and Warranty
Obligations.”  Each product
manufactured, sold, licensed, leased or delivered by the Seller at all times has
been in conformity in all material respects
with all applicable contractual commitments and all express and implied
warranties, and the Seller has no Liability (and no event has occurred or
circumstance exists that could reasonably be expected to give rise to any
Proceeding, claim or demand against any of them giving rise to any Liability)
for replacement or repair thereof or other damages in connection therewith, and
subject only to the reserve for product warranty claims set forth in the
corresponding line item on the Interim Balance Sheet, as adjusted for the
passage of time through the Closing Date in the ordinary course of business,
consistent with the past custom and practice of the Seller.

    


    (b)         
The Seller has satisfied in all respects the performance guarantees in any
Contract for which the Seller has been fully paid.


    
      
         


      

      
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    Section
3.23     Product Liability.  The Seller has
no Liability (and to Seller’s Knowledge no event has occurred or circumstance
exists that could reasonably be expected to give rise to any Proceeding, claim
or demand against any of them giving rise to any Liability) arising out of any
injury to individuals or property as a result of the ownership, possession or
use of any product manufactured, sold, leased or delivered by the Seller.

    


    Section
3.24     Insurance.

    


    (a)         
Section 3.24 of the Seller Disclosure Schedule sets forth an accurate and
complete list of (a) insurance maintained by the Seller, within the past two
years, and (b) all outstanding performance
bonds and letters of credit currently
securing contractual performance by the Seller.  All premiums and/or
fees due and payable under such insurance policies, bonds and letters of
credit  have been paid and the Seller is otherwise in compliance with
the terms thereof.  The Seller has no Knowledge of any threatened
termination of, or material premium increase with respect to, any such insurance
policy.  Section 3.24 of the Seller Disclosure Schedule further sets
forth an accurate and complete list of all claims asserted by the Seller
pursuant to any such insurance policy bond or letter of credit since January 1,
2005, and describes the nature and status of the claims.  The Seller
has not failed to give in a timely manner any notice of any claim that may be
insured under any certificate of insurance policy required to be listed in
Section 3.24 of the Seller Disclosure Schedule and there are no outstanding
claims which have been denied or disputed by the insurer. The Seller has never
maintained, established, sponsored, participated in or contributed to any
self-insurance program, retrospective premium program or captive insurance
program. Schedule 3.24 describes: (i) any
self-insurance arrangement by or affecting the Seller, including any reserves
established thereunder; and (ii) all obligations of the Seller to provide
insurance coverage to Third Parties (for example, under sales contracts or
service agreements) and identifies the policy under which such coverage is
provided.

    


    Section
3.25     Foreign Corrupt Political Practices Act;
Export Control.

    


    (a)         
Neither the Seller nor its Affiliates have, to obtain or retain business for the
Seller, directly or indirectly offered, paid or promised to pay, or authorized
the payment of, any money or other thing of value (including any fee, gift,
sample, travel expense or entertainment with a value in excess of $100 in the
aggregate to any one individual in any year), to: (i) any person who is an
official, officer, agent, employee or representative of any Governmental
Authority; (ii) any political party or official thereof; (iii) any candidate for
political or political party office; or (iv) any other individual or entity;
while knowing or having reason to believe that all or any portion of such money
or thing of value would be offered, given, or promised, directly or indirectly,
to any such official, officer, agent, employee, representative, political party,
political party official, candidate, individual, or any entity affiliated with
such political party or official or political office.

    


    (b)         
The Seller has made all payments to third parties by check mailed to such third
parties’ principal place of business or by wire transfer to a bank located in
the same jurisdiction as such party’s principal place of
business.


    
      
         


      

      
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    (c)         
Each transaction is properly and accurately recorded on the books and records of
the Seller, and each document upon which entries in the Seller’s books and
records are based is complete and accurate in all respects. The Seller maintains
a system of internal accounting controls adequate to insure that the Seller
maintains no off-the-books accounts.

    


    (d)         
The Seller has at all times been in compliance in
all material respects with all Laws relating to export control and trade
embargoes.

    


    Section
3.26     Related Party Transactions.  No
Shareholder, director, officer or employee of the Seller, or Affiliate of any
such Shareholder, director, officer or employee (each, an “Associate”), or
Affiliate of the Seller, (i) owns, directly or indirectly, and whether on an
individual, joint or other basis, any interest in (A) any property or asset,
real, personal or mixed, tangible or intangible, used in or pertaining to the
Seller’s business, (B) any Person that has had business dealings or a financial
interest in any transaction with the Seller, other than business dealings
conducted in the ordinary course of business on terms and conditions as
favorable to the Seller as would have been obtained by it at the time in a
comparable arm’s-length transaction with a Person other than an Associate or an
Affiliate of the Seller or (C) any Person that is a supplier, customer or
competitor of the Seller except for securities having no more than 1% of the
outstanding voting power of any such supplier, customer or competing business
which are listed on any national securities exchange, (ii) serves as an officer,
director or employee of any Person that is a supplier, customer or competitor of
the Seller.

    


    Section
3.27     No Guarantees.  None of the
Liabilities of the Seller is guaranteed by or subject to a similar contingent
obligation of any other Person.  The Seller has not guaranteed or
become subject to a similar contingent obligation in respect of the Liabilities
of any other Person.  There are no outstanding letters of credit,
surety bonds or similar instruments of the Seller or any of its Affiliates in
connection with the Seller’s business or the Purchased Assets.

    


    Section
3.28     Brokers or Finders.  Except as set
forth in Section 3.28 of the Seller Disclosure Schedule, neither the Seller, any
Shareholder nor any Person acting on behalf of the Seller or any Shareholder has
incurred any Liability to pay any fees or commissions to any broker, finder or
agent or any other similar payment in connection with any of the transactions
contemplated by this Agreement.

    


    Section
3.29     Solvency.  The Seller is not
insolvent and will not be rendered insolvent by any of the transactions
contemplated by this Agreement.  As used in this Section, “insolvent”
means that the sum of the debts and other probable Liabilities of the Seller
exceeds the present fair saleable value of the Seller’s assets.

    


    Section
3.30       Disclaimer.  Except
as expressly set forth in this Article 3, neither the Seller nor any Shareholder
makes any representation or warranty, express or implied, at law or in
equity, in respect of any of its assets (including, without limitation, the
Purchased Assets), liabilities or operations, including, without limitation,
with respect to merchantability or fitness for any particular purpose, and any
such other representations or warranties are hereby expressly
disclaimed.


    
      
         


      

      
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    ARTICLE
4

    REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER

    


    The Purchaser represents and warrants
to the Seller that as of the date of this Agreement and as of the Closing Date
the statements set forth in this Article 4 are true and correct:

    


    Section
4.1     Organization and Good Standing.  The
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation.

    


    Section
4.2     Authority and Enforceability.  The
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and each Ancillary Agreement to which it is a party and to
perform its obligations under this Agreement and each such Ancillary
Agreement.  The execution, delivery and performance of this Agreement
and each Ancillary Agreement to which the Purchaser is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of
the directors of the Purchaser.  The Purchaser has duly and
validly executed and delivered this Agreement and, on or prior to the Closing,
the Purchaser will have duly and validly executed and delivered each Ancillary
Agreement to which it is a party.  This Agreement constitutes, and
upon execution and delivery each Ancillary Agreement to which the Purchaser is a
party will constitute, the valid and binding obligation of the Purchaser, as
applicable, enforceable against the Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).

    


    Section
4.3     No Conflict.  Neither the execution,
delivery and performance by the Purchaser of this Agreement and each Ancillary
Agreement to which the Purchaser is a party, nor the consummation by the
Purchaser of the transactions contemplated hereby or thereby, will: (a) directly
or indirectly (with or without notice, lapse of time or both), conflict with,
result in a breach or violation of, constitute a default under, give rise to any
right of revocation, withdrawal, suspension, acceleration, cancellation,
termination, modification, imposition of additional obligations or loss of
rights under, result in any payment becoming due under, or result in the
imposition of any Encumbrance on any of the properties or assets of the
Purchaser under (i) the certificate of incorporation or bylaws of the Purchaser
or any resolution adopted by the stockholders or board of directors of the
Purchaser, (ii) any Contract to which the Purchaser is a party or by which the
Purchaser is bound or to which any of its properties or assets is subject or
(iii) any Law, Judgment or Governmental Authorization applicable to the
Purchaser or any of its properties or assets; or (b) require the Purchaser to
obtain any Consent or Governmental Authorization of, give any notice to, or make
any filing or registration with, any Governmental Authority or other Person,
except with respect to clauses (a) and (b) in any case that would not reasonably
be expected to have, either individually or in the aggregate, a material adverse
effect on the ability of the Purchaser to perform its obligations under this
Agreement or on the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.


    
      
         


      

      
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    Section
4.4     Legal Proceedings.  There is no
Proceeding pending or, to the Purchaser’s knowledge, threatened, against the
Purchaser that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, any of the transactions
contemplated by this Agreement.

    


    Section
4.5     Financial
Statements.

    


    (a)         
The Purchaser’s Annual Report on Form 10-K
for the period ended December 31, 2007 and Quarterly Reports on Form 10-Q for
the periods ended March 31, 2008, June 30, 2008 and September 30, 2008 at the
time filed, complied in all material respects with the applicable requirements
of the Securities Exchange Act of 1934.

    


    (b)         
The financial statements included in
Purchaser’s Annual Report on Form 10-K for the period ended December 31, 2007
when filed with the Securities and Exchange Commission complied as to form in
all material respects with applicable accounting requirements and were, when
filed, in accordance with the books and records of Purchaser, complete and
accurate in all material respects, and presented fairly the consolidated
financial position and the consolidated results of operations, changes in
stockholders' equity and cash flows of Purchaser and its subsidiaries as of the
dates and for the periods indicated, in accordance with generally accepted
accounting principles, consistently applied, subject in the case of interim
financial statements to normal year-end adjustments and the absence of certain
footnote information.

    


    (c)         
The financial statements included in
Purchaser’s Quarterly Reports on Form 10-Q for the periods ended March 31, 2008,
June 30, 2008 and September 30, 2008 when filed with the Securities Exchange
Commission complied as to form in all material respects with applicable
accounting requirements and were, when filed, in accordance with the books and
records of Purchaser, complete and accurate in all material respects, and, in
the opinion of Purchaser’s management, presented fairly the consolidated
financial position and the consolidated results of operations, changes in
stockholders' equity and cash flows of Purchaser and its subsidiaries as of the
dates and for the periods indicated, in accordance with generally accepted
accounting principles, consistently applied, subject in the case of interim
financial statements to normal year-end adjustments and the absence of certain
footnote information.

    


    Section
4.6     Brokers or Finders.  Neither
the Purchaser nor any Person acting on its behalf has incurred any Liability to
pay any fees or commissions to any broker, finder or agent or any other similar
payment in connection with any of the transactions contemplated by this
Agreement.

     

    ARTICLE
5

    PRE-CLOSING
COVENANTS

    


    Section
5.1     Access and Investigation.  Until the
Closing and upon reasonable advance notice from the Purchaser, the Seller will
allow the Purchaser and its directors, officers, employees, agents, prospective
financing sources, consultants and other advisors and representatives reasonable access during normal business
hours to, and
furnish them with all documents, records, work papers and information with
respect to, all of the properties, assets, personnel, books, Contracts,
Governmental Authorizations, reports and records relating to the Seller as the
Purchaser may reasonably request.  In addition, until the Closing, the
Seller will cause its accountants to cooperate with the Purchaser and its
representatives in making available the financial information of the Seller as
reasonably requested.  


    
      
         


      

      
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    Section
5.2     Operation of the Business of the
Seller.

    


    (a)         
Affirmative Covenants.  Until the Closing, except as expressly
consented to by the Purchaser in writing (which
consent shall not be unreasonably withheld, delayed or conditioned by the
Purchaser), the Seller will:

    


    (i)         
conduct its business only in the ordinary course of business and use its
commercially reasonable efforts to preserve and protect its business
organization, employment relationships, and relationships with customers,
strategic partners, suppliers, distributors, landlords and others having
dealings with it;

    


    (ii)         
pay its accounts payable and other obligations in the ordinary course of
business and in accordance with the Seller’s past practice;

    


    (iii)         perform
all of its obligations under all Contracts to which it is a party, by which it
or any of the Purchased Assets is bound or affected or pursuant to which the
Seller is an obligor or beneficiary, and comply with all Laws, Judgments and
Governmental Authorizations applicable to it, its business or the Purchased
Assets;

    


    (iv)         maintain (or use reasonable efforts to cause the applicable
landlord to maintain) the Leased Real Property and all other properties
and assets included in the Purchased Assets in a state of repair and condition
that complies with all applicable Laws and is consistent with the requirements
and normal conduct of the Seller’s business;

    


    (v)         
continue in full force and effect the certificates of insurance, binders and
policies set forth in Section 3.24 of the Seller Disclosure
Schedule;

    


    (vi)         maintain
its books and records consistent with the past custom and practice of the
Seller;

    


    (vii)        pay
all accrued but unpaid bonuses, incentive compensation, vacation and sick pay
due to any of the Seller’s employees up and to the Closing Date;
and

    


    (viii)       confer
with the Purchaser concerning any
operational matters of a material nature that is not in the ordinary course of Seller’s
business.

    


    (b)         
Negative Covenants.  Until the Closing, except as expressly permitted
by this Agreement or as otherwise expressly consented to by the Purchaser in
writing (which consent shall not be unreasonably
withheld, delayed or conditioned by the Purchaser), the Seller will not
and the Shareholders will not cause or permit the Seller to:


    
      
         


      

      
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    (i)      
    enter into or assume any Contract outside the ordinary course
of business;

    


    (ii)         
amend, modify, cancel or terminate any Contract or Governmental Authorization
included in the Purchased Assets outside the
ordinary course of business;

    


    (iii)        
except for the payments contemplated in Section 5.2(a)(vii) above or in the ordinary course of business, grant (or
commit to grant) any increase in the compensation (including incentive or bonus
compensation) of any employee employed by the Seller or institute, adopt or
amend (or commit to institute, adopt or amend) any compensation or benefit plan,
policy, program or arrangement or collective bargaining agreement applicable to
any such employee;

    


    (iv)        
act or omit to act in a manner that would impair or otherwise adversely affect
the Seller’s business, any of the Purchased Assets or Assumed Liabilities or the
financial or other ability of the Seller to perform its obligations under this
Agreement or any of the Ancillary Agreements;

    


    (v)         
otherwise take any action or omit to
take any action, which action or omission would result in a breach of any of the
representations and warranties set forth in Section 3.10; or

    


    (vi)        
agree, whether in writing or otherwise, to do any of the foregoing.

    


    Section
5.3     Reasonable Efforts; Lease
Agreement.  The Seller and the Shareholders will use their respective
commercially reasonable efforts to (a) take promptly, or cause to be taken
(including actions after the Closing), all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement and (b) enter into a
lease agreement, in form and substance satisfactory to the Purchaser, with
respect to the Seller’s headquarters in Hooksett, New Hampshire, together with a
consent to assignment to the Purchaser of such lease executed by the
landlord.

    


    Section
5.4     Seller Notification.  Until the
Closing, the Seller will give prompt notice to the Purchaser upon becoming aware of (a) the occurrence, or
non-occurrence, of any event, the occurrence or non-occurrence of which would
reasonably be expected to cause any representation or warranty of the Seller or
the Shareholders contained in this Agreement to be untrue or inaccurate, in each
case at any time from and after the date of this Agreement until the Closing,
(b) any failure to comply with or satisfy in any material respect any covenant
or agreement to be complied with or satisfied by the Seller or the Shareholders
under this Agreement and (c) the failure of any condition precedent to the
Purchaser’s obligations under this Agreement.  No notification
pursuant to this Section 5.4 will be deemed to amend or supplement the Seller
Disclosure Schedule, prevent or cure any misrepresentation, breach of warranty
or breach of covenant, or limit or otherwise affect any rights or remedies
available to the Purchaser, including pursuant to Article 7 or Article 9, except as otherwise provided elsewhere in this
Agreement.


    
      
         


      

      
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    Section
5.5     No Negotiation.  Until the Closing,
the Seller and the Shareholders will not, and will cause their respective
Affiliates, directors, officers, shareholders, employees, agents, consultants
and other advisors and representatives not to, directly or indirectly: (a)
solicit, initiate, encourage, knowingly facilitate, or entertain any inquiry or
the making of any proposal or offer; (b) enter into, continue or otherwise
participate in any discussions or negotiations; (c) furnish to any Person any
non-public information or grant any Person access to its properties, assets,
books, Contracts, personnel or records; or (d) approve or recommend, or propose
to approve or recommend, or execute or enter into, any letter of intent,
agreement in principal, merger agreement, acquisition agreement, option
agreement or other Contract or propose, whether publicly or to any director or
shareholder, or agree to do any of the foregoing for the purpose of encouraging
or facilitating any proposal, offer, discussions or negotiations; in each such case regarding any business combination
transaction involving the Seller or any other transaction to acquire all or
any material part of the business,
properties or assets of the Seller or any amount of the capital stock of the
Seller (whether or not outstanding), whether by merger, purchase of assets,
purchase of stock, tender offer, lease, license or otherwise, other than with
the Purchaser.  The Seller and the Shareholders will immediately cease
and cause to be terminated any such negotiations, discussion or Contracts (other
than with the Purchaser) that are the subject of clauses (a), (b) or (d) above
and will immediately cease providing and secure the return of any non-public
information and terminate any access of the type referenced in clause (c)
above.  If the Seller, any Shareholder or any of their respective
Affiliates, directors, officers, shareholders, employees, agents, consultants or
other advisors and representatives receives, prior to the Closing, any offer,
proposal or request, directly or indirectly, of the type referenced in clause
(a), (b) or (d) above or any request for disclosure or access as referenced in
clause (c) above, the Seller or such Shareholder, as applicable, will
immediately suspend or cause to be suspended any discussions with such offeror
or Person with regard to such offers, proposals or requests and
notify the
Purchaser thereof, including information as to the identity of the offeror or
Person making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be, and such other information related thereto as the
Purchaser may reasonably request.

    


    Section
5.6     Purchaser Notification.  Until the
Closing, the Purchaser will give notice to the Seller upon becoming aware of any representation or
warranty of the Seller or the Shareholders contained in this Agreement that, to
the Purchaser’s Knowledge, is untrue or inaccurate, in each case at the time
this Agreement is executed and until the Closing.  In the event that
the Purchaser fails to notify the Seller of its Knowledge of any such breach of
representation or warranty in accordance with this Section 5.6, the Purchaser
shall be deemed to have waived its right to be indemnified pursuant to Section
9.1(a) hereof with respect to such breach by the Seller and the
Shareholders.  The Purchaser’s Knowledge of any such breach will not
affect Purchaser’s rights pursuant to Article 7 hereof.

    


    ARTICLE
6

    CONDITIONS
PRECEDENT TO OBLIGATION TO CLOSE

    


    Section
6.1     Conditions to the Obligation of the
Purchaser.  The obligation of the Purchaser to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, on
or before the Closing Date, of each of the following conditions (any of which
may be waived by the Purchaser, in whole or in part):


    
      
         


      

      
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    (a)         
Accuracy of Representations and
Warranties.  The  representations and warranties of the
Seller and the Shareholders in this Agreement must have been true and correct in
all  respects as of the date of this
Agreement and must be true and correct in all material respects as of the
Closing Date (with materiality being measured individually and on an aggregate
basis with respect to all breaches of representations and warranties), except
for the representations and warranties set forth in Section 3.2 (Authority and Enforceability)
and Section 3.5 (Financial
Statements), and each of the Seller’s and the Shareholders’
representations and warranties that is qualified as to materiality or contains
terms such as “Material
Adverse Effect,” each of which must have been true and correct in all respects
as of the date of this Agreement and must be true and correct in all respects as
of the Closing Date, and except to the extent any representation or warranty of
the Seller and the Shareholders speaks as of the date of this Agreement or any
other specific date, in which case such representation or warranty must have
been true and correct in all respects as of such date;

    


    (b)         
Performance of Covenants.  All of the covenants and obligations that
the Seller or any Shareholder is required to perform or comply with under this
Agreement on or before the Closing Date must have been duly performed and
complied with in all material respects;

    


    (c)         
Consents.  Each of the Governmental Authorizations and Consents listed
in Section 6.1(c) and Section 6.2(c) of the
Seller Disclosure Schedule must have been obtained and must be in full force and
effect;

    


    (d)         
No Action.  There must not be in effect any Law or Judgment, and there
must not have been commenced or threatened any Proceeding, that in any case
could (i) prevent, make illegal or restrain the consummation of, or otherwise
materially alter, any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation;

    


    (e)         
The Seller’s Employees.  The Purchaser must have come to satisfactory
employment arrangements with each of the Seller’s employees listed on Schedule
6.1(e) following Closing in the manner
contemplated in Section 8.13 hereof.

    


    (f)         
Employment Agreements.  The Purchaser must have entered into an
Employment Agreement with each Shareholder;

    


    (g)         
Assignment and Assumption Agreement.  The Purchaser and Seller shall
have entered into a mutually acceptable agreement regarding Seller’s assignment
of the terms of this Agreement in the manner contemplated by Section
10.6;

    


    (h)         
No Material Adverse Effect.  Since the date of this Agreement, there
must not have been any Material Adverse Effect in
respect of Seller’s business; and


    
      
         


      

      
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    (i)         
Transaction Documents.  The Seller must have delivered or caused to be
delivered each document that Section 2.12(a) requires it to
deliver.

    


    Section
6.2     Conditions to the Obligation of the
Seller.  The obligation of the Seller to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions (any of which may be waived by
the Seller, in whole or in part):

    


    (a)         
Accuracy of Representations and Warranties.  The representations and
warranties of the Purchaser in this Agreement must have been true and correct in
all  respects as of the date of this
Agreement and must be true and correct in all material respects as of the
Closing Date (with materiality being measured individually and on an aggregate
basis with respect to all breaches of representations and warranties), except
for the Purchaser’s representations and warranties that are qualified as to
materiality, each of which must have been true and correct in all respects as of
the date of this Agreement and must be true and correct in all respects as of
the Closing Date, and except to the extent any representation or warranty of the
Purchaser speaks as of the date of this Agreement or any other specific date, in
which case such representation or warranty must have been true and correct in
all respects as of such date;

    


    (b)         
Performance of Covenants.  All of the covenants and obligations that
the Purchaser is required to perform or comply with under this Agreement on or
before the Closing Date must have been duly performed and complied with in all
material respects (with materiality being measured individually and on an
aggregate basis with respect to all breaches of covenants and
obligations);

    


    (c)         
Consents.  Each of the Governmental Authorizations and Consents listed
in Section 6.1(c) and Section 6.2(c) of the
Purchaser Disclosure Schedule must have been obtained and must be in full force
and effect;

    


    (d)         
No Action.   There
must not be in effect any Law or Judgment, and
there must not have been commenced or threatened any Proceeding, that in any
case could (i) prevent, make illegal or restrain the consummation of, or
otherwise materially alter, any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation;
and

    


    (e)         
Transaction Documents.  The Purchaser must have delivered or caused to
be delivered to the Seller each document that Section 2.12(b) requires it to
deliver.

    


    ARTICLE
7

    TERMINATION

    


    Section
7.1     Termination Events.  This Agreement
may, by written notice given before or at the Closing, be
terminated:

    


    (a)         
by mutual consent of the Purchaser and the Seller;


    
      
         


      

      
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    (b)         
by the Purchaser (so long as the Purchaser is not then in material breach of any
of its representations, warranties, covenants or agreements contained in this
Agreement) if there has been a material
breach of any of the Seller’s or the Shareholders’ representations, warranties,
covenants or agreements contained in this Agreement, which would result in the
failure of a condition set forth in Section 6.1(a) or Section 6.1(b), and which
breach has not been cured or cannot be cured within 30 days after the notice of
the breach from the Purchaser;  

    


    (c)         
by the Selling Parties’ Representative (so long as neither the Seller nor any of
the Shareholders is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement) if there has
been a material breach of any of the
Purchaser’s representations, warranties, covenants or agreements contained in
this Agreement, which would result in the failure of a condition set forth in
Section 6.2(a) or Section 6.2(b), and which breach has not been cured or cannot
be cured within 30 days after the notice of breach from the Seller;

    


    (d)         
by the Purchaser if there has been a Material Adverse Effect in respect of Seller’s business, other than a Material
Adverse Effect caused by the Purchaser or its Affiliates;

    


    (e)         
by either the Purchaser or the Seller if any Governmental Authority has issued a
nonappealable final Judgment or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;

    


    (f)         
by the Purchaser if the Closing has not occurred (other than through the failure
of the Purchaser to comply fully with its obligations under this Agreement) on
or before January 31, 2009; or

    


    (g)         
by the Selling Parties’ Representative if the Closing has not occurred (other
than through the failure of the Seller or any Shareholder to comply fully with
its obligations under this Agreement) on or before January 31,
2009.

    


    Section
7.2     Effect of Termination.

    


    (a)         
Each party’s rights of termination under Section 7.1 are in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such rights of termination is not an election of remedies.  If this
Agreement is terminated pursuant to Section 7.1, this Agreement and all rights
and obligations of the parties under this Agreement automatically end without
Liability against any party or its Affiliates, except that (a) Sections 3.28
(Brokers or Finders),
8.3 (Confidentiality),
and 8.4 (Public
Announcement), and Article 10 (except for Section 10.10 (Specific Performance)) and
this Section 7.2 will remain in full force and survive any termination of this
Agreement and (b) if this Agreement is terminated by a party because of the
breach of this Agreement by another party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies will survive such termination unimpaired.


    
      
         


      

      
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    (b)         
If this Agreement is terminated by the Purchaser pursuant to the provisions of
Section 7.1(b), Section 7.1(d) or Section 7.1(f) above, and within 90 days after
the date of such termination, the Seller signs a letter of intent or other
agreement relating to the acquisition of a material portion of its assets,
business or securities, in whole or in part, whether directly or indirectly,
through purchase, merger, consolidation, or otherwise (other than sales of
inventory or immaterial portions of Seller’s assets in the ordinary course) and
such transaction is ultimately consummated, then, immediately upon the closing
of such transaction, the Seller shall be obligated to pay, and will pay to the
Purchaser, the amount of Five Hundred Thousand Dollars ($500,000) in immediately
available funds to an account designated by the Purchaser.  This fee
will serve as the exclusive remedy to the Purchaser under this Agreement in the
event of a breach by the Seller or a Shareholder of this Agreement.

    


    ARTICLE
8

    ADDITIONAL
COVENANTS

    


    Section
8.1     Tax Matters.

    


    (a)         
The Seller will pay in a timely manner all applicable sales (including bulk
transfer), use, transfer, conveyance, documentary, recording, notarial, value
added, excise, registration, stamp, gross receipts and similar Taxes and fees
(“Transfer Taxes”), arising out of or in connection with or attributable to the
transactions effected pursuant to this Agreement and the Ancillary
Agreements . 

    


    (b)         
If, prior to the Closing, there have been any Taxes based on the value of
property assessed against any of the Purchased Assets, the Seller will pay those
Taxes attributable to periods or partial periods ending on or prior to the
Closing Date, and the Purchaser will pay those Taxes attributable to periods or
partial periods beginning after the Closing Date, with a daily allocation for
any period that begins before the Closing Date and ends after the Closing
Date.  Each party agrees to cooperate with the other party in paying
or reimbursing Tax obligations in accordance with this Section
8.1(b).  Nothing in this Agreement makes a party liable for the income
or franchise Taxes of the other party.  This Section 8.1 (b) does not
apply to Transfer Taxes, which are the sole obligation of the Seller under the
provisions of Section 8.1(a). 

    


    Section
8.2     Gross-Up.  If, in the allocation of
the Purchase Price prepared by the Purchaser in accordance with Section 2.10
hereof, the amount of the Purchase Price allocated to the Shareholders’
covenants contained in Section 8.8 hereof exceeds $1,000,000, then the Purchaser
shall pay to the Shareholders an aggregate amount equal to twenty percent (20%)
of such excess, with such payment being divided among the Shareholders as
directed by the Selling Parties’ Representative.  Such payment shall
be made not less than fourteen (14) days following the Purchaser’s filing of its
IRS Form 8594 with the IRS.

    


    Section
8.3     Tail Insurance.  For a period of
three years following the Closing, the Seller shall take all actions necessary
to maintain tail insurance covering claims relating to periods prior to the
Closing Date, with such coverage to include errors and omissions, general
liability and umbrella coverage in form and substance consistent with the
Seller’s past practices.


    
      
         


      

      
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    Section
8.4     Confidentiality.

    


    (a)         
The parties agree to continue to abide by that certain Confidentiality Agreement
between the Seller and the Purchaser dated September 7, 2007 (the
“Confidentiality Agreement”).  Beginning on the date of this
Agreement, neither the Seller, any Shareholder nor any of its or their
respective Affiliates will waive any right under any other nondisclosure
agreement previously entered into by   the
Seller or any Company or any Shareholder and any other Person with respect to
the evaluation of the sale of the Seller or any of its material properties or
assets without the prior written consent of the Purchaser.

    


    (b)         
From and after the Closing, the confidentiality obligations of the Purchaser
under the Confidentiality Agreement will terminate with respect to all
Confidential Information.  From and after the Closing, the Seller and
each Shareholder will, and will cause each of its respective Affiliates and its
and their directors, officers, shareholders, employees, agents, consultants and
other advisors and representatives (its “Restricted Persons”) to, maintain the
confidentiality of, and not use for their own benefit or the benefit of any
other Person, the Confidential Information.

    


    (c)         
Except as contemplated by Section 8.5, the Purchaser, the Seller and the
Shareholders will not, and the Purchaser, the Seller and the Shareholders will
cause each of their respective Restricted Persons not to, disclose to any Person
any information with respect to the legal, financial or other terms or
conditions of this Agreement, any of the Ancillary Agreements or any of the
transactions contemplated hereby or thereby.  The foregoing does not
restrict the right of any party to disclose such information (i) to its
respective Restricted Persons to the extent reasonably required to facilitate
the negotiation, execution, delivery or performance of this Agreement and the
Ancillary Agreements, (ii) to any Governmental Authority or arbitrator to the
extent reasonably required in connection with any Proceeding relating to the
enforcement of this Agreement or any Ancillary Agreement and (iii) as permitted
in accordance with Section 8.4(d).  Each party will advise its
respective Restricted Persons with respect to the confidentiality obligations
under this Section 8.4(a) and will be responsible for any breach or violation of
such obligations by its Restricted Persons.

    


    (d)         
If a party or any of its respective Restricted Persons become legally compelled
to make any disclosure that is prohibited or otherwise restricted by this
Agreement, then such party will (i) give the other party immediate written
notice of such requirement, and (ii)
consult with and assist the other party in obtaining an injunction or other
appropriate remedy to prevent such disclosure.
..  

    


    Section
8.5     Public Announcements.  Any public announcement or similar publicity with
respect to this Agreement or the transactions contemplated by this Agreement
will be issued at such time and in such manner as the Purchaser determines after
consultation with the Seller.  The Purchaser and the Seller will
consult with each other concerning the means by which the employees, customers,
suppliers and others having dealings with the Seller will be informed of the
transactions contemplated by this Agreement, and the Purchaser has the right to
be present for any such communication. 


    
      
         


      

      
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    Section
8.6     Assistance in Proceedings.  From and
after the Closing, at the reasonable request of the Purchaser (and without expense to the Seller or its Affiliates)
and subject to customary confidentiality restrictions, the Seller will
and will cause its Affiliates to cooperate with the Purchaser and its counsel in
the contest or defense of, and make available its personnel and provide any
testimony and access to its books and records in connection with, any Proceeding
involving or relating to (i) any of the transactions contemplated by this
Agreement or (ii) any action, activity, circumstance, condition, conduct, event,
fact, failure to act, incident, occurrence, plan, practice, situation, status or
transaction on or before the Closing Date involving the Seller, its business or
any Shareholder.

    


    Section
8.7     Privileges.  Effective
as of the Closing, the Seller hereby transfers, to the fullest extent
transferable under applicable Law, all attorney work-product protections,
attorney-client privileges and other legal protections and privileges contained
in the books and records transferred as part of the Purchased Assets and to
which the Seller may be entitled in connection with any of the Purchased Assets
or Assumed Liabilities.  The Seller is not waiving, and will not be
deemed to have waived or diminished, any of its attorney work-product
protections, attorney-client privileges or similar protections or privileges as
a result of the disclosure of information to the Purchaser and its
representatives in connection with this Agreement and the transactions
contemplated by this Agreement.  The Seller and the Purchaser (a)
share a common legal and commercial interest in all of the information and
communications that may subject to such protections and privileges, (b) are or
may become joint defendants in Proceedings to which such protections and
privileges may relate and (c) intend that such protections and privileges remain
intact should either party become subject to any actual or threatened Proceeding
to which such information or communications relate.  The Seller agrees
that it and its Affiliates will have no right or power after the Closing Date to
assert or waive any such protection or privilege included in the Purchased
Assets.  The Seller will take any actions reasonably requested by the
Purchaser, at the sole cost and expense of the Purchaser unless the Purchaser is
entitled to indemnification therefor under the provisions of Article 9, in order
to permit the Purchaser to preserve and assert any such protection or privilege
included in the Purchased Assets. 

    


    
      Section
8.8     Confidential Information, Noncompetition,
Nonsolicitation and Nondisparagement.

    

    


    (a)         
Each Shareholder acknowledges that such Shareholder has occupied a position of
trust and confidence with the Seller prior to the date hereof and has had access
to and has become familiar with the Confidential Information.

    


    (b)         
The Seller and each Shareholder acknowledges that (i) the business of the Seller
relating to the use and operation of the Purchased Assets prior to Closing is
international in scope; (ii) the Seller’s products and services related to such
business are marketed throughout the world; (iii) the Seller’s business prior to
Closing competes with other businesses that are or could be located in any part
of the world; (iv) the Purchaser has required that the Seller and each
Shareholder make the covenants set forth in Sections 8.8(c) and 8.8(d) of this
Agreement as a condition to the Purchaser’s purchase of the Purchased Assets;
(v) the provisions of Sections 8.8(c) and 8.8(d) of this Agreement are
reasonable and necessary to protect and preserve the Purchaser’s interests in
and right to the use and operation of the Purchased Assets from and after
Closing; and (vi) the Purchaser might be
irreparably damaged if the Seller or any Shareholder were to breach the
covenants set forth in Sections 8.8(c) and 8.8(d) of this
Agreement.


    
      
         


      

      
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    (c)         
The Seller acknowledges and agrees that the protection of the Confidential
Information is necessary to protect and preserve the value of the Purchased
Assets. Therefore, the Seller  agrees not to disclose to any
unauthorized Persons or use for its own account or for the benefit of any third
party any Confidential Information, whether or not such information is embodied
in writing or other physical form, without the Purchaser’s written consent,
unless and to the extent that the Confidential Information is or becomes
generally known to and available for use by the public other than as a result of
the Seller’s or any Shareholder’s fault or the fault of any other Person bound
by a duty of confidentiality to the Purchaser or the Seller. The Seller and each
Shareholder agrees to deliver to the Purchaser at the time of execution of this
Agreement, and at any other time the Purchaser may request, all documents,
memoranda, notes, plans, records, reports and other documentation, models,
components, devices or computer software, whether embodied in a disk or in other
form (and all copies of all of the foregoing), that contain Confidential
Information and any other Confidential Information that such Shareholder may
then possess or have under his or its control.
Each Shareholder, solely on behalf of himself, acknowledges and agrees that the
protection of the Confidential Information is necessary to protect and preserve the value of the Purchased Assets. Therefore, such
Shareholder agrees not to disclose to any
unauthorized Persons or use for his, her or its own account or for the benefit
of any third party any Confidential Information, whether or not such information
is embodied in writing or other physical form or is retained in the memory of such Shareholder, without the Purchaser’s written
consent, unless and to the extent that the Confidential Information is or
becomes generally known to and available for use by the public other than as a
result of the Seller’s or such  Shareholder’s fault or the fault of
any other Person bound by a duty of confidentiality to the Purchaser or the
Seller. 

    


    (d)         
As an inducement for the Purchaser to enter into this Agreement, for a period
of  five years after the Closing (the “Restrictive
Period”)

    


    (i)         
The Seller will not, and will cause its respective Affiliates not to, directly
or indirectly, engage in any business anywhere in the world that develops,
manufactures, produces, markets, sells or distributes any products or provides
any services of the kind developed, under development, manufactured, produced,
marketed, sold, distributed or provided by the Seller, or own an interest in,
manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as a partner, stockholder,
consultant, employee or otherwise, any Person that is engaged or planning to
become engaged in the business of developing, manufacturing, producing,
marketing, selling or distributing any products or providing any services of the
kind developed, under development, manufactured, produced, marketed, sold,
distributed or provided by the Seller. Each
Shareholder, solely on behalf of himself, acknowledges and agrees not to,
directly or indirectly, engage in any business anywhere in the world that
develops, manufactures, produces, markets, sells or distributes any products or
provides any services of the kind developed, under development, manufactured,
produced, marketed, sold, distributed or provided by the Seller, or own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as a partner,
stockholder, consultant, employee or otherwise, any Person that is engaged or
planning to become engaged in the business of developing, manufacturing,
producing, marketing, selling or distributing any products or providing any
services of the kind developed, under development, manufactured, produced,
marketed, sold, distributed or provided by the Seller; provided, however,
that, for the purposes of this Section 8.8(d), ownership of securities having no
more than 3% of the outstanding voting
power of any Person which is listed on any
national securities exchange will not be deemed to be in violation of this
Section 8.8(d) as long as the Person owning such securities has no other
connection or relationship with the issuer of
such securities.  


    
      
         


      

      
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    (ii)         
The Seller will not, and will cause its respective Affiliates not to, directly
or indirectly, (a) induce or attempt to induce any employee of the Seller who
becomes an employee of the Purchaser in connection with the purchase of the
Purchased Assets to leave the employ of the Purchaser; (b) in any way interfere
with the relationship between the Purchaser and any such employee of the
Purchaser; (c) employ or otherwise engage as an employee, independent contractor
or otherwise any such employee of the Purchaser; or (d) induce or attempt to
induce any customer, supplier, licensee or other Person to cease doing business
with the Purchaser or in any way interfere with the relationship between any
such customer, supplier, licensee or other business entity and the
Purchaser. Each Shareholder, solely on behalf of
himself, agrees that he will not directly or indirectly, (a) induce or attempt
to induce any employee of the Seller who becomes an employee of the Purchaser in
connection with the purchase of the Purchased Assets to leave the employ of the
Purchaser; (b) in any way interfere with the relationship between the Purchaser
and any such employee of the Purchaser; (c) employ or otherwise engage as an
employee, independent contractor or otherwise any such employee of the
Purchaser; or (d) induce or attempt to induce any customer, supplier, licensee
or other Person to cease doing business with the Purchaser or in any way
interfere with the relationship between any such customer, supplier, licensee or
other business entity and the Purchaser.

    


    (e)         
In the event of a breach by the Seller or any Shareholder of any covenant set
forth in this Section 8.8, the term of such covenant will be extended, solely
with respect to the breaching Party, by the period of the duration of such
breach.

    


    (f)         
The Seller will not, for a period of five (5) years after the Closing, disparage
the Purchaser, the Purchased Assets, the business formerly conducted by the
Seller, the business conducted by the Purchaser using the Purchased Assets or
any shareholder, director, officer, employee or agent of the Purchaser. Each
Shareholder, solely on behalf of himself, agrees that he will not for a period
of five years after the Closing, disparage the Purchaser, the Purchased Assets,
the business formerly conducted by the Seller, the business conducted by the
Purchaser using the Purchased Assets or any shareholder, director, officer,
employee or agent of the Purchaser.

    


    (g)         
Each Shareholder agrees, solely on behalf of
himself, that he will, for a period of five (5) years after the Closing,
within ten days after accepting any employment, consulting engagement,
engagement as an independent contractor, partnership or other association,
advise the Purchaser of the identity of the new employer, client, partner or
other Person with whom such Shareholder has become associated. The Purchaser may
serve notice upon such Person that such Shareholder is bound by this Agreement
and furnish such Person with a copy of this Agreement or relevant portions
thereof.


    
      
         


      

      
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    (h)         
If a final judgment of a court or tribunal of competent jurisdiction determines
that any term or provision contained in Section 8.8(a) through (g) is invalid or
unenforceable, then the parties agree that the court or tribunal will have the
power to reduce the scope, duration or geographic area of the term or provision,
to delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision. This Section 8.8 will be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

    


    (i)         
It is the intention of the parties that
each Shareholder shall only be liable for a breach of this Section 8.8 by such
Shareholder himself, and shall not be liable for any such breach by any other
Shareholder.

    


    Section
8.9     Use of Name.  From and after the
Closing, the Seller will not, and will cause its Affiliates not to, directly or
indirectly, use or do business, or assist any third party in using or doing
business under the name “ACT,” “Advanced Combustion Technology” or by another
name similar to such names and marks, except as necessary to effect the change
of the Seller’s name or to evidence that such change has occurred, or in
connection with the filing of Tax Returns or for such other non-commercial uses
as may be required by Law.  Promptly after the Closing, the Seller
will file all documents with the appropriate Governmental Authorities in the
state of its incorporation and any other jurisdictions in which it is qualified
or licensed to do business, to change the name of the Seller to a name that it
not the same or confusingly similar to its name used prior to the
Closing.

    


    Section
8.10     Refunds and Remittances.  If the
Seller (or any of its Affiliates), on the one hand, or the Purchaser, on the
other hand, after the Closing Date receives any funds properly belonging to the
other party in accordance with the terms of this Agreement, the receiving party
will promptly so advise such other party, will segregate and hold such funds in
trust for the benefit of such other party and will promptly deliver such funds,
together with any interest earned thereon, to an account or accounts designated
in writing by such other party.

    


    Section
8.11     Access to Records.  After the
Closing, the Purchaser will retain for a period of
four years or such longer period as is consistent with the Purchaser’s
record retention policies and practices those records included in the Purchased
Assets delivered to the Purchaser.  The Purchaser also will provide
the Seller and its employees, agents, consultants and other advisors and
representatives reasonable access thereto (and the
ability to make copies thereof), during normal business hours and on at
least three business days’ prior written notice, to enable them to prepare
financial statements or Tax Returns or deal with Tax audits or for any other reasonable business purpose specified
by the Seller in such notice.  After the Closing, the Seller
will, and will cause each of its Affiliates and its and its Affiliates’
respective employees, agents, consultants and other advisors and representatives
to, provide the Purchaser and its employees, agents, consultants and other
advisors and representatives reasonable access to records that are or that
relate to Excluded Assets, during normal business hours and on at least three
business days’ prior written notice, for any reasonable business purpose
specified by the Purchaser in such notice.


    
      
         


      

      
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    Section
8.12     Further Assurances.  Subject to the
other express provisions of this Agreement, the parties will cooperate
reasonably with each other and with their respective representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (a) to furnish, or cause
to be furnished, upon request to each other such further information, (b) to
execute and deliver, or cause to be executed and delivered, to each other such
other documents and (c) to do, or cause to be done, such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the transactions contemplated by this
Agreement.  Without limitation of the foregoing, in the event that,
following the Closing, the Parties discover that any Contract of the Seller was
not assumed by the Purchaser under Section 2.1(e) nor included in the Excluded
Assets under Section 2.2(e), the Purchaser shall have the option, in its sole
discretion, to include such Contract in the Purchased Assets and require the
Seller to assign and transfer such Contract to the Purchaser in the manner
contemplated by Section 2.13 hereof.

    


    Section
8.13     Employees and Employee Benefits.

    


    (a)         
The Seller will use all commercially reasonable efforts to cause its employees
to make available their employment services to the Purchaser. Except for the
Shareholders, the Purchaser is not obligated to hire any employee of the Seller
but may interview and make offers of employment to any, some, or all of the
Seller’s employees.  Subject to applicable Law, the Purchaser will
have reasonable access to the facilities and personnel records (including
performance appraisals, disciplinary actions, grievances and medical records) of
the Seller for the purpose of preparing for and conducting employment interviews
with any or all of the Seller’s employees and will conduct the interviews as
expeditiously as possible prior to the Closing Date.  Access will be
provided by the Seller upon reasonable prior notice during normal business
hours.  The Purchaser will promptly provide the Seller with a list of
the Seller’s employees to whom the Purchaser has made an offer of employment
that has been accepted to be effective on the Closing Date (collectively, the
“Hired Employees”).  The term “Hired
Employees” shall not be deemed to mean or include the Shareholders. Prior
to the Closing, the Seller will provide the Purchaser with completed I-9 forms
and attachments with respect to all Hired Employees, except for such employees
as the Seller will certify in writing to the Purchaser are exempt from such
requirement.  Effective immediately before the Closing, the Seller
will terminate the employment of all of the Hired Employees.

    


    (b)         
The Purchaser will set its own initial terms and conditions of employment for
the Hired Employees and others it may hire, including work rules, benefits and
salary and wage structure, all as permitted by applicable Law.  The
Purchaser is not obligated to assume any collective bargaining agreements under
this Agreement.  The Seller will be solely liable for any severance
payment required to be made to its employees as a result of the transactions
contemplated by this Agreement.


    
      
         


      

      
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    (c)         
Except for the Employment Agreements, it is understood and agreed that (i) the
Purchaser’s expressed intention to extend offers of employment as set forth in
this Section will not constitute a Contract (express or implied) on the part of
the Purchaser to a post-Closing employment relationship of any fixed term or
duration or upon any terms or conditions other than those that the Purchaser may
establish pursuant to individual offers of employment and (ii) employment
offered by the Purchaser is “at will” and may be terminated by the Purchaser or
by an employee at any time for any reason (subject to any written commitments to
the contrary made by the Purchaser or an employee and applicable Laws governing
employment).  Nothing in this Agreement will be deemed to prevent or
restrict in any way the right of the Purchaser to terminate, reassign, promote
or demote any of the Hired Employees after the Closing, or to change adversely
or favorably the title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment of such
employees.

    


    (d)         
From and after the Closing the Seller will remain solely responsible for all
Liabilities to or in respect of its employees and former employees, including
Hired Employees, and beneficiaries and dependents of any such employee or former
employee, relating to or arising in connection with or as a result of (i) the
employment of any such employee or former employee or the actual or constructive
termination of employment of any such employee or former employee by Seller (including in connection with the
consummation of the transactions contemplated by this Agreement and including
the payment of any termination or severance payments and the provision of health
plan continuation coverage in accordance with the continuation coverage
requirements of Sections 601 et seq. of ERISA and Section
4980B of the Code (“COBRA”)), (ii) the
participation in or accrual of benefits or compensation under, or the failure to
participate in or to accrue compensation or benefits under, any Seller Plan or
other employee or retiree benefit or compensation plan, program, practice,
policy or other Contract of the Seller, or (iii) accrued but unpaid salaries,
wages, bonuses, incentive compensation, vacation or sick pay or other
compensation or payroll items (including deferred compensation) arising in connection with the employment of such
employee by the Seller.  In addition, from and after the
Closing, the Seller will remain solely responsible for all Liabilities to or in
respect of the Hired Employees and their beneficiaries or dependents relating to
or arising in connection with any claims, whether such claims are asserted
before, on or after the Closing Date, for life, disability, accidental death or
dismemberment, supplemental unemployment compensation, medical, dental,
hospitalization, other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an occurrence before the
Closing Date (including claims for continuing treatment in respect of any
illness, accident, disability, condition or confinement which occurs or
commences on or before the Closing Date). 

    


    (e)         
All Hired Employees who are participants in the Seller Plans that are pension
plans as defined in Section 3(2) of ERISA will retain their accrued benefits
under such Seller Plans as of the Closing Date.  The Seller (or the
applicable Seller Plan) will retain sole liability for the payment of such
benefits as and when such Hired Employees become eligible for them under such
Seller Plans.  The Seller will cause the Hired Employees to be fully
and immediately vested in their accrued benefits under each such

    


    (f)         
Commencing January 1, 2009, all Hired Employees that remain employed by the
Purchaser shall be eligible, in the discretion of the Compensation Committee of
the Board of Directors of the Purchaser, to receive awards of non-qualified
stock options under the Purchaser’s equity-based employee compensation
plan.


    
      
         


      

      
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    (g)         
Commencing January 1, 2009, all Hired Employees that remain employed by the
Purchaser (other than Shareholders) will be eligible to participate in the
Purchaser’s annual corporate incentive plan.  Beginning January 1,
2012, if any Shareholder remains employed with the Purchaser, such Shareholder
will be eligible to be included in the Purchaser’s then current annual corporate
incentive plan in accordance with the terms of such plan.

    


    ARTICLE
9

    INDEMNIFICATION

    


    Section
9.1     Indemnification by the Seller and each
Shareholder. Subject to the limitations expressly set forth in Section 9.6, the
Seller and each Shareholder,  jointly and severally, will indemnify
and hold harmless the Purchaser and its directors, officers, and employees (but
only in their capacities as such), (collectively, the “Purchaser
Indemnified Parties”) from and against, and will pay to the Purchaser
Indemnified Parties the monetary value of, any and all Losses incurred or
suffered by the Purchaser Indemnified Parties directly or indirectly arising out
of, relating to or resulting from any of the following:

    


    (a)         
any inaccuracy in or breach of any representation or warranty or other statement
of the Seller or any Shareholder contained in this Agreement, the Seller
Disclosure Schedule, any Ancillary Agreement or in any certificate, instrument
or other document delivered by or on behalf of the Seller or any Shareholder
pursuant to this Agreement or any Ancillary Agreement;

    


    (b)         
any nonfulfillment, nonperformance or other breach of any covenant or agreement
of the Seller or any Shareholder contained in this Agreement, the Seller
Disclosure Schedule, any Ancillary Agreement or in any certificate, instrument
or other document delivered by or on behalf of the Seller or any Shareholder
pursuant to this Agreement or any Ancillary Agreement;

    


    (c)         
any Excluded Liability and any other Liability arising out of the ownership or
operation of the Purchased Assets before the Closing that is not an Assumed
Liability;

    


    (d)         
notwithstanding any provision of this Agreement to the contrary or any
disclosure included in Seller Disclosure Schedule, any Third Party Claim made
within thirty-nine (39) months of the Closing Date that alleges the patents
included in the Purchased Intellectual Property infringe the intellectual
property of another Person (but not any Loss suffered directly by the Purchaser
on account thereof independent of such Third Party Claim); and

    


    (e)         
any Proceedings, demands or assessments incidental to any of the matters set
forth in clauses (a) through (d) above.

    


    For purposes of this Section 9.1, any
inaccuracy in, or breach of any representation or warranty or other statement,
or nonfulfillment, nonperformance or other breach of any covenant or agreement
by the Seller or any Shareholder, and the amount of any Losses associated
therewith, will be determined without regard for any materiality, “Material
Adverse Effect” or similar qualification.  Notwithstanding anything to the contrary set
forth above, no Shareholder shall be liable under Section 9.1(b) above in
respect of any representation, warranty, statement, covenant or agreement
contained in Section 8.8 hereof that is expressly made, or agreed to, by a
Shareholder, solely on his own behalf, other that such Shareholder.



    
      
         


      

      
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    For
purposes of this Article 9, all Losses shall be computed net of any insurance
proceeds received by Purchaser with respect thereto that reduces the Losses that
would otherwise be sustained; provided, however, that in all cases, the timing
of the receipt or realization of insurance proceeds shall be taken into account
in determining the amount of reduction of Losses.

    


    Section 9.2 
     Indemnification by the
Purchaser.  Subject to the limitations expressly set forth in Section
9.6, the Purchaser will indemnify and hold harmless the Seller and each Shareholder (collectively, the “Seller
Indemnified Parties”) from and against, and will pay to the Seller Indemnified Parties the monetary value of, any
and all Losses incurred or suffered by the Seller
Indemnified Parties directly or indirectly arising out of, relating to or
resulting from any of the following:

    


    (a)       any
inaccuracy in or breach of any representation or warranty or other statement of
the Purchaser contained in this Agreement, the Purchaser Disclosure Schedule,
any Ancillary Agreement or in any certificate, instrument or other document
delivered by the Purchaser pursuant to this Agreement or any Ancillary
Agreement;

    


    (b)       any
nonfulfillment, nonperformance or other breach of any covenant or agreement of
the Purchaser contained in this Agreement, the Purchaser Disclosure Schedule,
any Ancillary Agreement or in any certificate, instrument or other document
delivered by the Purchaser pursuant to this Agreement or any Ancillary
Agreement;

    


    (c)       any
of the Assumed Liabilities and any other Liability
arising out of the ownership or operation of the Purchased Assets after the
Closing (except to the extent such Liability constitutes an Excluded
Liability); and

    


    (d)       any
Proceedings, demands or assessments incidental to any of the matters set forth
in clauses (a) through (c) above.

    


    For purposes of this Section 9.2, any
inaccuracy in, or breach of any representation or warranty or other statement,
or nonfulfillment, nonperformance or other breach of any covenant or agreement
by the Purchaser, and the amount of any Losses associated therewith, will be
determined without regard for any materiality, Material Adverse Effect or similar qualification.


    


    Section 9.3  
    Claim Procedure.

    


    (a)       A
party that seeks indemnity under this Article 9 (an “Indemnified Party”) will
give written notice (a “Claim Notice”) to the party from whom indemnification is
sought (an “Indemnifying Party”) containing (i) a description and, if known, the
estimated amount of any Losses incurred or reasonably expected to be incurred by
the Indemnified Party, (ii) a reasonable explanation of the basis for the Claim
Notice to the extent of the facts then known by the Indemnified Party and (iii)
a demand for payment of those Losses.


    
      
         


      

      
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    (b)       Within
30 days after delivery of a Claim Notice, the Indemnifying Party will deliver to
the Indemnified Party a written response in which the Indemnifying Party will
either:

    


    (i)      agree
that the Indemnified Party is entitled to receive all of the Losses at issue in
the Claim Notice; or

    


    (ii)     dispute
the Indemnified Party’s entitlement to indemnification by delivering to the
Indemnified Party a written notice (an “Objection Notice”) setting forth in
reasonable detail each disputed item, the basis for each such disputed item and
certifying that all such disputed items are being disputed in good
faith.

    


    (c)       If
the Indemnifying Party fails to take either of the foregoing actions within 30
days after delivery of the Claim Notice, then the Indemnifying Party will be
deemed to have irrevocably accepted the Claim Notice and the Indemnifying Party
will be deemed to have irrevocably agreed to pay the Losses at issue in the
Claim Notice.

    


    (d)       If
the Indemnifying Party delivers an Objection Notice to the Indemnified Party
within 30 days after delivery of the Claim Notice, then the dispute may be
resolved by any legally available means consistent with the provisions of
Section 10.12.

    


    (e)       Any
indemnification of the Purchaser Indemnified Parties pursuant to this Article 9
will be effected by wire transfer of immediately available funds from the Seller
or the Shareholders to an account designated by the Purchaser, and any
indemnification of the Seller Indemnified Parties
pursuant to this Article 9 will be effected by wire transfer of
immediately available funds to an account designated by the Selling Parties’
Representative.  

    


    (f)        The
foregoing indemnification payments will be made within five business days after
the date on which (i) the amount of such payments are determined by mutual
agreement of the parties, (ii) the amount of such payments are determined
pursuant to Section 9.3(c) if an Objection Notice has not been timely delivered
in accordance with Section 9.3(b) or (iii) both such amount and the Indemnifying
Party’s obligation to pay such amount have been finally determined by a final
Judgment of a court having jurisdiction over such proceeding as permitted by
Section 10.12 if an Objection Notice has been timely delivered in accordance
with Section 9.3(b).

    


    (g)       For
purposes of  Section 9.3 and Section 9.4, (i) if the Seller or the
Shareholders comprise the Indemnifying Party, any references to the Indemnifying
Party (except provisions relating to an obligation to make or a right to receive
any payments) will be deemed to refer to the Selling Parties’ Representative and
(ii) if the Seller or the Shareholders
comprises the Indemnified Party, any references to the Indemnified Party
(except provisions relating to an obligation to make or a right to receive any
payments) will be deemed to refer to the Selling Parties’
Representative.


    
      
         


      

      
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    Section 9.4 
     Third Party Claims.

    


    (a)       
Without limiting the general application of the other provisions of this
Agreement (including the Purchaser’s indemnification rights under Section 9.1(d)
hereof), if another Person not a party to this Agreement alleges facts that, if
true, would mean that a party has breached its representations and warranties in
this Agreement, the party for whose benefit the representations and warranties
are made will be entitled to indemnity for those allegations and demands and
related Losses under and pursuant to this Article 9.  If the
Indemnified Party seeks indemnity under this Article 9 in respect of, arising
out of or involving a claim or demand, whether or not involving a Proceeding, by
another Person not a party to this Agreement (a “Third Party Claim”), then the
Indemnified Party will include in the Claim Notice (i) notice of the
commencement or threat of any Proceeding relating to such Third Party Claim
within 30 days after the Indemnified Party has received written notice of the
commencement of the Third Party Claim and (ii) the facts constituting the basis
for such Third Party Claim and the amount of the damages claimed by the other
Person, in each case to the extent known to the Indemnified
Party.  Notwithstanding the foregoing, no delay or deficiency on the
part of the Indemnified Party in so notifying the Indemnifying Party will
relieve the Indemnifying Party of any Liability or obligation under this
Agreement except to the extent the Indemnifying Party has suffered actual Losses
directly caused by the delay or other deficiency.

    


    (b)       Within
30 days after the Indemnified Party’s delivery of a Claim Notice under this
Section 9.4, the Indemnifying Party may assume control of the defense of such
Third Party Claim by giving to the Indemnified Party written notice of the
intention to assume such defense, but if and only if the Indemnifying Party
further:

    


    (i)   
  acknowledges in writing to the Indemnified Party that any Losses
that may be assessed in connection with the Third Party Claim constitute Losses
for which the Indemnified Party will be indemnified pursuant to this Article 9
without contest or objection and that the Indemnifying Party will advance all
expenses and costs of defense; and

    


    (ii)   
 retains counsel for the defense of the Third Party Claim reasonably
satisfactory to the Indemnified Party and furnishes to the Indemnified Party
evidence satisfactory to the Indemnified Party that the Indemnifying Party has
and will have sufficient financial resources to fund on a current basis the cost
of such defense and pay all Losses that may arise under the Third Party
Claim.

    


    However,
if the Seller or the Shareholders are the Indemnifying Party, in no event may
the Indemnifying Party assume, maintain control of, or participate in, the
defense of any Third Party Claim (A) involving criminal liability, (B) in which
any relief other than monetary damages is sought against the Indemnified Party,
(C) in which the outcome of any Judgment or settlement in the matter could
adversely affect the Indemnified Party’s Tax Liability or the ability of the
Indemnified Party to conduct its business (collectively, clauses (A) – (D), the
“Special Claims”) or (D) for which the Purchaser makes a claim pursuant to
Section 9.1(d) (clause (D), an “IP Claim”).  An Indemnifying Party
will lose any previously acquired right to control the defense of any Third
Party Claim if for any reason the Indemnifying Party ceases to actively,
competently and diligently conduct the defense.


    
      
         


      

      
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    (c)      
If the Indemnifying Party does not, or is not able to, assume or maintain
control of the defense of a Third Party Claim in compliance with Section 9.4(b),
the Indemnified Party will have the right to control the defense of the Third
Party Claim.  If the Indemnified Party controls the defense of the
Third Party Claim, the Indemnifying Party agrees to pay to the Indemnified Party
promptly upon demand from time to time all reasonable attorneys’ fees and other
costs and expenses of defending the Third Party Claim.  To the extent
that the Third Party Claim does not constitute a Special Claim, the party not
controlling the defense (the “Noncontrolling Party”) may participate therein at
its own expense.  However, if the Indemnifying Party assumes control
of such defense as permitted above and the Indemnified Party reasonably
concludes that the Indemnifying Party and the Indemnified Party have conflicting
interests or different defenses available with respect to the Third Party Claim,
then the reasonable fees and expenses of counsel to the Indemnified Party will
be considered and included as “Losses” for purposes of this
Agreement.  The party controlling the defense (the “Controlling
Party”) will reasonably advise the Noncontrolling Party of the status of the
Third Party Claim and the defense thereof and, with respect to any Third Party
Claim that does not relate to a Special Claim, the Controlling Party will
consider in good faith recommendations made by the Noncontrolling
Party.  The Noncontrolling Party will furnish the Controlling Party
with such information as it may have with respect to such Third Party Claim and
related Proceedings (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and will
otherwise cooperate with and assist in the defense of the Third Party
Claim.

    


    (d)       If
the Indemnified Party is controlling the defense of a Third Party Claim, the
Indemnified Party has the right to agree in good faith to any compromise or
settlement of, or the entry of any Judgment arising from, the Third Party Claim
without prior notice to or consent of the Indemnifying Party; provided, however,
that with respect to any IP Claim, Seller will not be bound by any such
compromise, settlement or Judgment without its prior written
consent.  All amounts paid or payable under such settlement or
Judgment are Losses that the Indemnifying Party owes to the Indemnified Party
under this Article 9.  The Indemnifying Party will not agree to any
compromise or settlement of, or the entry of any Judgment arising from, the
Third Party Claim without the prior written consent of the Indemnified Party,
which consent the Indemnified Party will not unreasonably withhold or
delay.  The Indemnified Party will have no Liability with respect to
any compromise or settlement of, or the entry of any Judgment arising from, any
Third Party Claim effected without its consent.

    


    (e)       Notwithstanding
the other provisions of this Article 9, if a Person not a party to this
Agreement asserts that a Purchaser Indemnified Party is liable to such Person
for a monetary or other obligation which individually may constitute or result
in Losses not to exceed $100,000 for which the Purchaser Indemnified Party may
be entitled to indemnification pursuant to this Article 9, and the Purchaser
Indemnified Party reasonably determines that it has a business reason to fulfill
such obligation, then (i) the Purchaser Indemnified Party will be entitled to
satisfy such obligation, without prior notice to or consent from the
Indemnifying Party, (ii) the Purchaser Indemnified Party may subsequently make a
claim for indemnification in accordance with the provisions of this Article 9
and (iii) the Purchaser Indemnified Party will be reimbursed, in accordance with
the provisions of this Article 9, for any such Losses for which it is entitled
to indemnification pursuant to this Article 9, subject to the right of the
Indemnifying Party to dispute the Purchaser Indemnified Party’s entitlement to
indemnification, or the amount for which it is entitled to indemnification,
under the provisions of this Article 9.


    
      
         


      

      
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    (f)        Notwithstanding
the provisions of Section 10.12, the Seller and the Shareholders consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought by
another Person against any Purchaser Indemnified Party for purposes of any claim
that a Purchaser Indemnified Party may have under this Agreement with respect to
the Proceeding or the matters alleged therein.  The Seller and the
Shareholders agree that process may be served on them with respect to such a
claim anywhere in the world.

    


    Section
9.5       Survival of Representations and
Warranties. 


    


    (a)       All
representations and warranties contained in this Agreement, the Seller
Disclosure Schedule, the Purchaser Disclosure Schedule, any Ancillary Agreement
or in any certificate, instrument or other document delivered pursuant to this
Agreement will survive the Closing for a period of
thirty-nine (39) months 
from the Closing Date; provided, however, that (i) the representations and
warranties set forth in Sections 3.15 (Tax Matters), 3.16 (Employee Benefit Matters) and
3.18 (Environmental
Matters) will survive until 180 days following the expiration of the
statute of limitations applicable to the underlying matters covered by such
provisions; and (ii) the representations and warranties set forth in Sections
3.2 (Authority and
Enforceability), 3.3 (No Conflict), 3.4 (Capitalization and Ownership)
and 3.28 (Brokers or
Finders) will survive indefinitely.

    


    (b)       All
claims for indemnification under Section 9.1(a) or Section 9.2(a) must be
asserted prior to the expiration of the applicable survival period set forth in
Section 9.5(a); provided, however, that if an Indemnified Party delivers to an
Indemnifying Party, before expiration of the applicable survival period of a
representation or warranty as set forth in Section 9.5(a), either a Claim Notice
based upon a breach of any such representation or warranty, or a notice that, as
a result of a claim or demand made by a Person not a party to this Agreement,
the Indemnified Party reasonably expects to incur Losses, then the applicable
representation or warranty will survive until, but only for purposes of, the
resolution of the matter covered by such notice.  If the claim with
respect to which such notice has been given is definitively withdrawn or
resolved in favor of the Indemnified Party, the Indemnified Party will promptly
so notify the Indemnifying Party.

    


    Section
9.6       Limitations on
Liability.

    


    (a)       Neither
the Seller or the Shareholders, on the one hand, nor the Purchaser, on the other hand, is liable under this Article
9 unless and until the aggregate Losses for which they or it, respectively,
would otherwise be liable under this Agreement exceed $100,000 (at which point
the Seller and the Shareholders or the
Purchaser, as applicable, are liable for the aggregate Losses and not just
amounts in excess of that sum); provided, however, that the foregoing limitation
does not apply to the following:  

    


    (i)      claims with respect to any amounts owed to the Purchaser
or the Seller in connection with the adjustments contemplated by Section
2.7;


    
      
         


      

      
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    (ii)     claims under Section 9.1(a) relating to a breach of the
representations and warranties set forth in Sections 3.1 (Organization and Good
Standing), 3.2 (Authority and
Enforceability), 3.4 (Capitalization and
Ownership), 3.15 (Tax Matters) or 3.28 (Brokers or Finders), or any breach of any of the Seller’s and the
Shareholders’ other representations and warranties of which the Seller had
Knowledge on or before the Closing Date (and Section 9.1(e) relating to any of
the foregoing);  

    


    (iii)    claims under Sections 9.1(b), (c) or (d)  (or
Section 9.1(e) relating to any of the foregoing);

    


    (iv)    claims under Section 9.2(b) or (c) (or Section 9.2(d)
relating to any of the foregoing); and

    


    (v)     claims with respect to any amounts owed to the Seller,
or its assigns, in connection with any Annual Earn-out
Payment.

    


    (b)       In no event will the Seller’s and the Shareholder’s
aggregate Liability under this Agreement exceed the greater of (i) $5,000,000 or
(ii) the aggregate amount of the Annual Earn-out Payments; provided, however,
that the foregoing limitations do not apply to the
following:

    


    (i)      claims
with respect to any amounts owed to the Purchaser in connection with the
adjustments contemplated by Section 2.7;

    


    (ii)     claims under
Section 9.1(a) relating to a breach of the representations and warranties set
forth in Sections 3.1 (Organization and Good
Standing), 3.2 (Authority and
Enforceability), 3.4 (Capitalization and
Ownership), 3.15 (Tax
Matters) or 3.28 (Brokers or Finders); and

    


    (iii)    claims
under Sections 9.1(b), (c) or (d) (or Section 9.1(e) relating to any of the
foregoing).

    


    (c)       In no
event will the Purchaser’s Liability under
this Agreement, after the Closing and the payment
of the Initial Purchase Price, exceed the greater of (i) $5,000,000 or (ii) the
aggregate amount of the Annual Earn-out Payments; provided, however, that
the foregoing limitations do not apply to the following:

    


    (i)      claims
with respect to any amounts owed to the Seller in connection with the adjustments
contemplated by Section 2.7;

    


    (ii)     claims under
Section 9.2(a) relating to a breach of the
representations and warranties set forth in Sections 4.1 (Organization and Good
Standing), or 4.2 (Authority and
Enforceability); and

    


    (iii)    claims
under Sections 9.2(b) or (c) (or Section
9.2(d) relating to any of the foregoing),
including claims in respect of the Earn-out payable
hereunder.


    
      
         


      

      
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    (d)       Nothing
in this Agreement will limit the Liability of a party to the other party for
fraud or willful misconduct.

    


    Section
9.7       Exercise of Remedies by Purchaser
Indemnified Parties other than the Purchaser.  No Purchaser
Indemnified Party (other than the Purchaser or any successor or assignee of the
Purchaser) is entitled to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Purchaser (or any successor or assignee
of the Purchaser) consents to the assertion of the indemnification claim or the
exercise of such other remedy.

    


    Section
9.8      Exclusive Remedy.Notwithstanding anything contained in this Agreement to
the contrary, the parties acknowledge and agree that, except for claims of fraud
or willful misconduct, the indemnities set forth in this Article 9 will be the
sole and exclusive remedy of Purchaser for any breach, default, inaccuracy or
failure of any of the warranties, representations, conditions, covenants or
agreements by the Seller or the Shareholders contained in this Agreement and/or
in any certificate, document, writing or instrument delivered by the Seller or
the Shareholders pursuant to this Agreement, whether for Losses or other legal
or equitable relief and whether based upon contract, tort or upon any other
theory of law and, with respect to indemnification, where applicable, be subject
to the limitations and procedures contained in this Article
9.

    


    ARTICLE
10

    GENERAL
PROVISIONS

    


    Section
10.1     Selling Parties’ Representative.

    


    (a)       By
virtue of their execution of this Agreement, each of the Seller and each
Shareholder designates and appoints Peter D. Marx (the “Selling Parties’
Representative”) as its agent and attorney-in-fact with full power and authority
to act for and on behalf of each of them to give and receive notices and
communications, to accept service of process on behalf of each of them pursuant
to Section 9.4(f) and Section 10.12, to agree to, negotiate, enter into
settlements and compromises of, and comply with Judgments of courts or other
Governmental Authorities and awards of arbitrators, with respect to, any claims
by any Purchaser Indemnified Party against the Seller or any Shareholder or by
the Seller or any Shareholder against any Purchaser Indemnified Party, or any
other dispute between any Purchaser Indemnified Party and the Seller or any
Shareholder, in each case relating to this Agreement or the transactions
contemplated by this Agreement and to take all actions that are either (i)
necessary or appropriate in the judgment of the Selling Parties’ Representative
for the accomplishment of the foregoing or (ii) specifically mandated by the
terms of this Agreement.  Notices or communications to or from the
Selling Parties’ Representative constitute notice to or from the Seller and each
Shareholder for all purposes under this Agreement.


    
      
         


      

      
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    (b)       The
Selling Parties’ Representative may delegate its authority as Selling Parties’
Representative to any one of the Shareholders for a fixed or indeterminate
period of time upon not less than 10 business days’ prior written notice to the
Purchaser in accordance with Section 10.2.  In the event of the death
or incapacity of the Selling Parties’ Representative, a successor Selling
Parties’ Representative will be elected promptly by the Shareholders who as of
the Closing Date hold of record a majority of the shares of the Seller’s common
stock held by such Shareholders, and the Shareholders will so notify the
Purchaser.  Each successor Selling Parties’ Representative has all of
the power, authority, rights and privileges conferred by this Agreement upon the
original Selling Parties’ Representative, and the term “Selling Parties’
Representative” as used in this Agreement includes any successor Selling
Parties’ Representative.

     

    (c)       A
decision, act, instruction or Consent of the Selling Parties’ Representative
constitutes a decision, act, instruction or Consent of the Seller and all the
Shareholders and is final, binding and conclusive upon the Seller and the
Shareholders, and the Purchaser and any Indemnified Party may rely upon any such
decision, act, instruction or Consent of the Selling Parties’ Representative as
being the decision, act, instruction or Consent of the Seller and the
Shareholders.  The Purchaser is hereby relieved from any Liability to
any Person for any acts done or omissions by the Purchaser in accordance with
such decision, act, instruction or Consent of the Selling Parties’
Representative.  Without limiting the generality of the foregoing, the
Purchaser is entitled to rely, without inquiry, upon any document delivered by
the Selling Parties’ Representative as being genuine and correct and having been
duly signed or sent by the Selling Parties’ Representative.

     

    (d)       This
appointment and grant of power and authority by the Seller and the Shareholders
to the Selling Parties’ Representative pursuant to this Section 10.1 is coupled
with an interest, is in consideration of the mutual covenants made in this
Agreement, is irrevocable and may not be terminated by the act of the Seller or
any Shareholder or by operation of Law, whether upon the death or incapacity of
any Shareholder, or by the occurrence of any other event.

    


    Section
10.2     Notices.  All notices and other
communications under this Agreement must be in writing and are deemed duly
delivered when (a) delivered if delivered personally or by nationally recognized
overnight courier service (costs prepaid), (b) sent by facsimile with
confirmation of transmission by the transmitting equipment (or, the first
business day following such transmission if the date of transmission is not a
business day) or (c) received or rejected by the addressee, if sent by United
States of America certified or registered mail, return receipt requested; in
each case to the following addresses or facsimile numbers and marked to the
attention of the individual (by name or title) designated below (or to such
other address, facsimile number or individual as a party may designate by notice
to the other parties):

    


    If to the
Seller:

    


    Advanced
Combustion Technology, Inc.

    1106
Hooksett Road

    Hooksett,
New Hampshire 03106

    


    Attention:
Peter D. Marx

    Fax no.:
(603) 627-9449


    
      
         


      

      
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    with a
mandatory copy (not constituting notice) to:

    


    Berkowitz,
Trager and Trager, LLC

    8 Wright
Street

    Westport,
Connecticut 06880

    


    Attention:
Paul Berg

    Fax no:
(203) 226-3801

    


    If to the
Purchaser:

    


    Fuel
Tech, Inc.

    27601
Bella Vista Parkway

    Warrenville,
Illinois 60555

    


    Attention:
Legal Department

    Fax no.:
630.845.4501

    


    If to a
Shareholder:

    


    Peter D.
Marx

    11
Fieldstone Drive

    Hooksett,
New Hampshire 03106

    Fax no.:
(603) 218-6094

    


    Robert W.
Pickering

    74
Oakmont Drive

    Concord,
New Hampshire

    Fax no.:
(603) 289-0882

    


    Charles
E. Trippel

    16 Lewis
Road

    Marlborough,
Connecticut 06447

    Fax no.:
(860) 371-2346

    


    Section
10.3     Amendment.  This Agreement may not
be amended, supplemented or otherwise modified except in a written document
signed by each party to be bound by the amendment and that identifies itself as
an amendment to this Agreement.

     

    Section
10.4    Waiver and Remedies.  The parties may (a)
extend the time for performance of any of the obligations or other acts of any
other party to this Agreement, (b) waive any inaccuracies in the representations
and warranties of any other party to this Agreement contained in this Agreement
or in any certificate, instrument or document delivered pursuant to this
Agreement or (c) waive compliance with any of the covenants, agreements or
conditions for the benefit of such party contained in this
Agreement.  Any such extension or waiver by any party to this
Agreement will be valid only if set forth in a written document signed on behalf
of the party or parties against whom the waiver or extension is to be
effective.  Any such extension or waiver signed by the Selling
Parties’ Representative is binding upon and effective against the Seller and
each Shareholder regardless of whether or not the Seller or such Shareholder has
in fact signed the extension or waiver.  No extension or waiver will
apply to any time for performance, inaccuracy in any representation or warranty,
or noncompliance with any covenant, agreement or condition, as the case may be,
other than that which is specified in the written extension or
waiver.  No failure or delay by any party in exercising any right or
remedy under this Agreement or any of the documents delivered pursuant to this
Agreement, and no course of dealing between the parties, operates as a waiver of
such right or remedy, and no single or partial exercise of any such right or
remedy precludes any other or further exercise of such right or remedy or the
exercise of any other right or remedy.  Any enumeration of a party’s
rights and remedies in this Agreement is not intended to be exclusive, and a
party’s rights and remedies are intended to be cumulative to the extent
permitted by law and include any rights and remedies authorized in law or in
equity.


    
      
         


      

      
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    Section
10.5     Entire Agreement.   This
Agreement (including the Schedules and Exhibits hereto and the documents and
instruments referred to in this Agreement that are to be delivered at the
Closing) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties, or
any of them, written or oral, with respect to the subject matter of this
Agreement.

    


    Section
10.6     Assignment and Successors and No Third Party
Rights.  This Agreement binds and benefits the parties and their
respective heirs, executors, administrators, successors and
assigns.  Seller may not assign any of its rights under this Agreement
without the prior written consent of the Purchaser (which consent may be
withheld in the Purchaser’s sole and absolute discretion); provided, however,
that Seller may assign its rights under this Agreement to a corporation or
limited liability company formed in the United States provided that such entity
(a) is owned solely and exclusively by the Shareholders, and (b) unconditionally
and irrevocably assumes all of the Seller’s duties and obligations under this
Agreement and all Excluded Liabilities of the Seller pursuant to a written
assumption agreement in form and substance satisfactory to the
Purchaser.  Nothing expressed or referred to in this Agreement will be
construed to give any Person, other than the parties to this Agreement, any
legal or equitable right, remedy or claim under or with respect to this
Agreement or any provision of this Agreement except such rights as may inure to
a successor or permitted assignee under this Section. 

    


    Section
10.7     Severability.  If any provision of
this Agreement is held invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions of this Agreement are not
affected or impaired in any way and the parties agree to negotiate in good faith
to replace such invalid, illegal and unenforceable provision with a valid, legal
and enforceable provision that achieves, to the greatest lawful extent under
this Agreement, the economic, business and other purposes of such invalid,
illegal or unenforceable provision.

    


    Section
10.8     Exhibits and Schedules.  The
Exhibits and Schedules to this Agreement are incorporated herein by reference
and made a part of this Agreement.  The Seller Disclosure Schedule and
the Purchaser Disclosure Schedule are arranged in sections and paragraphs
corresponding to the numbered and lettered sections and paragraphs of Article 3,
Article 4 and Article 6, as applicable.  Statements in one section of the Seller Disclosure Schedule
may specifically cross reference other applicable
sections or parts of the Seller Disclosure Schedule without repeating disclosure
that applies to more than one section. In addition, any matters disclosed in any
section of this Agreement or in any section of the Seller Disclosure Schedule
shall be deemed to qualify other sections of this Agreement or the Seller
Disclosure Schedule only to the extent it is reasonably clear that such
disclosure applies.  The listing or inclusion of a copy of a
document or other item is not adequate to disclose an exception to any
representation or warranty in this Agreement unless the representation or
warranty relates to the existence of the document or item
itself.


    
      
         


      

      
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    Section
10.9     Interpretation.  In the negotiation
of this Agreement, each party has received advice from its own
attorney.  The language used in this Agreement is the language chosen
by the parties to express their mutual intent, and no provision of this
Agreement will be interpreted for or against any party because that party or its
attorney drafted the provision.

    


    Section
10.10   Governing Law.  Unless any Exhibit or Schedule
specifies a different choice of law, the internal laws of the State of Delaware
(without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of laws of any other jurisdiction) govern all matters
arising out of or relating to this Agreement and its Exhibits and Schedules and
all of the transactions it contemplates, including its validity, interpretation,
construction, performance and enforcement and any disputes or controversies
arising therefrom or related thereto.  

    


    Section 10.11   Specific
Performance.  The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  The
parties accordingly agree that, in addition to any other remedy to which they
are entitled at law or in equity, the parties are entitled to seek injunctive relief to prevent breaches of
this Agreement and otherwise to enforce specifically the provisions of this
Agreement.  Each party expressly waives any requirement that any other
party obtain any bond or provide any indemnity in connection with any action
seeking injunctive relief or specific enforcement of the provisions of this
Agreement.

    


    Section
10.12   Jurisdiction and Service of Process. Each party hereto irrevocably and unconditionally (a)
agrees that any suit, action or other
legal proceeding arising out of this Agreement must be brought in the
United States District Court for the Northern District of Illinois or, if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction
in  DuPage  County, Illinois (b) consents to the
jurisdiction of any such court in any such
suit, action or proceeding; and (c)
waives any objection which such party may
have to the laying of venue of any such suit,
action or proceeding in any such court. 

    


    Section 10.13   Waiver
of Jury Trial.  Each of the
parties knowingly, voluntarily and irrevocably waives, to the fullest extent
permitted by law, all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the transactions contemplated by this Agreement or
the actions of any party to this Agreement in negotiation, administration,
performance or enforcement of this Agreement.


    
      
         


      

      
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    Section
10.14  Expenses.  Except as otherwise provided in this
Agreement, each party will pay its respective direct and indirect expenses
incurred by it in connection with the preparation and negotiation of this
Agreement and the consummation of the transactions contemplated by this
Agreement, including all fees and expenses of its advisors and
representatives.  If this Agreement is terminated, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from any breach of this Agreement by another party.

    


    Section
10.15   Counterparts.  The parties may execute this
Agreement in multiple counterparts, each of which constitutes an original as
against the party that signed it, and all of which together constitute one
agreement.  This Agreement is effective upon delivery of one executed
counterpart from each party to the other parties.  The signatures of
all parties need not appear on the same counterpart.  The delivery of
signed counterparts by facsimile or email transmission that includes a copy of
the sending party’s signature(s) is as effective as signing and delivering the
counterpart in person.

    


    [Signature
page follows.]


    
      
         


      

      
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    The parties have executed and delivered
this Agreement as of the date indicated in the first sentence of this
Agreement.

    


    
      
        	
                FUEL
      TECH, INC.

              
	 
      	 
      
	
                By:

              	
                /s/ John F. Norris Jr.

              
	 
      	
                John
      F. Norris Jr.

              
	 
      	
                Chief
      Executive Officer

              
	 
      	 
      
	
                ADVANCED
      COMBUSTION

                TECHNOLOGY,
      INC.

              
	 
      	 
      
	
                By:

              	
                /s/ Peter D. Marx

              
	 
      	
                Peter
      D. Marx

              
	 
      	
                President

              


      

    

    


    
      
        
          	
                  /s/ Peter D. Marx

                
	
                  Peter
      D. Marx, in his individual capacity

                
	 
      
	
                  /s/ Robert W. Pickering

                
	
                  Robert
      W. Pickering, in his individual capacity

                
	 
      
	
                  /s/ Charles E. Trippel

                
	
                  Charles
      E. Trippel, in his individual
capacity

                


        

      

    


    
      
         


      

      
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    ACCEPTANCE
AND AGREEMENT OF SELLING PARTIES’ REPRESENTATIVE

     

    The
undersigned, being the Selling Parties’ Representative appointed in Section 10.1
of the foregoing Agreement, agrees to serve as the Selling Parties’
Representative and to be bound by the terms of the Agreement pertaining to that
role.

     

    Date:
December 5, 2008

    


    
      
        	
                /s/ Peter D. Marx

              
	
                Peter
      D. Marx

              


      

    


    
      
         


      

      
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