Document:

20-F

Exhibit 10.2  

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the
incorporation by reference in the previously filed Registration Statements on Form F-3 (No
333-130048) and Form S-8 (No 333-110696, 333-100971 and 333-11650) of B.O.S. Better Online
Solutions Ltd. of our report dated March 25, 2005, with respect to the financial
statements of Odem Electronic Technologies 1992 Ltd. included in this Annual Report on
Form 20-F for the year ended December 31, 2005. 

		
		/S/ Kesselman & Kesselman
	 
	Jerusalem, Israel	Kesselman & Kesselman
	   June 27, 2006	Certified Public Accountants (Israel)
		A member of PricewaterhouseCoopers International LimitedExhibit 10.1

    
      

    

     

    Exhibit
      10.1

    

      ASSET
        PURCHASE AGREEMENT

       

      THIS
        ASSET PURCHASE AGREEMENT (this “Agreement”)
        is
        effective as of June 22, 2006 (the “Effective
        Date”),
        by
        and among ELECTRONIC
        BILLBOARD TECHNOLOGY, INC.,
        a
        Delaware corporation (the “Seller”),
        NANO-PROPRIETARY,
        INC.,
        a Texas
        corporation (the “Stockholder”),
        NOVUS
        DISPLAYS, LLC,
        an Ohio
        limited liability company (the “Purchaser”),
        and
NOVUS
        COMMUNICATION TECHNOLOGIES, INC.,
        an Ohio
        corporation, the sole Member of Purchaser (the “Member”).
        

       

      Background

       

      Seller,
        Stockholder and Member have entered into that certain Patent Purchase Agreement
        dated as of the Effective Date regarding substantially all of the system
        and
        method patents and patent applications related thereto of Seller related
        to
        digital billboard networks and advertising therewith (the “Patent
        Purchase Agreement”).

       

      Seller
        desires to sell and Purchaser desires to purchase substantially all of the
        remaining assets of Seller, not otherwise included in the Patent Purchase
        Agreement, including those related to the digital or electronic display business
        of Seller (the “Business”),
        all
        as more particularly described in this Agreement.

       

      NOW
        THEREFORE,
        in
        consideration of the representations, warranties and covenants contained
        in this
        Agreement and other consideration, the sufficiency of which is hereby
        acknowledged, the parties agree as follows:

       

      1.    CLOSING.

       

      The
        closing of this Agreement (the “Closing”)
        will
        take place within five business days following the date on which the conditions
        set forth in this Agreement have been satisfied or duly waived or on such
        other
        date as the parties mutually agree, but in no event later than June 22, 2006
        (the “Closing
        Date”).

       

      2.    ASSETS
        TO BE PURCHASED.

       

      On
        the
        Closing Date and subject to the terms and conditions of this Agreement, Seller
        shall sell, convey, transfer, assign, set over and deliver to Purchaser all
        of
        Seller’s right, title and interest in and to those of following assets which
        Purchaser owns on the Closing Date (collectively, the “Purchased
        Assets”):

       

      2.1 all
        Intellectual Property used in the Business or otherwise owned by Seller,
        including, but not limited to, the items listed and described on Exhibit
        A;
        as used
        herein, “Intellectual
        Property”
        includes:

       

      (a)    registered
        and unregistered trademarks, service marks, trade dress, brands, logos, symbols,
        emblems and slogans, together with the goodwill associated with the foregoing
        and any applications to register the foregoing;

      
        
          
          

        

        
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      (b)    copyrights
        (including any registrations therefor), works of authorship, maskworks,
        schematics, proprietary information, know-how, trade secrets, computer software,
        technology, ideas, algorithms, methods, processes, and inventions;

      

      (c)    patents
        and patent applications (and all patents issuing therefrom), including, but
        not
        limited to, those listed in Exhibit
        A,
        and all
        continuations, continuations-in-part, divisionals, reexaminations, reissues,
        extensions, and foreign counterparts, as well as all patents or patent
        applications claiming priority from any of the foregoing, and the right to
        claim
        priority to any of the foregoing (the assets described in this section 2.5(c)
        are referred to herein as the “Patent
        Assets”);

      

      (d)    all
        documents and documentation (whether in written or electronic form), owned,
        possessed, in the custody of or under the control of Seller, which are related
        to the Intellectual Property, including, but not limited to, research
        documentation, inventors’ notebooks, prototypes, designs, software and similar
        materials, invention disclosure documents, and file histories for any patents
        and patent applications; and

      

      (e)    the
        right
        to all causes of action (either in law or in equity) and the right to sue,
        counterclaim, cross-claim, and recover for past, present or future infringement,
        misappropriation or violation of the Intellectual Property (or any portion
        thereof) in the United States and throughout the world.

      

      2.2 all
        competitor data, mailing lists and all sales, pricing, prototypes, samples,
        drawings, research notes, writings, experimental results, product development,
        business plans, market appraisals and information and other data, files,
        records
        and reports relating to the Purchased Assets or the Business;

       

      2.3 any
        existing customer and supplier lists;

       

      2.4 all
        software and computer hardware owned by Seller (whether or not listed on
        Exhibit
        A)
        and
        used in the Business or otherwise owned by Seller; and
        

       

      2.5 all
        other
        miscellaneous assets of Seller that are used in Business.

       

      3.    EXCLUDED
        ASSETS.

       

      Notwithstanding
        any other provision of this Agreement, Seller shall retain and shall not
        transfer to Purchaser the following assets (the “Excluded
        Assets”):

       

      3.1 all
        of
        Seller’s cash on hand as of the Closing Date;

       

      3.2 all
        accounts receivable of Seller in existence at the time of Closing; 

       

      3.3 all
        system and method patents or patent applications (foreign or domestic) related
        thereto, owned or licensed by Seller, which are the subject of the Patent
        Purchase Agreement; 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      3.4 the
        organizational documents, including corporate minute books and stock books,
        having to do solely with the organization of Seller;

       

      3.5 financial
        and accounting records of the Seller;

       

      3.6 the
        corporate and trade name of Seller; and

       

      3.7 other
        items of excluded assets as described in Exhibit
        B.
        

       

      4.    PURCHASE
        PRICE; CASH TO CLOSE; DOCUMENTS TO BE DELIVERED AT CLOSING; CLOSING
        PROCEDURE.

       

      4.1 Purchase
        Price.
        The
        total purchase price for the Purchased Assets payable hereunder shall be
        $500,000.00 (the “Purchase
        Price”)
        which
        shall be payable as follows: (i) $498,000.00 in cash at the Closing (the
        “Cash
        to Close”),
        (ii)
        $1,000.00 to each of Seller and Stockholder pursuant to the terms and conditions
        of the non-compete agreements between Purchaser and each of Seller and
        Stockholder in the form set forth on Exhibit
        C
        (the
“Noncompete
        Agreements”);
        and
        (iii) a twenty-five percent (25%) membership interest in the Purchaser. All
        of
        the Cash to Close shall be paid in immediately available funds to Seller
        in the
        manner set forth on a closing statement that Purchaser prepares and delivers
        to
        Seller prior to the Closing (the “Closing
        Statement”).
        The
        parties hereby agree that the Closing Statement shall reflect an adjustment
        in
        favor of Purchaser in the amount of $200,000, which reflects the amount
        Purchaser has previously paid to Seller towards the Purchase Price.

       

      4.2 Documents
        to be Delivered at Closing.
        The Noncompete
        Agreements, the Bill of Sale and Assignment and Assumption Agreement (as
        defined
        below), the
        Intellectual Property Assignment and Assumption Agreements (as defined below),
        the Operating Agreement of Purchaser (as defined below) and
        any
        other agreements, documents, or instruments that this Agreement contemplates
        are
        collectively referred to in this Agreement as the “Collateral
        Agreements.”

       

      4.2.1  At
        the
        Closing, Seller shall deliver to Purchaser:

       

      (a) (i)
        documents in form and substance satisfactory to counsel for Purchaser evidencing
        releases of any liens, claims, pledges, security interests or other encumbrances
        (collectively, the “Liens”)
        on any
        of the Purchased Assets, (ii) such other instruments of conveyance, assignment
        and transfer, in form and substance satisfactory to Purchaser and its counsel,
        as shall be effective to convey, transfer and assign to Purchaser good and
        marketable title to the Purchased Assets, free of all Liens;

       

      (b) a
        copy of
        the text of the resolutions adopted by the board of directors of Seller and
        the
        Stockholder authorizing the execution, delivery and performance of this
        Agreement and the consummation of all of the transactions contemplated in
        this
        Agreement, duly certified by Seller’s secretary or assistant secretary to the
        effect that such copies are true, correct and complete copies of such
        resolutions and that such resolutions were duly adopted and have not been
        amended or rescinded;

       

      
        
          
          

        

        
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      (c) a
        certificate of good standing of Seller from the secretary of state of the
        state
        where Seller is incorporated and in each other jurisdiction in which Seller
        conducts business;

       

      (d) an
        incumbency certificate executed on behalf of Seller by its secretary certifying
        the signature and office of each officer executing this Agreement and the
        other
        documents and instruments contemplated in this Agreement;

       

      (e) a
        certificate that an officer of Seller executes, dated as of the Closing Date,
        certifying as to the fulfillment of the conditions set forth in Sections
        10.1
        and
10.2;
        and

       

      (f) a
        receipt
        for the Cash to Close.

       

      4.2.2 At
        the
        Closing, Purchaser will deliver to Seller:

       

      (a) the
        Cash
        to Close;

       

      (b) the
        Closing Statement;

       

      (c) a
        copy of
        the text of the resolutions adopted by the sole member of Purchaser authorizing
        the execution, delivery and performance of this Agreement and the consummation
        of all of the transactions contemplated in this Agreement, duly certified
        by
        Purchaser’s secretary or assistant secretary to the effect that such copies are
        true, correct and complete copies of such resolutions and that such resolutions
        were duly adopted and have not been amended or rescinded;

       

      (d) a
        certificate of good standing of Purchaser from the secretary of state of
        the
        state where Purchaser is organized and in each other jurisdiction in which
        Purchaser conducts business;

       

      (e) an
        incumbency certificate executed on behalf of Purchaser by its secretary
        certifying the signature and office of each officer or representative executing
        this Agreement and the other documents and instruments contemplated in this
        Agreement; and

       

      (f) a
        certificate that an officer of Purchaser executes, dated as of the Closing
        Date,
        certifying as to the fulfillment of the conditions set forth in Sections
        9.1
        and
9.2.

       

      4.2.3  At
        the
        Closing, the parties shall deliver to each other the following:

       

      (a) the
        Noncompete Agreement;

       

      (b) the
        operating agreement of Purchaser which reflects the ownership by Seller of
        a 25%
        membership interest and the ownership by Advanced Technology Incubator, Inc.
        ("ATI")
        of a
        5% membership, in a form satisfactory to Purchaser, Seller and Member (the
        “Operating
        Agreement”);

       

      (c) a
        bill of
        sale and assignment and assumption agreement pursuant to which, as of the
        Closing Date, Seller will assign to Purchaser all the Purchased Assets, and
        Purchaser will assume the Assumed Liabilities (as defined below), substantially
        in the form set forth on Exhibit
        D
        (“Bill
        of Sale and Assignment and Assumption Agreement”);
        and

       

      
        
          
          

        

        
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      (d) individual
        instruments of assignment or transfer by country and corporate owner, of
        the
        patents, trademarks and copyrights which constitute the Intellectual Property,
        sufficient to convey and vest full legal and equitable title in the Intellectual
        Property to the Purchaser, in recordable form, if not already registered
        or
        applied for in the name of the Purchaser (the “Intellectual
        Property Assignment and Assumption Agreements”).

       

      5.    REPRESENTATIONS
        AND WARRANTIES OF SELLER AND STOCKHOLDER.

       

      Seller
        and Stockholder, jointly and severally, represent and warrant to Purchaser
        and
        Member that, except as may be set forth in particularity and in detail on
        the
        disclosure schedules attached to this Agreement, which shall be arranged
        in
        paragraphs corresponding to the numbered paragraphs in this Section 5
        (the
“Disclosure
        Schedules”),
        the
        following statements are true and correct as of this date and will be true
        and
        correct as of the Closing Date:

       

      5.1    Organization;
        Good Standing; Ownership. Seller
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware. Stockholder holds of record and owns beneficially
        1,000 shares of Seller's common stock, constituting all of the issued and
        outstanding shares of Seller's capital stock. 

       

      5.2    No
        Violation. The
        execution and delivery of this Agreement, the Collateral Agreements and any
        documents and agreements that Seller or Stockholder are to execute and deliver
        pursuant to this Agreement to consummate the transactions contemplated hereby
        do
        not and will not (i) to the knowledge of Seller and Stockholder, violate
        any
        provision of the terms of any applicable law, rule or regulation of any
        governmental body having jurisdiction, the violation of which would have
        a
        material adverse effect on Seller or Stockholder, (ii) conflict with or result
        in a breach of any provision of Seller’s articles of incorporation or bylaws or
        result in a default under any of the terms, conditions or provisions of,
        or
        result in the breach of, conflict with, or accelerate or permit the acceleration
        of the performance required by, any note, bond, mortgage, indenture, license,
        agreement or other instrument or obligation of any nature whatsoever, whether
        written or oral, to which Seller or Stockholder is a party, or (iii) to Seller’s
        or Stockholder’s knowledge, violate any order, writ, injunction, decree,
        statute, rule or regulation applicable to Seller, Stockholder or any of their
        respective properties or assets in a manner that would have a material adverse
        effect on Seller or Stockholder.

       

      5.3    Authorization
        and Validity. The
        execution, delivery, and performance of this Agreement and the Collateral
        Agreements by Seller have been (or prior to the Closing will be) duly and
        validly authorized and approved by all necessary action on the part of Seller,
        and this Agreement and the Collateral Agreements are legally binding upon
        and
        enforceable against Seller and Stockholder in accordance with their respective
        terms, except to the extent that such enforcement may be limited by bankruptcy,
        insolvency, reorganization, moratorium or other laws relative to or affecting
        the rights and remedies of creditors generally and by general principles
        of
        equity (regardless of whether in equity or at law).

       

      
        
          
          

        

        
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      5.4    Marketable
        Title; No Liens. Seller
        has good and marketable title to the Purchased Assets, free and clear of
        all
        Liens, except for Liens set forth in Schedule
        5.4
        to be
        satisfied at Closing. Purchaser shall transfer to Purchaser at Closing good
        and
        marketable title to the Purchased Assets, and the Purchased Assets shall
        be free
        from all Liens.

       

      5.5    Condition
        of Purchased Assets. The
        Purchased Assets are all of the assets, except for those assets subject to
        the
        Patent Purchase Agreement, which Seller currently uses for the operation
        of the
        Business. To the extent applicable, the Purchased Assets are in a good state
        of
        repair, reasonable wear and tear only excepted and meet and fulfill the
        requirements of all applicable safety, environment, building, zoning, fire,
        health and other laws and ordinances and rules and regulations affecting
        the
        same.

       

      5.6    Contracts.
        Seller
        has no existing contracts or licenses. 

       

      5.7    Real
        Property/Environmental Matters.
        Seller
        does not, and has not, leased or owned any real property. Seller is unaware
        of
        any circumstance that would have created any obligation of Seller with regard
        to
        any environmental liabilities or obligations.

       

      5.8    Labor
        and Employment Matters. Seller
        has had no employees since 2002.
        Seller
        has at all times been in compliance with all applicable laws respecting
        employment and employment practices and the terms and conditions of employment
        and wages and hours, including, without limitation, any such laws respecting
        employment discrimination; equal employment opportunity; immigration; social
        security; Medicare and other similar taxes; occupational safety and health;
        the
        Worker Adjustment and Retraining Notification Act (or other similar state
        or
        local statute or regulation ); and unfair labor practices. Seller
        has never been a party to any pension, retirement, profit sharing, bonus
        or
        other benefit plan, arrangement or understanding applicable to any of its
        employees. 

       

      5.9    Solvency.
        Stockholder is the sole creditor of Seller. Seller and Stockholder shall
        not
        cause Seller to file for bankruptcy protection within ninety days from the
        Closing Date.

       

      5.10    Financial
        Statements. The
        annual and interim financial statements and other financial information related
        to the Purchased Assets delivered to Purchaser prior to the date hereof,
        (i)
        present fairly in all material respects the financial position and results
        of
        operations of the Business as of the date of such financial statements, and
        (ii)
        are true and correct and in accordance with the books of account and records
        of
        the Business.

       

      5.11    Litigation.
        There
        are
        no claims, lawsuits, actions, arbitrations or other proceedings pending with
        respect to this Agreement and the transactions contemplated hereby. Other
        than
        as set forth on Schedule
        5.11,
        there
        are no claims, lawsuits, actions, arbitrations or other proceedings or
        governmental investigations pending or, to the knowledge of Seller and
        Stockholder, threatened against Seller or any of its officers, directors,
        employees or affiliates involving, affecting or relating to Seller, Stockholder,
        the Business or the Purchased Assets (collectively, the “Claims”).
        The
        information contained on each Claim set forth on Schedule
        5.11,
        includes: (i) the name of each party to the 

       

      
        
          
          

        

        
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      Claim;
        (ii) the monetary amount being demanded by each party to the Claim; (iii)
        if
        there are demands for something other than monetary damages, a description
        of
        the relief being sought; (iv) a caption name and case number for the Claim;
        (v)
        the court or administrative agency where such Claim is pending; (vi) the
        status
        of the Claim, including if any settlement discussions have occurred; and
        (vii)
        if such Claim is covered by insurance and if so, the name of the insurance
        carrier, and whether or not the insurance carrier has reserved any rights
        with
        respect to such Claim. There are no outstanding judgments, orders, injunctions,
        decrees, stipulations or awards (whether rendered by a court or administrative
        agency, or by arbitration) against Seller or the Business.

       

      5.12    Intellectual
        Property. With
        respect to the Intellectual Property:

       

      5.12.1 Seller
        is
        the owner of the Intellectual Property free and clear of any Liens, encumbrances
        or defects in title, and Seller has the right to use the same in the conduct
        of
        the Business and to assign such rights to Purchaser;

       

      5.12.2 Seller
        has no licensed Intellectual Property;

       

      5.12.3 Except
        for patent prosecution activities, no proceedings or actions before any court
        or
        tribunal (including the USPTO or equivalent authority anywhere in the world)
        have been instituted, are pending or, to the knowledge of Seller or Stockholder,
        threatened which challenge any rights with respect to the validity or
        enforceability of the Intellectual Property, or which in any way relate to
        the
        Intellectual Property;

       

      5.12.4 No
        issued
        patent or pending patent application has been or is now involved in any
        interference, reissue, reexamination or opposition proceeding, and, to the
        knowledge of Seller or Stockholder, there is no potentially interfering patent
        or patent application owned by any third party;

       

      5.12.5 To
        the
        knowledge of Seller or Stockholder, all patents, patent applications, registered
        trademarks and service marks, and copyrights included in the Intellectual
        Property are valid, enforceable and subsisting;

       

      5.12.6 To
        the
        knowledge of Seller or Stockholder, there are no defects in the prosecution
        of
        the Patent Assets and all duties of disclosure owed to the USPTO (or equivalent
        patent authority anywhere in the world) have been fulfilled in the prosecution
        of the Patent Assets;

       

      5.12.7 To
        the
        knowledge of Seller or Stockholder, there has been no fraud or inequitable
        conduct during the prosecution of the Patent Assets; 

       

      5.12.8 Except
        as
        set forth on Schedule 5.12.8,
        to the
        knowledge of Seller or Stockholder, there is no unauthorized use, disclosure,
        infringement or misappropriation of the Intellectual Property;

       

      5.12.9 To
        the
        knowledge of Seller or Stockholder, neither Seller nor the Intellectual Property
        (including the practice of any claimed invention in the Patent Assets) is
        infringing upon or otherwise violating the rights of others (including, but
        not
        limited to, the patent rights of any other party);

       

      
        
          
          

        

        
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      5.12.10 Except
        for patent prosecution activities, the validity, enforceability, scope, content
        or title of any Intellectual Property has not been challenged, questioned
        or
        threatened by any third party, in any way (including, but not limited to,
        the
        patentability of any claimed invention in a patent application);

       

      5.12.11 The
        patents and patent applications identified in Exhibit
        A
        are
        currently in compliance with all applicable legal requirements (including
        payment of filing, examination and maintenance fees), and are not subject
        to any
        maintenance fees, taxes or actions falling due prior to within thirty (30)
        days
        after the Closing Date; 

       

      5.12.12 The
        Intellectual Property is not subject to any outstanding order, decree, judgment,
        stipulation or charge;

       

      5.12.13 No
        licenses, sublicenses or agreements granting rights in any of the Intellectual
        Property have been granted or entered into by Seller, or will be granted
        or
        entered into by Seller other than to Purchaser or its designee;

       

      5.12.14 To
        the
        extent necessary to effectuate the transaction contemplated hereby, Seller
        has
        secured valid written assignments from all consultants, employees and others
        who
        contributed to the creation or development of Intellectual Property of the
        rights to such contributions that Seller does not already own by operation
        of
        law; 

       

      5.12.15 Seller
        is
        not obligated to pay any royalties or make similar payments in respect of
        the
        Intellectual Property; and

       

      5.12.16 The
        Intellectual Property is all of the intellectual property used in the Business
        and that is needed to operate the Business, and Exhibit
        A
        is a
        complete list of all issued patents and pending patent applications included
        in
        Intellectual Property.

       

      5.13    Approvals.
        There
        are
        no registrations, filings, applications, notices, consents, approvals, orders,
        qualifications and waivers required to be made, filed, given or obtained
        by
        Seller or Stockholder with, to or from any person or governmental authority
        in
        order to consummate the transactions contemplated herein.

       

      5.14    Insurance.
        Seller
        has no insurance policies which cover the Business or any of Seller’s assets.
        Neither Seller nor Stockholder has received any notice of a (a) cancellation
        or
        termination of any insurance policy covering Seller or its assets, or (b)
        refusal of coverage or that a defense will be afforded with reservation of
        rights.

       

      5.15    No
        Material Adverse Change. Since
        March 8, 2006, (i) there has not been any material adverse change in the
        business, assets, financial condition, or results of operations of Seller,
        and
        (ii) Seller has operated the Business consistent with past practices of the
        Business in the last three years.

       

      
        
          
          

        

        
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      5.16    Taxes.
        Seller
        has duly and timely filed (taking into account any extensions granted with
        respect thereto) all Tax Returns (as defined below) required to have been
        filed
        by, or with respect to, Seller. All such Tax Returns are true, complete and
        correct. All Taxes (as defined below) required to have been paid by (or
        presently claimed by any governmental authority to be due from) Seller, or
        with
        respect to a period covered by a Tax Return of Seller, whether or not shown
        on
        any Tax Return of Seller, have been paid or are shown on the balance sheet
        included in the financial statements of Seller that Seller has previously
        delivered to Purchaser.“Tax
        Returns”
means
        any return, report, information return, schedule, certificate, statement
        or
        other document filed or required to be filed with a governmental authority
        in
        connection with any Tax. “Tax”
means:
        (i) any income, alternative or add-on minimum tax, gross income, gross receipts,
        franchise, profits, including estimated taxes relating to any of the foregoing,
        or other similar tax or other like assessment or charge of similar kind
        whatsoever, together with any interest and any penalty, or additional amount
        imposed by any governmental authority responsible for the imposition of any
        such
        Tax (domestic or foreign); or (ii) any sales, use, ad valorem, business license,
        withholding, payroll, employment, excise, stamp, transfer, recording,
        occupation, premium, property, unclaimed property, value added, custom duty,
        severance, windfall profit or license tax, governmental fee or other similar
        assessment or charge, together with any interest and any penalty, or additional
        amount imposed by any governmental authority responsible for the imposition
        of
        any such tax (domestic or foreign).

       

      5.17    Disclosure.
        All
        information, schedules, documents and other materials delivered to the Purchaser
        by or on behalf of the Seller are true, correct and complete in all material
        respects. Seller
        has provided Purchaser with all material information it possesses, whether
        in
        written or non-written form, related to the Purchased Assets. Seller
        does not have knowledge of any fact that has specific application to Seller
        or
        the Purchased Assets (other than general economic or industry conditions)
        and
        that may materially adversely affect the Purchased Assets or the Business
        that
        has not been otherwise set forth in this Agreement. Seller
        has not knowingly provided access to any non-public information associated
        with
        the Purchased Assets or the Seller’s Business to any third party other than its
        authorized representatives.

       

      5.18    Seller’s
        and Stockholder’s representations and warranties contained in this Agreement
        will survive the Closing Date for a period of two (2)
        years; provided that the representations and warranties contained in Sections
        5.12 and 5.11
        will
        survive the Closing for a period equal to the relevant statute of limitations
        plus sixty days. Seller’s covenants will survive indefinitely unless otherwise
        stated in the individual covenant. The limitations on the survival of
        representations and warranties in this Agreement shall not limit any rights,
        causes of action or other claims Purchaser may have against Seller under
        common
        law, equity, statute or regulation.

       

      5.19    For
        purposes of all of the Representations and Warranties made by the Seller
        or
        Stockholder herein, any reference to the word(s) “knowledge” or “to the best of
        Seller’s or Stockholder’s knowledge” shall refer to the actual knowledge of Marc
        Eller, Zvi Yaniv and Douglas Baker, upon reasonable investigation or inquiry,
        as
        of the date of this Agreement.

       

      
        
          
          

        

        
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      6.    REPRESENTATIONS
        AND WARRANTIES OF PURCHASER.

       

      6.1 Good
        Standing and Organization. Purchaser
        is duly organized, validly existing and in good standing under the laws of
        the
        State of Ohio.

       

      6.2 Authority
        and Validity. The
        execution, delivery, and performance of this Agreement and the Collateral
        Agreements by Purchaser have been (or prior to the Closing will be) duly
        and
        validly authorized and approved by all necessary action on the part of
        Purchaser, and this Agreement and the Collateral Agreements are legally binding
        upon and enforceable against Purchaser in accordance with their terms, except
        to
        the extent that such enforcement may be limited by bankruptcy, insolvency,
        reorganization, moratorium or other laws relative to or affecting the rights
        and
        remedies of creditors generally and by general principles of equity (regardless
        of whether in equity or at law).

       

      6.3 No
        Violation. The
        execution and delivery of this Agreement and the documents and agreements
        to be
        executed and delivered pursuant to this Agreement to consummate the transactions
        contemplated hereby do not and will not (i) to the knowledge of Purchaser,
        violate any provision of the terms of any applicable law, rule or regulation
        of
        any governmental body having jurisdiction, (ii) result in a default under
        any of
        the terms, conditions or provisions of, or result in the breach of, or
        accelerate or permit the acceleration of the performance required by, any
        note,
        bond, mortgage, indenture, license, agreement or other instrument or obligation
        of any nature whatsoever to which Purchaser is a party, or (iii) violate
        any
        order, writ, injunction, decree, statute, rule or regulation applicable to
        Purchaser or any of its property or assets, and are enforceable in accordance
        with their terms.

       

      6.4 Litigation.
        There
        are
        no claims, lawsuits actions, arbitrations or other proceedings pending or,
        to
        the knowledge of Purchaser, threatened by or against Purchaser with respect
        to
        this Agreement, or which would materially affect the consummation of the
        transactions contemplated hereunder or any of the representations and warranties
        contained herein.

       

      Purchaser’s
        representations and warranties contained in this Agreement will survive the
        Closing Date for a period of two (2) years. The limitations on the survival
        of
        representations and warranties in this Agreement shall not limit any rights,
        causes of action or other claims Seller may have against Purchaser under
        common
        law, equity, statute or regulation. Purchaser’s covenants will survive
        indefinitely unless otherwise stated in the individual covenant.

       

      7.    CERTAIN
        PRE-CLOSING COVENANTS.

       

      From
        the
        Effective Date through the Closing Date:

       

      7.1 Conduct
        of Business. Seller
        shall carry on its business in the usual and normal course consistent with
        its
        past business practices and industry standards. Except with prior written
        consent of Purchaser, Seller shall not purchase any asset, or enter into
        any
        contract or agreement involving more than $1,000.

       

      
        
          
          

        

        
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      7.2 Access.
        Seller
        shall permit Purchaser and its representatives to have full access to Seller’s
        auditors and legal counsel and to all books and records of Seller at reasonable
        hours. Seller shall furnish Purchaser with such financial and operating data
        and
        other information with respect to any of the Purchased Assets as Purchaser
        may
        from time to time request.

       

      7.3 Maintenance
        of Purchased Assets. Seller
        shall maintain the Purchased Assets in good state of repair, reasonable wear
        and
        tear only excepted, and meet the requirements of all applicable safety,
        environment, building, zoning, fire, health and other laws, ordinances, rules
        and regulations affecting same.

       

      7.4 No
        Indebtedness. Seller
        will not create, incur, assume, guarantee or otherwise become liable with
        respect to any indebtedness for any reason whatsoever, except in the ordinary
        course of business.

       

      7.5 Accounting
        Practices. Seller
        shall maintain its accounting books, records and accounts in accordance with
        customary practices, consistently applied, and shall not make any change
        in any
        method of accounting or accounting principle, method, estimate or practice.
        Seller shall maintain all other files and records consistent with past
        practice.

       

      7.6 Corporate
        Existence. Seller
        shall maintain its corporate existence and powers, shall not make any change
        in
        its articles of incorporation or bylaws and shall not dissolve or
        liquidate.

       

      7.7 No
        Disposal of Purchased Assets. Except
        pursuant to the terms of any contract executed on or before the Effective
        Date
        and made known to Purchaser, or upon the direction of Purchaser, Seller shall
        not dispose of any of the Purchased Assets or enter into or assume any
        obligation with respect thereto, or modify or amend in any material respect,
        or
        terminate, any contract, agreement, lease, license or commitment which is
        part
        of the Purchased Assets, except as expressly contemplated by this Agreement.
        Seller shall not subject any of the Purchased Assets to any Liens, or suffer
        any
        Liens to exist.

       

      7.8 No
        Breach. Neither
        Seller nor Stockholder shall knowingly do any act or omit to do any act that
        will cause a breach of any contract, agreement, obligation, lease, license
        or
        commitment included in the Purchased Assets.

       

      7.9 Notice
        of Certain Events. Seller
        and Stockholder shall promptly notify Purchaser in writing of any threatened
        lawsuit, or claim against Seller or Stockholder relating to the business
        of
        Seller, or any adverse change or any projected or threatened adverse change
        to
        Seller or the Purchased Assets.

       

      7.10 Maintenance
        of Insurance. Seller
        shall keep in full force and effect insurance (including casualty and public
        liability policies) comparable in amount, scope and coverage maintained with
        respect to the Business as of the Effective Date.

       

      7.11 Obtaining
        Consents. Seller
        shall obtain any and all necessary consents and Approvals of creditors, whether
        secured or unsecured, or other third parties with respect to the transactions
        contemplated by this Agreement.

       

      
        
          
          

        

        
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      7.12 Representations
        and Warranties. Seller,
        Stockholder and Purchaser shall not take any action which would cause any
        of the
        representations or warranties made in this Agreement not to be true and correct
        in all respects on and as of the Closing Date with the same force and effect
        as
        if such representation or warranty had been made on and as of the Closing
        Date,
        except for changes in any such representation or warranty approved in writing
        by
        Purchaser or Seller (as the case may be). Seller, Stockholder and Purchaser
        shall not agree to take any actions prohibited by this Section 7.12.

       

      7.13 Joint
        Ventures. Seller
        shall not enter into any joint venture or partnership.

       

      7.14 Notice
        of Damages. Seller
        shall give prompt written notice to Purchaser of any damage to or destruction
        or
        loss of any Purchased Assets occurring prior to Closing which exceeds or
        may
        exceed an aggregate of $5,000.

       

      7.15 Public
        Statements. Seller,
        Stockholder and Purchaser hereby agree to make the public statement or press
        release set forth on Exhibit
        E
        at
        Closing, and no other public statement or release with respect to this Agreement
        and the transactions contemplated hereby shall be made by either Seller or
        Purchaser before or after the Closing Date without the prior written consent
        of
        such other party. 

       

      7.16 Notice
        Concerning Miscellaneous Contract and Licenses. Seller
        shall give prompt written notice to Purchaser of any occurrence, condition
        or
        act of which Seller becomes aware indicating that any of the other parties
        to
        the Miscellaneous Contract or Licenses intend to or is considering termination,
        non-renewal, a material reduction in the volume of, or refusal to consent
        to
        Seller’s assignment to Purchaser of any such contract prior to the end of its
        stated term.

       

      8.    COVENANTS
        WHICH INCLUDE POST CLOSING ACTIONS.

       

      8.1 Taxes.
        From
        and
        after the Effective Date, except for Taxes contested in good faith and by
        appropriate proceedings diligently conducted, Seller shall pay all Taxes
        levied
        against Seller or Stockholder or upon their properties and the Business,
        relating to events or time periods prior to the Closing Date, as they become
        due, and shall timely file all returns relating to such Taxes.

       

      8.2 Access
        to Books and Records. Following
        the Closing, Seller and Purchaser shall allow each other access to available
        books and records of the Business as either shall reasonably
        request.

       

      8.3 Notice
        to Customers. At
        Purchaser’s written request, Seller shall deliver to Purchaser or directly to
        any of Seller’s former customers or suppliers (i.e., those with which Seller has
        carried on any business activity within the 24 month period prior to the
        Effective Date), a letter prepared by Purchaser and executed by Seller, pursuant
        to which Seller shall advise each addressee that the Purchased Assets have
        been
        sold to Purchaser.

       

      8.4 Disclosure.
        Except
        as
        required by law, neither Seller, Stockholder nor Purchaser will, without
        the
        prior consent of the other parties, disclose any of the terms of this Agreement
        other than as set forth on Exhibit
        E to
        any
        third party, other than a party’s 

       

      
        
          
          

        

        
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      accountants,
        attorneys and advisors. Notwithstanding
        the foregoing, either party may file any documents it is legally required
        to
        file with the Securities and Exchange Commission upon timely notice to and
        consultation with the other party, it being understood that it is the intent
        of
        the parties to limit the disclosure of confidential information to the extent
        legally possible.

       

      8.5 No
        Solicitation. Seller
        and Stockholder agree that neither they, nor any of their affiliates, nor
        any of
        their respective directors, executive officers, agents or representatives
        will,
        directly or indirectly, (i) solicit, initiate or encourage (including by
        way of
        furnishing information) any inquiries or the making of any proposal with
        respect
        to any merger, consolidation or other business combination involving Seller
        or
        the acquisition of all or any significant part of the assets or capital stock
        (including, but not limited to, a control position voting interest) of Seller
        (an “Acquisition
        Transaction”),
        (ii)
        negotiate or otherwise engage in discussions with any person or entity with
        respect to any Acquisition Transaction, or that may reasonably be expected
        to
        lead to a proposal for an Acquisition Transaction, or (iii) enter into any
        agreement, arrangement or understanding (including any letter of intent,
        agreement in principle or similar agreement) with respect to any such
        Acquisition Transaction, in the case of each clauses (i), (ii) and (iii)
        other
        than in connection with the transactions with Purchaser contemplated by this
        Agreement.
        Seller
        and Stockholder agree to promptly advise Purchaser of any inquiries or proposals
        received by, any information requested from, or any negotiations or discussions
        sought to be initiated or continued with, Seller, Stockholder, their affiliates,
        or any of their respective directors, executive officers, agents or
        representatives, in each case from a person or entity (other than Purchaser)
        with respect to an Acquisition Transaction.

       

      8.6 Consulting
        Agreement.
        After
        the Closing Date, Purchaser and Stockholder shall enter into a consulting
        agreement in substantially the form attached hereto as Exhibit
        F
        with
        respect to certain employees of Stockholder the identity of which the parties
        shall mutually agree upon.

       

      9.    CONDITIONS
        TO SELLER’S AND STOCKHOLDER’S OBLIGATION TO CLOSE.

       

      The
        obligation of Seller and Stockholder to consummate this Agreement and the
        Collateral Agreements is subject to the satisfaction of the following
        conditions, unless waived by Seller and Stockholder:

       

      9.1 Accuracy
        of Representations and Warranties. The
        representations and warranties of Purchaser contained in this Agreement shall
        be
        true and correct except where the failure to be true and correct would not
        cause
        a material adverse change on Purchaser taken as a whole (it being understood
        that, notwithstanding anything to the contrary contained in this Agreement,
        for
        the sole purpose of determining whether there has been a material adverse
        change
        as a result of any inaccuracy of a representation or warranty of Purchaser,
        such
        representation or warranty shall be read as if it were not qualified by
“material” or “material adverse change” or other words of similar import), in
        each case on the date hereof and on the Closing Date (unless the representations
        and warranties address matters as of a particular date, in which case they
        shall
        remain true and correct in all respects as of such date).

       

      
        
          
          

        

        
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      9.2 Performance
        of Obligations. Purchaser
        shall have performed each obligation required to be performed by it under
        this
        Agreement prior to the Closing Date in all material respects.

       

      9.3 Deliverables.
        Seller
        shall have received from Purchaser those items set forth in Sections
4.2.2
        and
4.2.3.

       

      9.4 No
        Proceedings. No
        action
        or proceeding against Purchaser, Seller or Stockholder shall have been
        instituted or, to the knowledge of the parties, threatened that, if successful,
        could prohibit consummation or require substantial rescission of the
        transactions contemplated by this Agreement and the Collateral Agreements
        or
        divestiture by Purchaser of any business purchased hereunder or any of the
        Purchased Assets or impose material restrictions on the way Purchaser operates
        the Purchased Assets following the Closing.

       

      9.5 Contemporaneous
        Closing. The
        closing of the transactions contemplated by the Patent Purchase Agreement
        shall
        have occurred.

       

      10.    CONDITIONS
        TO PURCHASER’S OBLIGATION TO CLOSE.

       

      The
        obligation of Purchaser to consummate this Agreement and the Collateral
        Agreements is subject to the satisfaction of the following conditions, on
        or
        before the Closing Date unless waived by Purchaser:

       

      10.1    Accuracy
        of Representations and Warranties. The
        representations and warranties of Seller and Stockholder contained in this
        Agreement shall be true and correct except where the failure to be true and
        correct would not cause a material adverse change on Seller taken as a whole
        (it
        being understood that, notwithstanding anything to the contrary contained
        in
        this Agreement, for the sole purpose of determining whether there has been
        a
        material adverse change as a result of any inaccuracy of a representation
        or
        warranty of Seller or Stockholder, such representation or warranty shall
        be read
        as if it were not qualified by “material” or “material adverse change” or other
        words of similar import), in each case on the date hereof and on the Closing
        Date (unless the representations and warranties address matters as of a
        particular date, in which case they shall remain true and correct in all
        respects as of such date).

       

      10.2    Performance
        of Obligations. Seller
        and Stockholder shall have performed each obligation required to be performed
        by
        it under this Agreement prior to the Closing Date in all material
        respects.

       

      10.3    Deliverables.
        Purchaser
        shall have received from Seller and Stockholder those items set forth in
        Sections 4.2.1
        and
4.2.3.

       

      10.4    No
        Proceedings. No
        action
        or proceeding against Purchaser, Seller or Stockholder shall have been
        instituted or, to the knowledge of the parties, threatened that, if successful,
        could prohibit consummation or require substantial rescission of the
        transactions contemplated by this Agreement and the Collateral Agreements
        or
        divestiture by Purchaser of any business purchased hereunder or any of the
        Purchased Assets or impose material restrictions on the way Purchaser operates
        the Purchased Assets following the Closing.

       

      
        
          
          

        

        
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      10.5    Satisfaction
        of Creditors and Taxing Authorities. Seller
        shall have notified Purchaser of, and paid or otherwise dealt to Purchaser’s
        reasonable satisfaction with, any and all demands made by any creditor or
        taxing
        authority regarding obligations of Seller.

       

      10.6    Release
        of Liens. Seller
        shall have obtained a release of any and all security interests and Liens
        affecting the Purchased Assets and shall have delivered transfer documents
        satisfactory in form and substance to counsel for Purchaser assigning and
        conveying all such assets free and clear of any and all mortgages, Liens,
        pledges, charges, adverse claims or encumbrances of any nature
        whatsoever.

       

      10.7    No
        Material Adverse Change. There
        shall not have occurred any material adverse change in the business, operations,
        result of operations, projected contract revenue or financial condition of
        Seller.

       

      10.8    No
        Damage. There
        shall not have occurred a loss of or damage to the Purchased Assets in the
        aggregate over $5,000.00, unless Seller has replaced the damaged, stolen
        or lost
        Purchased Assets to the reasonable satisfaction of Purchaser prior to
        Closing.

       

      10.9    Approvals.
        Seller
        shall have obtained all consents and approvals necessary to effectuate the
        transactions contemplated by this Agreement and the Collateral
        Agreements.

       

      10.10      
        Contemporaneous
        Closing. The
        closing of the transactions contemplated by the Patent Purchase Agreement
        by and
        between Seller and Member shall have occurred.

       

      10.11      
        Due
        Diligence. Purchaser
        shall be satisfied in its sole discretion with the results of its due diligence
        investigation of the Business.

       

      10.12       
        ATI
        Contribution Agreement.
        Purchaser shall have entered into a contribution agreement with ATI, in a
        form
        satisfactory to Purchaser and its counsel, in their sole discretion, for
        the
        technology under that certain patent assignment and royalty agreement, by
        and
        between Seller and ATI (the "Patent
        Assignment Agreement").
        Seller and ATI shall have terminated the Patent Assignment Agreement and
        ATI
        shall become party to the Operating Agreement of Purchaser. 

       

      11.    TERMINATION.

       

      11.1    Right
        To Terminate. This
        Agreement may be terminated and the transactions contemplated hereby may
        be
        abandoned at any time prior to the Closing Date:

       

      11.1.1 Mutual
        Consent.
        By
        mutual written consent of Purchaser and Seller;

       

      
        
          
          

        

        
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      11.1.2 By
        Purchaser.
        By
        Purchaser, if any of the conditions set forth in Section 10
        shall
        have become incapable of fulfillment (other than as a result of a breach
        of this
        Agreement by Purchaser);

       

      11.1.3 By
        Seller.
        By
        Seller, if any of the conditions set forth in Section 9
        shall
        have become incapable of fulfillment (other than as a result of a breach
        of this
        Agreement by any of the Seller or Stockholder);

       

      11.1.4 Termination
        Date.
        By
        either Purchaser or the Seller, if the transactions contemplated hereby are
        not
        consummated on or before July 16, 2006; provided that, any such termination
        shall not in any way prejudice Purchaser’s or Seller’s rights to seek specific
        performance or other injunctive relief after such termination;

       

      11.1.5 Breach
        of Covenant.
        By
        either Purchaser or Seller, if the other party (or Stockholder, in case of
        a
        termination by Purchaser) shall be in material breach of any of its covenants
        contained in this Agreement and such breach either is incapable of cure or
        is
        not cured within 30 days after notice from the party wishing to terminate;
        provided, that the party seeking such termination (or Stockholder in the
        case of
        Seller) shall not also then be in material breach of this Agreement; and,
        provided, further, that any material breach of the provisions of Section
        8.5
        shall
        entitle Purchaser to an immediate right to termination without any notice
        or
        cure requirement;

       

      11.1.6 Breach
        of Representations and Warranties.
        By
        either Purchaser or Seller, if the other party (or Stockholder in the case
        of
        termination by Purchaser) shall be in breach of any of its representations
        or
        warranties contained in this Agreement, which breach, individually or together
        with all other breaches, is reasonably expected to have a material adverse
        change on such party, and such breach either is incapable of cure or is not
        cured within 30 days after notice from the party wishing to terminate; provided,
        that the party seeking such termination (or Stockholder in the case of Seller)
        shall not also then be in material breach of this Agreement; or

       

      11.1.7 Order
        or Action by Governmental Entity.
        By
        either Purchaser or Seller, if a governmental entity shall have issued a
        non-appealable final order or shall have taken any other action having the
        effect of permanently restraining, enjoining or otherwise prohibiting the
        transactions contemplated hereby.

       

      11.2    Manner
        and Effect of Termination. Termination
        shall be effected by the giving of written notice to that effect by the party
        seeking termination. If this Agreement is validly terminated and the
        transactions contemplated hereby are not consummated, then this Agreement
        shall
        become null and void and of no further force and effect and no party shall
        be
        obligated to any other party hereunder; provided, however, that termination
        shall not affect (a) the rights and remedies available to a party as a result
        of
        the breach by the other party or parties hereunder or (b) the provisions
        of
        Sections 7.15,
        8.4
        and
18.12
        and any
        provisions concerning indemnification for broker’s or similar fees, or this
        Section 11.2.

       

      
        
          
          

        

        
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      12.    INDEMNIFICATION.

       

      12.1    Seller
        Indemnification. Seller
        and Stockholder, jointly and severally, agree to indemnify, defend, release,
        and
        hold Purchaser and Member and their affiliates, subsidiaries or related
        companies, member and their directors, officers and employees harmless from
        and
        against any and all damages, losses, penalties, interest obligations,
        liabilities (including tax liabilities), claims, judgments, causes of action,
        deficiencies, costs, clean up costs, and expenses (including reasonable
        attorneys’ fees and other costs) (“Damages”)
        asserted against, incurred or required to be paid by Purchaser on account
        of or
        incident or pursuant to: (i) breach of any representation or warranty made
        by
        Seller or Stockholder in this Agreement, the Collateral Agreements or in
        any
        document delivered by Seller or Stockholder pursuant to or in connection
        with
        this Agreement; (ii) breach of any covenant or obligation made by Seller
        or
        Stockholder in this Agreement, the Collateral Agreements or any document
        delivered by Seller or Stockholder pursuant to or in connection with this
        Agreement; (iii) the business or operations of Seller or any conduct or failure
        to act of Seller (or any of its employees or agents) before, at or after
        the
        Closing including any tax liability resulting therefrom; (iv) the ownership,
        maintenance, use or operation of the Purchased Assets prior to or on the
        Closing
        Date; (v) releases, spills, discharges or leaks of oil, fuel, regulated,
        hazardous, or toxic substances, or other pollutants of any kind in or on
        any
        real property owned, leased, operated or used by Seller that occurred on
        or
        before the Closing Date; (vi) the unauthorized disclosure of any terms of
        this
        Agreement or the transaction contemplated hereby; and (vii) any broker’s or
        finders fees due and payable to any third party arising out of this Agreement
        or
        the transactions contemplated hereby where such party claims that it entered
        into an agreement with Seller or Stockholder.

       

      12.2    Purchaser
        Indemnification. Purchaser
        agrees to indemnify, defend, release, and hold Stockholder and Seller and
        their
        directors, officers and employees, as applicable, harmless from and against
        any
        and all Damages asserted against, incurred or required to be paid by Stockholder
        or Seller on account of or incident to: (i) the breach of any representation
        or
        warranty made by Purchaser in this Agreement, the Collateral Agreements or
        in
        any document delivered pursuant to or in connection with this Agreement;
        (ii)
        the breach of any covenant or obligation made by Purchaser in this Agreement,
        the Collateral Agreements or in any document delivered pursuant to or in
        connection with this Agreement; (iii) the business or operations of Purchaser
        before, at or after the date of this Agreement; (iv) the ownership, maintenance,
        use, or operation of the Purchased Assets after the Closing Date; (v) the
        unauthorized disclosure of any terms of this Agreement or the transaction
        contemplated hereby; and (vi) any broker’s or finders fees due and payable to
        any third party arising out of this Agreement or the transactions contemplated
        hereby where such party claims that it entered into an agreement with
        Purchaser.

       

      
        
          
          

        

        
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      13.    INDEMNIFICATION
        PROCEDURE.

       

      13.1    With
        respect to any matter for which indemnification is claimed by Purchaser,
        Purchaser will promptly notify Seller and Stockholder in writing after Purchaser
        becomes aware of it, and Seller and Stockholder will promptly and diligently
        defend, contest, settle, compromise, or otherwise protect against any such
        suit,
        action, investigation, claim or proceeding at their own cost and expense;
        provided, however, that Seller and Stockholder shall not, without the prior
        written consent of Purchaser, consent to an entry of judgment or enter into
        any
        settlement (i) which does not include an unconditional release of Purchaser
        from
        all liability, or (ii) which requires action on the part of Purchaser or
        otherwise subjects Purchaser to any obligation or restriction to which it
        would
        not otherwise be subject. Any delay or failure to so notify Seller or
        Stockholder will only relieve Seller or Stockholder of their obligations
        hereunder to the extent, if at all, that they or the proceedings are prejudiced
        by reason of such delay or failure. Purchaser will have the right, but not
        the
        obligation, to participate, at its own expense, in the defense by counsel
        of its
        own choosing; however, Seller and/or Stockholder will be entitled to control
        the
        defense unless Purchaser has relieved Seller or Stockholder in writing from
        liability with respect to the particular matter. If Seller and Stockholder
        request that Purchaser participate in the defense and if Purchaser so elects,
        at
        Purchaser’s option, Seller and Stockholder will reimburse Purchaser for its
        expenses and the cost of providing assistance at the request of Seller or
        Stockholder, including, without limitation, reasonable attorneys’ fees and
        investigation expenses. If Seller and Stockholder do not timely defend, contest
        or otherwise protect against any suit, action, investigation, claim or
        proceeding after receipt of the required notice from Purchaser, Purchaser
        will
        have the right, but not the obligation, to defend, contest or otherwise protect
        against the same, make any compromise or settlement thereof, and recover
        all
        Damages as a result of such suit, action, investigation, claim, proceeding,
        compromise, or settlement.

       

      13.2    With
        respect to any matter for which indemnification is claimed by Seller or
        Stockholder, Seller or Stockholder will promptly notify Purchaser in writing
        after Seller or Stockholder becomes aware of it, and Purchaser will promptly
        and
        diligently defend, contest, settle, compromise, or otherwise protect against
        any
        such suit, action, investigation, claim or proceeding at its own cost and
        expense; provided, however, that Purchaser shall not, without the prior written
        consent of Seller and Stockholder, consent to an entry of judgment or enter
        into
        any settlement (i) which does not include an unconditional release of Seller
        and
        Stockholder from all liability, or (ii) which requires action on the part
        of
        Seller and Stockholder or otherwise subjects Seller and Stockholder to any
        obligation or restriction to which it would not otherwise be subject. Any
        delay
        or failure to so notify Purchaser will only relieve Purchaser of its obligations
        hereunder to the extent, if at all, that it is prejudiced by reason of such
        delay or failure. Seller or Stockholder will have the right, but not the
        obligation, to participate, at their own expense, in the defense by counsel
        of
        their own choosing; however, Purchaser will be entitled to control the defense
        unless Seller or Stockholder have relieved Purchaser in writing from liability
        with respect to the particular matter. If Purchaser requests that Seller
        or
        Stockholder participate in the defense and if Seller or Stockholder so elect,
        at
        Seller’s or Stockholder’s option, Purchaser will reimburse Seller or Stockholder
        for their expenses and the cost of providing assistance at the request of
        Purchaser, including, without limitation, reasonable attorneys’ fees and
        investigation expenses. If Purchaser does not timely defend, contest or
        otherwise protect against any suit, action, investigation, claim or proceeding
        after receipt of the required notice from Seller or Stockholder, Seller or
        Stockholder will have the right, but not the obligation, to defend, contest
        or
        otherwise protect against the same, make any compromise or settlement thereof,
        and recover all Damages from Purchaser as a result of such suit, action,
        investigation, claim, proceeding, compromise, or settlement.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      

       

      14.    RIGHT
        OF SET OFF; CAP.

       

      14.1    The
        Purchaser shall be entitled to offset any amount payable under the Non-Compete
        Agreements or any claim for indemnity made pursuant to Section 12.1
        against
        (i) any payment of the Purchase Price hereunder or under the Non-Compete
        Agreements or (ii) any distributions or other payments payable to Seller
        pursuant to the Operating Agreement; provided, however, provided, however,
        (i)
        that Purchaser shall not withhold or set off any such amounts if Purchaser
        elects to seek any other remedy available to Purchaser, at law or in equity
        and
        (ii) the Purchaser may only exercise such right of offset in respect of claims
        relating to Damages actually incurred by Purchaser (in which case the amount
        of
        such offset shall be the amount of such actual Damages) or claims actually
        asserted by a third party (in which case the amount of the offset shall not
        exceed the Purchaser’s good faith estimate of the amount of indemnifiable
        Damages that will ultimately be payable to the Purchaser in respect of such
        claims). If any such claims for indemnity are resolved in favor of the Seller
        by
        mutual agreement or otherwise, or if the amount withheld exceeds the amount
        ultimately payable to the Purchaser in respect of such claim, the Purchaser
        shall pay to the Seller the excess amount withheld with respect to such claim,
        together with interest thereon for the period such amount has been withheld
        at a
        rate equal to the published "prime rate" of interest for money center banks
        as
        published in The
        Wall Street Journal
        (Eastern
        edition), in effect from time to time during the relevant period.

       

      14.2    In
        no
        event shall the Seller’s indemnity obligations under Section
        12.1 
        exceed
        an amount equal to $1,000,000.00, which is equivalent to two times the Purchase
        Price.

       

      15.    TAXES.
        

       

      To
        the
        extent an obligation to pay any tax on the Purchased Assets arises under
        applicable law, Seller agrees to pay any taxes duly imposed on the sale of
        the
        Purchased Assets.

       

      16.    DISCLAIMER
        OF LIABILITIES.

       

      Purchaser
        does not assume and will not be responsible for any debts, obligations or
        liabilities of Seller, accrued or unaccrued, fixed or contingent regardless
        of
        the character thereof and regardless of when asserted, including without
        limitation: (i) any employee liabilities for unemployment compensation or
        premiums, workers’ compensation claims or premiums; (ii) property or casualty
        insurance premiums; (iii) accrued employee vacations, unfunded or under funded
        employee benefit plans, whether multi employer or otherwise; (iv) any liability
        of Seller arising from indebtedness for borrowed money or long-term debt
        of
        Seller; (v) any liability arising from, or in connection with the conduct
        of
        Seller’s business or the ownership of the Purchased Assets by Seller on or prior
        to the Closing Date; (vi) any liability of Seller for Taxes owed to any taxing
        authority; (vii) any liability or obligation of Seller under any contract
        or
        commitment; (viii) any accounts payable; (ix) any liability arising out of
        the
        employment or termination of employment of any person employed by Seller;
        or (x)
        any other liability of any nature (collectively, the “Retained
        Liabilities”),
        it
        being understood that all of the Retained Liabilities shall remain the sole
        responsibility of and shall be retained, paid, performed and/or discharged
        solely by Seller.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      

       

      17.    TAX
        ALLOCATION OF PURCHASE PRICE.

       

      For
        purposes of each party’s reporting of the transactions contemplated by this
        Agreement to the United States Department of Internal Revenue Service, prior
        to
        the Closing, the parties shall agree as to a schedule allocating the Purchase
        Price amongst the Purchased Assets which shall be set forth on Exhibit
        G,
        adjusted for additions and deletions of the Purchased Assets between the
        Effective Date of this Agreement and the Closing. The Purchase Price allocation
        as agreed upon by the parties shall be evidenced by the completion, by both
        Seller and Purchaser, of Form 8594, Asset Acquisition Statement Under Section
        1060 if the transactions contemplated hereby constitute the sale and purchase
        of
        a trade or business. Such Form is to be attached to both the Seller’s and
        Purchaser's tax return in the tax year of the sale.

       

      18.    MISCELLANEOUS.

       

      18.1    Headings.
        The
        headings in this Agreement are for convenience of reference only and do not
        limit or otherwise affect any of the terms or provisions of this
        Agreement.

       

      18.2    Governing
        Law.
        The laws
        of the State of Ohio govern all matters arising out of this Agreement and
        the
        rights and obligations of the parties under this Agreement without consideration
        of Ohio’s conflicts of laws principles.

       

      18.3    Severability.
        If any
        provision of this Agreement is held to be illegal, invalid or unenforceable,
        that provision will be fully severable, and this Agreement will be construed
        and
        enforced as if the illegal, invalid or unenforceable provision never comprised
        a
        part of this Agreement; and the remaining provisions of this Agreement will
        remain in full force and effect. Furthermore, in lieu of the illegal, invalid
        or
        unenforceable provision, there will be added automatically as part of this
        Agreement a provision as similar in its terms to the illegal, invalid or
        unenforceable provision as may be possible and be legal, valid and
        enforceable.

       

      18.4    Entire
        Agreement.
        This
        Agreement and all documents and agreements referred to in this Agreement
        supersede all prior or contemporaneous understandings, agreements, negotiations
        and discussions, whether oral or written, between the parties concerning
        this
        subject matter and constitute the entire agreement between the parties with
        regard to this subject matter; provided that the Mutual Non-Disclosure Agreement
        executed by the parties on or about February 22, 2006, as the same has been
        amended by that certain Summary of Principal Terms, shall survive the execution
        of this Agreement and continue to bind the parties. The parties have not
        relied
        upon any promises, representations, warranties, agreements, covenants or
        undertakings, other than those expressly set forth in this
        Agreement.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      

       

      18.5    Waiver.
        Waiver
        of the benefit of any provision of this Agreement must be in writing and
        signed
        by the party against whom enforcement is sought to be effective. The waiver
        by
        any party of a breach of any provision of this Agreement will not operate
        or be
        construed as a waiver of any subsequent breach. No action taken pursuant
        to this
        Agreement will be deemed to constitute a waiver by that party of compliance
        by
        the other party with any of the covenants or other obligations contained
        in this
        Agreement. A failure by a party to insist upon strict compliance with any
        term
        of this Agreement, enforce any right or seek any remedy upon any breach of
        any
        other party will not affect, or constitute a waiver of, that party’s right to
        insist upon strict compliance, enforce that right or seek that remedy with
        respect to that default or any prior, contemporaneous or subsequent
        default.

       

      18.6    Binding
        on Successors.
        This
        Agreement applies to and binds the successors and permitted assigns of the
        parties.

       

      18.7    Amendments.
        No
        amendment of this Agreement is valid unless in writing and the party against
        whom enforcement is sought signs it.

       

      18.8    Notices.
        The
        parties shall give any notice or other communication required or permitted
        in
        this Agreement in writing and shall deliver any notice by personal delivery,
        overnight delivery service, certified mail, return receipt requested, postage
        prepaid, regular U.S. mail, postage prepaid or facsimile transmission. A
        notice
        is deemed given upon delivery of the notice in person, on the day after the
        notice is deposited with an overnight delivery service, two days after the
        notice is deposited with the United States Postal Service certified mail,
        return
        receipt requested, postage prepaid, two days after the notice is deposited
        with
        the United States Postal Service regular U.S. mail, postage prepaid, or
        immediately when sent by facsimile transmission, and addressed or faxed as
        follows:

       

      
        	
                If
                  to Seller or Stockholder:

              	
                Electronic
                  Billboard Technology, Inc.

              
	 	
                c/o
                  Nano-Proprietary, Inc.

              
	 	
                3006
                  Longhorn Boulevard

              
	 	
                Suite
                  107

              
	 	
                Austin,
                  Texas 78758

              
	 	
                Attn:
                  Douglas Baker

              
	 	 
	
                With
                  a copy to:

              	
                Kelley
                  Drye Collier Shannon

              
	 	
                3050
                  K Street, NW

              
	 	
                Suite
                  400

              
	 	
                Washington,
                  DC 20007

              
	 	
                Attn:
                  David Ervin, Esq.

              

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      

      
        	
                If
                  to Purchaser:

              	
                NOVUS
                  Displays, LLC

              
	 	
                4480
                  Lake Forest Drive

              
	 	
                Suite
                  412 

              
	 	
                Cincinnati,
                  Ohio 45242

              
	 	
                Attn:
                  President

                 

              
	
                with
                  a copy to:

              	
                Dinsmore
                  & Shohl LLP

              
	 	
                1900
                  Chemed Center

              
	 	
                255
                  E. Fifth Street

              
	 	
                Cincinnati,
                  Ohio 45202

              
	 	
                Attn:
                  Martin Miller, Esq.

                 

              

      

      

       

      From
        time
        to time, either party may designate another address for all purposes of this
        Agreement if it gives to the other party not less than three days advance
        notice
        of the change of address in accordance with the provisions of this Agreement.
        The failure or refusal of a party to accept receipt of a notice or other
        communication under this Agreement shall not invalidate the notice.

       

      18.9    Presumption. This
        Agreement or any section of this Agreement will not be construed against
        any
        party due to the fact that the party drafted this Agreement or any section
        of
        this Agreement.

       

      18.10      
        Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which will
        be
        deemed to be an original but all of which together will constitute one and
        the
        same instrument. Execution of this Agreement via facsimile will be effective,
        and signatures received via facsimile will be binding upon the parties and
        effective as originals. The parties expressly acknowledge that, notwithstanding
        any statutory or decisional law to the contrary, the printed product of a
        facsimile transmittal will be deemed to be “written” and a “writing” for all
        purposes of this Agreement.

       

      18.11      
        Third
        Party Beneficiaries. The
        terms
        and provisions of this Agreement are intended solely for the benefit of each
        party to this Agreement and their respective successors or permitted assigns,
        and it is not the intention of the parties to confer third party beneficiary
        rights, and this Agreement does not confer any such rights, upon any other
        person or entity.

       

      18.12      
        Expenses.
        Seller,
        Stockholder, Member and Purchaser shall each pay their own expenses incidental
        to this Agreement, including, without limitation, fees and expenses of their
        respective agents, representatives, counsel, accountants, and other
        experts.

       

      18.13      
        Attorneys’
        Fees. If
        any
        party resorts to legal action to enforce any of its rights under this Agreement,
        the prevailing party will be entitled to recover its costs and expenses
        associated with such legal action, including, but not limited to court costs
        and
        reasonable attorneys’ fees at trial or appeal.

       

      18.14     
        Further
        Assurances.
        Before
        and after the Closing, either party shall promptly execute and deliver to
        the
        other party (upon the other party’s written request) such other instruments or
        documents as the other party reasonably deems necessary or appropriate to
        carry
        out and effect the purpose and intent of this Agreement.

       

      [Signature
        Page To Follow]

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, this Agreement has been executed by or on behalf of each
        of the
        parties as of the Effective Date.

       

      
        	
                SELLER:

                 

              	
                PURCHASER:

                 

              
	
                ELECTRONIC
                  BILLBOARD TECHNOLOGY, INC.

                 

              	
                NOVUS
                  DISPLAYS, LLC

                 

              
	
                By: 
                  /s/ Douglas P. Baker

              	
                By: 
                  /s/ Scott Wampler

                 

              
	
                Title: 
                  Vice President and Corporate Secretary

              	
                Title: 
                  Chief Executive Officer

                 

              
	
                STOCKHOLDER:

                 

              	
                MEMBER:

                 

              
	
                NANO-PROPRIETARY,
                  INC.

              	
                NOVUS
                  COMMUNICATION TECHNOLOGIES, INC.

              
	 	 
	
                By: 
                  /s/ Douglas P. Baker

              	
                By: 
                  /s/ Scott Wampler

                 

              
	
                Title: 
                  Vice President and Corporate Secretary

              	
                Title: 
                  Chief Executive Officer

              

      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      LIST
        OF EXHIBITS

      

      
        	
                Exhibit
                  A

                 

              	
                Intellectual
                  Property

                 

              
	
                Exhibit
                  B

                 

              	
                Other
                  Excluded Assets

                 

              
	
                Exhibit
                  C

                 

              	
                Form
                  of Noncompete Agreement

                 

              
	
                Exhibit
                  D

                 

              	
                Bill
                  of Sale and Assignment and Assumption Agreement

                 

              
	
                Exhibit
                  E

                 

              	
                Press
                  Release

                 

              
	
                Exhibit
                  F

                 

              	
                Form
                  of Consulting Agreement

                 

              
	
                Exhibit
                  G

                 

              	
                Tax
                  Allocation of Purchase Price

                 

              

      

      

      
        
          
          

        

        
          24

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