Document:

ex41tos807319_04092010.htm

Exhibit 4.1

 

GenCorp Inc.

Amended and Restated 2009 Equity and Performance Incentive Plan

ARTICLE 1.

Establishment, Purpose, and Duration

1.1  Establishment.  GenCorp Inc., an Ohio corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the 2009 Equity and Performance Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.

The Plan permits the grant of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards.

The Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

1.2  Purpose of the Plan.  The purpose of the Plan is to promote the interests of the Company and its shareholders by strengthening the Company’s ability to attract, motivate, and retain Employees and Directors upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend, and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of the Company and create value for shareholders.

1.3  Duration of the Plan.  Unless sooner terminated as provided herein, the Plan shall terminate ten years from the Effective Date. After the Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

ARTICLE 2.

Definitions

Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1  “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the General Rules and Regulations of the Exchange Act.

2.2  “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

2.3  “Award” means, individually or collectively, a grant under this Plan of Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or Other Stock-Based Awards, in each case subject to the terms of this Plan.  Awards shall also include, if approved by the Committee, any Nonqualified Stock Options, Incentive Stock Options, or Performance Shares that could not be fully awarded under the 1999 GenCorp Inc. Equity and Performance Incentive Plan because of any numerical limit on Awards set forth thereunder.

2.4  “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the General Rules and Regulations under the Exchange Act.

2.5  “Board” or “Board of Directors” means the Board of Directors of the Company.

2.6  “Cash-Based Award” means an Award granted to a Participant as described in Article 10.

 

  

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2.7  “Change in Control” means a Change in Control as defined in Article 15.

2.8  “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.9.  “Committee” means the Organization and Compensation Committee of the Board, or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. The Committee shall consist of two or more directors who are Nonemployee Directors and “Outside Directors” (as such term is defined in Section 162(m) of the Code).

2.10  “Company” means GenCorp Inc., an Ohio corporation, and any successor thereto as provided in Article 18 herein.

2.11  “Consolidated Operating Earnings” means the consolidated earnings before income taxes of the Company, computed in accordance with generally accepted accounting principles, but shall exclude the effects of Extraordinary Items.

2.12  “Covered Employee” means a Participant who is a “covered employee,” as defined in Section 162(m) of the Code and the regulations promulgated under Section 162(m) of the Code, or any successor statute.

2.13  “Director” means a member of the Board of Directors of the Company and/or any of its Affiliates and/or Subsidiaries.

2.14  “Effective Date” has the meaning set forth in Section 1.1.

2.15  “Employee” means any employee of the Company, its Affiliates and/or Subsidiaries.

2.16  “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.17  “Extraordinary Items” means (i) extraordinary, unusual and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting regulations or laws; or (iv) the effect of a merger or acquisition, all of which must be identified in the audited financial statements, including footnotes, or Management Discussion and Analysis section of the Company’s annual report.

2.18  “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award. An Evidence of Award may be in any electronic medium, may be limited to a notation on the books and records of the Company and, with the approval of the Committee, need not be signed by a representative of the Company or a Participant.

2.19  “Fair Market Value” or “FMV” means the last sales price reported for the Shares on the applicable date as reported on the principal national securities exchange in the United States on which it is then traded or The NASDAQ Stock Market (if the Shares are so listed), or, if not so listed, the mean between the closing bid and asked prices of publicly traded Shares in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. If, however, the required accounting standards used to account for equity Awards granted to Participants are substantially modified subsequent to the Effective Date of the Plan such that fair value accounting for such Awards becomes required, the Committee shall have the ability to determine an Award’s FMV based on the relevant facts and circumstances.

2.20  “Full Value Award” means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Shares.

 

  

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2.21  “Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7.

2.22  “Grant Price” means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

2.23  “Incentive Stock Option” means an Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

2.24  “Insider” shall mean an individual who is, on the relevant date, an officer, Director, or more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.25  “Net Income” means the consolidated net income before taxes for the Plan Year, as reported in the Company’s annual report to shareholders or as otherwise reported to shareholders.

2.26  “Nonemployee Director” has the same meaning set forth in Rule 16b-3 promulgated under the Exchange Act, or any successor definition adopted by the United States Securities and Exchange Commission.

2.27  “Nonqualified Stock Option” means an Option that is not intended to meet the requirements of Section 422 of the Code, or that otherwise does not meet such requirements.

2.28  “Operating Cash Flow” means cash flow from operating activities as defined in Statement of Financial Accounting Standards Number 95, Statement of Cash Flows.

2.29  “Option” means the right to purchase Shares granted to a Participant in accordance with Article 6. Options granted under this Plan may be Nonqualified Stock Options, Incentive Stock Option or a combination thereof.

2.30  “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.31  “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

2.32  “Participant” means any eligible person as set forth in Article 5 to whom an Award is granted.

2.33  “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Section 162(m) of the Code for deductibility of remuneration paid to Covered Employees.

2.34  “Performance Measures” means measures as described in Article 11 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

2.35  “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

2.36  “Performance Share” means an Award granted to a Participant, as described in Article 9.

2.37  “Performance Unit” means an Award granted to a Participant, as described in Article 9.

 

  

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2.38  “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

2.39  “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.40  “Plan” means the GenCorp Inc. 2009 Equity and Performance Incentive Plan.

2.41  “Plan Year” means the Company’s fiscal year that begins December 1 and ends November 30.

2.42  “Restricted Stock” means Shares granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.43  “Restricted Stock Unit” means a unit granted or sold to a Participant pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.44  “Section 409A Rules” means the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder.

2.45  “Share” means a share of common stock of the Company, $.10 par value per share.

2.46  “Stock Appreciation Right” or “SAR” means an Award, designated as a SAR and granted pursuant to the terms of Article 7 herein.

2.47  “Subsidiary” means a corporation, company or other entity (i) more than 50 percent (50%) of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent (50%) of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company, except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent (50%) of the total combined voting power represented by all classes of stock issued by such corporation.

ARTICLE 3.

Administration

3.1  General.  The Committee shall be responsible for administering the Plan, subject to this Article 3 and the other provisions of the Plan. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested persons.

3.2  Authority of the Committee.  The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of the Plan and any Evidence of Award or other agreement or document ancillary to or in connection with the Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering the Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in an Evidence of Award, and, subject to Article 16, adopting modifications and amendments to the Plan or any Evidence of Award, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate. In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, Award or other acquisition under the Plan does not consist of two or more Nonemployee Directors, or if there shall be no such Committee, then the Plan shall be administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board.

 

  

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ARTICLE 4.

Shares Subject to the Plan and Maximum Awards

4.1  Number of Shares Available for Awards.

(a) Subject to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan (the “Share Authorization”) shall be two million (2,000,000) Shares, all of which may be Incentive Stock Options.

(b) Of the Shares reserved for issuance under Section 4.1(a) of the Plan, no more than one million (1,000,000) of the reserved Shares may be issued pursuant to Full Value Awards.

(c) Subject to the limit set forth in Section 4.1(a) on the number of Shares that may be issued in the aggregate under the Plan, the maximum number of Shares that may be issued to Nonemployee Directors shall be two hundred thousand (200,000) Shares, and no Nonemployee Director may receive more than one hundred fifty thousand (150,000) Shares in any Plan Year.

4.2  Share Usage.  Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under the Plan. Moreover, if the Option Price of any Option granted under the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan and any Shares so tendered shall again be available for issuance under the Plan. The maximum number of Shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, or Stock-Based Awards. The Shares available for issuance under the Plan may be authorized and unissued Shares, treasury Shares or a combination thereof.

4.3  Annual Award Limits.  Subject to the terms of Section 4.1 hereof and unless and until the Committee determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an “Annual Award Limit,” and, collectively, “Annual Award Limits”) shall apply to grants of such Awards under the Plan:

(a) Options:  The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be two hundred thousand (200,000).

 

  

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(b) Incentive Stock Options:  The maximum aggregate number of Shares subject to Incentive Stock Options granted under the Plan to any one Participant shall be two hundred thousand (200,000).

(c) SARs:  The maximum number of Shares subject to Stock Appreciation Rights granted in any one Plan Year to any one Participant shall be two hundred thousand (200,000).

(d) Restricted Stock or Restricted Stock Units:  The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be two hundred thousand (200,000).

(e) Performance Units or Performance Shares:  The maximum aggregate Award of Performance Units or Performance Shares that any one Participant may receive in any one Plan Year shall be two hundred thousand (200,000) Shares, or equal to the value of two hundred thousand (200,000) Shares determined as of the date of vesting or payout, as applicable.

(f) Cash-Based Awards:  The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed the value of one hundred thousand dollars ($100,000) determined as of the date of vesting or payout, as applicable.

(g) Other Stock-Based Awards.  The maximum aggregate grant with respect to other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one Participant shall be one hundred thousand (100,000) Shares.

4.4  Adjustments in Authorized Shares.  In the event of any corporate event or transaction (including, but not limited to, a change in the shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards.

Except as otherwise provided by Section 162(m) of the Code, the Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under the Plan to reflect or related to such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

Subject to the provisions of Article 16, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules under Section 422 of the Code and the Section 409A Rules, where applicable.

To the extent that any Award hereunder is one that is made solely because of a limitation on awards under the 1999 GenCorp Inc. Equity and Performance Incentive Plan such Award shall reduce on a Share for Share basis, as applicable, any limit on Shares set forth in this Section 4.

 

  

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ARTICLE 5.

Eligibility and Participation

5.1  Eligibility.  Individuals eligible to participate in this Plan include all Employees and Nonemployee Directors.

5.2  Actual Participation.  Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible individuals, those to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award. In making this determination, the Committee may consider any factors it deems relevant, including without limitation, the office or position held by a Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary or Affiliate, the Participant’s length of service, promotions and potential.

ARTICLE 6.

Options

6.1  Grant of Options.  Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion.

6.2  Evidence of Award.  Each Option grant shall be evidenced by an Evidence of Award that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan.

6.3  Option Price.  The Option Price for each grant of an Option under this Plan shall be as determined by the Committee and shall be specified in the Evidence of Award. The Option Price may not be less than 100% of the Fair Market Value of the Shares on the date of grant; provided, however, that an Option granted outside the United States to a person who is a non-U.S. taxpayer may be granted with a Option Price less than the Fair Market Value of the underlying Shares on the date of grant if necessary to utilize a locally available tax advantage.

6.4  Duration of Options.  Except as otherwise provided in Section 422 of the Code, each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant and specify in the Evidence of Award; provided, however, that no Option shall be exercisable later than the seventh (7th) anniversary date of its grant. Notwithstanding the foregoing, for Options granted to Participants outside the United States who are non-U.S. taxpayers, the Committee has the authority to grant Options that have a term greater than seven (7) years.

6.5  Exercise of Options.  Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and specify in the Evidence of Award, which terms and restrictions need not be the same for each grant or for each Participant. The Committee may provide in the Evidence of Award for the acceleration of the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion, in the event of a Change in Control.

6.6  Payment.  Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Committee, the Shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price or have been purchased on the open market); (c) by a combination of (a) and (b); or (d) any other method approved or accepted by the Committee in its sole discretion, including, without limitation, if the Committee so determines, (i) a cashless (broker-assisted) exercise, or (ii) a reduction in the number of Shares that would otherwise be issued by such number of Shares having in the aggregate a Fair Market Value at the time of exercise equal to the portion of the Option Price being so paid.

 

  

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Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

6.7  Restrictions on Share Transferability.  The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable and specify in the Evidence of Award, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

6.8  Termination of Employment.  Each Participant’s Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company, its Affiliates, its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

6.9  Transferability of Options.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no Option granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law; provided that the Board or Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, or unless the Board or Committee decides to permit further transferability, all Options granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant. With respect to those Options, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of the Option Price by the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

ARTICLE 7.

Stock Appreciation Rights

7.1  Grant of SARs.  Subject to the terms and conditions of the Plan, SARs, including Freestanding SARs, may be granted to Participants at any time and from time to time as shall be determined by the Committee.

Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.

 

  

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The Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and shall be specified in the Evidence of Award. The Grant Price may include (but not be limited to) a Grant Price based on one hundred percent (100%) of the FMV of the Shares on the date of grant, a Grant Price that is set at a premium to the FMV of the Shares on the date of grant, or is indexed to the FMV of the Shares on the date of grant, with the index determined by the Committee, in its discretion to the extent consistent with the Section 409A Rules.

7.2  SAR Agreement.  Each SAR Award shall be evidenced by an Evidence of Award that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

7.3  Term of SAR.  The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Evidence of Award, no SAR shall be exercisable later than the seventh (7th) anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants who are non-U.S. taxpayers, the Committee has the authority to grant SARs that have a term greater than seven (7) years.

7.4  Exercise of Freestanding SARs.  Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes and specifies in the Evidence of Award. The Committee may provide in the Evidence of Award for the earlier exercise of Freestanding SARS in the event of a Change in Control.

7.5.  Payment of SAR Amount.  Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Evidence of Award pertaining to the grant of the SAR.

7.6  Termination of Employment.  Each Evidence of Award shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

7.7  Nontransferability of SARs.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. With respect to those SARs, if any, that are permitted to be transferred to another person, references in the Plan to exercise of the SAR by the Participant or payment of any amount to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

7.8  Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.

 

  

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ARTICLE 8.

Restricted Stock and Restricted Stock Units

8.1  Grant of Restricted Stock or Restricted Stock Units.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall represent the right of a Participant to receive payment upon the lapse of the Period of Restriction.

8.2  Restricted Stock or Restricted Stock Unit Agreement.  Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Evidence of Award that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

8.3  Transferability.  Except as provided in this Plan or an Evidence of Award, the Shares of Restricted Stock and/or Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Evidence of Award (and in the case of Restricted Stock Units until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the Committee, in its sole discretion, and set forth in the Evidence of Award or otherwise at any time by the Committee. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant, except as otherwise provided in an Evidence of Award or at any time by the Committee.

8.4  Other Restrictions.  The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

Except with respect to a maximum of five percent (5%) of the Shares authorized in Section 4.1(a), or as otherwise provided in Section 8.7 hereto, any Awards of Restricted Stock or Restricted Stock Units which vest on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting which is any more rapid than annual pro rata vesting over a three (3) year period and any Awards of Restricted Stock or Restricted Stock Units which vest upon the attainment of performance goals shall provide for a performance period of at least twelve (12) months. The Committee may provide in the Evidence of Award for immediate vesting of Restricted Stock or Restricted Stock Units, in whole or in part, in the event of a Change in Control.

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

 

  

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8.5  Certificate Legend.  In addition to any legends placed on certificates pursuant to Section 8.4, each certificate representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend as determined by the Committee in its sole discretion.

8.6  Voting Rights.  Unless otherwise determined by the Committee and set forth in a Participant’s Evidence of Award, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

8.7  Termination of Employment.  To the extent consistent with the Section 409A Rules, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

ARTICLE 9.

Performance Units/Performance Shares

9.1  Grant of Performance Units/Performance Shares.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall determine.

9.2  Value of Performance Units/Performance Shares.  Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion as described in Section 11.4 which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.

9.3  Earning of Performance Units/Performance Shares.  Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

9.4  Form and Timing of Payment of Performance Units/Performance Shares.  Payment of earned Performance Units/Performance Shares shall be as determined by the Committee and as evidenced in the Evidence of Award. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Evidence of Award pertaining to the grant of the Award.

9.5  Termination of Employment.  To the extent consistent with the Section 409A Rules and Section 162(m) of the Code, each Evidence of Award shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Evidence of Award entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

  

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9.6  Nontransferability.  Except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or as otherwise required by law. Further, except as otherwise provided in a Participant’s Evidence of Award or otherwise at any time by the Committee, a Participant’s rights under the Plan shall be exercisable during his or her lifetime only by such Participant.

ARTICLE 10.

Cash-Based Awards and Other Stock-Based Awards

10.1  Grant of Cash-Based Awards.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.

10.2  Other Stock-Based Awards.  The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

10.3  Value of Cash-Based and Other Stock-Based Awards.  Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may design Cash-Based Awards and Other Stock-Based Awards to qualify as Performance-Based Compensation and may design Cash-Based Awards and Other Stock-Based Awards to not qualify as Performance-Based Compensation. If the Committee exercises its discretion to establish Cash-Based Awards and Other Stock-Based Awards as Performance-Based Compensation, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Measures are met.

10.4  Payment of Cash-Based Awards and Other Stock-Based Awards.  Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, Shares or a combination thereof, as the Committee determines.

10.5  Termination of Employment.  The Committee shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards following termination of the Participant’s employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

10.6  Nontransferability.  Except as otherwise determined by the Committee, neither Cash-Based Awards nor Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided by the Committee, a Participant’s rights under the Plan, if exercisable, shall be exercisable during his or her lifetime only by such Participant. With respect to those Cash-Based Awards or Other Stock-Based Awards, if any, that are permitted to be transferred to another person, references in the Plan to exercise or payment of such Awards by or to the Participant shall be deemed to include, as determined by the Committee, the Participant’s permitted transferee.

 

  

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ARTICLE 11.

Performance Measures

11.1  Performance Measures.  Unless and until the Committee proposes for shareholder vote and the shareholders approve a change in the general Performance Measures set forth in this Article 11, the performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to one or more of the following Performance Measures:

(a) Net earnings or net income (before or after taxes and interest/investments);

(b) Earnings per share;

(c) Earnings per share growth;

(d) Net sales growth;

(e) Net earnings or net income growth (before or after taxes and interest/investment);

(f) Net operating profit;

(g) Return measures (including return on assets, capital, equity, or sales);

(h) Cash flow (including operating cash flow , free cash flow, and cash flow return on capital);

(i) Earnings before or after taxes, interest, depreciation, and/or amortization;

(j) Gross or operating margins or growth thereof;

(k) Productivity ratios;

(l) Share price (including growth measures and total shareholder return);

(m) Expense targets;

(n) Operating efficiency;

(o) Customer satisfaction;

(p) Revenue or Revenue growth;

(q) Operating profit growth;

(r) Working capital targets;

(s) Economic value added;

(t) Real estate management objectives;

(u) Sale or disposition of assets; and

 

  

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(v) Acquisition of key assets.

Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select Performance Measure (l) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 11.

To the extent that any Award hereunder is one that is made solely because of a limitation on awards under the 1999 GenCorp Inc. Equity and Performance Incentive Plan, the Performance Measurement shall be the same as under the 1999 GenCorp Inc. Equity and Performance Incentive Plan.

11.2  Evaluation of Performance.  The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions or divestitures and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code for deductibility.

11.3  Adjustment of Performance-Based Compensation.  The terms of Awards that are designed to qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be modified, except to the extent that after such modification the Award would continue to constitute Performance-Based Compensation. The Committee shall retain the discretion to reduce the amount of any payment under an Award that is designed to qualify as Performance-Based Compensation that would otherwise be payable to a Covered Employee, either on a formula or discretionary basis or any combination, as the Committee determines.

11.4  Committee Discretion.  In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Section 162(m) of the Code and may base vesting on Performance Measures other than those set forth in Section 11.1.

ARTICLE 12.

Beneficiary Designation

Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

 

  

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ARTICLE 13.

Deferrals

To the extent permitted by the Section 409A Rules, the Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, or the satisfaction of any requirements or performance goals with respect to Performance Shares, Performance Units, Cash-Based Awards or Other Stock-Based Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, consistent with the Section 409A Rules.

ARTICLE 14.

Rights of Participants

14.1  Employment.  Nothing in the Plan or an Evidence of Award shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment or service on the Board at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his or her employment or service for any specified period of time.

Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 16, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

14.2  Participation.  No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

14.3  Rights as a Shareholder.  Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

ARTICLE 15.

Change in Control

15.1  Change in Control.  For purposes of this Plan, a “Change in Control” shall mean the occurrence during the term of any of the following events:

(a) All or substantially all (meaning having a total gross fair market value at least equal to 50.1% of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions) of the assets of the Company are acquired by a Person (during a twelve month period ending on the date of the most recent acquisition by such Person); or

(b) The Company is merged, consolidated, or reorganized into or with another corporation or entity during a twelve-month period with the result that upon the conclusion of the transaction less than 50.1% of the outstanding securities entitled to vote generally in the election of directors or other capital interests of the surviving, resulting or acquiring corporation are beneficially owned (as that term is defined in Rule 13-d 3 under the Exchange Act) by the shareholders of the Company immediately prior to the completion of the transaction.

 

  

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ARTICLE 16.

Amendment, Modification, Suspension, and Termination

16.1  Amendment, Modification, Suspension, and Termination.  Subject to Section 16.3 and 16.4, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Evidence of Award in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders, Options issued under the Plan will not be repriced, replaced, or regranted through cancellation, and no amendment of the Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule.

16.2  Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee may make adjustments, consistent with Section 162(m) of the Code and the Section 409A Rules, in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

16.3  Awards Previously Granted.  Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan or an Evidence of Award shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award except as required under the tax laws.

16.4  Compliance with the Section 409A Rules.  It is the intention of the Board that the Plan comply strictly with the Section 409A Rules and the Committee shall exercise its discretion in granting Awards hereunder (and the terms of such grants), accordingly. The Plan and any grant of an Award hereunder may be amended from time to time as may be necessary or appropriate to comply with the Section 409A Rules.

ARTICLE 17.

Withholding

17.1  Tax Withholding.  The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

17.2  Share Withholding.  With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

  

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ARTICLE 18.

Successors

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

ARTICLE 19.

General Provisions

19.1  Forfeiture Events.

(a) The Committee may specify in an Evidence of Award that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant’s provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the persons subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

19.2  Legend.  The certificates for Shares may include any legend, which the Committee deems appropriate in its sole discretion to reflect any restrictions on transfer of such Shares.

19.3  Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

19.4  Severability.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. To the extent that any provision of this Plan would prevent any Option that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option. Such provision, however, shall remain in effect for other Options and there shall be no further effect on any provision of this Plan.

19.5  Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

19.6  Delivery of Title.  The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

  

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(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

19.7  Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

19.8  Investment Representations.  The Committee may require any person receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the person is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

19.9  Employees Based Outside of the United States.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees or Directors, the Committee, in its sole discretion, shall have the power and authority to:

(a) Determine which Affiliates and Subsidiaries shall be covered by the Plan;

(b) Determine which Employees and/or Nonemployee Directors outside the United States are eligible to participate in the Plan;

(c) Modify the terms and conditions of any Award granted to Employees and/or Nonemployee Directors outside the United States to comply with applicable foreign laws;

(d) Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 19.9 by the Committee shall be attached to this Plan document as appendices; and

(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

19.10  Uncertificated Shares.  To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

19.11  Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or Affiliates may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company, and/or its Subsidiaries, and/or Affiliates under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not subject to ERISA.

 

  

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19.12  No Fractional Shares.  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

19.13  Retirement and Welfare Plans.  Neither Awards made under the Plan nor Shares or cash paid pursuant to such Awards will be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a participant’s benefit.

19.14  Nonexclusivity of the Plan.  The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

19.15  No Constraint on Corporate Action.  Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

19.16  Governing Law.  The Plan and each Evidence of Award shall be governed by the laws of the State of Ohio, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Evidence of Award, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Ohio, to resolve any and all issues that may arise out of or relate to the Plan or any related Evidence of Award.

 

  

19Exhibit 10.1

Execution Copy

ASSET PURCHASE AGREEMENT

          This
Asset Purchase Agreement made this 9th day of April 2010 (the “Effective
Date”), by and between (A) Willtek Communications GmbH, a private
limited liability company organized and existing under the laws of Germany and
registered with the commercial register of the local court of Munich and having
its principal place of business in Ismaning, Germany (“Willtek”), the wholly owned
subsidiaries of Willtek listed and identified on Schedule 3.1 by name
and country of origin (the “Willtek Subsidiaries,” and together with
Willtek, the “Willtek Group”) and Wireless Telecom Group, Inc., a New
Jersey corporation with its principal place of business at 25 Eastmans Road,
Parsippany, New Jersey (the “Company,” and together with the Willtek
Group, “Seller”)
and (B) Aeroflex Incorporated, a Delaware corporation with its principal place
of business at 35 South Service Road, Plainview, New York (“Aeroflex” or “Parent”)
and those of its subsidiaries listed and identified on Schedule 4.1 by
name and country of origin (each an “Aeroflex Subsidiary” and, collectively,
the “Buyers”).
The Buyers, Parent and the Seller are hereinafter sometimes referred to as the
“Parties”
and each individually as a “Party”. Unless specifically indicated or
the context otherwise requires, any reference to the Willtek Group jointly
shall be deemed to constitute a reference as well to each of Willtek and every
one of the Willtek Subsidiaries severally, and any reference to Seller jointly
shall be deemed to constitute a reference as well to each of the Company,
Willtek and every one of the Willtek Subsidiaries severally. Correspondingly,
unless specifically indicated or the context otherwise requires, any reference
to the Buyers jointly shall be deemed to constitute a reference as well to each
of the Aeroflex Subsidiaries severally.

RECITALS

          A.
Willtek is a wholly owned subsidiary of the Company.

          B.
The Willtek Group is currently engaged in the business (the “Business”)
of designing, developing and manufacturing for terminal testing and air
interface testing market applications, electronic instruments and products with
varying degrees of capabilities, that test wireless communications networks and
mobile terminals at their radio frequency interface for quality and
transmission, as well as general purpose spectrum analyzers for radio frequency
applications that produce a graphical representation of a radio signal and
display a range of wavelengths in a frequency domain (collectively, the “Products”).

          C.
The Company has determined that it is in its best interests for it to cause
Willtek and, correspondingly, the Willtek Subsidiaries, to sell to the Buyers
substantially all of the assets of the Business, upon the terms and subject to
the 

conditions set
forth in this Agreement.

          D.
The Parties have agreed that, upon the terms and subject to the conditions
hereinafter set forth, Willtek and each of the Willtek Subsidiaries,
respectively, shall sell, transfer, convey and deliver all of its right, title
and interest in, to, and under the Acquired Assets, free and clear of all Liens
except Permitted Liens, to the particular Aeroflex Subsidiary indicated, and
such Aeroflex Subsidiary, correspondingly, shall purchase and acquire the same
from Willtek or such Willtek Subsidiary, as the case may be, and assume
responsibility for the performance or discharge of the Assumed Liabilities upon
the terms and subject to the conditions set forth herein (the “Transaction
Structure”). 

          NOW,
THEREFORE, in consideration of the mutual covenants
and agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by each Party, the
Parties, intending legally to be bound, agree as follows:

ARTICLE I

DEFINITIONS

                    1.1
As used in this Agreement, the following terms shall have the meanings set
forth in this Article I:

                    “Actions” means all litigation, actions,
proceedings, investigations, hearings, claims, suits, arbitrations or
mediations by or before any Governmental Authority.

                    “Acquisition Transaction” means all of the
transactions contemplated by this Agreement and the Related Documents.

                    “Adjusted
Net Assets” shall mean, to the extent acquired or assumed hereunder,
the amount of the total assets, as adjusted, less the total liabilities,
as calculated in accordance with the principles set forth on Schedule 2.6(b).

                    “Adjusted Net Assets Target” shall mean
Five Million Three Hundred Thousand ($5,300,000) Dollars.

                    “Affiliate” of any
specified Person means any other Person which, directly or indirectly, is in
control of, is controlled by or is under common control with such specified
Person. For the purposes of this definition, “control,” when used with respect
to any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

                    “Agreement” means
this Agreement and all exhibits and Schedules annexed hereto, as the same may
be amended, modified or supplemented from time to time prior to the Closing
Date.

2

                    “Balance
Sheet Date” shall mean December 31, 2009.

                    “Bank Debt” shall mean all of the
obligations of the Willtek Group under a note and other evidences of
Indebtedness in connection with that certain bank loan Willtek received from
Commerzbank in the original amount of Euro 1,570,800, the outstanding balance
of which was $2,029,827 when converted to U. S. dollars at December 31, 2008
which bears interest at the rate of 4% per annum and matures at June 1, 2014.

                    “Bill of Sale, Assignment and Assumption Agreements” means each of those
respective Bills of Sale, Assignment and Assumption Agreements, including the
German Bill of Sale, Assignment and Assumption Agreement, that is prepared in
accordance with, and governed by, applicable national Laws, by which each of
the respective Aeroflex Subsidiaries is vested with title in, to and under the
Acquired Assets that it is specifically acquiring, free and clear of all Liens,
other than Permitted Liens, and otherwise provides for the assumption by each
such Aeroflex Subsidiary of responsibility for the Assumed Liabilities.

                    “Business Days” means any day that is not a
Saturday, Sunday or a day on which the banks in New York, New York are required
or permitted by law to be closed.

                    “Buyer Material Adverse Effect” means (i)
any material adverse change in the business, properties, assets, Liabilities
and results of operations or condition (financial or otherwise) of Parent or
the Buyers or their respective businesses, taken as a whole or (ii) any effect
that would be reasonably expected to materially impede or delay the ability of
any of Parent and the Buyers to consummate the transactions contemplated by
this Agreement and the Related Documents in accordance with their respective
terms and applicable Laws or otherwise to perform their obligations hereunder
and thereunder; provided, however, that in determining whether a Buyer
Material Adverse Effect has occurred, any effect to the extent reasonably
attributable to the following shall not be considered: (a) material changes in
Laws or the interpretation thereof in the geographic regions where the Buyers’
or Parent’s businesses are principally operated, (b) changes in general
economic conditions in the U.S. or global economy or financial markets as a
whole which affect the industries in which the Parent and Buyers principally
conduct their businesses (except to the extent that the businesses of the Buyer
or Parent are disproportionately affected relative to other participants in the
industry in which the Parent’s or the Buyers’ businesses operate), (c) any
change in general economic conditions in the industries or markets in which the
Parent’s or the Buyers’ businesses principally operate (except to the extent
that such businesses are disproportionately affected relative to other
participants in the industry in which the Parent’s or the Buyers’ businesses
operate), (d) acts of terrorism or war, including any engagement by the United
States or Germany in hostilities, whether or not pursuant to the declaration of
a national emergency or war, or the occurrence of any military or terrorist
attack occurring prior to, on or after the Effective Date, (e) changes in GAAP
or the 

3

interpretation thereof, (f) the announcement
of this Agreement, the performance by Buyers or Parent of obligations other
than in the Ordinary Course that Buyers or Parent are specifically required to
perform by the terms of this Agreement, or the consummation of this Acquisition
Transaction, (g) earthquakes, hurricanes, floods or other natural disasters,
(h) any change or fluctuations in the Parent’s share price, provided that the
same does not arise out of an event that in and of itself otherwise would be a
Buyer Material Adverse Effect, and (i) (A) any action taken by the Seller or
(B) the omission of an action that was required to be taken by the Seller, or
(j) any action taken by any of Parent and the Buyers at the request or with the
written consent of the Seller.

                    “Claim” means any claim made by either the
Buyer or Seller to enforce its respective rights pursuant to the terms of this
Agreement. 

                    “Closing Date” means such date for the consummation of
the transactions herein, which, unless this Agreement shall have been sooner
terminated pursuant to Article X, shall occur, unless otherwise agreed between
the Buyers and the Seller, three (3) Business Days after the conditions set
forth in Article VII are fulfilled, satisfied or, to the extent permitted by
applicable Laws, waived (other than those conditions that by their nature can
only be satisfied or, if applicable Laws permit, waived at the Closing), but in
no event later than May 1, 2010.

                    “Code” means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.

                    “Confidentiality Agreement” shall mean that
Confidentiality and Non-disclosure Agreement, dated January 5, 2010, between
Parent and the Company.

                    “Contracts” means all contracts,
agreements, options, leases, licenses, sales and purchase orders, binding bids,
quotations and proposals, arrangements, commitments, letters of credit,
evidences of indebtedness and instruments of any kind, or a series of the same,
whether written or oral, and in each case which relate to, are connected with,
or used in the operation of, the Business or to which the Willtek Group is a
party or by which the Willtek Group, the Acquired Assets or the Business are
otherwise bound on the Closing Date, including the Scheduled Contracts.

                    “December
31, 2009 Balance Sheet” shall mean the balance sheet of the Business
as at December 31, 2009 as otherwise described in the definition of Financial
Statements.

                    “Environmental Claim” means any written
accusation, allegation, notice of violation, action, claim, demand, or threat,
environmental lien, abatement or other Order or direction (conditional or
otherwise) by any Governmental Authority or any other Person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions
resulting from or based upon (i) the existence, or the continuation of the 

4

existence, of
a Release (including sudden or non-sudden accidental or non-accidental
Releases) of, or exposure to, any Hazardous Material, odor or audible noise in,
into or onto the environment (including the air, soil, surface water or
groundwater) at, in, by, from or related to any property owned, leased or
operated by Seller and used in the operation of the Business; (ii) the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with any property owned, operated or leased by the Seller and used
in the operation of the Business; or (iii) any Environmental Law, including the
violation, or alleged violation, of any Environmental Law or Environmental
Permit connected with the Willtek Group and the operation of the Business. 

                    “Environmental Costs and Liabilities” means any and all
losses, damages, fines, penalties, judgments, actions, claims, Liens, costs and
expenses (including fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and feasibility
studies and remediation activities) arising from or under any Environmental Law
or Order or contract with any Governmental Authority or other Person.

                    “Environmental Laws” means United States,
German, and other federal, national, state, municipal, provincial and local
Laws (including common law), Order and other requirements relating to the
environment, natural resources, or public or employee health and safety, as
such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous Laws pertaining thereto.

                    “Environmental Permit” means any Permit
required under any applicable Environmental Law.

                    “ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor statute.

                    “Export Control Laws Costs and Liabilities”
means any and all losses, damages, fines, penalties, judgments, actions,
claims, Liens, costs and expenses (including fees, disbursements and expenses
of legal counsel, experts and consultants and the costs of investigations,
audits, implementation of mandatory compliance protocols and voluntary
disclosure filings) arising from or under any Export Control Laws.

                    “EU Business Employees” means any employee
currently employed by Willtek or any Willtek Subsidiary based in any member
state of the European Union or who is ordinarily working in any member state of
the European Union, in each case, as of the Effective Date.

                    “Financial Statements” means the unaudited,
consolidated balance sheet and income statement of the Business (Willtek and
the Willtek Subsidiaries) as at and for the year ended December 31, 2009.

5

                     “GAAP” means
United States generally accepted accounting principles.

                    “German Bill
of Sale, Assignment and Assumption Agreement” means the agreement to
be concluded between Willtek and Aeroflex GmbH in accordance with the
Transaction Structure, to effect the sale and transfer of those Acquired Assets
and part of the Business to be transferred from Willtek to Aeroflex GmbH and
the assumption of the Assumed Liabilities by Aeroflex GmbH as described
therein, the form of which is annexed hereto as Exhibit A. 

                    “Governmental Authority” means any local, municipal, national,
international, multinational or supranational (including the European Union)
governmental, legislative, judicial or regulatory entity, agency, commission or
authority and any department, division and subdivision thereof. 

                    “Hazardous Material” means any substance, material or waste
which is regulated by any Governmental Authority including petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls and any
other material, substance or waste which is defined as a “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “contaminant,” “toxic waste,” “pollutant” or
“toxic substance” under any Environmental Law.

                    “Indebtedness” means (i) indebtedness
of the Willtek Group for borrowed money (including the aggregate principal
amount thereof, the aggregate amount of any accrued but unpaid interest thereon
and any prepayment penalties or other similar amounts payable in connection
with the repayment thereof on or prior to the Closing Date),
(ii) obligations of the Willtek Group evidenced by bonds, notes,
debentures, letters of credit or similar instruments, (iii) obligations of
the Willtek Group under capitalized leases, (iv) obligations of the
Willtek Group under conditional sale, title retention or similar agreements or
arrangements creating an obligation of the Willtek Group with respect to the
deferred purchase price of property, (v) obligations in respect of
interest rate and currency obligation swaps, hedges or similar arrangements,
(vi) all intercompany obligations of the Willtek Group to the Company or any of
the Company’s Affiliates and (vii) all obligations of the Willtek Group to
guarantee any of the foregoing types of obligations on behalf of any Person. 

                    “Information Technology” means all of the
computer hardware, software, networks, microprocessors, firmware and other
information technology and communications equipment used in the operation of
the information technology systems of the Business.. 

                    “IRS” means the United States Internal
Revenue Service.

                    “Knowledge” (i) with respect to
Seller, means the actual knowledge of 

6

those
individuals identified in Schedule 1.1(a), and presumes, by way of a
representation to such effect, that all such individuals have conducted a
reasonable investigation and made all inquiries that would be reasonable in
light of each such individual’s knowledge, and (ii) with respect to the Buyers
or Parent, means the actual knowledge of those individuals identified on Schedule
1.1(b) and presumes, by way of a representation to such effect, that all
that such individuals have conducted a reasonable investigation and made all
inquiries that would be reasonable in light of such individual’s knowledge.

                    “Laws” means,
with respect to any Person, any United States (including federal, state or
local), German or other national, international, multinational or supranational
(including the European Union) laws (including common law), statutes, codes,
ordinances, rules, regulations, Orders, judgments, directives or decrees
applicable to such Person.

                    “Liability”
means, with respect to any Person, any liability or obligation of such Person
of any kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise.

                    “Liens” means,
with respect to any asset of any Person, any mortgage, lien, pledge, charge,
claim, interest, security interest, condition, restriction, obligation,
liability, debt, Tax, option or encumbrance of any kind (whether matured or unmatured)
in respect of such asset.

                    “Non-EU Business Employees” means all
Willtek Group Employees other than U.S. Business Employees who are not EU
Employees.

                    “Order” means any order, execution, writ,
injunction, judgment, decree, ruling, assessment or arbitration award.

                    “Ordinary Course” or “Ordinary Course of Business”
means the ordinary course of business consistent with Past Practice (including,
without limitation, with respect to quantity, quality and frequency).

                    “Past
Practice” means with respect to the Willtek Group or the Buyers, as
the case may be, the practice and procedures utilized consistently during the
three years prior to the Balance Sheet Date.

                    “Permit” means any license, franchise, permit, certificate,
approval, permission, registration, variance or other similar authorization.

                    “Permitted Liens” means (a) Liens for
Taxes, impositions, assessments, fees, rents or other governmental charges
levied or assessed or imposed that are not yet due and payable, or that are
delinquent but may be paid without 

7

interest or
penalties and for which appropriate reserves have been established to the
extent required by GAAP, or are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established to the
extent required by GAAP, (b) statutory Liens (including materialmen’s,
warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar Liens)
arising in the ordinary course of business securing payments not yet due and
payable, or that are delinquent but may be paid without interest or penalties
and for which appropriate reserves have been established to the extent required
by GAAP, or are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established to the extent required by
GAAP, (c) the rights of lessors and lessees under the Real Property Leases, (d)
(i) restrictive covenants, easements and defects, imperfections or
irregularities of title, if any, (ii) zoning, building or other generally
applicable land use restrictions and (iii) Liens that have been placed by a
third party on the fee title of the real property constituting the Leased Real
Property as permitted under the leases for such Leased Real Property, which, in
case of each of clauses (i), (ii) and (iii), do not materially detract from the
value of the Acquired Assets or materially interfere with the present use of
such Acquired Assets, or (e) Liens created by the Buyers, Parent or their
respective Affiliates, successors and assigns.

                    “Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, trust, unincorporated organization,
governmental body or authority or any other entity.

                    “Post-Closing Tax Period” means any taxable period beginning and
ending after the Closing Date, or the portion ending after the Closing Date of
any Straddle Period.

                    “Pre-Closing Environmental Liabilities”
shall mean any Environmental Costs and Liabilities to the extent (i) arising as
a result of a breach of any representation or warranty made by Seller in
Section 3.22 hereof or (ii) resulting from the operation of the Business prior
to the Closing Date. 

                    “Pre-Closing Export Control Laws Liabilities”
shall mean any Export Control Laws Costs and Liabilities to the extent (i)
arising as a result of a breach of any representation or warranty made by
Seller in Sections 3.13(b) and (c) hereof or (ii) resulting from the operation
of the Business prior to the Closing Date.

                    “Pre-Closing Tax Period” means any taxable period ending on or
before the Closing Date, or the portion ending on or before the Closing Date of
any Straddle Period.

                    “Real Property” means land and all
permanent improvements thereon, i.e., buildings and structures, and all
appurtenances thereto.

                    “Related Documents” means, collectively, all
agreements, instruments and other documents described herein or related hereto,
including the Bill of Sale, 

8

Assignment and
Assumption Agreements, the Confidentiality Agreement and such Intellectual
Property assignments as the Buyers shall reasonably require or as are necessary
and appropriate to vest in Buyers title to the Intellectual Property comprising
the Acquired Assets.

                    “Release” means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the indoor or outdoor environment
or into or out of any property, including any property owned, leased or
operated by the Willtek Group and currently or formerly used in the operation
of the Business.

                    “Remedial Action” means all actions, including any
capital on-going operating expenditures, required pursuant to any Environmental
Law or voluntarily undertaken, on or in connection with any property, to: (i)
clean up, remove, contain, treat, or in any other way address any Hazardous
Material or other substance to comply Environmental Laws; (ii) prevent the
Release or threat of Release, or minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (iii)
perform reasonable pre-remedial studies and investigations or post-remedial
monitoring and care; or (iv) bring facilities on any property and operations
conducted thereon into compliance with all Environmental Laws and Environmental
Permits. Remedial Action shall include remedial actions conducted off-site to
address conditions emanating from any property leased or operated by the
Willtek Group.

                    “Returns” means any returns, reports, and information
statements with respect to Taxes required to be filed with the IRS or any other
United States, German, national, state, municipal, provincial and local Taxing
Authority, including consolidated, combined and unitary tax returns.

                    “Schedule” means any schedule attached
hereto, dated the Effective Date, delivered by the Seller to the Buyers or by
the Buyers to Seller, as the case may be, in connection with this Agreement. 

                    “Seller Material Adverse Effect” means (i)
any material adverse change in the business, properties, assets, Liabilities
and results of operations or condition (financial or otherwise) of the Business
taken as a whole or (ii) any effect that would be reasonably expected to
materially impede or delay the ability of any of Seller to consummate the
transactions contemplated by this Agreement and the Related Documents in
accordance with their respective terms and applicable Laws or otherwise to
perform its obligations hereunder and thereunder; provided, however, that in
determining whether a Seller Material Adverse Effect has occurred, any effect
to the extent reasonably attributable to the following shall not be considered:
(a) material changes in Laws or the interpretation thereof in the geographic
regions where the Business is principally operated, (b) changes in general
economic conditions in the U.S. or global economy or financial markets as a
whole which affect the industries

9

in which the
Business is principally operated (except to the extent that the Business is
disproportionately affected relative to other participants in the industry in
which the Business operates), (c) any change in general economic conditions in
the industries or markets in which the Business principally operates (except to
the extent that the Business is disproportionately affected relative to other
participants in the industry in which the Business operates), (d) acts of
terrorism or war, including any engagement by the United States or Germany in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack occurring prior
to, on or after the date of this Agreement, (e) changes in GAAP or the
interpretation thereof, (f) the announcement of this Agreement, the performance
by Seller of obligations (other than in connection with the operation of the
Business in the Ordinary Course in the manner prescribed in the first sentence
of Section 5.3(a)), that Seller is required to perform by the terms of this
Agreement, or the consummation of the Acquisition Transaction, (g) earthquakes,
hurricanes, floods or other natural disasters, (h) any change or fluctuations
in the Company’s share price, provided that the same does not arise out of an
event that in and of itself otherwise would be a Seller Material Adverse Effect
or (i) (A) any action taken by the Buyers or the Parent or (B) the omission of
an action that was required to be taken by the Buyers or the Parent or (i) any
action taken by any of the Willtek Group or the Company at the request or with
the written consent of the Buyers or Parent. 

                    “Severance Pay” means any payments and
other obligations that are or become due and owing from the Willtek Group (or
in the case of the U.S. Business Employees, the Company) to any of the Willtek
Group Employees pursuant to any Contract, Employee Plan, social arrangement or
under any applicable Law as a consequence of the termination of the employment
of such Willtek Group Employees with the Willtek Group from and after the
Effective Date, including the failure of any of such Willtek Group Employees to
become or remain employed by the Buyers after the Closing Date; provided, however, Severance Pay does not
include (i) any change in control payments or retention or incentive bonuses
that become due and owing to any Willtek Group Employees by reason of or in
connection with the successful consummation of the Acquisition Transaction, or
(ii) with regard to the US Business Employees, COBRA. 

                    “Straddle Period” means any taxable period
that includes (but does not end on) the Closing Date. 

                    “Taxes” means any taxes, fees, levies,
duties, customs, tariffs, imposts and governmental impositions or charges of
any kind payable to any Taxing Authority, including, without limitation, (i)
income, corporation, franchise, profits, gross receipts, ad valorem, net worth, value added, sales,
use, service, real or personal property, special assessments, capital stock,
land transfer, license, payroll, wages and salary, withholding, employment,
social security, workers’ compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, and (ii) interest, penalties, additional taxes and
additions to tax imposed with respect thereto. 

10

                    “Taxing Authority” means any Governmental
Authority exercising taxing, collecting, levying or assessing authority. 

                    “U.S. Business Employee” means any employee
currently employed by Willtek Communications, Inc or who is employed by the
Willtek Group and ordinarily working in the United States, in either case, as
of the Effective Date; provided, however,
for purposes of this definition, employment of any of such employees with the
Company for bookkeeping purposes shall be deemed employment with Willtek
Communications, Inc. and the Willtek Group, as the case may be, or as the
context requires. 

                    “Willtek Group Employees” means those
current business employees of Willtek or any of the Willtek Subsidiaries who
are employed by the Willtek Group as of the Effective Date as identified on Schedule
3.18(a).

                    “Willtek 1992 Social Plan” means the Social
Plan (Sozialplan) of April 28,
1992 entered into between Schlumberger Technologies GmbH and its works council
in relation to the measures regulated in the reconciliation of interests of
December 4, 1991. 

                    1.2
Index of Other Defined Terms: 

	
 

	
 

	
Aeroflex
Subsidiaries

	
Preamble

	
Accounts
Receivable

	
Section
2.1(m)

	
Acquired
Assets

	
Section 2.1

	
Adjustment
Amount

	
Section
2.6(a)

	
Aeroflex

	
Preamble

	
Applicable
Rate

	
Section
2.6(a)

	
Assumed
Liabilities

	
Section 2.3

	
Assumed
Pension Liabilities

	
Section
2.3(e)

	
Basket
Amount

	
Section
9.4(a)

	
BGB

	
Section
5.8(a)

	
Business

	
Preamble

	
Business
Software

	
Section
3.12(h)

	
Buyers

	
Preamble

	
Buyer
Indemnified Parties

	
Section 9.2

	
Buyers’
Plans

	
Section
5.8(a)

	
Cash
Purchase Price

	
Section
2.5(a)

	
Channel
Partner Agreement

	
Section
3.10(a)(xvi)

	
Claim Notice

	
Section
9.5(a)

	
Closing

	
Section 8.1

	
Closing
Adjusted Net Assets Amount

	
Section
2.6(d)

	
Closing
Adjusted Net Assets Statement

	
Section
2.6(b)

	
COBRA

	
Section
3.16(c)

	
Company

	
Preamble

	
Confidential
Records

	
Section
5.4(b)

11

	
 

	
 

	
Copyrights

	
Section
3.12(a)(i)

	
Cure Period

	
Section
10.1(b)

	
Dispute
Notice

	
Section
9.5(b)

	
Domain Names

	
Section
3.12(a)(iv)

	
Effective
Date

	
Preamble

	
Employee
Invention Agreements

	
Section
3.12(d)

	
Employee
Plan

	
Section
3.16(a)

	
Employee
Plan Insurances

	
Section
2.1(n)

	
Employment
Claims

	
Section
3.18(d)

	
Employment
Transfer Liabilities

	
Section
5.8(d)

	
Employment
Transfer Notice Obligations

	
Section
5.8(c)

	
Equipment

	
Section
2.1(a)

	
Excluded
Assets

	
Section 2.2

	
Excluded
Liabilities

	
Section 2.4

	
Export
Control Laws

	
Section
3.13(b)

	
Fundamental
Representations

	
Section
9.1(b)(ii)

	
German
Business Employees

	
Section
5.8(a)

	
Government
Contracts

	
Section
3.10(b)

	
Indemnified
Party

	
Section 9.5(a)

	
Indemnifying
Party

	
Section
9.5(a)

	
Independent
Accountant

	
Section
2.6(d)

	
Intellectual
Property

	
Section
3.12(a)

	
International
Plan

	
Section
3.16(j)

	
Inventions

	
Section
3.12(a)(vi)

	
Inventory

	
Section
2.1(b)

	
IP Escrow
Agreements

	
Section
3.12(c)

	
Know-How

	
Section
3.12(a)(vii)

	
Leased Real
Property

	
Section
3.15(b)

	
License

	
Section
3.12(c)

	
Losses

	
Section 9.2

	
Non-Competition
Period

	
Section
5.5(b)

	
Objecting
Employee

	
Section
5.8(d)

	
Obsolete
Inventory

	
Section 3.28

	
Omitted
Asset

	
Section
5.13(a)

	
Omitted Asset
Notice

	
Section
5.13(a)

	
Omitted
Liability

	
Section
5.13(b)

	
Omitted
Liability Notice

	
Section
5.13(b)

	
Outside Date

	
Section
10.1(a)(v)

	
Parent

	
Preamble

	
Party or
Parties

	
Preamble

	
Patents

	
Section
3.12(a)(ii)

	
Products

	
Preamble

	
Proprietary
Information

	
Section
5.4(a)

	
R & D
Agreements

	
Section
3.12(c)

	
Real
Property Agreements

	
Section
3.15(c)

	
Required
Consents

	
Section 3.4

12

	
 

	
 

	
Resolution
Period

	
Section
2.6(c)(ii)

	
Restricted
Business

	
Section
5.5(b)

	
Scheduled
Contracts

	
Section
3.10(a)

	
Scheduled
Intellectual Property

	
Section
3.12(b)

	
Seller

	
Preamble

	
Seller
Indemnified Parties

	
Section 9.3

	
Seller’s
Notice

	
Section
2.6(c)(ii)

	
Seller’s
Review Period

	
Section
2.6(c)(i)

	
Software

	
Section
3.12(a)(viii)

	
Termination
Date

	
Section
10.1(a)

	
Third Party
Claim

	
Section
9.6(a)

	
Trademark

	
Section
3.12(a)(iii)

	
Trade
Secrets

	
Section
3.12(a)(v)

	
Transaction
Structure

	
Preamble

	
Transferred
Employees

	
Section
5.8(a)

	
Transfer
Taxes

	
Section 6.4

	
Willtek

	
Preamble

	
Willtek
Subsidiaries

	
Preamble

	
Work
Interferences

	
Section
3.18(c)

ARTICLE II

SALE AND PURCHASE OF ACQUIRED ASSETS

                    2.1
Sale and Purchase of Acquired Assets. Upon the terms and subject to the
conditions set forth in this Agreement and the Related Documents, as of the
Closing Date, consistent with the Transaction Structure, the Company shall
cause the Willtek Group to, and the Willtek Group shall, sell, transfer,
convey, assign and deliver to the Buyers, free and clear of all Liens other
than Permitted Liens, and the Buyers shall purchase from the Willtek Group all
of the Willtek Group’s right, title and interest in, to, and under the Acquired
Assets. As used herein, the “Acquired
Assets” means, as of the Closing Date, all of the business of, and
all of the assets and properties related to, and used in or held for use in the
operation of, the Business, of every kind, character and description, whether
tangible, intangible, personal or mixed, and wherever located, (other than the
Excluded Assets), including, as set forth on the Schedule indicated and otherwise
referenced specifically in a schedule to the German Bill of Sale and Assignment
and Assumption Agreement or such other relevant local Bill of Sale, Assignment
and Assumption Agreement or Related Document, the following: 

                    (a)
all equipment, machinery, furniture, fixtures, office equipment, computer
equipment (including all hardware, software and software codes and other
Information Technology), communications equipment, motor vehicles and other
transportation assets and property and spare and replacement parts, leasehold
improvements, samples and demonstration models and systems, and other fixed
assets 

13

(sometimes
referred to herein collectively as the “Equipment”),
supplies and other tangible personal property used in the operation of the
Business, including that which is listed on Schedule 2.1(a);

                    (b)
all raw materials, work in process, finished goods and other inventory items,
including related supplies, packaging materials and containers, held for manufacture
or sale in connection with the Business (sometimes referred to herein as the “Inventory”), including those listed on Schedule
2.1(b);

                    (c)
(i) all Intellectual Property, and all licenses and sublicenses granted and
obtained with respect thereto, and all Intellectual Property rights thereunder,
remedies against infringement thereof, and rights to protection of the interest
therein under the Laws of all jurisdictions, including as set forth on Schedule
2.1(c)(i) and (ii) all Information Technology described on Schedule
2.1(c)(ii); 

                    (d)
all outstanding customer purchase orders of the Business on the Closing Date,
including those listed on Schedule 2.1(d);

                    (e)
all Contracts (other than all outstanding customer purchase orders of the
Business referred to in Schedule 2.1(d)), warranties and security
interests to which the Willtek Group is a party or by which the Willtek Group
is bound, or which relates to the Business or to which any of the Business or
the Acquired Assets is subject, and all of the Willtek Group’s rights
thereunder, including those listed on Schedule 2.1(e) (the “Assumed Contracts”); 

                    (f)
to the extent transferable, all Permits used in the Business; 

                    (g)
all prepaid expenses relating to the Business as of the Closing Date, including
those listed on Schedule 2.1(g);

                    (h)
all documents, part number lists, business and financial records, working
papers, correspondence, memoranda, files, books, records, lists, and other
documentation of any nature and in any format relating to the Products,
services, customers, suppliers, vendors and distributors of the Business or
otherwise relating to the Acquired Assets or the Business, including that
developed and used for or in connection with accounting, designing, marketing,
engineering, manufacturing, selling and testing or any other business operation
or purpose; 

                    (i)
all part numbers for Products designed, developed, manufactured, sold or
distributed by the Business, including those listed on Schedule 2.1(i);

                    (j)
all goodwill and other tangible and intangible assets associated with the
assets, properties and rights of the Business as a going concern, including,
without any obligation to use the same after the Closing, the name and brand
“Willtek” and “Willtek Communications” and any derivations of the foregoing,
telephone and fax numbers, electronic mail addresses and websites; 

14

                    (k)
all claims, causes of action, judgments and rights of the Seller related to the
Acquired Assets, the Business and the Assumed Liabilities (except to the extent
related to any Excluded Asset described in Section 2.2); 

                    (l)
all lease security and other like deposits including those listed on Schedule
2.1(l);

                    (m)
all accounts and notes receivable, together with any unpaid interest or fees
accrued thereon or other amounts due with respect thereto relating to, or arising
in connection with, the Business reflected on the December 31, 2009 Balance
Sheet and generated and not thereafter collected in the Ordinary Course of the
Business as of the Closing Date including those set forth on Schedule 2.1(m)
(collectively, “Accounts Receivable”);

                    (n)
all pension liability insurances and direct life insurances and annuities (as
well as the cash surrender value thereof), which congruently or partially cover
or otherwise fund the actual net present value of the pension obligations of
the Willtek Group under any one or more of the Employee Plans (the “Employee Plan Insurances”); and 

                    (o)
all other Assets related to the Business which are not identified as Excluded
Assets, including those assets which should have been but were not listed on
the Schedules above, as well as all other Assets acquired by the Willtek Group
subsequent to the Effective Date and on or before the Closing Date related to
the Business or any replacements of or for any of the Acquired Assets. 

                    2.2
Excluded Assets. The purchase of the Acquired Assets by the Buyers and
the sale of the Acquired Assets by the Willtek Group contemplated by this
Agreement shall not include the following assets of the Willtek Group (the “Excluded Assets”):

                    (a)
all cash and cash equivalents existing as of the Closing Date; 

                    (b)
all rights of the Seller in and to this Agreement; 

                    (c)
all Returns and rights to Tax refunds, credits, offsets or other tax benefits
relating to any Pre-Closing Tax Period; 

                    (d)
all claims, causes of action, judgments and rights in litigation of the
Business to the extent related to any Excluded Asset; 

                    (e)
subject to Section 5.9, any Contracts that are not Acquired Assets as
identified on Schedule 2.2(e);

                    (f)
minute books, charter documents, stock or equity record books and records of
the Willtek Group as related to corporate existence or capitalization; 

15

and 

                    (g)
any of the common stock or other evidences of the equity interests of the
Willtek Subsidiaries owned by Willtek. 

                    (h)
except to the extent that the same are deemed to constitute Employee Plan
Insurances, all current and prior insurance policies and all rights of any
nature with respect thereto, including all insurance recoveries and return of
premiums due thereunder, rights to assert claims with respect to any such
policies and all premium deposits, claims deposits and other security deposits
in connection therewith; 

                    (i)
all rights of the Willtek Group under any confidentiality, non-use or similar
Contract with any employee or contractor of the Seller to the extent that such
rights are not related to the Business; 

                    (j)
all personnel and employment records for employees and former employees who are
not Transferred Employees; and 

                    (k)
any properties, assets, goodwill and rights of the Seller of whatever kind and
nature, real, personal or mixed, tangible or intangible that are set forth or
described in Schedule 2.2(k) or are not related to the Business. 

                    2.3
Assumed Liabilities. As of the Closing Date, the Buyers, in a manner
consistent with the Transaction Structure and as described below or in any
particular Schedule to this Agreement and otherwise specifically referenced in
a schedule to the German Bill of Sale, Assignment and Assumption Agreement or
such other relevant local Bill of Sale, Assignment and Assumption Agreements,
shall assume the Assumed Liabilities from the Willtek Group. As used herein,
the term “Assumed Liabilities” means
the following: 

                    (a)
(i) all those trade accounts payable and expenses of the Business that (A) are
accrued on the December 31, 2009 Balance Sheet, (B) are described specifically
on Schedule 2.3(a), or (C) arise in the Ordinary Course of the Business
from the Balance Sheet Date to the Closing Date other than Excluded Liabilities
and (ii) all such other debts, obligations and Liabilities relating to the
operation of the Business after the Closing Date or the ownership of the
Acquired Assets after the Closing Date; 

                    (b)
all Taxes in respect of the operation of the Business or ownership of the
Acquired Assets relating to any Post-Closing Tax Period exclusive of Transfer
Taxes; 

                    (c)
all Liabilities included in the calculation of the Adjusted Net Assets of the
Business pursuant to Section 2.6; 

                    (d)
all Liabilities for making payments or providing benefits to the Willtek Group
Employees including (i) all Liabilities for the payment to any of the 

16

Willtek Group
Employees of salary or bonuses that were earned or accrued but otherwise not
actually due and payable prior to the Closing Date, as reflected on the
December 31, 2009 Balance Sheet or otherwise incurred from the Balance Sheet
Date in the Ordinary Course up to the Closing Date, but excluding any Liabilities
for change in control payments or any bonuses or retention or incentive
payments that are predicated on the successful consummation of the Acquisition
Transaction, (ii) all Liabilities under any existing Employee Plans described
in Schedule 3.16(a) for the payment to any Willtek Group Employees of
benefits that were earned or accrued but otherwise not actually due and payable
prior to the Closing Date as reflected on the December 31, 2009 Balance Sheet
or otherwise incurred from the Balance Sheet Date in the Ordinary Course up to
the Closing Date, (iii) all Liabilities for accrued sick leave, vacation,
holiday or paid personal time for any of the Willtek Group Employees as
reflected on the December 31, 2009 Balance Sheet or otherwise incurred from the
Balance Sheet Date in the Ordinary Course up to the Closing Date, and (iv) all
Liabilities for Severance Pay to any Willtek Group Employees which arise by
reason of the termination of the employment of the Willtek Group Employees with
the Willtek Group from and after the Effective Date, including the failure of
any of the Willtek Group Employees to become or remain employed by Buyers after
the consummation of the Acquisition Transaction. 

                    (e)
the accumulated benefit obligation through and including the Closing Date under
the non-contributory, defined benefit pension Employee Plan maintained by the
Willtek Group, except for any Liabilities related to the Willtek 1992 Social
Plan (the “Assumed Pension Liabilities”);

                    (f)
all Liabilities relating to the employment of the Transferred Employees by any
of the Buyers, Parent or any of their Affiliates on and after the Closing Date
and all Employment Transfer Liabilities; 

                    (g)
all Liabilities of the Willtek Group for the performance of the Assumed
Contracts and the Real Property Agreements, except for any breaches thereof
which arise out of circumstances or events related to the operation of the
Business by the Willtek Group prior to the Closing Date; 

                    (h)
all Liabilities of the Willtek Group for the performance of customer purchase
orders of the Business existing on the Closing Date. 

                    (i)
all Environmental Cost and Liabilities other than Pre-Closing Environmental
Liabilities and any Export Control Laws Costs and Liabilities other than Pre-Closing Export Control Laws Liabilities; 

                    (j)
to the extent (i) not constituting a breach of the representations and
warranties of the Seller in Section 3.9, (ii) accrued on the December 31, 2009
Balance Sheet, or (iii) arising in the Ordinary Course of Business between the
Balance Sheet Date and the Closing Date, all Liabilities to customers of the
Business with respect to (A) customer credits, customer advances, merchandise
vouchers, refund vouchers, coupons and refunds purchased, issued, or earned in
connection with the Business and (B) all exchanges or returns of merchandise
sold by the Business; 

17

                    (k)
all Liabilities arising out of or in connection with the marketing,
distribution and sale of the Products to the extent (i) accrued on the December
31, 2009 Balance Sheet, (ii) identified on Schedule 3.30 and/or
Schedule 3.31 or (iii) arising in the Ordinary Course of the Business from
the Balance Sheet Date through the Closing Date;

                    (l)
all Liabilities of the Willtek Group with respect to any Indebtedness issued
or created for the account of the Business as set forth specifically on Schedule
2.3(l); 

                    (m)
all Liabilities for any Actions initiated after the Closing Date which relate
to the Business, the Assumed Liabilities or any Acquired Asset, but excluding
any such Action if and to the extent it (i) relates solely to any Excluded
Asset or Excluded Liability or (ii) arises out of circumstances and events
related to the operation of the Business by the Willtek Group prior to the
Closing Date and not accrued on the December 31, 2009 Balance Sheet or set
forth on Schedule 2.3(m);

                    (n)
all other Liabilities to be expressly undertaken by any of Parent and the
Buyers pursuant to this Agreement and any obligation or Liability of the Buyers
or Parent created by this Agreement or the Related Documents; 

                    (o)
all Liabilities which are identified as Assumed Liabilities but for which the
Willtek Group otherwise is held to be liable under applicable German Law,
nevertheless shall remain and be treated internally as Assumed Liabilities for
purposes of this Agreement; 

                    (p)
to the extent set forth in Section 5.8, Liabilities in connection with the
Employment Transfer Notice Obligation; and 

                    (q)
expenses incurred by the Buyers and Parent in connection with the Acquisition
Transaction or any other transactions contemplated herein, including, fees and
expenses of counsel, accountants, consultants or investment advisors of Parent
or the Buyers.

                    
2.4 Excluded Liabilities. Except for Assumed Liabilities,
notwithstanding anything to the contrary contained in this Agreement, the
Buyers do not assume, agree to perform or discharge, indemnify the Seller
Indemnified Parties against or otherwise have any responsibility or liability
for any Liabilities of the Willtek Group, whether fixed or contingent, and
whether arising prior to, on or after the Closing Date (the “Excluded
Liabilities”) including the following:

                    (a)
the Bank Debt and any accrued interest expense in connection therewith;

                    (b)
any Indebtedness or Liability of the Willtek Group to the Company or any of its
corporate Affiliates, or to any officer, director or shareholder of the
Company, including the Indebtedness described on Schedule 2.4(b) and any
accrued interest thereon;

18

                    (c)
any Liability for Taxes relating to the Business or the Acquired Assets
attributable to any period prior to the Closing Date and any Liability for
Transfer Taxes in connection with the consummation of the transactions
contemplated herein; 

                    (d)
any Liability of the Willtek Group to indemnify the Company or any corporate
Affiliate of the Company or any officer, director, employee or shareholder of
any of the Willtek Group, the Company or any of the corporate Affiliates of the
Company; 

                    (e)
any Liability pertaining to the Willtek Group or the Business and arising out
of or resulting from non-compliance prior to the Closing Date with any Laws;

                    (f)
any Liabilities of the Willtek Group (i) to make any payments or provide
benefits of any kind to any former employees or retirees of the Willtek Group
other than the Assumed Pension Liabilities, (ii) to provide any U.S. Business
Employees with COBRA benefits, (iii) in respect of work related employee
injuries or workmen’s compensation claims for any Willtek Group Employees based
on events or circumstances occurring prior to the Closing Date (iv) to the
Willtek Group Employees for any change in control payments or bonuses or
retention or incentive payments that are predicated on the successful
consummation of the Acquisition Transaction, (v) for any payments to any of the
Willtek Group Employees constituting salary, bonus or Severance Pay or for any
payments to the Willtek Group Employees under any Employee Plans of the Willtek
Group to the extent that, in either case, the same actually was due and payable
and not paid by the Willtek Group (or the Seller) prior to the Closing Date,
(vi) relating to, or arising under, the Willtek 1992 Social Plan; and (vii) not
assumed as Assumed Liabilities pursuant to Section 2.3(d). 

                    (g)
expenses incurred by the Seller in connection with the Acquisition Transaction
or any other transactions contemplated herein, including fees and expenses of
Seller’s counsel, accountants, consultants and investment advisors;

                    (h)
any obligation or Liability of the Seller to the Buyers created by this
Agreement or any Related Document;

                    (i)
any Pre-Closing Environmental Liabilities;

                    (j)
any Liability, whether currently existing or hereafter arising, to the extent
attributable to an Excluded Asset; 

                    (k)
any Liability arising from the failure by the Willtek Group to comply with the
bulk transfer or other applicable Laws of any jurisdiction with respect to the
consummation of the transactions contemplated hereby, including the German
Foreign Trade Act;

19

                    (l)
any Liability for any Action if and to the extent that it (i) relates solely to
an Excluded Asset or an Excluded Liability or (ii) arises out of circumstances
or events related to the operation of the Business by the Willtek Group prior
to the Closing Date and is not accrued on the December 31, 2009 Balance Sheet
or set forth on Schedule 2.3(m);

                    (m)
any Liability for Employment Claims resulting from, or predicated upon, any
events or circumstances arising or occurring prior to the Closing Date in
connection with the operation of the Business;

                    (n)
any Pre-Closing Export Control Laws Liabilities; and 

                    (o)
any Liabilities of the Willtek Group not incurred in the Ordinary Course of the
Business which are not expressly assumed by the Buyers; and 

                    (p)
all Liabilities which are identified as Excluded Liabilities but for which the
Buyers otherwise are held to be liable under applicable German Law, including
Section 75 of the German General Tax Code and Section 25 of the German
Commercial Code and any other similar national law provisions, nevertheless
shall remain and be treated internally as Excluded Liabilities for purposes of
this Agreement.

          To
the extent, if at all, that any Liability is identified in this Agreement as
both an Assumed Liability and an Excluded Liability, it shall be treated for
all purposes under this Agreement and the Related Documents as an Excluded
Liability. To the extent that any current Liability of the Willtek Group may be
partly an Assumed Liability and partly an Excluded Liability, the apportionment
of such Liability shall be determined pursuant to applicable accounting
principles by the Parties hereto. 

                    2.5
Purchase Price.

                    (a)
As consideration for the purchase of the Acquired Assets, the Buyers, in a
manner consistent with the Transaction Structure, shall assume the Assumed
Liabilities and pay to the Willtek Group on the Closing Date, Two Million Seven
Hundred Fifty Thousand ($2,750,000) Dollars, according to the allocation set
forth in Schedule 2.5(a), by wire transfer of immediately available
funds to an account or accounts previously specified by written notice to the
Buyers at least five (5) Business Days prior to the Closing Date (the “Cash Purchase Price”). The Cash Purchase
Price shall be adjusted by the Adjustment Amount pursuant to Section 2.6
hereof.

                    (b)
The Parties agree to the allocation of the Cash Purchase Price, as adjusted by
the Adjustment Amount (taking into account the Assumed Liabilities) and any
indemnity payments pursuant to Section 9.9(c), under any applicable Tax Laws,
as set forth in Schedule 2.5(a). The Parties agree that, for tax
reporting purposes, they will 

20

file all forms
that are required by any Taxing Authority to which they are subject for the
taxable year that includes the Closing Date, reflecting the price allocation,
and otherwise report the transactions contemplated by this Agreement wherever
and whenever any of them are required to do so in accordance with such
allocation and not take a position for Tax purposes inconsistent therewith. The
Buyers and Parent and the Seller shall notify and provide each other with
reasonable assistance in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Cash Purchase Price.

                    2.6
Post Closing Adjustment of Purchase Price.

                    (a)
A post-Closing adjustment of the Cash Purchase Price (the “Adjustment Amount”) shall be made to
reflect the U.S. dollar amount by which, if at all, the Adjusted Net Assets of
the Business as of the Closing Date, as finally determined in the manner
provided in this Section 2.6, is
less than the Adjusted Net Assets Target. Within three (3) Business Days after
the Closing Adjusted Net Assets Amount is finally determined and becomes
binding and conclusive on the Parties pursuant to this Section 2.6, the
Company, on behalf of Willtek, shall make the payment provided for in this Section
2.6(a), if any, by wire transfer in immediately available funds to an account
specified by the Buyers. If the Seller fails to timely make payment of the
Adjustment Amount, if any, as provided, the Buyers (or Parent) shall have the
right to institute such action or proceeding as they (it) deem appropriate to
recover the Adjustment Amount, and, without limiting the foregoing, may do so
otherwise, in whole or in part, by way of offset against any monies that may
become payable to the Seller Indemnified Parties pursuant to Article IX of this
Agreement.

                    (b)
Within one hundred twenty (120) days following the Closing Date, the Buyers or
Parent shall prepare and deliver to the Company on behalf of Willtek, a
statement of the Adjusted Net Assets of the Business as of the Closing Date
(the “Closing
Adjusted Net Assets Statement”) by applying the same methodology and
principles described on Schedule 2.6(b) that were used to calculate the
Adjusted Net Assets Target. 

                    (c)
(i) The Company shall have forty-five (45) days after the receipt of the
Closing Adjusted Net Assets Statement (the
“Seller’s Review Period”) to review the Closing Adjusted Net Assets
Statement, and the books and records on which the preparation of the same were
based. 

                         (ii)
If the Company disputes any item(s) on the Closing Adjusted Net Assets
Statement, it shall give the Buyers written notice of such disagreement prior
to the expiration of the Seller’s Review Period specifically identifying the
item(s) and amount(s) in dispute and the basis for such dispute (the “Seller’s Notice”). The Parties shall use
commercially reasonable efforts to reach agreement with respect to the disputed
items within thirty (30) days following the delivery of the Seller’s Notice, or
such longer period as may be agreed upon by the Parties (the “Resolution Period”).

21

                         (iii)
If the Company and the Parent mutually agree upon the Closing Adjusted Net
Assets Statement within the Resolution Period, such agreement shall be binding
upon the Parties. Any item(s) on the Closing Adjusted Net Assets Statement not
specifically identified in writing as a disputed item before the end of
Seller’s Review Period shall be deemed to have been accepted by Willtek and
shall not be subject to any further dispute, review or change.

                    (d)
If the Parties fail to resolve any disputes with respect to the Closing
Adjusted Net Assets Statement within the Resolution Period, the dispute shall
be submitted for resolution within ten (10) days after the expiration of the
Resolution Period to, and definitively and finally determined by, an
independent, internationally recognized accounting firm that currently does not
audit/review, and has not audited/ reviewed, within two years preceding the
date of the appointment of such firm, any of the Seller, Parent or the Buyers,
which shall be mutually selected by the Buyers and Willtek from those listed on
Schedule 2.6(d) (the “Independent
Accountant”). The Independent Accountant shall act as an expert and
not as an arbitrator to determine, based solely on the presentations of the
Company and the Parent and Buyers, and not by independent review, only those
items that are still in dispute. The Independent Accountant’s determination,
rendered consistent with the terms hereof and in no event later than (30) days
after the dispute is submitted to it, shall be final, conclusive and binding
and be set forth in a written statement delivered to the Company and Parent.
The Company and the Buyers (or Parent), jointly and severally, shall have equal
responsibility for the fees and expenses of the Independent Accountant, unless
either Party has been found to (i) have acted in bad faith or (ii) have engaged
in fraud or other such misconduct, in which case, that Party could be held
responsible for the whole or a significant portion of such fees and expenses.
The Closing Adjusted Net Assets Statement as mutually agreed to by the Parties
or otherwise as finally determined in the manner provided shall be referred to
as the “Closing Adjusted Net Assets Amount.”

                    (e)
The Adjustment Amount shall be treated for income tax purposes as an adjustment
to the Cash Purchase Price. 

                    (f)
As a matter of convenience, in connection with the performance of the protocol
outlined in this Section 2.6, Parent may substitute itself in the place and
stead of the Buyers as their representative.

                    (g)
Parent and the Buyers will make the work papers and back-up materials and
records used in preparing the Closing Adjusted Net Assets Statement available
to the Company and its accountants at reasonable times and upon reasonable
notice at any time during (A) the review by the Company of the Closing Adjusted
Net Assets Statement, and (B) the resolution by the Company and the Buyers of
any dispute with respect thereto pursuant to this Section 2.6.

22

ARTICLE
III

REPRESENTATIONS
AND WARRANTIES OF THE SELLER

                    As
an inducement to the Buyers and Parent to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller, on a joint and
several basis, represents and warrants to the Buyers and Parent that as of the
Effective Date and the Closing Date:

                    
3.1 Organization and Qualification; Subsidiaries. Willtek and each of
the Willtek Subsidiaries is a corporation, limited company, limited
partnership, limited liability company or other entity duly organized, validly
existing and in good standing (in each instance where such concepts are legally
applicable) under the Laws of the jurisdiction of its organization or origin
and has the requisite corporate, limited company, partnership, limited
liability company or other entity (as the case may be) power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except, with respect to any Willtek Subsidiary, where the
failure to be in good standing would not, or would not reasonably be expected
to, individually or in the aggregate, have a Seller Material Adverse Effect.
Willtek and each of the Willtek Subsidiaries is duly qualified or licensed as a
foreign corporation to do business and is in good standing (in each instance
where such concepts are legally applicable) in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary as set forth on Schedule
3.1, except where the failure to be so qualified or licensed and in good
standing would not, or would not reasonably be expected to, individually or in
the aggregate, have a Seller Material Adverse Effect. A true, accurate and
complete list of (i) all of the Willtek Subsidiaries, together with the
jurisdiction of incorporation or organization of each such Willtek Subsidiary,
and (ii) exclusive of the Willtek Subsidiaries, each sales office of Willtek,
together with its location, is set forth in Schedule 3.1.

                    3.2
Authorization. Each of the Company, Willtek and the Willtek Subsidiaries
has all requisite corporate power and authority to execute and deliver this
Agreement and the Related Documents and to perform its obligations hereunder
and thereunder. Each of the Company, Willtek and the Willtek Subsidiaries has
duly authorized the execution, delivery and performance of this Agreement and
the Related Documents and the consummation of the transactions contemplated
hereby or thereby, and no other corporate proceedings or action on the part of any
of them is necessary to authorize this Agreement or the Related Documents or to
consummate the transactions contemplated
hereby or thereby. This Agreement and the Related Documents have been duly
executed and delivered by the Company, Willtek and the Willtek Subsidiaries
and, assuming due execution, constitute legal, valid and binding obligations of each of them and enforceable
against each of them in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws of general applicability affecting the rights of creditors or by
general equitable principles.

23

                    
3.3 No Violations or Conflicts. Neither the execution and delivery of
this Agreement by each of the Company, Willtek and the Willtek Subsidiaries or,
as may applicable, those of the Related Documents to which it is a party, nor
the consummation by each of them of the transactions contemplated by this
Agreement or the Related Documents (assuming all required
consents, approvals, authorizations, filings and notices set forth in Schedule
3.4 have been made, given or obtained)
does or will (i) violate any provision of the their organizational documents
(ii) result in a violation or breach of, or constitute a default under (or an
event that, with notice, lapse of time, or both would be a default under), or
result in the acceleration of any obligations under, any indenture, mortgage,
bond, Contract, license, agreement, Permit, instrument or other obligation to
which any of the Company, Willtek or the Willtek Subsidiaries is a party or by
which any of the assets of the Willtek Group, including the Acquired Assets, is
bound, (iii) result in an event that would permit any party to terminate any
agreement or Contract of Willtek or the Willtek Subsidiaries, (iv) violate in
any material respect any Law or Order to which Willtek or the Willtek
Subsidiaries is subject, or (v) result in the creation or imposition of
any Lien on any assets of the Willtek Group, including the Acquired Assets,
except in the case of clauses (ii) and (iii), above, as would not individually
or in the aggregate, reasonably be expected to have Seller Material Adverse
Effect.

                    3.4
Consents and Approvals. Except as set forth on Schedule 3.4
(collectively, the “Required
Consents”), there is no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or any other Person that if not obtained or
made by the Seller as required in connection with the execution, delivery and
performance by the Seller of this Agreement or the Related Documents, would be
reasonably likely to have a Seller Material Adverse Effect. All of the Required
Consents will be obtained on or prior to the Closing Date.

                    3.5
Financial Statements. 

                    (a)
The Financial Statements have been previously delivered to the Buyers and are
attached hereto as Schedule 3.5(a). 

                    (b)
The Financial Statements (i) are complete, true and correct in all material
respects; (ii) were prepared in accordance with GAAP, consistent with Past
Practice; (iii) present fairly the financial position and results of operations
of the Willtek Group and the Business as of the date thereof and for the year
ended; and (iv) are based upon and accurately and correctly reflect, in all
material respects, the books of account and other financial records of the
Willtek Group and the Business. Assets and Liabilities reflected on the
December 31, 2009 Balance Sheet have been translated at year end exchange
rates.

                    (c)
The books of account and other financial records of the Willtek Group and the
Business are complete and accurate in all material respects and have 

24

been properly maintained
in all material respects in accordance with applicable Law.

                    3.6
Assets; Continued Operation. The Willtek Group has good and marketable
title to, or a valid leasehold interest in, or a license to or otherwise
possesses the lawful right to use, all tangible assets that are part of the
Acquired Assets, including, but not limited to, those reflected on the books
and records of the Willtek Group and on the December 31, 2009 Balance Sheet as
“Property and Equipment” (except those sold or disposed of subsequent to the
date thereof in the Ordinary Course of Business consistent with Past Practice),
free and clear of all Liens except for the Permitted Liens. None of the
Acquired Assets is subject to any sublease, sublicense or other agreement
granting to any other Person any right to the use or enjoyment of such assets.
All of the tangible assets comprising the Acquired Assets are in good operating
condition and in a good state of maintenance and repair. The Acquired Assets
constitute all of the assets necessary for the operation of the Business as it
is presently conducted. The Willtek Group has the right to sell, assign,
transfer, convey and deliver the Acquired Assets to the Buyers and upon
consummation of the transactions contemplated hereby, the Buyers will have
acquired, as the case may be, good and marketable title to, or a valid
leasehold interest in, or a valid license to use and practice, each of the
Acquired Assets, free and clear of all Liens except for the Permitted Liens.

                    3.7
No Undisclosed Liabilities. Except for the Excluded Liabilities, other
than to the extent disclosed or reserved for in the December 31, 2009 Balance
Sheet, or otherwise specifically disclosed on Schedule 3.7, the Willtek
Group has no Liabilities, commitments or obligations of any nature whatsoever,
whether accrued, absolute, contingent, known, unknown, asserted, unasserted or
otherwise, and whether due or to become due except for Liabilities, obligations
and commitments incurred in the Ordinary Course in a manner consistent with
Past Practice since the Balance Sheet Date which do not exceed, in the
aggregate, $50,000. 

                    3.8
Absence of Certain Changes, Conduct of Business.

                    (a)
Since the Balance Sheet Date, the Willtek Group has conducted the operations
and affairs of the Business only in the Ordinary Course consistent with Past
Practice and there has not occurred a Seller Material Adverse Effect or any
events and circumstances which reasonably could be expected to result in a
Seller Material Adverse Effect.

                    (b)
In addition to, and not in limitation of the foregoing, since the Balance Sheet
Date, the Willtek Group has not: (i) encumbered any of the Acquired Assets or
material property of the Business; (ii) hired additional employees, converted
full time employees to part time employees, or increased or accelerated the
payment or vesting of compensation or other remuneration or benefits payable or
to become payable to any of the current directors, officers or other employees
or agents of the Business other than as expressly required by the terms of
employment agreements or works agreements existing on the date hereof and
disclosed to the Buyers or Parent; 

25

(iii) adopted
or (except as otherwise required by applicable Law) amended or made any
unscheduled contribution to any Employee Plan for or with employees, or entered
into any collective bargaining or works agreement covering any employees of the
Business; (iv) waived any right under, or terminated or modified, any Contract,
except for terminations of Contracts upon their expiration in accordance with
their terms; (v) created, incurred, assumed or otherwise become liable for any
Indebtedness in an aggregate amount in excess of $50,000 or guaranteed or
endorsed any obligation or the net worth of any Person, in each case in respect
of or otherwise relating to or affecting the Business; (vi) except in the
Ordinary Course consistent with Past Practice, paid, discharged or satisfied
any claim, obligation or Liability of the Business in an aggregate amount in
excess of $50,000; (vii) sold, transferred, leased or otherwise disposed of any
of the Acquired Assets, except in the Ordinary Course in a manner consistent
with Past Practice and for a cash consideration equal to the fair value thereof
at the time of such sale, transfer, lease or other disposition; (viii) sold,
transferred, leased, licensed or otherwise disposed of any Intellectual
Property or other intangible assets that are part of the Acquired Assets or
disclosed any confidential Proprietary Information relating to the Business to
any Person; (ix) cancelled, compromised, released or waived any debt, claim or
right in respect of or otherwise relating to or affecting the Business; (x) caused
the Business to make any loan or advance to any Person, or to acquire the
capital stock or other securities or any ownership interest in, or
substantially all of the assets of, any other business enterprise; (xi) made
any capital investment or expenditure or capital improvement, addition or
betterment in respect of or otherwise relating to or affecting the Business in
excess of $25,000 (xii) instituted or settled any action, suit or proceeding
before any Governmental Authority relating to the Acquired Assets or in respect
of or otherwise relating to or affecting the Business; (xiii) entered into any
Contract, commitment, transaction or obligation in respect of or otherwise
relating to or affecting the Business, except in the Ordinary Course in a manner
consistent with Past Practice; (xiv) suffered any damage, destruction or
casualty loss to the Acquired Assets in excess of $25,000 in the aggregate,
whether or not covered by insurance; (xv) made any Tax election or settled or
compromised any Tax controversy relating to the Acquired Assets or the
Business; (xvi) announced or effected any material change in the form or manner
of distribution of any of the Products provided by the Business; (xvii) made
deliveries in connection with its backlog of orders other than in the Ordinary
Course; (xviii) made or effected any material change in the practices or
policies of pricing, booking orders, discounting for sales of finished goods,
ordering supplies and raw materials, shipping finished goods, accepting returns
or honoring warranties, invoicing customers and collecting receivables; (xix)
materially changed any of the accounting methods or principles used in
recording transactions on its books or records or in preparing the Financial
Statements; (xx) wrote up or wrote down or wrote off the book value of any of
the Acquired Assets other than in the Ordinary Course consistent with Past
Practice; (xxii) entered into, renewed or modified in any material respect any
agreement, understanding, arrangement or manner of doing business between the
Company and the Willtek Group or Willtek and the Willtek Subsidiaries,
including the transfer of ownership of any Intellectual Property or other of
the Acquired Assets; (xxiii) took or failed to take any action that could
reasonably 

26

be expected to
have a Seller Material Adverse Effect on the Business except as may have been
warranted in the good faith business judgment of the Willtek Group in the
Ordinary Course; (xxiv) incurred any Indebtedness for money borrowed in excess
of $50,000 for which the Buyers or the Business would be liable after the
Closing Date; (xxv) entered into any Contract or commitment to do any of
the foregoing; or (xxvi) entered into any other transaction or taken any other
action not in the Ordinary Course of the Business (except for transactions
contemplated by this Agreement).

                    3.9
Customers and Suppliers. Schedule 3.9 sets forth, by volume and
monetary amount, a list of the ten largest customers and ten largest suppliers
of the Business for the year ended December 31, 2009. For the purposes of this
Section, “customer” shall mean any Person to whom the Willtek Group sold
Products, whether such Products were sold under current part numbers or
predecessor part numbers. There exists no actual, and the Seller has no
Knowledge, of any threatened, termination, cancellation or limitation of, or
any material change in, the business relationship of the Business with any
material customer or supplier (including as a result of the consummation of the
transactions contemplated hereby). To the Knowledge of the Seller, no material
customer or supplier has experienced any work stoppage or other material
adverse circumstance or condition that is reasonably likely to jeopardize or
adversely affect the future relationship of the Business with any such customer
or supplier. Except as set forth on Schedule 3.9, there are no pending
disputes or controversies with any material customer or supplier of the
Business which, to the Seller’s Knowledge, would materially affect the
continuation of business with such customer. To the Knowledge of the Seller, no
customer of the Business has any right to any credit or refund for Products
sold by the Business pursuant to any Contract, understanding or practice of the
Willtek Group other than pursuant to the normal course return or rescission
policy of the Willtek Group. No sales incentives, rebates or trade-ins have
been offered to any of the customers of the Business which differ substantially
from what have been granted or offered to such customers in the Ordinary Course
consistent with Past Practice, and otherwise there are no special post shipment
obligations or acceptance provisions that exist with regard to any sales
arrangements with the customers of the Business. 

                    3.10
Contracts.

                    (a)
Schedule 3.10(a) sets forth a true, complete and correct list of the
existing material Contracts described below that relate to, are connected with,
or are used in the operation of, the Business or the Acquired Assets, to which
the Willtek Group is a party or pursuant to which the Willtek Group, the
Acquired Assets or the Business are bound (the “Scheduled Contracts”):

                         (i)
any Contracts providing for a commitment of employment or for consultation,
legal, investment banking, brokerage or accounting services to the Business;

                         (ii)
any Contracts with any Person containing any provision 

27

or covenant
(A) prohibiting or materially limiting the ability of the Willtek Group or the
Business to engage in any business activity or compete with any Person
generally or in connection with any product or in any territory; or (B)
requiring most favored pricing to be provided to any third party; (C) granting
first refusal or similar rights to any Person;

                              (iii)
any Contracts pursuant to which any Lien (other than an Assumed Liability or a
Permitted Lien) has been or could be imposed on any of the Acquired Assets;

                              (iv)
any Contracts (other than this Agreement) providing for (i) the future
disposition or acquisition of any of the Acquired Assets (other than
dispositions or acquisitions of inventory in the Ordinary Course of Business),
and (ii) any merger or other business combination involving the Business;

                              (v)
any Contract, the terms of which include express provisions regarding confidentiality
(excluding licenses for commercial off the shelf software);

                              (vi)
any Contract (A) for the lease of personal property or Equipment constituting
an Acquired Asset to or from any Person which provides for lease payments in
excess of $50,000 per year or (B) for the lease, sublease or license of Real
Property in connection with the operation of the Business;

                              (vii)
any Contract that limits or contains restrictions on the ability of the Willtek
Group to incur or suffer to exist any Lien, to purchase or sell any assets, to
change the lines of business in which it participates or engages or to engage
in any merger or other business combination; 

                              (viii)
any other Contracts that involve the payment, pursuant to the terms of any
such Contract, (A) by or to the Willtek Group of more than $50,000 annually;

                              (ix)
any Contract concerning the issuance of a Permit or License which is material
to the Business requiring an annual payment of $25,000 or more in fees,
royalties or otherwise by the Willtek Group;

                              (x)
any Contract, the particulars of which are required to be furnished to any
competition or regulatory authority and any undertaking that has been given or
Order made pursuant to any competition legislation or in response to any
request for information or statement of objection from any Governmental
Authority;

                              (xi)
any bid, tender, proposal or offer which, if accepted, will result in the
Willtek Group becoming a party to any agreement or arrangement in which the
aggregate payments to be received or paid by the Willtek Group would exceed
$50,000;

28

                              (xii)
(A) any Employee Plan, industrial or works council agreement and any other
Contract, arrangement or scheme providing for severance, bonuses, retention
payments, success payments, retirement benefits, deferred compensation or
change in control payments to any current or former directors, officers and
employees of, and consultants to, the Willtek Group and the Business, and (B)
any employment agreement or employment Contract which is not substantially in
the form of the standard employment agreement of the Willtek Group (a copy of
which has been provided to Buyers) or otherwise provides for wages greater than
$75,000 per year; (C) any Contract constituting, reflecting or providing for
Employee Plan Insurances;

                              (xiii)
any Contract that (A) requires performance more than one year from the Closing
Date, or (B) cannot be terminated within ninety (90) days after giving notice
of termination without resulting in a cost or penalty or (C) which requires
consent to assign the same to the Buyers or imposes a financial penalty or
requires a payment of any kind as a result of the consummation of the
transactions contemplated herein;

                              (xiv)
all Contracts relating to the manufacture, sale, distribution, marketing or
promotion of the Products or under which a commission is currently or could be
payable in connection with any of the foregoing;

                              (xv)
all Contracts with vendors or suppliers to the Business;

                              (xvi)
any Contract between the Willtek Group and a “channel partner” (a “Channel
Partner Agreement”) who accounted for more than 1% of the sales of
the Business in any of the past three years and any Channel Partner Agreement
that is not terminable on 60 days notice;

                              (xvii)
any Contract between or among (A) Willtek and any of the Willtek Subsidiaries,
or (B) any of the Willtek Group and the Company or any other Affiliate of
Willtek;

                              (xviii)
any Contract not otherwise described in any of clauses (i) through (xvii) above
under which the consequences of a default or termination could reasonably be
expected to have Seller Material Adverse Effect;

                              (xix)
any Contract relating to the licensing, sublicensing or development of
Intellectual Property by or for the Willtek Group;

                              (xx)
any material Contract not made in the Ordinary Course of the Business; and

                              (xxi)
all amendments, exhibits and schedules to any of the Contracts described or
referenced in this Section 3.10(a).

29

True, complete
and correct copies of each Contract have been furnished or made available to
the Buyers and Parent. 

          Each
Scheduled Contract, with respect to the Willtek Group (or, if applicable, the
Company), and to the Knowledge of the Seller, each other party thereto and
assuming due execution, is a legal, valid, enforceable and binding agreement,
is in full force and effect, and will continue to be legal, valid, enforceable
and binding and in full force and effect in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar Laws of general applicability affecting the rights of creditors
or by general equitable principles, following the consummation of the
transactions contemplated hereby. The Willtek Group is not in default or breach
of any of the Scheduled Contracts and, to the Knowledge of the Seller, no other
party to any of the Scheduled Contracts is in default or breach thereof. With
respect to the Willtek Group (or if applicable, the Company), and to the
Knowledge of the Seller, any other party to any Scheduled Contracts, there
exists no condition, event or act (including the consummation of the
transactions contemplated by this Agreement) which, with the giving of notice, the
lapse of time or the happening of any other event or condition, (i) would
become a default or an event of default, or would constitute a breach of any
provision of any Scheduled Contract, or (ii) would permit the acceleration of
any obligation of any party to any Scheduled Contract or the creation of a Lien
upon any of the Acquired Assets, except as would not, individually or in the
aggregate, be reasonably expected to have a Seller Material Adverse Effect. The
Willtek Group has not been notified in writing of the pending or threatened
cancellation, revocation or termination of any of the Scheduled Contracts, and,
to the Seller’s Knowledge, there are no facts or circumstances which could
reasonably be expected to result in any cancellation, revocation or
termination. The Willtek Group has not assigned, delegated or otherwise
transferred any of its rights or obligations with respect to any Scheduled
Contract. None of the Scheduled Contracts places restrictions on the Willtek
Group to engage in the Business in any place or to solicit any Persons as
customers, employees or independent contractors of the Business. 

                    (b)
Schedule 3.10(b) sets forth a complete and accurate list of the Government
Contracts, true, complete and correct copies of which have been delivered or
made available to the Buyers or Parent. “Government
Contracts” shall mean all current Contracts, including Contracts
under which performance is completed, but which are subject to audits or
adjustments by any Governmental Authority or for which all related accounting,
legal and performance issues are not resolved: (i) between the Willtek Group
and any Governmental Authority, including any blanket purchase agreements, task
orders, or other agreements thereunder; and (ii) between the Willtek Group and
an entity which is a party to a Contract or other agreement with a Governmental
Authority. 

                          (i)The
Willtek Group has complied in all material respects with all terms and
conditions of each of the Government Contracts, has complied with 

30

all
requirements of all applicable Laws pertaining to each such Government Contract
and otherwise is not a party to any current dispute relating to a Government
Contract. There are no current or, to the Knowledge of the Seller, threatened,
or known pending claims, appeals, protests, or lawsuits relating to a
Government Contract. The Willtek Group has not received a cure notice, a show
cause notice, a suspension of work notice, or a stop work order under any
Government Contract. 

                          (ii)
No Governmental Authority or any prime contractor, subcontractor, joint venture
partner, teaming partner, or other Person has notified the Willtek Group in
writing that the Willtek Group or any of its directors, officers, agents, or
employees have breached or violated any Law, certification, regulation,
representation, clause, provision, or requirement relating to any Government
Contract. 

                          (iii)
The Seller has not been questioned or challenged in writing as to any cost
incurred by the Willtek Group nor has any cost been the subject of any audit or
investigation, or disallowed. No payment due to the Willtek Group relating to
any Government Contract has been withheld (except to the extent such
withholding or retention is in the Ordinary Course) or set off, or has any
claim been made in writing to withhold or set off money. 

                          (iv)
The Willtek Group has not knowingly or recklessly submitted to any Governmental
Authority any inaccurate, untruthful, or misleading cost or pricing data,
certification, bid, proposal, application, report, claim, or any other
information relating to the procurement or performance of a Government
Contract. 

                          (v)
No Government Contract has been totally or partially terminated for default or
for the convenience of a Governmental Authority. 

                          (vi)
The Willtek Group has complied in all material respects with all terms and
conditions of each Government Contract, including all clauses, provisions and
requirements incorporated by reference or operation of law. 

                          (vii)
The Willtek Group has not been notified of any warranty claims relating to any
Government Contract. 

                          (viii)
The Willtek Group has not been suspended or debarred from doing business with
any Governmental Authority or has any such suspension or debarment action been
threatened, proposed, or commenced. To the Knowledge of the Seller, there is no
valid basis, or specific circumstances that with notice or the passage of time
or both would become a basis, for the Willtek Group’s suspension or debarment
from doing business with any Governmental Authority. 

                          (ix)
The Willtek Group has not been nor is it now being audited or investigated by
any Governmental Authority, nor has such audit or investigation been threatened
in writing. 

                          (x)
There are no restraints upon eligibility of the Willtek 

31

Group or the
Business with regard to the procurement in the future of any Government
Contract other than those restraints extant in the documents made available to
the Buyers or Parent for inspection. 

                    3.11
Litigation. There is no civil, criminal or administrative action, suit,
claim, hearing, investigation or proceeding pending, or, to the Knowledge of
the Seller, threatened, against the Willtek Group or relating to the Business
or the Acquired Assets, in any court, by any Governmental Authority or before
any arbitrator or other tribunal. The Willtek Group is not subject to any
outstanding action or Order of any court or Governmental Authority which places
any Lien on the Acquired Assets or otherwise would reasonably be expected to
have a Seller Material Adverse Effect. 

                    3.12
Intellectual Property; Information Technology

                    (a)
As used herein, “Intellectual
Property” means all intellectual property (and all
proprietary rights attendant thereto) owned, used or licensed (as licensor or
licensee) by the Willtek Group that is used or has been used in the Business,
or in any Products, any technology or process currently or formerly offered by
the Business, or currently under development by the Willtek Group for use in
connection with the Business, including: 

                         (i)
all United States and foreign copyright interests in any original work
of authorship, whether registered or unregistered, including but not limited
to, all United States copyright registrations or foreign equivalent, all
applications for registration or foreign equivalent, all moral rights, all
common-law rights, and all rights to register and obtain renewals and
extensions of copyright registrations, together with all other copyright
interests accruing by reason of international copyright convention (“Copyrights”); 

                         (ii)
all United States and foreign patents (including certificates of
invention and other patent equivalents), provisional applications, patent
applications and patents issuing therefrom as well as any division,
continuation or continuation in part, reissue, extension, reexamination,
certification, revival or renewal of any patent, all Inventions and subject
matter related to such patents, in any and all forms (“Patents”); 

                         (iii)
all United States and foreign trademarks, trade dress, service marks,
trade and brand names, icons, logos, slogans, and any other indicia of source
or sponsorship of goods and services, designs and logotypes related to the
above, in any and all forms, all trademark registrations and applications for
registration related to such trademarks (including, but not limited to intent
to use applications), and all goodwill related to the foregoing (“Trademarks”); 

                         (iv)
all domain name registrations (“Domain Names”); 

32

                         (v)
any formula, design, device or compilation, or other information which is used
or held for use by the Business, which gives the holder thereof an advantage or
opportunity for advantage over competitors which do not have or use the same,
and which is not generally known by the public (“Trade Secrets”). Trade
Secrets can include, by way of example, formulas, algorithms, market surveys,
market research studies, information contained on drawings and other documents,
and information relating to research, development or testing; 

                         (vi)
novel devices, processes, compositions of matter, methods, techniques,
observations, discoveries, apparatuses, machines, designs, expressions,
theories and ideas, whether or not patentable and whether or not registered (“Inventions”); 

                         (vii) scientific,
engineering, mechanical, electrical, financial, marketing or practical
knowledge or experience useful in the operation of the Business (“Know-How”); 

                         (viii)
(A) any and all computer programs and/or software programs (including
all source codes, object codes, firmware, programming tools and/or
documentation), (B) machine readable databases and compilations, including any
and all data and collections of data, and (C) all content contained on Internet
site(s) (“Software”);

                         (ix)
all documentation and media constituting, describing or relating to the above,
including memoranda, manuals, technical specifications and other records
wherever created throughout the world; and 

                         (x)
the right to sue for past, present or future infringement and to collect and
retain all damages and profits related to the foregoing. 

                    (b)
Schedule 3.12(b) sets forth a true and correct list, worldwide, of (i) all
issued Patents and all pending applications for Patents; (ii) all registered
Trademarks and all pending Trademark applications; (iii) all Copyright, mask
work and design registrations and applications, and (iv) all Domain Name
registrations and applications, currently owned by the Willtek Group
(collectively, the “Scheduled Intellectual
Property”). 

                    (c)
Schedule 3.12(c) lists all licenses, sublicenses, agreements or
instruments involving the Intellectual Property including (i) licenses by the
Willtek Group to any Person of any Intellectual Property; and (ii) licenses by
any other Person to the Willtek Group of any Intellectual Property (except with
respect to generally available “off-the-shelf’ software) (each a “License”), (iii) all research and
development agreements (“R & D
Agreements”), and all Intellectual Property Escrow Agreements (“IP Escrow Agreements”). Each License, R & D Agreement
and IP Escrow Agreement identified in Schedule 3.12(c) is a valid and
binding agreement enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting the rights of 

33

creditors or
by general equitable principles. With respect to each License and R & D
Agreement, there is no default (or event that with the giving of notice or
passage of time would constitute a default) by the Willtek Group, or to the
Knowledge of Seller, any other party thereto. There are no pending, and, to the
Knowledge of the Seller, no threatened claims with respect to any License or R
& D Agreement, and there otherwise has not occurred any event or
circumstance that would entitle any Person to implicate any of the IP Escrow
Agreements described in Schedule 3.12(c). No License contains an indemnity by
the Willtek Group in favor of a third party with respect to the Intellectual
Property. Except as set forth on Schedule 3.12(c), subject only to obtaining
such consent as may be required therein, the Willtek Group has the right, in
accordance with the terms thereof, either to assign each License, R & D
Agreement and IP Escrow Agreement identified on Schedule 3.12(c) to Buyers or,
in the absence of such consent, to transfer or sublicense to Buyers all of its
Intellectual Property and other rights thereunder, and there is no License, R
& D Agreement or IP Escrow Agreement material to the Business as it is
currently conducted which is not assignable. Each License, R & D Agreement
and IP Escrow Agreement will continue to be valid, legally binding, enforceable
and in full force and effect on identical terms subsequent to the assignment of
the same to the Buyers in connection with the consummation of the transactions
contemplated herein.  

                    (d)
The Willtek Group has good and valid title to, or otherwise possesses the
rights to use, all Intellectual Property necessary to conduct the Business from
and after the Closing Date in the same manner as it is being conducted as of
the date hereof. Neither the consummation of the transactions contemplated by
this Agreement nor the performance by the Willtek Group hereunder will result
in the diminution, license, transfer, termination or forfeiture of the rights
of the Willtek Group in the Intellectual Property or Licenses. Except as set
forth on Schedule 3.12(d), and except for Intellectual Property owned by
third parties, no Person other than the Willtek Group has any right or interest
of any kind or nature in or with respect to the Intellectual Property, or any
portion thereof, or any rights to sell, license, lease, transfer or use or
otherwise exploit the Intellectual Property or any portion thereof. All current
and former officers, employees, consultants and contractors of the Willtek Group
who have created Intellectual Property, have executed an agreement or are
subject to a works agreement (collectively, “Employee
Invention Agreements”) under which, in accordance with applicable
Law, for such compensation, if any, as stated therein, all rights, title and
ownership in and to such Intellectual Property have been validly assigned or
transferred to the Willtek Group, and otherwise there are no claims by any of
such officers, employees consultants and contractors for any further remuneration
under the Employee Invention Agreements. To the Knowledge of the Seller, no
Intellectual Property has been developed by any current or former employee,
officer or consultant using, in whole or in part, without authorization or in
derogation of any contractual restrictions, the Intellectual Property of any
Person, including a former employer. To the Knowledge of the Seller, no current
or former employee of the Willtek Group has unlawfully disclosed to the Willtek
Group or otherwise used for his own benefit or the benefit of the Willtek
Group, the confidential or proprietary information of any Person in violation
of any Contract prohibiting him from doing so. 

34

                    (e)
The Willtek Group has not been alleged in writing to have, or, to the Knowledge
of the Seller, has the Willtek Group, infringed upon, misappropriated or
misused any intellectual property or proprietary information of another Person.
Except as set forth on Schedule 3.12(e), there are no pending, and, to the
Knowledge of the Seller, threatened, claims or proceedings contesting or
challenging the Intellectual Property owned by the Willtek Group or the Willtek
Group’s use of the Intellectual Property owned by another Person. To the
Knowledge of the Seller, no third party, including any current or former
employee or contractor of the Willtek Group, is infringing upon,
misappropriating or otherwise violating the rights of the Willtek Group in and
to the Intellectual Property.  

                    (f)
Each item of the Scheduled Intellectual Property has been duly registered or an
application has been filed with respect thereto with the appropriate
Governmental Authority, in each case to the extent indicated on Schedule
3.12(f). All Patent, Copyright, Trademark, Domain Name and other applications,
renewals and other similar fees have been fully and properly paid and are
current, and all Patent, Copyright, Trademark, Domain Name and other
registrations and filings are currently in compliance with all legal
requirements and remain in full force and effect.  

                    (g)
The Willtek Group has taken commercially reasonable steps to protect the
proprietary nature of the Intellectual Property and to maintain in confidence
all Trade Secrets and confidential Intellectual Property and information owned
or used by the Willtek Group in connection with the Business. To the Knowledge
of the Seller, no Trade Secret or other confidential Intellectual Property or
information of the Willtek Group that is owned or used in connection with the
Business has been disclosed or authorized to be disclosed to any Person,
including any employee, agent, contractor, or other Person, other than pursuant
to a non-disclosure agreement or other conditional obligation that protects the
Willtek Group’s proprietary interests in and to such Trade Secrets or
confidential Intellectual Property or other information. 

                    (h)
Schedule 3.12(h) contains a true and complete list of all of the
Software included, embedded or incorporated in or developed for inclusion in
the Products or in websites of the Willtek Group covering the Business (the “Business Software”). The Willtek Group
owns full and unencumbered right and good, valid and marketable title or has
valid licenses to such Business Software, and the Business Software owned by
the Willtek Group is free and clear of all Liens. The Willtek Group has not
incorporated any third party intellectual property into the Business Software
not identified in Schedule 3.12(h). Except as identified in Schedule
3.12(h), no open source or public library software, including any version of
any software licensed pursuant to any GNU public license, is, in whole or in
part, embodied or incorporated in the Business Software programs.  

                    (i)
The Willtek Group employs commercially reasonable measures to ensure that the
Business Software contains no “viruses.” For the purposes of this Agreement,
“virus” means any computer code intentionally designed to disrupt, disable or
harm in any manner the operation of any software or hardware. To the Knowledge
of the Seller, none of the Business Software programs contains any worm, 

35

bomb,
backdoor, clock, timer or other disabling device, code, design or routine which
causes the software to be erased, inoperable, impaired in performance or
otherwise incapable of being used, either automatically or upon command by any
Person. 

                    (j)
The Intellectual Property (including, to the Knowledge of the Seller, the
Intellectual Property licensed to the Willtek Group by third parties), is free
and clear of any Liens other than Permitted Liens. 

                    (k)
Schedule 3.12(k) sets forth all agreements by which the Willtek Group is
obligated to make to third parties any payments related to the Intellectual
Property. The Willtek Group is not bound by any agreement by which it owes any
present or future royalties or other payments to third parties in respect of
the Intellectual Property in excess of $25,000.

                    (l)
The Willtek Group has implemented industry “best practices” to ensure the
physical and electronic protection of its websites and information assets from
unauthorized disclosure, use or modification. To the Knowledge of the Seller,
there has been no breach of security involving any websites or information
assets of the Willtek Group which constitute Acquired Assets. All data which
has been collected, stored, maintained or otherwise used by the Willtek Group
has been collected, stored, maintained and used in accordance with all
applicable Laws, guidelines and industry standards. The Willtek Group has not
been notified in writing of noncompliance with applicable data protection Laws,
guidelines or industry standards. 

                    (m)
All Information Technology used by the Willtek Group in the conduct of the
Business and all Contracts relating to the maintenance and support, security,
disaster recovery management and utilization (including facilities management
and computer bureau services agreements) of the Information Technology owned or
used by the Willtek Group in the conduct of the Business are listed in Schedule
3.12 (m). 

                    (n)
Except as set forth in Schedule 3.12(n), all Information Technology
currently used by or required to carry on the Business and fulfill the
Contracts that are part of the Acquired Assets is either owned by, or validly
leased or licensed to, the Willtek Group and is being transferred to Buyers
hereunder. 

                    (o)
The Information Technology owned or used by the Willtek Group in the conduct of
the Business and transferred to the Buyers hereunder has the capacity and
performance necessary to fulfill the requirements it currently performs. 

                    3.13
Compliance with Laws. 

                    (a)
The Willtek Group has been and currently is in compliance in all material
respects with all Laws applicable to the Business, including those Laws
relating to the design, development, manufacture and sale of the Products. The
Willtek Group is currently not subject to any judicial, governmental or
administrative 

36

Order relating
to the Business. The Willtek Group has not been notified in writing of any
violation by the Business (or any investigation, inspection, audit, or other
proceeding by any Governmental Authority involving an allegation of any
violation by the Business) of any Law, and, to the Knowledge of the Seller, no
investigation, inspection, audit, or other proceeding by any Governmental
Authority involving an allegation of violation of any Law by the Business is
threatened or contemplated.

                    (b)
The Willtek Group has been and currently is in compliance with all statutory
and regulatory Laws of the United States, Germany and any other nation or
international, multinational or supranational Governmental Authority having
jurisdiction, which govern and control or otherwise are applicable to the
export or sale of its Products and Intellectual Property, including, as
applicable, the Arms Export Control Act (22 U.S.C. 2778), the International
Traffic in Arms Regulations (22 C.F.R. §§ 120 et seq.), the Export
Administration Regulations (15 C.F.R. §§ 730 et seq.) and associated executive
orders, the Laws implemented by the Office of Foreign Assets Controls, United
States Department of the Treasury (collectively, the “Export Control Laws”). The Willtek Group has not received
any written communication that alleges that the Willtek Group is not, or may
not be, in compliance with, or has, or may have, any Liability under, any
Export Control Laws, and there are no facts or circumstances or other basis which
could reasonably be expected to result in such Liability or which would have
required the Willtek Group (or the Company) to have made or which, by reason of
the consummation of the transactions contemplated by this Agreement, would
require the Buyers or Parent to make, a voluntary disclosure thereunder in
connection with the Business.

                    (c)
Neither the Willtek Group nor any other Persons acting on its behalf has, in
connection with the operation of their respective businesses, (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials, candidates or members of political parties or
organizations, or established or maintained any unlawful or unrecorded funds in
violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as
amended, or any other similar applicable Laws, (ii) paid, accepted or
received any unlawful contributions, payments, expenditures or gifts, or
(iii) violated or operated in noncompliance with any export restrictions
or controls, anti-boycott regulations or embargo regulations of the United
States, Germany, or any national, international or supranational Governmental
Authority which are applicable.

                    3.14
Permits. Schedule 3.14 sets forth a true, complete and correct
description of each material Permit, including Environmental Permits, necessary
for the operation of the Business and the ownership and use of the Acquired Assets,
together with the name of the Governmental Authority or other Person issuing
such Permits. Such Permits are valid and in full force and effect, and none of
such Permits will be terminated, revoked, suspended, impaired or become
terminable as a result of the transactions contemplated hereby. The Permits
listed on Schedule 3.14 constitute all of the material Permits necessary
to permit the Willtek Group to conduct and

37

operate the Business lawfully in the
manner in which it currently conducts and operates the
Business and to permit the Willtek Group to own and use the Acquired Assets in
the manner in which it currently owns and uses such assets. The Willtek Group
has not been notified by any Governmental Authority or any other Person
regarding any actual, alleged, possible or potential contravention of any of
such Permits and, to the Knowledge of the Seller, there are no facts or
circumstances which could reasonably be deemed to constitute a violation of the
terms of, or non-compliance with, any of such Permits, or of any Permits
relating to the export of any of the Products.

                    3.15
Real Property.

                    (a)
The Willtek Group does not own any Real Property.

                    (b)
Schedule 3.15(b) sets forth a description of all of the real property
currently leased or subleased, licensed or otherwise occupied by the Willtek
Group (“Leased
Real Property”).

                    (c)
The Willtek Group has delivered or made available to Buyers or Parent, correct
and complete copies of the leases, subleases, licenses or occupancy
arrangements (the “Real Property Agreements”) relating to the
Leased Real Property listed in Schedule
3.15(b) (as amended
to date), including all relevant notices or other correspondence relating to
any renewals or option exercises, which Real Property Agreements have not been
amended or modified since the amendments furnished. With respect to each Real
Property Agreement listed on Schedule 3.15(b):

	
  

 	
  

 
	
  

 	
           (i)
 Willtek or a Willtek Subsidiary is the lawful tenant, subtenant or licensee
 of record and enjoys quiet possession under all such Real Property
 Agreements;

 
	
  

 	
  

 
	
  

 	
           (ii)
 each such Real Property Agreement will continue to be valid, legally binding,
 enforceable and in full force and effect on identical terms following the
 consummation of the transactions contemplated hereby, subject to any required
 consent to assignment to Buyers having been received and assuming that any of
 Parent and the Buyers will, as of the Closing Date, qualify and otherwise
 meet the requirements to be the assignee of the tenant’s interest under any
 Real Property Agreement upon the terms and subject to the conditions thereof,
 whether on account of a minimum net worth requirement or otherwise;

 
	
  

 	
  

 
	
  

 	
           (iii)
 all of the terms and conditions of each Real Property Agreement have been
 observed or performed by the Willtek Group in all material respects, and
 neither the Willtek Group, nor to the Knowledge of Seller, any other party to
 any such Real Property Agreement is in breach or default, and no event has
 occurred which, 

 

38

	
  

 	
  

 
	
  

 	
 with notice
 or lapse of time or both, would constitute a breach or default or permit
 termination, modification, or acceleration hereunder;

 
	
  

 	
  

 
	
  

 	
           (iv)
 the Willtek Group has not assigned, transferred, conveyed, mortgaged, deeded
 in trust, or encumbered any interest in any of the Leased Real Property;

 
	
  

 	
  

 
	
  

 	
           (v)
 all facilities leased, subleased or licensed pursuant to each Real Property
 Agreement have received all material approvals of Governmental Authorities
 required in connection with the operation thereof and have been operated and
 maintained by the Willtek Group in all material respects in accordance with
 applicable Law; 

 
	
  

 	
  

 
	
  

 	
           (vi)
 all facilities leased, subleased or licensed pursuant to the Real Property
 Agreements are supplied with utilities and other services necessary for the
 operation of said facilities; and 

 
	
  

 	
  

 
	
  

 	
           (vii)
 except as set forth on Schedule 3.15 (c)(vii), there is no Liability
 greater than $1,000 under any Real Property Agreement for dilapidations or
 otherwise to restore the Leased Real Property at the end of the term of such
 Real Property Agreement.

 

                    (d)
There are no structural, electrical, mechanical, plumbing, roof, paving or
other defects in any improvements located on the Leased Real Property that
adversely affect in any material respect the operations of the Business at such
property.

                    (e)
All of the Leased Real Property, as described in the Real Property Agreements,
is occupied solely by the Willtek Group and is being used exclusively for, and
in connection with, the Business. None of the Leased Real Property is subject
to any agreement, arrangement or understanding for its use by any Person other
than Seller.

                    (f)
All improvements located at or comprising the Leased Real Property are in a
good state of maintenance and repair and in a condition adequate and reasonably
suitable for the conduct therein of the Business as it is conducted currently.
All of the Leased Real Property exists and has been maintained by the Willtek
Group in compliance with all applicable Laws and the Real Property Agreements.

                    3.16
Employee Benefit Plans; ERISA.

                    (a)
Schedule 3.16 (a) sets forth a true, correct and complete list of all
“employee pension benefit plans” (as defined in Section 3(2) of ERISA), all
medical, disability, life insurance and other “employee welfare benefit plans” (as defined in
Section 3(1) of ERISA), and all other employee benefit plans, programs, schemes
or arrangements, whether formal or informal, including any bonus, stock option,
stock purchase or other equity-based compensation arrangements, and any 

39

incentive,
deferred compensation, supplemental retirement, old age, part time employment,
severance, disability, bonus, vacation, cafeteria and other similar employee
benefit plans, policies, programs, agreements or arrangements (whether written
or otherwise), that (i) are maintained or contributed to (or to which there was
an obligation to contribute) by the Willtek Group and/or (ii) in which, even if
established and maintained by the Company, the employees of the Willtek Group
participate or are entitled to participate (collectively, the “Employee Plans”). The
Willtek Group has provided or made available to the Buyers or Parent, prior to
the date of this Agreement, with respect to each Employee Plan, a copy of the
plan (and a written description of any Employee Plan which is not written), the
summary plan description, and, where applicable in connection with any Employee
Plan maintained for the U.S Business Employees, the most recent annual report
(for 5500 series), and all summaries of material modifications and
communications distributed to plan participants explaining Employee Plan
benefits (other than routine statements of accounts). Except as set forth on Schedule
3.16(a), there are no Employee Plans or any other agreements, programs,
policies, practices, schemes and arrangements which provide, or could
reasonably be expected to provide, benefits, rights, payments or entitlements
of any kind to the current and former employees, directors of, or consultants
to, the Willtek Group, regardless of whether established and maintained by the
Willtek Group or the Company for the Willtek Group employees. 

                    (b)
All Employee Plans have been established, maintained, funded, operated and
administered in all respects in accordance with their terms, and, the
requirements of ERISA, the Code and such other Laws of any nation or
international, multinational or supranational Governmental Authority, including
the European Union, as may be applicable, including all reporting, notice and
disclosure obligations thereof. The Willtek Group (or where applicable, the
Company) is not in default under or in violation of any of the Employee Plans.
The Willtek Group (or where applicable, the Company) has made all contributions
required to be made with respect to each Employee Plan on or before the due
dates for such contributions (including any extensions thereof) and all such
amounts accrued but not yet paid which are an obligation of the Willtek Group
have been properly and accurately recorded and reflected in the financial books
and records of the Willtek Group and on the Financial Statements to the extent
required by GAAP. No Liability to the Pension Benefit Guaranty Corporation
(except for premiums) has been incurred with respect to any Employee Plans. A
favorable determination letter has been obtained from the IRS, and a copy
thereof delivered to the Buyers or Parent, for any Employee Plan that is a
pension plan intended to be qualified under Section 401(a) of the Code, and
since the date of such determination letter, no event has occurred that would
disqualify such plan. 

                    (c)
No post-termination welfare benefits of any kind (including, but not limited
to, workmen’s compensation, disability, severance, or continuation coverage
under Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA (“COBRA”) are payable to or
with respect to any former employee of the Willtek Group (or are due to be paid
on account of terminations or other events that 

40

have already
occurred) and, except for COBRA coverage, no Employee Plan or other agreement
provides coverage for medical or death benefits (whether or not insured) with
respect to current or former employees, directors and consultants of the
Willtek Group beyond the termination of their employment. Any COBRA coverage
provided under any Employee Plan complies with Section 4980B of the Code or any
other applicable Laws and is provided at the expense of the participant or
beneficiary.

                    (d)
No Employee Plan is covered by or subject to Title IV of ERISA or Section 412
of the Code. Neither the Willtek Group nor the Business has any liability or
potential liability arising under Title IV of ERISA or Section 412 of the Code.

                    (e)
Neither the Willtek Group nor any trade or business under common control with the
Willtek Group within the meaning of Section 4001(a)(14) of ERISA (or any
comparable Laws of any other jurisdiction) has contributed to, or incurred any
liability under, any plan which is a “multi-employer plan” as defined in Section
3(37) of ERISA.

                    (f)
(i) No Employee Plan subject to ERISA, no trust created thereunder, and no
trustee, administrator or other party in interest or disqualified person (as
defined in Section 3(14) of ERISA and Section 4975 of the Code) is either
currently engaged or has at any time engaged in a transaction with respect to
any Employee Plan which could subject the Business or the Acquired Assets after
the Closing, directly or indirectly, to a Tax, penalty, or other liability for
prohibited transactions under ERISA or Section 4975 of the Code or to a civil
penalty imposed by Section 502 of ERISA, and no such transaction has occurred
that could subject the Business or the Acquired Assets to any such liability;
and (ii) no fiduciary (as defined in Section 3(21) of ERISA) with respect to
any Employee Plan, or for whose conduct the Business could have any liability
(by reason of indemnities or otherwise), has breached any of the
responsibilities or obligations imposed upon the fiduciary under Title I of
ERISA, which breach could result in liability to the Business after the
Closing.

                    (g)
There are no pending or, to the Knowledge of the Seller, threatened, claims,
investigations or causes of action with respect to any Employee Plan, whether
made by a participant or beneficiary of such a plan, a Governmental Authority
or otherwise, against the Willtek Group or any director, officer or employee of
the Willtek Group which could subject the Business or the Acquired Assets to
any liability.

                    (h)
The consummation of the transactions contemplated hereby, either alone or in
combination with another event, with respect to any current or former officer,
director, employee and consultant of the Business, will not result, or
reasonably be expected to result, in (i) any payment (including, without
limitation, severance, unemployment compensation or bonus payments) becoming
due from the Willtek Group under any Employee Plan or otherwise (ii) any
increase in the amount of compensation or benefits payable to any such
individual or (iii) any acceleration of 

41

the vesting or
timing of payment of benefits or compensation payable to any such individual.
No payment or other benefit that has been or may be paid as a consequence of
the consummation of the transactions contemplated herein to any current or
former employee, director, officer or consultant of the Willtek Group under any
Employee Plan or other scheme, arrangement or employment, severance, retention
or termination agreement with the Willtek Group will result in the same being
characterized as an “excess parachute payment” as such term is defined in
Section 280G of the Code. The Willtek Group is not party to, or otherwise bound
by, any agreement, arrangement or scheme pursuant to which it is obligated to
compensate any Person for any excise or additional Taxes paid pursuant to
Section 409A or 4999 of the Code or any similar provision of any applicable
national Law.

                    (i)
All contributions (including all employer contributions and employee salary
reduction contributions) or premium payments required to have been made under
the terms of any Employee Plan, or in accordance with applicable Laws, as of
the date hereof, have been made or are reflected on the Financial Statements in
accordance with GAAP. All Employee Plans are “fully funded” and there is no
“accumulated funding deficiency” as defined in Section 302 of ERISA or Section
412 of the Code, whether or not waived, with respect to any Plan. To the extent
that any deficit in funding that otherwise would exist under GAAP or otherwise
based on the actual net present value of the accumulated pension benefit
obligations under any Employee Plan, including any International Plan, is
congruently covered or fully funded by direct life insurances or annuities or
pension liability insurances which are not deemed to constitute Employee Plan
assets, such insurances are free and clear of all Liens and other claims of
creditors of the Willtek Group. 

                    (j)
Any closures of Employee Plans carried out prior to
the Closing Date, if any, have been accomplished in accordance with applicable
Law. To the Knowledge of the Seller, there is no factual basis which could give
rise to (i) any claims, entitlements or expectancies under a closed Employee
Plan in favor of any employees of the Willtek Group hired after such closure,
or (ii) any pension claims, pension entitlements or pension expectancies by any
Transferred Employees under equal treatment principles (Gleichbehandlungs-grundsatz)
or shop practice aspects (Betriebliche Übung) of German Law, to the
extent applicable. 

                    (k)
Each Employee Plan covering non-U. S. Business Employees of the Willtek Group
(an “International
Plan”), has been maintained in compliance with its terms and the
requirements prescribed by such Laws as may be applicable thereto (including
any special provisions relating to qualified plans where such International
Plan was intended to so qualify) and has been maintained in good standing with
applicable Governmental Authorities. 

                    (l)
With respect to each Employee Plan, other than restrictions under applicable
Law and restrictions under the terms of the Employee Plan that prevent
amendments that would adversely affect benefits already accrued, credited or
granted at the time of the amendment, there are no restrictions that would
prevent any 

42

Buyer or
Parent, if it assumed and continued such Employee Plan, from terminating or
amending such Employee Plan, and neither the Company nor the Willtek Group has
made any representations to the participants of such Employee Plan that would
conflict with or contradict that right.

                    3.17
Insurance. Schedule 3.17 sets forth a true, correct and complete
list and a description of the coverage provided thereby, of all insurance
policies held by the Willtek Group on the Business and its properties. The
Willtek Group maintains such policies with reputable insurance carriers, and,
to the Knowledge of Seller, such policies are adequate to insure the Business
against such risks as are customarily insured against by companies in the same
or similar business and having a similar size and scope of operations. All of
such policies are in full force and effect. All premiums due on such insurance
policies on or prior to the date hereof have been paid. There are no pending
claims with respect to the Business or the Acquired Assets under any such
insurance policies, and there are no such claims as to which the insurers have
notified the Willtek Group that they intend to deny liability. To the Knowledge
of Seller, there is no existing default on the part of the Willtek Group under
any such insurance policies.

                    3.18
Employees and Labor Matters

                    (a)
Schedule 3.18(a) sets forth a true, correct and complete list of all
current full and part time officers, employees employed currently by the
Willtek Group in connection with the Business and, with respect to each, the
following information: (i) date of employment and years of continuous
employment, (ii) position and title, duties and place of employment (iii) age,
(iv) status (full time, part time, or part time when approaching retirement),
(v) base salary, (vi) maximum amount of any bonuses, performance related payments,
sales or profit participation, (vii) average commission, if any, (viii)
participation in Employee Plans, (ix) notice required for termination, (x)
special dismissal protection rights, (xi) citizenship, and (xii) maternity
leave or other suspended employment relationships as well as early retirement. Schedule
3.18(a) also sets forth a true and correct and complete list of all
consultants and independent contractor currently retained or engaged by the
Willtek Group in connection with the Business, and with respect to each
consultant and independent contractor retained or engaged by the Willtek Group,
the fees received during the last twelve month period, the duties performed,
and whether there is an existing agreement between such consultant and the Willtek
Group.

                    (b)
Except as set forth on Schedule 3.18(b), each of the Willtek Group
Employees is employed under a standard form of employment agreement, a copy of
which has been provided to the Buyers or Parent, and the Willtek Group does not
have any written or oral agreement with any of such employees, which (A)
modifies or purports to modify in any manner the protections afforded any of
such employees regarding notice periods or against unlawful discharge or
dismissal under (x) the standard form employment agreement, (y) any collective
bargaining agreement or (z) under applicable employment or labor Laws of the
country or jurisdiction in 

43

which the
employee is employed, or (B) would interfere with the Buyers’ ability to hire
or employ any of such employees as Transferred Employees as contemplated
herein. Any employment agreements with any of the Willtek Group Employees for a
definite term will, as of the Closing Date, either have been converted to
employment agreements at will or for an indefinite term in accordance with
applicable Law or not renewed after the expiration or elapse of such term prior
to the Closing Date. The Willtek Group has not promised or represented to any
of its directors, officers, employees, consultants, independent contractors,
agents, representatives or other personnel that any of such Persons will be
employed or engaged by or receive any particular benefits from (i) the Willtek
Group or (ii) the Buyers or any of their Affiliates, in each case on or after
the Closing Date. To the Knowledge of the Seller, no key employee and no group
of employees of the Business have any plans to terminate or modify their status
as an employee or employees of the Business (including upon consummation of the
transactions contemplated hereby).

                    (c)
There is no nationally or privately negotiated collective bargaining agreement
or other labor union Contract with, or binding on, the Willtek Group that
covers any of the Willtek Group Employees, and the Willtek Group is under no
obligation to negotiate any such agreement or Contract with respect to any such
employees. The Willtek Group is not a member of any employers association. As
related to the Business, other than a Works Council, no labor organization or
Person represents any of the Willtek Group Employees and no other Person, labor
organization or group of Willtek Group Employees has made a pending demand for
recognition or certification or are there any representation or certification
proceedings or petitions seeking a representation proceeding filed with any
labor relations Governmental Authority. There is no pending, or, to the
Knowledge of the Seller, threatened, labor strike, dispute, slowdown,
picketing, boycott, organization drive, stoppage or any other interference
involving or relating to the operation or conduct of the Business
(collectively, “Work
Interferences”). There are no filed, pending or threatened
injunctions against the Business which would have the effect of constituting
Work Interferences.

                    (d)
The Willtek Group has complied with all applicable Laws relating to the
employment of labor relating to the Business, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other Taxes. All changes in job position,
description, assignment, work location, salary and bonus schemes or any other
contractual terms and conditions of employment, including dismissal, discharge
or termination of employment, with regard to any of the Willtek Group Employees
have been implemented or effected by the Willtek Group in accordance with
applicable labor and employment Laws. There are no claims or disputes with
regard to any of the foregoing nor are there any unfair labor practice claims,
charges or complaints, minimum wage or overtime or equal pay claims, charges or
complaints, occupational safety and health claims, charges or complaints,
wrongful discharge claims, charges or complaints, employee grievances,
discrimination claims or workers’ compensation claims (collectively, “Employment Claims”) pending or, to the Knowledge of the 

44

Seller,
threatened, against the Willtek Group before any Governmental Authority in
respect of the Business or which otherwise affects or could affect the conduct
of the Business. The Willtek Group has not been notified in writing by any
Governmental Authority of any alleged violation of Law by the Business that
remains unresolved respecting employment and employment practices, terms and
conditions of employment, or wage and hours.

                    (e)
There are no outstanding Orders or charges against the Willtek Group or the
Business under any occupational health or safety legislation and, to the
Knowledge of the Seller, none have been threatened. All material levies,
assessments and penalties, if any, made against the Willtek Group or the
Business pursuant to all applicable workers compensation legislation as of the
date hereof have been paid by the Willtek Group and the Willtek Group has not been
reassessed under any such legislation.

                    (f)
Except as set forth on Schedule 3.18(f), other than the standard
employment agreements and the Employee Plans, the Willtek Group is not party to
any industrial or works council agreements or other employment agreements
applicable to the Willtek Group Employees or consultants of the Willtek Group
regarding employment, compensation, termination, severance and benefits.

                    (g)
The Willtek Group does not retain any individuals who have been improperly
classified as independent contractors under any applicable Laws. Neither the
Willtek Group nor the Business has any liability under the Code or the German
employment, Tax and social Laws (or the comparable, applicable Laws of any other
nation or international, multinational or supranational Governmental Authority)
based upon, arising out of, or relating to, the classification of any
individual working for, or related to, the Business as an independent
contractor, freelancer or “leased employee” (within the meaning of Section
414(n) of the Code and applicable national Tax and Employment Laws) rather than
as an employee, and no facts exist as a result of which the Business could have
any such liability, including the manner in which the independent contractor’s
or freelancer’s Contract is handled. All foreign nationals employed with the
Willtek Group hold valid work permits, if necessary.

                    (h)
All payments and other obligations of the Willtek Group with respect to the social
insurance and the Taxing Authorities have been duly and timely made.

                    3.19
Brokers and Finders. No broker or finder retained by the Seller is
entitled to any brokerage or finder’s fee from the Buyers or Parent with
respect to the consummation of any of the transactions contemplated by this
Agreement or the Related Documents.

                    3.20
Relationships with Related Persons. Except as set forth on Schedule
3.20, neither the Company nor any other Affiliate of the Willtek Group or
any officer, director, employee, agent or representative of the Willtek Group,
or any Person associated with any of them, has any interest in any of the
Acquired Assets or in any of the Contracts pertaining to the Business. Except
as set forth on Schedule 

45

3.20, neither the Company nor any other
Affiliate of the Willtek Group, or any officer, director, employee, agent or
representative of the Willtek Group or any Person associated with any of them,
has owned, directly or indirectly, on an individual, joint or other basis, any
equity interest or any other financial or profit interest in a Person that has
had business dealings with or is engaged in competition with the Willtek Group
in relation to the Business.

                    3.21
Taxes.

                    (a)
The Willtek Group (or the Company) has timely filed with the appropriate Taxing
Authorities in all applicable countries and jurisdictions, all Returns required
to be filed by it (taking into account any extension of time to file) with respect
to the Acquired Assets or the Business. All such Returns have been prepared in
compliance with all applicable Laws and regulations. The information on such
Returns is complete and accurate in all material respects. The Willtek Group
has paid on a timely basis all Taxes due and payable with respect to the
Acquired Assets or the Business, except for Taxes which the Willtek Group
believes in good faith are not due and payable and are being diligently
contested by appropriate proceedings and for which the Willtek Group has set
aside reserves on its books to the extent required by GAAP. There have not been
placed or created any Liens for Taxes (other than for current Taxes not yet due
and payable) upon the Acquired Assets or the Business.

                    (b)
No unpaid or unreserved deficiencies for Taxes have been claimed, proposed or
assessed in writing by any Taxing Authority or other Governmental Authority
with respect to the Acquired Assets or the Business for any Pre-Closing Tax
Period that have not been finally settled and paid, and there are no pending
or, to the Knowledge of the Seller, threatened, audits, investigations or
claims or issued and outstanding assessments for or relating to any liability
in respect of Taxes with respect to, or which could reasonably be expected to
affect, the Acquired Assets or the Business. The Willtek Group has not requested any extension of time within
which to file any currently unfiled Returns in respect of the Acquired Assets
or the Business and no extension of any statute of limitations relating to any
Taxes is in effect with respect to the Acquired Assets or the Business. To the
Knowledge of the Seller, the Willtek Group has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor or creditor of the Business or to
any other third party in connection with the Business.

                    (c)
(i) Neither the Willtek Group nor the Company has obtained any advance tax
rulings in respect of any Tax with respect to the Acquired Assets or the
Business; (ii) none of the Acquired Assets are an interest in any joint
venture, partnership or other arrangement or contract which could be treated as
a partnership for United States or foreign income tax purposes; and (iii) none
of the Acquired Assets is subject to or part of any sale-leaseback or any
leveraged lease transaction, (iv) the Willtek Group is not required to treat
any of the Acquired Assets as owned by another Person for United States or
foreign income tax purposes or as tax-exempt 

46

bond financed
property or tax-exempt use property within the meaning of section 168 of the
Code (or any corresponding provision of state, local or foreign Law); and (v)
Willtek has made an election pursuant to Treas. Reg. 301.7701-3 to be treated
as a disregarded entity for U.S. federal income Tax purposes effective as of
December 31, 2009. 

                    3.22
Environmental and Safety Matters.

                    (a)
The Willtek Group has been and currently is in material compliance with all
Environmental Laws applicable to the Business and the Leased Real Property,
including the generation, transportation, treatment, storage or disposal of
Hazardous Material.

                    (b)
The Willtek Group is not subject to Environmental Costs and Liabilities related
to the Business, and no facts or circumstances exist which could give rise to
such Environmental Costs and Liabilities.

                    (c)
The Willtek Group currently maintains all Environmental Permits necessary for
the operation of the Business and otherwise has been and currently is in
compliance with such Environmental Permits. A true and complete list of all
such Environmental Permits is set forth on Schedule 3.22(c). There are
no legal proceedings pending or, to the Knowledge of the Seller, threatened, to
revoke any of such Environmental Permits; the Willtek Group has not been
notified in writing by any Governmental Authority that there is lacking any
Environmental Permit required for the current use or operation of the Business
at any of the Leased Real Property or otherwise; and, except as prohibited by
applicable Law, such Environmental Permits are transferable to the Buyers.

                    (d)
Neither the Willtek Group nor the Business is subject to any outstanding
written Order or a party to any written agreement with any Governmental
Authority or other Person respecting (i) Environmental Laws, (ii) any Remedial
Action, (iii) any Environmental Claim or (iv) the Release or threatened Release
of any Hazardous Material.

                    (e)
There are no legal proceedings pending or threatened against the Willtek Group
or the Business arising under Environmental Law. 

                    (f)
There have been no Releases of any Hazardous Materials (A) into, on, from or
under the Leased Real Property or (B) into, on or under any other properties,
including landfills, in which Hazardous Substances generated by, or transported
from, the Business have been Released.

                    (g)
There are no claims, suits or proceedings by Willtek Group Employees or any
other Person employed by the Business pending, or, to the Knowledge of the
Seller, threatened in writing, against the Willtek Group that are premised on
the exposure to any Hazardous Material.

47

                    3.23
Warranties; Product Liability; Etc.

                    (a)
The standard warranty provided by the Willtek Group with regard to its
Products, as set forth on Schedule 3.23(a), is one year, covering both
parts and labor, with the option of the Willtek Group to repair or replace
Products that are defective during the warranty period if the proper preventive
maintenance measures have been followed. Schedule 3.23(a) sets forth a
true, correct and complete list of any and all warranties made by the Willtek
Group covering or relating to any of the Products sold by the Business which
are other or different than the standard warranty. Except as set forth on Schedule
3.23(a), there are no losses, claims, damages, expenses or Liabilities
(whether absolute, accrued, contingent or otherwise) of the Willtek Group
asserted and arising out of or based upon incidents occurring on or prior to
the Closing Date with respect to: (i) any product liability or any similar
claim that relates to any of the Products; or (ii) any claim for the breach of
any express or limited product warranty, or any similar claim that relates to
any Product provided by the Business, and, to the Knowledge of the Seller,
there are no product defects or warranty breaches or other facts and
circumstances which could give rise to any such losses, claims, damages,
expenses or Liabilities.

                    (b)
To the Knowledge of the Seller, there exists no basis for (i) the withdrawal or
suspension of any approval, consent, certification of any Governmental
Authority with respect to any Product currently or to be designed, developed,
manufactured or sold by the Business, or (ii) the recall, withdrawal or
suspension by Order of any Governmental Authority of any such Product. To the Knowledge
of the Seller, there are no defects in the designs, specifications or processes
with respect to any Product designed, developed, manufactured or sold by the
Business that could give rise to any Liability. Schedule 3.23(b) sets
forth a list and brief description of all material correspondence received or
sent by or on behalf of the Willtek Group from or to any Governmental Authority
with respect to a contemplated or actual recall, withdrawal, or suspension from
the market of any Product designed, developed, manufactured or sold by the
Business. Copies of all such correspondence have previously been made available
to the Buyers or Parent.

                    3.24
Books and Records. The books and records of the Willtek Group with
respect to the Business, including with respect to the operations, employees
and properties of such business, have been maintained in the usual, regular and
ordinary manner in accordance with applicable Law, all entries with respect
thereto have been accurately made, and all transactions have been accurately
accounted for. All such books and records have been furnished to the Buyers.

                    3.25
Restrictions on Business Activities. There is no Order binding upon the
Willtek Group or, to the Knowledge of the Seller, threatened in writing, that
has or could reasonably be expected to have the effect of prohibiting or
impairing in any material respect the conduct of the Business, any acquisition
of property by the Business, or the hiring of employees by the Business. To the
Knowledge of the Seller, 

48

no employee
of, or consultant to, the Willtek Group, currently is, or since the time he or
she became an employee of, or consultant to, the Willtek Group has been,
subject to any Contract which materially restricts in any way his or her
ability to compete with any other Person, to solicit the employees of any other
Person or to disclose confidential information of any other Person. 

                    3.26
Accounts Receivable. The Accounts Receivable shown on the December 31,
2009 Balance Sheet and those generated by the Willtek Group since the Balance
Sheet Date have either been collected in the Ordinary Course since the Balance
Sheet Date or reflect, as of the Closing Date, bona fide obligations for the
payment of goods or services provided by the Willtek Group in the Ordinary
Course of the Business which are current and collectible in the booked amounts
thereof (net of reserves or allowances for doubtful accounts which have been
established in accordance with GAAP in a manner consistent with Past Practice).
Annexed hereto as Schedule 3.26 is a true and complete aged Accounts Receivable
run as of the date indicated thereon. Other than indicated on the Accounts
Receivable run, there are no Accounts Receivable which, as of the date hereof,
are past due more than ninety (90) days from the invoice date. Allowances for
doubtful accounts and warranty returns are adequate and have been determined in
accordance with GAAP in a manner consistent with Past Practice. The material
Accounts Receivable are not subject to any claim of offset, recoupment or any
counterclaim (for which adequate reserves have not been established and
reflected on the December 31, 2009 Balance Sheet), and to the Knowledge of the
Seller, there are no facts or circumstances that could give rise to any such
offset or claim. No Account Receivable is contingent upon the performance by
the Willtek Group of any obligation or Contract other than normal warranty
repair or replacement. Except as reflected in the allowances or reserves on the
December 31, 2009 Balance Sheet, no agreement for deduction or discount has
been made with respect to any of the material Accounts Receivable of the
Willtek Group. 

                    3.27
Equipment. Schedule 3.27 sets forth an accurate and complete list
of all of the Equipment reflected on the December 31, 2009 Balance Sheet as
“Property and Equipment” and the material Equipment acquired thereafter,
including whether the same is owned or leased by Willtek Group. Consistent with
Past Practice, the Equipment is reflected on the December 31, 2009 Balance
Sheet at cost, less accumulated depreciation. The Equipment is in good
operating condition, ordinary wear and tear excepted, for the purposes for
which such Equipment is being used currently in the Business, and otherwise has
at all times been maintained and operated in accordance with the highest
industry standards and the manufacturer’s published requirements.

                    3.28
Inventory. Except for items which have been written down to realizable
market value, or for which adequate reserves have been provided in accordance
with GAAP in a manner consistent with Past Practice and reflected on the
December 31, 2009 Balance Sheet, the Inventory of the Business is, in all
material respects (a) of good and merchantable quality, (b) readily usable and
saleable in the Ordinary Course of the Business, (c) fit for the purpose for
which it was procured or 

49

manufactured,
(d) of such quality as to meet the quality control standards of the Willtek
Group and any applicable quality control standards of any Governmental
Authority or other customer of the Willtek Group and to satisfy the
requirements of the Contracts, and (e) no material portion of such Inventory is
“Obsolete Inventory” or Inventory not usable or saleable in the Ordinary Course
of the Business as conducted as of the Closing Date. Except for sales made in
the Ordinary Course since the Balance Sheet Date, the Willtek Group has good
and marketable title to the Inventory free and clear of all Liens other than
Permitted Liens. Except as set forth on Schedule 3.28, no Inventory is
in the possession, custody or control of any customer of the Willtek Group or
third party and no material portion of the Inventory consists of inventory of a
customer or third party. Consistent with Past Practice, the Inventory on the
December 31, 2009 Balance Sheet has been valued as of the Balance Sheet Date as
follows: (i) raw material, on the lower of cost or market assuming a first in,
first out, flow of goods and (ii) work in progress and finished goods, at the
lower of (A) the average cost of production, which includes material, labor and
manufacturing overhead expenses and (B) realizable market value. For purposes
of this Section, “Obsolete Inventory” is Inventory which is not usable or
saleable because of legal restrictions, failure to meet specifications imposed
by any commitment, loss of market, damage, physical deterioration or for any
other cause.

                    3.29
Backlog. Schedule 3.29 sets forth, truly and accurately, the
backlog of orders for the Products of the Business as of a date two (2)
Business Days prior the Effective Date. The backlog is based on valid and
existing orders received from customers of the Willtek Group. None of the orders
included in the backlog have been cancelled or materially modified, and, to the
Knowledge of the Seller, no customer is intending to cancel or materially
modify any of such orders. To the Knowledge of Seller, each of the orders
comprising the backlog, when fully performed in accordance with its current
terms and provisions by the Buyers, is reasonably expected to result in a net
profit to the Buyers.

                    3.30
Sales Representatives. Schedule 3.30 is a true, correct and
complete list of all independent sales representatives engaged by the Willtek
Group to sell the Products and the amount of unpaid commissions owed to each as
of a date one week prior to the Effective Date. Except for the Persons
identified on Schedule 3.30, no sales representative has earned or is
entitled to earn commissions from the Willtek Group in connection with the sale
of the Products. There are no commissions owed to any sales representative to
the extent that the whole or any portion of such commissions (i) has not been
accrued on the December 31, 2009 Balance Sheet, (ii) is not set forth on Schedule
3.30, or (iii) relates to sales of Products where the proceeds therefrom
either have been fully collected by the Willtek Group or, in whole or in part,
have been refunded or credited to the customer.

                    3.31
Distributors. Schedule 3.31 sets forth a true, correct and
complete list of all distributors engaged by the Willtek Group to distribute
the Products and the material price concessions, discounts and other special
terms granted to each in connection therewith. Except for those Persons
specifically identified by the Buyers on 

50

Schedule 3.31, there are no Contracts or
arrangements made by the Willtek Group with any Person to distribute the
Products. Except as set forth on Schedule 3.31, no distributor is
entitled to return any Products purchased previously or on consignment from the
Willtek Group.

                    3.32
Disclosure. No representation or warranty by the Seller contained in
this Agreement or any Related Document or any certificate furnished by the
Willtek Group or the Company, as the case may be, to the Buyers or Parent in
connection herewith or therewith or pursuant hereto or thereto contains any
untrue statement of a material fact, or omits to state any material fact
required to make the statements herein or therein contained not misleading. To
the Seller’s Knowledge, there are no events, facts or circumstances which are
reasonably likely to cause or have a Seller Material Adverse Effect.

                    3.33
No Other Representations and Warranties. Except for the representations
and warranties contained in this Article III of this Agreement into which the
Schedules are incorporated and those, if any, contained in the Related
Documents, the Seller does not make any (a) other express or implied, written
or oral, representation or warranty with respect to the Willtek Group, the
Acquired Assets, the Business or the transactions contemplated by this
Agreement and the Related Documents, the Assumed Liabilities and any other
rights or obligations to be transferred hereunder or pursuant hereto, or (b)
implied representation or warranty as to the condition, merchantability, usage,
suitability or fitness for any particular purpose with respect to the
foregoing, and the Seller disclaims any other representations or warranties,
whether made by the Seller or any of its Affiliates or representatives. Except
for the representations and warranties contained in this Article III of this
Agreement and in the Related Documents, if any, the Seller hereby disclaims all
Liability and responsibility for any representation, warranty, projection,
forecast, statement, or information made, communicated, or furnished (orally or
in writing) to any of Parent, the Buyers or any of their Affiliates and
representatives. The Seller makes no representations or warranties to any of
Parent, the Buyers or any of their Affiliates and representatives regarding the
probable success or profitability of the Business or the Acquired Assets.

ARTICLE
IV

REPRESENTATIONS
AND WARRANTIES OF THE BUYERS AND PARENT

                    As
an inducement to the Seller to enter into this Agreement, the Buyers and
Parent, on a joint and several basis, represent and warrant to the Seller that
as of the Effective Date and the Closing Date:

                    4.1
Organization and Qualification. Each of the Aeroflex Subsidiaries
constituting a Buyer hereunder, as listed on Schedule 4.1, is a
corporation, limited liability company or other entity duly organized, validly
existing 

51

and in good
standing (in each instance where such concepts are legally applicable) under
the Laws of the jurisdiction of its organization or origin and has the
requisite corporate, limited liability company or other entity (as the case may
be) power and authority to conduct its business as presently conducted and to
own, lease and operate its property and assets, except where the failure to be
in good standing would not, or would not be reasonably expected to,
individually and in the aggregate, have a Buyer Material Adverse Effect. As of
the Closing Date, each of the Aeroflex Subsidiaries is duly qualified or
licensed as a foreign corporation to do business and is in good standing (in
each instance where such concepts are legally applicable) in every jurisdiction
where the character of the properties owned, leased and operated by it makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed or in good standing would not, or would not be reasonably
expected to, individually and in the aggregate, have a Buyer Material Adverse
Effect. The Parent is a Delaware corporation in good standing and has all
requisite power and authority to conduct its business as presently conducted
and to own, lease and operate its property and assets. 

                    4.2
Authorization. Each of the Aeroflex Subsidiaries and Parent has all
requisite corporate power and authority to execute and deliver this Agreement
and the Related Documents and to perform their respective obligations hereunder
and thereunder. The Buyers and Parent have duly authorized the execution,
delivery and performance of this Agreement and the Related Documents and no
other corporate proceedings on the part of the Buyers or Parent are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby or thereby. This Agreement and the Related Documents have been, or will,
prior to the Closing, be, duly executed and delivered by the Buyers and Parent
and constitute legal, valid and binding obligations of the Buyers and Parent,
enforceable against the Buyers and Parent in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar Laws of general applicability affecting the rights
of creditors or by general equitable principles.

                    4.3
No Violations or Conflicts. Neither the execution and delivery of this
Agreement or the Related Documents by the Buyers and Parent nor the consummation
by it of the transactions contemplated by this Agreement or the Related
Documents (assuming all required consents, approvals, authorizations, filings
and notices set forth in Schedule 3.4 have been made, given or obtained)
does or will (i) violate any provision of the either the Buyers’ or Parent’s
organizational documents, (ii) result in a violation or breach of, or
constitute a default under (or an event that, with notice, lapse of time, or
both would be a default under), any indenture, mortgage, bond, contract,
license, agreement, permit, instrument or other obligation to which any of the
Aeroflex Subsidiaries or Parent is a party or by which its assets are bound, or
(iii) violate in any material respect any Law or Order to which the Buyers or
Parent are subject, except in the case of clauses (ii) and (iii) above, as
would not individually or in the aggregate, reasonably be expected to have a
Buyer Material Adverse Effect.

52

                    4.4
Consents and Approvals. No consent, approval or authorization of, or
declaration, filing or registration with any Governmental Authority or any
other Person is required to be made or obtained by the Buyers or Parent in
connection with its execution, delivery and performance of this Agreement and
the Related Documents.

                    4.5
Brokers and Finders. No broker or finder retained by the Buyers or
Parent is entitled to any brokerage or finder’s fee from the Willtek Group with
respect to the consummation of the transactions contemplated by this Agreement
or the Related Documents.

                    4.6
Disclosure. No representation or warranty by the Buyers or Parent
contained in this Agreement or any Related Document or any statement or
certificate furnished by the Buyers to the Willtek Group or their respective
representatives in connection herewith or therewith or pursuant hereto or
thereto contains any untrue statement of a material fact, or omits to state any
material fact required to make the statements herein or therein contained not
misleading.

                    4.7
Certain Proceedings. There is no proceeding that has been commenced or,
to the Buyers’ Knowledge, threatened in writing, against Buyers or the Parent,
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the transactions herein contemplated.

                    4.8
Financial Ability. As of the Closing Date, Parent and the Buyers shall
have sufficient immediately available funds, to pay, in cash, the Cash Purchase
Price and to pay the fees and expenses payable by the Buyers at the Closing in
connection with the transactions contemplated hereby and thereby.

                    4.9
Independent Investigation. Each of the Buyers and Parent acknowledges
and agrees that it has made its own inquiry and investigation into, and, based
thereon and on the representations and warranties contained in this Agreement,
has formed an independent judgment concerning the Seller, the Acquired Assets,
the Business and the transactions contemplated by this Agreement and the
Related Documents, the Assumed Liabilities and any other rights or obligations
to be transferred hereunder or pursuant hereto. Each of the Buyers and Parent
further acknowledges and agrees that (i) the only representations and
warranties made by the Seller are the representations and warranties made in
Article III of this Agreement and each of the Buyers and Parent are not relying
upon any other representations or warranties made by the Seller, (ii) any
claims that either the Buyers or Parent may have for breach of any
representation or warranty shall be based solely on the representations and
warranties of the Seller set forth in Article III of this Agreement and (iii)
except as expressly set forth in this Agreement, Buyer shall acquire the
Acquired Assets, the Business and the Assumed Liabilities without any
representation or warranty, express or implied, as to the condition,
merchantability, usage, suitability or fitness for any particular purpose, in
“as is” condition and on a “where is” basis.

53

ARTICLE
V

COVENANTS

                    5.1
Access to Information. To the extent permitted by applicable Law and not
unreasonably disruptive of the normal business operations of the Willtek Group,
from and after the Effective Date to the Closing Date, for the purpose of (i)
enabling the Buyers and Parent to consummate the transactions contemplated by
this Agreement and (ii) to operate the Business after the Closing, the Buyers
and Parent shall be afforded full access during normal business hours to all
properties and other facilities of, and to the books, accounts, records,
Contracts, and documents of or relating to, the Business. The Seller shall
promptly furnish or cause to be furnished to the Buyers and Parent all data, documents,
records and information concerning the business, customers and suppliers,
finances, properties, facilities, assets and personnel of the Business as
reasonably requested by the Buyers and Parent. The Seller also shall make
available to the Buyers and Parent the appropriate officers, directors,
employees and agents of the Business for discussion of, and reasonable
assistance with regard to, the business, finances, properties, facilities,
assets and personnel of the Business as well as to facilitate introductions and
afford Buyers and Parent opportunities for access to the customers and
suppliers of the Business. All information provided by the Seller to the Buyers
and the Parent pursuant to this Section shall be kept confidential in
accordance with the terms of the Confidentiality Agreement.

                    5.2
Additional Agreements; Reasonable Best Efforts.

                    (a)
Subject to the terms and conditions herein provided, each of the Parties hereto
agrees to use its commercially reasonable best efforts to take or cause to be
taken all action and to do or cause to be done all things reasonably necessary,
proper or advisable under applicable Law to consummate and make effective in
the most expeditious manner practicable, the transactions contemplated by this
Agreement, including, without limitation, (i) contesting any legal
proceeding challenging the transactions contemplated hereby,
(ii) executing any additional documents, certificates or instruments
necessary to consummate the transactions contemplated hereby and thereby, and
(iii) obtaining all third party consents and approvals (including consents and
approvals of Governmental Authorities) as are reasonably necessary in
connection with the consummation of the transactions contemplated hereunder and
under the Related Documents to transfer or assign the Permits, Contracts,
Intellectual Property and other of the Acquired Assets to the Buyers; provided,
however, without the Buyers’ prior written consent, in no event
shall the Willtek Group amend, waive or otherwise alter any of the material
terms of any Contract or Permit in order to obtain a consent from a third party
required under any Contract or Permit. If at any time after the Closing Date
any further action is necessary to carry out the purposes of this Agreement,
the proper officers and directors of each party hereto shall take all such
necessary action. 

54

                    (b)
The Seller, at its own cost and expense, shall cooperate with, and be available
to, the Buyers and Parent and otherwise provide all such information and
assistance and prepare and execute all such documents as may be reasonably
requested by the Buyers and Parent and their legal representatives in
connection with any audits and investigations conducted or voluntary
disclosures to be made by Buyers or Parent in connection with, or arising out
of, any violations of the Export Control Laws by the Willtek Group and the
Business prior to the Closing. 

                    (c)
Neither of the Seller or the Buyers and Parent shall intentionally take or
permit to be taken on their behalf any actions that would reasonably be
expected to result in any of the conditions set forth in Article VII not being
satisfied or fulfilled.

          5.3.
Conduct of the Business Pending the Closing.

                    (a)
From the Effective Date through the Closing Date, the Willtek Group shall cause
the Business to be operated in the Ordinary Course and in a manner consistent
with Past Practice, except for such changes as are necessary or appropriate to
prepare for or accommodate the consummation of the transactions contemplated
herein. The Willtek Group shall use commercially reasonable efforts to preserve
in all material respects its business organization, to maintain its assets and properties
in good repair and condition, to maintain capital expenditure levels consistent
with Past Practice, to retain the services of its current officers and
directors and to preserve and foster in all material respects its current
relationships with customers, suppliers, employees and other Persons with whom
the Willtek Group has material business relations, in each case in the Ordinary
Course and in a manner consistent with Past Practice. Without limiting the
generality of the foregoing, except as contemplated by any other provision of
this Agreement or as otherwise required by applicable Law, from the Effective
Date to the Closing Date, the Willtek Group, in the conduct of the operations
and affairs of the Business, will not do or cause to be done or occur or
otherwise permit, except with the prior written consent of the Buyers and
Parent, any of the actions described in Section 3.8(b) as if such Section were
applicable to such period.

                    (b)
Nothing in Section 5.3 (a) gives or shall be deemed to give the Buyers (or
Parent), directly or indirectly, the right to control or direct the operations
or financial affairs of the Business or the Willtek Group prior to the Closing
Date. Prior to the Closing Date, the Willtek Group and the Company, consistent
with the terms of this Agreement, shall exercise complete dominion and control
over the business operations and financial affairs of the Business and of the
Willtek Group.

                    5.4
Proprietary Information, Confidential Records; Intellectual Property Rights.

                    (a) Proprietary Information. The Company acknowledges that it 

55

and the
Willtek Group and certain of their respective officers and directors have had
access to, and use of, Proprietary Information and Confidential Records (as
each such term is defined below). The Company and the Willtek Group covenant
that subsequent to the Closing, without written authorization from the Buyers
or Parent, they and their respective Affiliates shall not at any time hereafter,
directly or indirectly, use for their own purpose or for the benefit of any
Person other than the Buyers, any Proprietary Information, or disclose any
Proprietary Information to any Person. For purposes of this Agreement, the term
“Proprietary Information”
shall mean all Intellectual Property constituting an Acquired Asset
or relating solely to an Acquired Asset or the Restricted Business, including:
(i) the names and addresses of customers and vendors and information concerning
transactions or relations therewith; (ii) information concerning any Product,
technology or procedure not generally known to its customers, vendors or
competitors, or under development by or being tested but not at the time
offered generally to its customers or vendors; (iii) information relating to
Information Technology, computer software and systems other than off-the-shelf
software and systems furnished by third party vendors; (iv) business plans,
budgets, advertising and marketing plans, pricing and marketing methods, sales
margins, cost of goods, cost of material, capital structure, operating results,
and borrowing arrangements; (v) information belonging to customers and vendors
and any other Person which by agreement is held in confidence; (vi) other
information which is generally regarded as confidential or proprietary; and
(vii) all written, graphic and other material relating to any of the foregoing.
Information that is not novel or copyrighted or patented may nevertheless be
Proprietary Information. The term “Proprietary Information” shall not include
(A) information which is now or becomes generally available to, or known by,
the public or the industry in which the Business operates (other than by reason
of a breach of this Agreement), (B) becomes available to the Company or the
Willtek Group subsequent to the Closing Date on a non-confidential basis from a
source (other than a party to this Agreement or the Related Documents or any
Affiliate or representative of such Party) that is not bound by a
confidentiality agreement with regard to such information. The Company further
agrees that it will promptly enforce to the fullest extent permitted by
applicable Law any confidentiality agreements with a third party that the
Company or any of its representatives have entered into during the process of
selling or negotiating for sale either the stock of the Company or the stock or
the assets of the Willtek Group or the Business that involve any Proprietary
Information in any manner if such agreements are not assignable to, or otherwise
enforceable by, the Buyers. The enforcement of such confidentiality agreements
shall include, subject to the terms of such agreements, requiring the return of
any and all Proprietary Information and all copies thereof, requiring the
destruction of any notes regarding the Proprietary Information, prohibiting the
use of any Proprietary Information by any Person other than the Buyers or
Parent, and immediately and fully enforcing any non-disclosure provisions
contained in such agreements. The Company and the Willtek Group shall be
responsible for the breach of this provision by any of their respective
Affiliates who have had access to such Proprietary Information.

                    (b) Confidentiality and Surrender of Records. The Company and 

56

the Willtek
Group (and their respective Affiliates) shall not at any time, directly or
indirectly, publish, make known or in any fashion disclose any Confidential
Records to, or permit any inspection or copying of any Confidential Records by,
any Person. For purposes hereof, “Confidential
Records” means all records and similar items (but only to the extent
that such records constitute or pertain to an Acquired Asset), that relate to
or are connected with the Business and contain any Proprietary Information,
including all correspondence, memoranda, files, manuals, books, lists,
financial records, operating or marketing records, magnetic tape, or electronic
or other media or equipment of any kind which may be in the Company’s
possession or under its control or accessible to it. All Confidential Records
shall be and remain the sole property of the Buyers from and after the Closing
Date. If not otherwise in their possession, the Company and the Willtek Group
shall have reasonable access to, and the right to make copies of, such records
of the Business which otherwise are not “Confidential” or “Proprietary” to the
extent reasonably necessary for the Company and the Willtek Group to prepare
and file tax returns, respond to any claims or inquiries by any Governmental
Authority or to comply with applicable Laws and other such obligations.

                    (c)
Certain Permitted Disclosures and Uses. Sections 5.4(a) and (b) shall
not prevent any disclosure required by Law or Order of a court or Governmental
Authority provided that the Company or the Willtek Group or their Affiliates,
as the case may be, shall, prior to any such disclosure, give the Buyers prompt
notice of any such requirement, and cooperate with the Buyers in obtaining a
protective Order or other means of protecting the confidentiality of the
Proprietary Information and Confidential Records of the Business. The Company
or the Willtek Group, as the case may be, shall disclose only that information
or provide such documents as are legally required or compelled to be disclosed
or provided if the Buyers either fail to obtain such protective order or a
comparable remedy or waive the right to do so. In producing such documents and
disclosing such information, the Company or the Willtek Group, as the case may
be, shall exercise, or cause their legal representatives to exercise,
reasonable best efforts to obtain assurance that confidential treatment will be
accorded such disclosed information and records. 

                    5.5
Covenant Not to Compete, Etc.

                    (a)
The Company and the Willtek Group understand and acknowledge that the
provisions of Section 5.4 and this Section 5.5 are necessary to protect the
goodwill and the legitimate business interests of the Business, are fair and
reasonable and are an essential prerequisite and inducement to the Buyers and
Parent to enter into this Agreement and to consummate the transactions
contemplated herein.

                    (b)
Non-Compete. Based on the foregoing, for a period of three (3) years
from the Closing Date (the “Non-Competition
Period”), each of the
Company, Willtek and the Willtek Subsidiaries for itself and its Affiliates,
shall not directly or indirectly, own, manage, operate, join, control, engage
in, participate in, invest in, act

57

as a
consultant or advisor to, or otherwise assist or be connected or associated
with, in any manner, any Restricted Business; provided, however,
that nothing contained in this Agreement shall prevent the Company, Willtek or
any Willtek Subsidiary or any of their respective Affiliates (A) from being a
passive owner of less than five percent (5%) of the voting stock of a publicly
held corporation for investment purposes, so long as the Company, Willtek and
the Willtek Subsidiaries and their respective Affiliates have no active
participation in such business or (B) acquiring all or a majority of the stock
or assets of any Person that has a business, division or operations which has
20% or less of its sales in any Restricted Business; provided, however,
that the acquisition by any of the Company, Willtek, the Willtek Subsidiaries
and their respective Affiliates of a majority of the stock or assets of any
Person that has a business, division or operations which has more than 20% of
its sales in any Restricted Business shall not be deemed to be a breach of the
obligations set forth in this Section 5.5(b) as long as such acquiring party
shall take all commercially reasonable steps to sell or otherwise divest such
business, division or operations as soon as reasonably practicable after such
acquisition to any unaffiliated Person after first offering to sell such
Business to the Buyers and Parent. For purposes of this Section, “Restricted
Business” shall mean any business engaged in the design,
development, manufacture or sale of products for terminal testing and air
interface testing market applications.

                    (c)
Non-Solicitation. During the Non-Competition Period, the Seller and its
Affiliates, per the Confidentiality and Non-Competition Agreement, shall not,
directly or indirectly,

                              (i)
persuade or seek to persuade any customer of the Business to cease doing
business or to reduce the amount of business which the customer has customarily
done or contemplates doing with the Business, whether or not the relationship
between the Business and such customer was originally established in whole or
in part through the efforts of the Willtek Group;

                              
(ii) actively solicit any customer of the Business with respect to any of the
Products purchased by the Buyers pursuant hereto (or products similar to the
Products) or part numbers purchased by the Buyers pursuant hereto (or part
numbers used in replacement thereof, or any part numbers with the same
electrical characteristics, form and functions as such part numbers);

                              
(iii) seek to employ or engage, or assist anyone else to seek to employ or
engage, any Person who, at the relevant time, is in the employ of the Business
or is an independent contractor providing engineering, marketing, sales,
financial, management consulting services or other services in connection with
or to the Business; or

                              
(iv) interfere in any manner in the relationship of the Business with any of
its customers, suppliers or independent contractors, whether or not the
relationship between the Business and such customer, supplier or independent
contractor was originally established in whole or in part by the efforts of the
Willtek 

58

Group.

                    (d)
Harm to the Business. During the Non-Competition Period, (i) the Company
and the Willtek Group shall not, and shall cause their Affiliates not to, take
any action which is intended to, or could reasonably be expected to, harm the
Business or its reputation; and (ii) Parent and Buyers shall not, and shall
cause their respective Affiliates not to, take any action which is intended to,
or reasonably could be expected to harm the business or reputation of the
Company and the Willtek Group.

                    (e)
Remedies. (i) Each of the Company and the Willtek Group expressly
acknowledges and agrees that it would be difficult to measure the damages that
might result from any actual or threatened breach of Section 5.4 or this Section
5.5, and that any actual or threatened breach by it or its Affiliates of any of
the provisions of Section 5.4 or this Section 5.5 will result in immediate,
irreparable and continuing injury to the Buyers and that a remedy at law for
any such actual or threatened breach of the provisions of Section 5.4 or this
Section 5.5 would be inadequate. Accordingly, the Parties agree that the
Buyers, in their sole discretion, and in addition to, and not mutually
exclusive of, any other remedies they may have at law or in equity, shall be
entitled, without the posting of a bond or deposit, to temporary, preliminary
and permanent injunctive relief or other equitable relief, issued by a court of
competent jurisdiction, in case of any such actual or threatened breach; and
(ii) the Buyers and Parent agree and acknowledge that the Company and the
Willtek Group, in their sole discretion, and in addition to, and not mutually
exclusive of, any other remedies they may have at law or in equity, shall be
entitled, without the posting of a bond or deposit, to temporary, preliminary
and permanent injunctive relief or other equitable relief, issued by a court of
competent jurisdiction, in case of any actual or threatened breach by the
Buyers or Parent or their respective Affiliates of the provisions of Section
5.5(d).

                    5.6
Receipt of Property Relating to the Acquired Assets. 

                    (a) If, following the Closing Date, Seller or
any of its Affiliates shall receive any money, checks, notes, drafts, instruments,
payments or other property relating to or as proceeds of the Acquired Assets,
it shall receive all such items in trust for, and as the sole and exclusive
property of, the Buyers and, promptly upon receipt thereof, shall notify the
Buyers in writing of such receipt and shall remit the same (or cause the same
to be remitted) in kind to the Buyers in the manner specified by the Buyers.
If, following the Closing Date, Seller or any of its Affiliates shall receive
any bill or other demand for payment or performance in respect of any Assumed
Liability, then it promptly shall forward such bill or demand to the Buyers.

                    (b)
If, following the Closing Date, any of Parent or the Buyers (or their
respective Affiliates) shall receive any money, checks, notes, drafts,
instruments, payments or other property relating to or as proceeds of the
Excluded Assets, it shall receive all such items in trust for, and as the sole
and exclusive property of, the Seller 

59

and, promptly
upon receipt thereof, shall notify the Seller in writing of such receipt and
shall remit the same (or cause the same to be remitted) in kind to the Seller
in the manner specified by the Seller. If, following the Closing Date, any of
Parent or the Buyers (or their respective Affiliates) shall receive any bill or
other demand for payment or performance in respect of any Excluded Liability,
then it promptly shall forward such bill or demand to the Seller.

                    5.7
Provision of Records. The Seller shall arrange as soon as practicable
following the Closing Date, to the extent not already in the possession of the
Buyers or Parent, for delivery to the Buyers, at the sole cost and expense of
the Willtek Group, of the records in the possession of the Willtek Group or its
directors, consultants, agents and representatives which are part of, or relate
solely to, the Acquired Assets and the Assumed Liabilities or otherwise relate
solely to the Business (other than records that constitute Excluded Assets or
relate solely to the Excluded Liabilities) subject to the right of the Company
or the Willtek Group, as the case may be, to retain copies thereof as may be
necessary for the Company and/or the Willtek Group to file Returns and
otherwise comply with its incumbent obligations and responsibilities (a) under
applicable Laws, (b) under existing Contracts which are not Acquired Assets or
(c) to any Governmental Authorities.

                    5.8
Employment Matters.

                    (a)
Effective as of the Closing Date, the Buyers, Parent or any of their
Affiliates, subject to compliance by the parties as hereinafter provided with
all of the notice and other transfer regulations and directives of the European
Union and other applicable national Laws, including Section 613a of the German
Civil Code (“BGB”), and such other terms and conditions as are applicable
pursuant to any industrial or works council agreements or negotiated
arrangements, shall employ the Willtek Group Employees as follows: (i) all
individuals listed on Schedule 5.8(a)(i) who, immediately prior to the
Closing Date, are employees of Willtek (the “German Business Employees”) will,
pursuant to the transfer regulations and such other applicable German Laws,
including, Section 613a of the BGB, automatically transfer to Aeroflex GmbH (or
one of its Affiliates) at their current wage and salary levels and in the same
position as they held with Willtek, except for those German Business Employees
who exercise their right of objection according to Section 613a para. 6 of the
BGB; (ii) all individuals (other than the German Business Employees) listed on Schedule
5.8(a)(ii), who, immediately prior to the Closing Date, are EU Business
Employees, shall automatically transfer to Aeroflex France SAS (or one of its
Affiliates), at their current wage and salary levels and in the same position
as they held with the Willtek Group, except for those EU Business Employees who
exercise their right of objection or right to revert to the Willtek Group under
under Article L 1224-1 of the French Labor Code or any of the transfer
regulations and directives of the European Union or such national Laws as are
applicable; (iii) those individuals listed on Schedule 5.8(a)(iii) who,
immediately prior to the Closing Date, are U.S. Business Employees, shall be
offered employment by Aeroflex Wichita, Inc. (or one of its Affiliates) at
their current wage and salary levels and in a comparable position 

60

to that which
they held with Willtek Communications, Inc., (iv) those individuals on Schedule
5.8(a)(iv) who immediately prior to the Closing Date are Non-EU Business
Employees, shall either be transferred to, or be offered employment by, one or
more of the Buyers or their Affiliates at their current wage and salary levels
and in the same or a comparable position to that which they held with the
Willtek Group, as required by, and otherwise in compliance with, applicable
Laws of the country in which they are located or such other applicable Laws
governing such matters. Those of the U.S. Business Employees and Non-EU
Business Employees who accept such offers of employment (or otherwise are
deemed to have been transferred as the case may be) and those German Business
Employees and EU Business Employees who automatically transfer by operation of
law and become employees of the Buyers (or their Affiliates) after the Closing
and otherwise do not exercise their objection rights or timely elect
subsequently to revert to the Willtek Group in accordance with any right to do
so, shall be referred to herein as the “Transferred
Employees.” In addition, consistent with European Union directives
and regulations and such other national or supranational Laws as may be
applicable, to the extent that the Buyers or Parent (or their respective
Affiliates) currently maintain or have in effect such plans, policies,
arrangements and programs (the “Buyers’ Plans”) as the Employee Plans (or
otherwise by the Buyers’ election to continue certain of the Employee Plans),
Buyers or Parent shall provide the Transferred Employees with life insurance,
medical coverage and other employee benefits and plans (other than (1) stock
based plans relating to equity securities or the equivalent, or any incentive
bonus programs based on the achievement of financial targets or (2) any vision
or dental care plan or deferred compensation plan), on the same basis to what
the Transferred Employees enjoyed prior to the Closing Date under the Employee
Plans or, with respect only to the U.S. Business Employees, on a substantially
similar basis to what the U.S. Business Employees enjoyed prior to the Closing
Date under the Employee Plans. If and only to the extent permitted by the
Buyers’ Plans, each Transferred Employee shall be given credit for all service
with the Willtek Group under the Buyers’ Plans in which such Transferred
Employees participate for purposes of eligibility and vesting (but not for
benefit accrual). Effective on the Closing Date, to the extent permitted under
the Buyers’ Plans or as otherwise required by applicable Law, the Buyers shall
waive (or arrange for the waiver of) all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Transferred Employees under the Buyers’
Plans, and shall credit each Transferred Employee with any co-payments and
deductibles paid respectively by them under the Employee’s Plans toward
satisfaction of any applicable deductible or out-of-pocket requirements under
the Buyers’ Plans. Unless otherwise specifically provided on Schedule 5.8(a),
the employment of the Transferred Employees shall be on an “at will” basis and
nothing herein shall be deemed to invest any Transferred Employee with the
right to continued employment with any of the Buyers, Parent or their
Affiliates or otherwise preclude or in any manner restrict the Buyers, Parent
or any of their Affiliates, as the case may be, from terminating any of the
Transferred Employees after the Closing Date, or terminating or modifying any
of the Employee Plans, to the extent continued after the Closing, or any of the
Buyers’ Plans or any of the benefits provided thereunder or eligibility 

61

requirements
thereof, subject only, in each instance, to the requirements and restrictions
of applicable Laws pertaining thereto. 

                    (b)
The Parties agree that as of the Closing Date, Aeroflex GmbH and Aeroflex
France SAS (or any of their respective Affiliates) shall assume all rights and
duties attendant to the employment relationship with all German Business
Employees and all EU Business Employees, respectively, unless a German Business
Employee or an EU Business Employee, as the case may be, timely objects to the
transfer of his or her employment relationship to Aeroflex GmbH or Aeroflex
France SAS (or any of their Affiliates) in accordance with, respectively,
Section 613a para. 6 of the BGB, the transfer regulations as set forth under
Article L 1224-1 of the French Labor Code or the transfer regulations and
directives of the European Union and such other local and national Laws as are
applicable. The Parties shall inform each other in writing promptly upon the
receipt of an objection from any of the German Business Employees (or any of
the EU Business Employees) regarding the transfer of the employment
relationship to Aeroflex GmbH or Aeroflex France SAS or their Affiliates. 

                    (c)
Sometime after the Effective Date but prior to the Closing Date, Aeroflex GmbH
(or its Affiliate) and Willtek shall inform all German Business Employees and
Aeroflex France SAS (or its Affiliate) and Willtek shall inform all of the
other EU Business Employees in writing (the “Employment Transfer Letter”)
of the Acquisition Transaction and otherwise notify them accordingly that their
employment will be transferred to Aeroflex GmbH (or its Affiliate) or Aeroflex
France SAS (or its Affiliate), as the case may be, effectively on and after the
Closing Date. The Employment Transfer Letter shall comply in all material
respects, both as to form and substance, with Section 613a para. 5 of the BGB
with regard to the German Business Employees and with regard to all other EU
Business Employees, the transfer regulations under Article L 1224-1 of the
French Labor Code or the transfer regulations and directives of the European
Union and such other local or national Laws as may be applicable. The Buyers
initially shall prepare the draft of the Employment Transfer Letter for review
and comment by Willtek. In order to facilitate the foregoing, the Willtek Group
shall provide to the Buyer all of the information that is necessary and
appropriate for the preparation of the Employment Transfer Letter. The Willtek
Group, at its sole cost and expense, shall undertake and assume responsibility
for transmitting or delivering the Employment Transfer Letter in the manner
prescribed by applicable Law to each of the German Business Employees and other
EU Business Employees (the Parties’ respective obligations pursuant to this
Section 5.8(c) being referred to as the “Employment Transfer Notice Obligations”). 

                    (d)
If a German Business Employee or an EU Business Employee, as the case may be
(an “Objecting
Employee”), timely and legitimately objects to the transfer of his
or her employment relationship to, respectively, Aeroflex GmbH (or its
Affiliate) according to Section 613a para. 6 of the BGB or Aeroflex France SAS
(or its Affiliate) according to Article L 1224-1 of the French Labor Code, or
according to any other of the transfer regulations and directives of the
European Union or such 

62

other local or
national Law as may be applicable, or otherwise asserts that the employment
relationship with the Willtek Group continues to exist, the Willtek Group (or
in the case of those EU Business Employees who have transferred to Aeroflex
France, SAS, Aeroflex France SAS itself) shall terminate the employment
relationship of the Objecting Employee, effectively as of the earliest possible
date, by way of a notice of termination for operational or other reasons or by
way of a termination agreement in accordance with applicable German, French or
any other labor and employment Laws applicable in such circumstances. Except to
the extent that the same is attributable to the failure of the Willtek Group to
perform those of the Employment Transfer Notice Obligations on its part to be
performed, if the Objecting Employee’s claim is successful, the Buyers shall
indemnify and hold the Willtek Group harmless from all claims and reimburse the
Willtek Group accordingly for all costs actually incurred and payments actually
made in connection with the (temporary) continuation and termination of the
employment relationship including, but not limited to, all costs for the
Objecting Employee’s remuneration, employer contributions to the social
security and/or pension schemes, and any Severance Pay to which such Objecting
Employee would be entitled pursuant to Contract, Employee Plan or social
arrangement or under applicable Law, including, in the case of the German
Business Employees, the German Termination Protection Act (collectively, the “Employment
Transfer
Liabilities”).

                    (e)
As of the Closing Date, where required, the Willtek Group agrees to waive and
release each Transferred Employee, with respect to his or her affiliation with
or employment by the Buyers or their Affiliates, from any and all contractual,
common law or other restrictions enforceable by the Willtek Group on the
employment, activities or other conduct of such individuals after their
termination of employment with the Willtek Group.

                    (f)
Except as may be required by the Employee Plans or by applicable Laws
(including, with regard to the U.S. Business Employees, COBRA), after the
Closing Date, the Willtek Group and the Seller, as the case may be, shall cause
the termination of active participation by the Transferred Employees under all
Employee Plans not assumed and continued after the Closing Date by the Buyers; provided,
however, the Buyers shall remain responsible for all Assumed
Liabilities in connection with such Employee Plans. From and after the Closing
Date, the Buyers shall be solely responsible for all Liabilities in respect of,
owing to, or in connection with, claims incurred by, the Transferred Employees
and their beneficiaries and dependents (i) under the Employee Plans assumed by
Buyers and continued after the Closing Date and (ii) under the Buyers’ Plans.

                    (g)
The Buyers shall fulfill and remain liable for all Liabilities arising out of,
or in connection with, (i) the employment relationships created with the
Transferred Employees on and after the Closing Date, (ii) all payments and
benefits to be made or provided to the Willtek Group Employees which constitute
Assumed Liabilities, and (iii) the Assumed Pension Liabilities.

63

                    (h)
For purposes of continuation coverage required by COBRA, to the extent
applicable to any of the Transferred Employees who were U.S. Business
Employees, such Transferred Employees shall be considered to have undergone a
termination of employment with the Willtek Group. It is the understanding and
intention of the Willtek Group and Buyers that the health coverage to be
afforded those Transferred Employees pursuant to Section
5.8(a)(iii), shall be coverage that, pursuant to ERISA, terminates any continuation
coverage rights such Transferred Employees might otherwise have under COBRA or
any other comparable Laws as a result of termination of employment with Willtek
Communications, Inc.

                    (i)
Nothing in this Section 5.8, express or implied, is intended to modify the
terms of employment of any Willtek Group Employee, amend any Employee Plan, or
otherwise to confer on any Person other than the Parties to this Agreement and
their respective successors and assigns any rights under, or remedies to
enforce, this Section 5.8.

                    5.9
Assigned/Novated Contracts and Permits. This Agreement shall not
constitute an assignment, transfer or novation, or an attempted assignment,
transfer or novation, of any Contract or Permit that cannot be assigned,
transferred or novated, as applicable, without a third party consent that has
not been obtained prior to the Closing or for any other reason. The Willtek
Group shall have a continuing obligation to use its best commercially
reasonable efforts to obtain any consent necessary for the assignment, transfer
or novation of each Contract and Permit and the Willtek Group and the Buyers
shall cooperate, to the extent reasonably requested by the other, in connection
therewith, including executing agreements of assumption or novation and
providing such other documents and opinions as may be required. If a required
consent is not obtained, or if an attempted assignment, transfer or novation of
a Contract or Permit would be ineffective or would adversely affect the rights
of the Buyers thereunder so that the Buyers would not, in fact, receive all of
the rights and benefits (consistent with the attendant obligations to perform)
thereunder, the Willtek Group shall use commercially reasonable efforts jointly
with the Buyers to secure for the Buyers the same economic rights and benefits
thereunder through a mutually agreeable alternate arrangement (including
subcontracting, sublicensing or subleasing to the Buyers, or an arrangement
under which the Willtek Group (or the Company) would enforce for the benefit of
the Buyers, with the Buyers assuming any and all rights of the Willtek Group
against, and performance obligations to, a third party thereto and otherwise
indemnifying the Seller and holding it harmless accordingly). With regard to,
and in furtherance of, all such mutually agreeable alternate or other
arrangements described above, the Company will promptly pay to the Buyers or
Parent pursuant to this Section 5.9, all monies received by the Willtek Group
under any Contract or any claim or right or any benefit arising thereunder not
transferred. Notwithstanding the foregoing, neither the Willtek Group nor the
Company shall be obligated to make any payments or otherwise pay any
consideration to any Person, to commence or participate in any litigation or to
offer or grant any accommodation to any third party to obtain any consent
necessary for the assignment, transfer or novation of each Contract or Permit.
Upon the receipt of the requisite consent to 

64

transfer,
assign or novate a Contract, such Contract shall become in all respects an
Acquired Asset. Provided the Willtek Group complies with its incumbent
obligations hereunder, the Willtek Group’s failure to obtain any of the
Required Consents (to the extent indicated on Schedule 3.4) after the
Closing Date shall not constitute a breach of this Agreement entitling the
Buyers to indemnification hereunder. 

                    5.10
Discharge of Liabilities. On or before the Closing Date, the Willtek
Group shall pay to the Willtek Group Employees all salary, bonuses, severance
and other benefits and any payments of benefits under any Employee Plans which
are actually due and payable and otherwise not Assumed Liabilities. From and
after the Closing Date (a) the Seller shall be responsible for discharging all
of the Excluded Liabilities, and (b) Parent and the Buyers shall be responsible
for discharging all of the Assumed Liabilities and the obligations of the
Business relating to the operation of the Business from and after the Closing
Date.

                    5.11
Change of Name. Within five (5) Business Days of the Closing, the
Willtek Group shall take all action necessary and appropriate to cause the
amendment of the respective charters, certificates of incorporation, articles
of association or organizational documents, as the case may be, of Willtek and
the Willtek Subsidiaries to change their names from, and to cease doing
business under, any name using any form, variation, derivation or permutations
of “Willtek” and the Willtek Group shall deliver to the Buyers evidence
satisfactory that Willtek and each of the Willtek Subsidiaries has done so. 

                    5.12
Notification. During the period from the Effective Date to and including
the Closing Date, the Seller shall be obligated to notify the Buyers and Parent
promptly of any fact or circumstance of which it becomes aware which would
render any of the representations and warranties that it made to the Buyers and
Parent in Article III hereof untrue or inaccurate in any material respect; provided,
however, such notification shall not relieve the Seller from any
liability for breach of such representations and warranties to the extent
provided herein. Correspondingly, during the period from the Effective Date to
and including the Closing Date, the Buyers and Parent shall be obligated to
notify the Seller promptly of any fact or circumstance of which they become
aware which would render any of the representations and warranties that they
made to the Seller in Article IV hereof untrue or inaccurate in any material
respect; provided,
however, such notification shall not relieve the Buyers and Parent
from any liability for breach of such representations and warranties to the
extent provided herein. 

                    5.13.
Manifest Omissions. 

                    (a)
To the extent that, during the six (6) month period following the Closing Date,
either the Willtek Group (or the Company) or the Buyers and Parent, in good
faith, identifies an asset owned by the Willtek Group or their Affiliates that
is or should be an Acquired Asset (any such asset, an “Omitted Asset”), then the
Company or the Buyers, as the case may be, shall promptly deliver to the other
Party written notice describing the Omitted Asset and the facts supporting that
Party’s determination 

65

that such
asset is an Omitted Asset (the “Omitted Asset Notice”). Promptly
following its delivery or receipt of an Omitted Asset Notice, the Company shall
cause the Willtek Group to transfer such Omitted Asset to the Buyers, at no
cost to the Buyers and in a manner mutually agreeable to the Company and the
Buyers, as promptly as practicable after the Company delivers or receives the
Omitted Asset Notice. If the Buyers (or Parent) delivers an Omitted Asset Notice
to the Company and the Company disagrees with Buyers’ assertion that the asset
referred to in the Omitted Asset Notice is an Omitted Asset, the Buyers and the
Company shall escalate the disagreement to their respective Chief Financial
Officers or similar level executives of the Company and Parent who shall
attempt in good faith to resolve the dispute. If such officers are unable to
resolve such dispute within ten (10) calendar days, either of the Company (on
behalf of the Willtek Group) or the Buyers or Parent shall have the right to
commence such proceedings as they deem appropriate in, and submit the dispute
for adjudication to, a court of competent jurisdiction in accordance with
Section11.3 hereof.

                    (b)
To the extent that, during the six (6) month period following the Closing Date,
either the Willtek Group (or the Company) or the Buyers and Parent, in good
faith, identifies a Liability owed by the Willtek Group or their Affiliates
that is or should be an Assumed Liability (any such Liability, an “Omitted
Liability”), then the Company or the Buyers, as the case may be,
shall promptly deliver to the other Party written notice describing the Omitted
Liability and the facts supporting that Party’s determination that such
Liability is an Omitted Liability (the “Omitted Liability Notice”). Promptly
following its delivery or receipt of an Omitted Liability Notice, Parent shall
cause the Buyers to assume such Omitted Liability, at no cost to the Willtek
Group or the Company and in a manner mutually agreeable to the Company and the
Buyers, as promptly as practicable after the Buyers delivers or receives the
Omitted Liability Notice. If any of the Willtek Group or the Company delivers
an Omitted Liability Notice to Parent (or any of the Buyers) and the Parent (or
any of the Buyers) disagrees with the Willtek Group’s or the Company’s
assertion that the Liability referred to in the Omitted Liability Notice is an
Omitted Liability, the Buyers and the Company shall escalate the disagreement
to their respective Chief Financial Officers or similar level executives of the
Company and Parent who shall attempt in good faith to resolve the dispute. If
such officers are unable to resolve such dispute within ten (10) calendar days,
either of the Company (on behalf of the Willtek Group) or the Buyers or Parent
shall have the right to commence such proceedings as they deem appropriate in,
and submit the dispute for adjudication to, a court of competent jurisdiction
in accordance with Section 11.3 hereof.

66

ARTICLE VI

TAX MATTERS

                    6.1
Returns. The Willtek Group (or, as the case may be, the Company) shall
cause to be filed when due all Returns that are required to be filed with
respect to the Acquired Assets and the Business for periods ending on or before
the Closing Date, including any Returns that are required to be filed in
connection with the sale and transfer of such Acquired Assets to the Buyers,
and the Buyers shall file or cause to be filed when due all other Returns that
are required to be filed with respect to the Acquired Assets and the Business.

                    6.2 Cooperation. The Buyers and the
Willtek Group shall reasonably cooperate, and shall cause their respective
Affiliates, officers, managers, employees, agents, auditors, accountants and
representatives reasonably to cooperate, in preparing and filing all Returns,
reports and forms relating to Taxes, including maintaining and making available
to each other on a timely basis all records necessary in connection with Taxes
and in resolving all disputes and audits with respect to all taxable periods
relating to Taxes. The Buyers and the Willtek Group each recognizes that the
other (and, as the case may be, the Company or Parent) may need access, from
time to time, after the Closing Date, to certain accounting and Tax records and
information held by the Seller or the Buyers, respectively, to the extent such
records and information pertain to events occurring prior to the Closing Date;
therefore, Seller and the Buyers each agree, (a) to properly retain and
maintain such records until the later of (i) the six (6) year anniversary of
the Closing Date and (ii) six (6) months after the expiration of the statute of
limitations applicable to Taxes to which such records relate and (b) to
allow the other Party and its agents and representatives, at times and dates
mutually acceptable to the Parties, to inspect, review and make copies of such
records as such Party or its representatives may deem necessary or appropriate
from time to time, such activities to be conducted during normal business hours
and at the expense of the requesting Party.

                    6.3
Allocation of Taxes. All real and personal property Taxes and similar ad valorem obligations levied with respect
to the Acquired Assets for a Straddle Period shall, to the extent that the
Buyers are responsible therefor after the Closing Date, be apportioned between
the Willtek Group and the Buyers as of the Closing Date based on the number of
days of such taxable period included in the Pre-Closing Tax Period and the
number of days of such taxable period included in the Post-Closing Tax Period.
The Willtek Group shall be liable for the proportionate amount of such Taxes
that is attributable to the Pre-Closing Tax Period, and the Buyers shall be
liable for the proportionate amount of such Taxes that is attributable to the
Post-Closing Tax Period. Within a reasonable period after the Closing, the
Willtek Group and the Buyers shall present a statement to the other setting
forth the amount of reimbursement to which each is entitled under this
Section 6.3 for the Straddle Period, together with such supporting
evidence as is reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the Party 

67

owing it to
the other within ten (10) days after delivery of such statement. Thereafter,
Willtek Group shall notify the Buyers upon receipt of any bill for personal
property taxes relating to the Acquired Assets, part or all of which are
attributable to the Post-Closing Tax Period, and shall promptly deliver such
bill to the Buyers, and the Buyers shall pay the same to the appropriate Tax
Authority, provided that if such bill covers any part of the Pre-Closing Tax
Period, The Willtek Group shall also remit to the Buyers prior to the due date
of assessment, payment for the proportionate amount of such bill that is
attributable to the Pre-Closing Tax Period. In the event that the Willtek Group
or the Buyers shall thereafter make a payment for which it is entitled to
reimbursement under this Section 6.3, the other party shall make such
reimbursement promptly, but in no event later than thirty (30) days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. The foregoing
shall apply, but not be limited to, that circumstance where liability is
imposed on the Buyers for Taxes of the Business pertaining to the Pre-closing
Period based on Section 75 of the German General Tax Code (Abgabenordnung) or any
comparable national equivalent applicable in any other jurisdiction. Any
payment required under this Section 6.3 and not made within ten (10) days
after delivery of the statement shall bear interest at the one month LIBOR Rate
plus two (2%) percent until paid.

                    6.4
Transfer Taxes. The Willtek Group shall be responsible for the
preparation and timely filing with the appropriate Tax Authorities of all
Returns required to be filed in connection with the sale, conveyance and
transfer of the Acquired Assets, and, accordingly, for the payment (or if
applicable Law provides otherwise, the reimbursement to Buyers) of all Taxes,
including, without limitation, sales, stamp, ad valorem, capital gains and
transfer Taxes, required to be paid as computed and reflected thereon or
otherwise which arise under applicable Law in connection with the sale,
conveyance and transfer of the Acquired Assets to the Buyers hereunder,
regardless of however characterized (the “Transfer Taxes”).

ARTICLE VII

CONDITIONS PRECEDENT

                    7.1
Conditions to Each Party’s Obligations. The obligations of the
Seller, the Buyers and Parent to consummate the transactions contemplated
herein are subject to the satisfaction or waiver, where legally permissible
under applicable Law, as of the Closing Date, of each of the following
conditions:

                  
(a) Those of the Required Consents set forth on Schedule 3.4 that are
required under applicable Law from any Governmental Authority in order to
consummate any of the transactions contemplated herein shall have been
obtained, except to the extent that the failure to obtain any of such Required
Consents would not prohibit or make the consummation of the Acquisition
Transaction illegal, and all 

68

requisite
filings with Governmental Authorities as required by, and in accordance with,
applicable national Laws shall have been made. 

                    
(b) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Order (whether temporary or preliminary) which is then in effect
and which either makes the consummation of any of the transactions contemplated
herein illegal or otherwise prevents or prohibits the consummation of such
transactions.

                     7.2
Conditions to the Obligations of Buyers and Parent. The obligations of
the Buyers and Parent to consummate the transactions contemplated herein are
subject to the satisfaction or waiver in writing (where permissible) as of the
Closing of the following additional conditions:

                    
(a) All of the representations and warranties of the Seller in Article III that
are qualified as to materiality or by Seller Material Adverse Effect shall be
true and correct in all respects, and those representations and warranties that
are not so qualified shall be true and correct in all material respects, in
each case, (x) as of the Effective Date, and (y) as of the Closing Date, as
though made on and as of such date and time (except for representations and
warranties expressly made as of a specified date, the accuracy of which shall
be determined as of that specified date).

                     (b)
The Seller shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.

                    
(c) The Seller shall have delivered to Buyers and Parent a certificate, dated
the Closing Date, signed by both an executive officer and the Chief Financial
Officer of the Company on behalf of the Seller certifying as to the
satisfaction of the conditions specified in Sections 7.2(a), (b) and (d).

                    
(d) Since the Effective Date, there shall not have occurred any Seller Material
Adverse Effect or any event, circumstance, development, change or effect
(whether arising out of facts and circumstances addressed by the
representations and warranties set forth in Article III or otherwise) that
would or would reasonably be expected to, individually or in the aggregate,
have a Seller Material Adverse Effect.

                    
(e) Seller shall have delivered certificates, in form and substance reasonably
satisfactory to the Buyers, signed by the Secretary of each of the Company and
Willtek, as appropriate, and dated as of the Closing Date, certifying that in
full force and effect as of that date and attached thereto are copies of:
resolutions adopted by the board of directors and the Company (as sole
shareholder of Willtek), the respective boards of directors of each of the
Willtek Subsidiaries and Willtek (as the sole shareholder of each such Willtek
Subsidiary), and the board of directors of the Company which (A) authorize and
approve this Agreement and the Related Documents and the transactions
contemplated hereby and thereby, and (B) ratify and 

69

approve all
prior transactions engaged in by Willtek, the Willtek Subsidiaries and the
Company, as the case may be, and their respective officers and directors. 

                    
(f) To the extent such concept is recognized in the pertinent jurisdiction,
Willtek shall have delivered to the Buyers certificates, dated as of a date no
more than ten (10) days prior to the Closing Date and certified by an official
of the appropriate Governmental Authority, as to the good standing of Willtek
and each of the Willtek Subsidiaries in the state or country where they were
chartered, organized, incorporated or registered.

                     (g) Each of Willtek, the Willtek Subsidiaries and
the Company shall have duly executed and delivered or caused or arranged for
the execution and delivery to the Buyers of counterparts of each of the Related
Documents of which they are signatories, and otherwise shall have provided
appropriate documents required by the Buyers releasing certain of the Willtek
Group Employees from any employment contracts with the Willtek Group.

                     (h) Willtek shall have delivered to the Buyers
copies of all landlord consents required to effectuate the assignment of the
Leased Real Property and of the those Persons necessary to transfer and assign
the Employee Plan Insurances.

                     (i) Willtek shall have delivered to the Buyers
copies of all other Required Consents set forth on Schedule 3.4 (except
as otherwise agreed upon by the Buyers), and all approvals and other documents
necessary for novation of all Government Contracts, as applicable.

                     (j) Willtek shall have arranged for the delivery
to the Buyers of all requisite UCC-3s or other releases as may be required to
release or discharge effectively as of the Closing Date all Liens on the
Acquired Assets. 

                     (k) Willtek, the Willtek Subsidiaries and the
Company shall have duly executed and/or delivered to the Buyers all such other
certificates, instruments, assignments, consents and other documents as the
Buyers’ counsel shall reasonably require to effectuate the transactions as and
in the manner contemplated by this Agreement and the Related Documents.

                     7.3
Conditions to the Obligations of Seller. The obligations of the Seller
to consummate the transactions contemplated herein are subject to the
satisfaction or waiver in writing (where permissible) as of the Closing of the
following additional conditions:

                    
(a) All of the representations and warranties of the Buyers and Parent in
Article IV that are qualified as to materiality or Buyer Material Adverse Effect,
shall be true and correct in all respects, and the representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case, (i) as of the date of this Agreement, and (ii) as of
the Closing Date, as though made on and as of such date and time (except for
representations and warranties expressly made as of a specified date, the
accuracy of which shall be determined as of that specified 

70

date). 

                    
(b) The Buyers and Parent shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.

                    
(c) The Buyers and Parent shall have delivered to Buyers and Parent a
certificate, dated the Closing Date, signed by both an executive officer and
the Chief Financial Officer of Parent on behalf of the Buyers certifying as to
the satisfaction of the conditions specified in Sections 7.3(a), (b) and (d).

                    
(d) Since the Effective Date, there shall not have occurred any Buyer Material
Adverse Effect or event, circumstance, development, change or effect (whether
arising out of facts and circumstances addressed by the representations and
warranties in Article IV) that would or would reasonably be expected to,
individually or in the aggregate, have a Buyer Material Adverse Effect.

                    
(e) Buyers and Parent shall have delivered certificates, in form and substance
reasonably satisfactory to the Seller, signed by the Secretary of each of the
Aeroflex Subsidiaries and Parent, as appropriate, and dated as of the Closing
Date, certifying that in full force and effect as of that date and attached
thereto are copies of: resolutions adopted by the respective boards of
directors of each of the Aeroflex Subsidiaries and Parent, which (A) authorize
and approve this Agreement and the Related Documents and the transactions
contemplated hereby and thereby, and (B) ratify and approve all prior transactions
engaged in by the Aeroflex Subsidiaries and Parent, as the case may be, and
their respective officers and directors. 

                    
(f) To the extent such concept is recognized in the pertinent jurisdiction,
each of the Aeroflex Subsidiaries and Parent shall have delivered to the Seller
certificates, dated as of a date no more than ten (10) days prior to the
Closing Date and certified by an official of the appropriate Governmental
Authority, as to the good standing of Parent and each of the Aeroflex
Subsidiaries in the state or country where they were chartered, organized,
incorporated or registered.

                     (g) Each of the Aeroflex Subsidiaries and Parent
shall have duly executed and delivered or caused or arranged for the execution
and delivery to the Seller of counterparts of each of the Related Documents of
which they are signatories.

                     (h) Parent and the Aeroflex Subsidiaries shall
have duly executed and/or delivered to Seller all such other certificates,
instruments, assignments, consents and other documents as the Seller’s counsel
shall reasonably require to effectuate the transactions as and in the manner
contemplated by this Agreement and the Related Documents.

71

ARTICLE VIII

CLOSING

                    8.1
Closing. The consummation of the transactions contemplated by this
Agreement (the “Closing”) shall be held
via facsimile or electronic transmission at the offices of Moomjian, Waite,
Wactlar & Coleman, LLP, 100 Jericho Quadrangle, Jericho, New York 11753, on
the Closing Date.

                    8.2
Transactions to be Effected at Closing. 

                    Subject
to the fulfillment (or to the extent legally permitted, waiver) of the
conditions set forth in Article VII, at the Closing, Seller and the Buyers and
Parent, respectively, shall duly execute and deliver all of the Related
Documents and the Buyers shall make payment to the Willtek Group of the Cash
Purchase Price in the manner set forth in Section 2.5(a).

ARTICLE IX

SURVIVAL; INDEMNIFICATION

                    9.1
Survival:

                   
(a) All representations, warranties, covenants, and obligations in this
Agreement, the Schedules and any other certificate or document delivered
pursuant to this Agreement will survive the Closing and the consummation of the
transactions contemplated hereby, subject to the limitations set forth in
Section 9.1(b) below.

                   
(b) The Parties’ representations and warranties in this Agreement or in any
document or instrument delivered pursuant to this Agreement shall survive the
Closing and continue as provided in this Section 9.1(b):

                         
(i) the representations and warranties of Seller contained in Section 3.2
(“Authorization”) and the first sentence of Section 3.6 (“Assets; Continued
Operation”) and the representations and warranties of Buyer contained in
Section 4.2 (“Authorization”) and 4.7 (“Financial Ability”) shall survive the
Closing indefinitely;

                         
(ii) the representations and warranties of Seller contained in Section 3.16
(“Employee Benefit Plans; ERISA”), Section 3.18 (“Employees and Labor Matters”)
and Section 3.22 (“Environmental and Safety Matters”) shall survive the Closing
for a period of six (6) years, and Section 3.21 (“Taxes”) until six (6) months
after the expiration of the later of (A) the longest statute of limitations
applicable to the matters at issue or (B) the final determination 

72

(without any
further right of appeal) of the Tax Liability for which indemnification is
sought (the representations and warranties referenced in clauses (i) and (ii),
the “Fundamental
Representations”); 

                         
(iii) all other representations and warranties contained herein shall survive
for a period of eighteen (18) months following the Closing; and

                         
(iv) all covenants and agreements shall survive until fully performed in accordance
with their terms or for so long as permitted by applicable Law after a breach
thereof unless otherwise specified. 

Notwithstanding
the matters above, any representation or warranty in respect of which indemnity
may be sought under Sections 9.2 or 9.3 shall survive the time at which it
would otherwise terminate pursuant to this Section 9.1(b) if notice of the
breach thereof shall have been given to the Party against whom such indemnity
may be sought prior to the expiration of the applicable survival period; provided
however, no action to enforce a claim for indemnification may be
commenced more than six months after the time when such representation or
warranty otherwise would have terminated. The Parties’ respective covenants and
agreements under this Agreement shall survive the Closing indefinitely unless a
shorter period of performance is explicitly specified with respect to such
covenant or agreement; provided, however, no action to enforce a
claim for indemnification for breach of any of such covenants or agreement may
be commenced more than six (6) years after the claim has accrued. 

                    9.2
Indemnification by Seller. Except as otherwise set forth below, Seller
shall indemnify and defend the Buyers, Parent and their respective Affiliates,
directors, officers, employees, consultants, agents, representatives and other
personnel, in their capacities as such, and the successors, heirs and personal
representatives of any of them (collectively, the “Buyer Indemnified Parties”)against and hold each of them
harmless from any and all damages, claims, losses, liabilities, Environmental
Costs and Liabilities, Export Control Laws Costs and Liabilities, costs and
expenses (including reasonable expenses of investigation and attorneys’ fees
and expenses) (collectively, “Losses”) incurred or suffered by any Buyer Indemnified Party arising
out of or relating to (i) a breach by the Seller of any representation or
warranty made by the Seller in this Agreement or in any certificate delivered
pursuant hereto, (ii) a failure by Willtek, the Willtek Subsidiaries and/or the
Company, as the case may be, (or, with regard to Sections 5.3 and 5.4, the
Seller’s Affiliates) to perform or comply with their respective covenants or
agreements contained herein or in any Related Document, (iii) noncompliance
with any applicable bulk transfer Laws of any state or country, (iv) any Taxes
in respect of the operation of the Business or ownership of the Acquired Assets
attributable to any Pre-Closing Tax Period and Transfer Taxes arising as a
result of, or in connection with, the sale, transfer and conveyance of the
Acquired Assets which, according to Sections 6.3 and 6.4, notwithstanding the
operation of applicable Law, are internally to be the responsibility of the
Willtek Group, (v) all Pre-Closing Environmental Liabilities, (vi) Liabilities
for Employment Claims resulting from, or predicated upon, any events or
circumstances arising or occurring prior to the 

73

Closing Date
in connection with the operation of the Business, (vii) all Pre-Closing Export
Control Laws Liabilities, (viii) any Excluded Liabilities, (ix) the security
    interests in the patents described on Schedule 3.12(d), and (x) the non-compliance by Willtek with the
requirements of the German Foreign Trade Act, provided, however,
that the Seller shall have no indemnification obligations to the Buyer
Indemnified Parties hereunder to the extent that any of the foregoing
obligations or liabilities is an Assumed Liability.

                    9.3
Indemnification by Buyers and Parent. The Buyers and Parent shall
indemnify and defend the Seller and its Affiliates, directors, officers,
employees, consultants, agents, representatives and other personnel, in their
capacities as such, and the successors, heirs and personal representatives of
any of them (collectively, the “Seller Indemnified Parties”) against and hold each of them
harmless from any and all Losses incurred or suffered by any Seller Indemnified
Party arising out of or relating to (i) a breach by the Buyers and Parent of
any representation or warranty made by them in this Agreement or in any other
Related Document, or in any Schedule or certificate delivered pursuant hereto
or thereto, (ii) a failure by the Buyers (and, where applicable, Parent) to
perform or comply with any covenant or agreement on the part of the Buyers
contained herein or in any Related Document, (iii) any Assumed Liability, (iv)
any Taxes in respect of the ownership of the Acquired Assets and the operation
of the Business attributable to the Post-Closing Tax Period which, according to
Section 6.3, internally are the responsibility of the Buyers; (v) any Assumed
Pension Liabilities for retired employees which are to be the responsibility of
the Buyers notwithstanding the operation of applicable Law, (vi) the Employment
Transfer Liabilities, (vii) any Environmental Costs and Liabilities other than
Pre-Closing Environmental Liabilities; and (viii) any Export Control Laws Costs
and Liabilities other than Pre-Closing Export Control Laws Liabilities; provided,
however, that the Buyers and Parent shall have no indemnification
obligations to the Seller Indemnified Parties hereunder to the extent that any
of the foregoing obligations or liabilities is an Excluded Liability.

                    9.4
Limitations on Indemnification.

                    (a)
Notwithstanding anything in this Article IX to the contrary, no Buyer
Indemnified Party shall be entitled to indemnification for Losses arising under
Section 9.2 (i) unless and until the aggregate amount of any and all such
Losses sustained or incurred by all Buyer Indemnified Parties exceeds an
aggregate amount equal to Fifty Thousand ($50,000) Dollars (the “Basket Amount”), after
which the Seller shall be obligated (subject to Section 9.4(b) below) for any
and all Losses of the Buyer Indemnified Parties including the Basket Amount; provided,
however, that any claim by the Buyers pursuant to Section 9.2(i) as
a result of a breach by the Seller of the representations and warranties in
Section 3.21 (“Taxes”) shall be payable without regard to the Basket Amount.
Correspondingly, no Seller Indemnified Party shall be entitled to
indemnification for Losses arising under Section 9.3(i) unless and until the
aggregate amount of any and all such Losses sustained or incurred by all Seller
Indemnified Parties exceeds the Basket Amount, after which the Buyers shall be 

74

obligated
(subject to Section 9.4(b) below) for any and all Losses of the Seller
Indemnified Parties including the Basket Amount.

                    (b)
Notwithstanding anything in this Article IX to the contrary, (i) no Indemnified
Party shall be entitled to indemnification for Losses with regard to Sections
9.2(i) or 9.3(i), respectively, in excess of One Million Five Hundred Thousand
($1,500,000) Dollars, except that the maximum amount of indemnifiable Losses
which may be recovered by either the Buyer Indemnified Parties or the Seller
Indemnified Parties, as the case may be, arising out of or resulting from the
breach of any Fundamental Representation shall be the amount of the Cash
Purchase Price, as the same may be reduced by the Adjustment Amount pursuant to
Section 2.6 of this Agreement, and (ii) the maximum amount of indemnifiable
Losses which may be recovered by the Buyer Indemnified Parties with regard to
Section 9.2(ix) shall be the amount of the Cash Purchase Price, as the same may
be reduced by the Adjustment Amount pursuant to Section 2.6 of this Agreement.

                    (c)
The limitations contained in the preceding Sections 9.4(a) and 9.4(b) shall not
apply to any Losses sustained or incurred by any Buyer Indemnified Party or
Seller Indemnified Party arising, out of or relating to any claim of
fraud.

                    (d)
It is agreed that for the purpose of making a claim for indemnification, the
expiration of any one survival period, as set forth in Section 9.1(b), of
certain representations and warranties, shall not affect the ability to make
any claim for indemnification hereunder under any other representations and
warranties still surviving; provided,
however, that no Party shall be entitled to make a claim for
indemnification more than once on account of the same facts and circumstances
or to aggregate the same for purposes of the Basket Amount. 

                    (e)
Notwithstanding any other provision of this Agreement to the contrary, neither
Seller nor the Buyers and Parent shall be required to indemnify, hold harmless
or otherwise compensate any Indemnified Party for special, exemplary, indirect
or consequential damages, including lost profits, loss of business reputation
or opportunity, diminution in value or damages based on a multiple of earnings
or similar financial measure, whether based on tort, contract or strict
liability theories of liability, except to the extent that such damages are
required to be paid by either Party to a third party and arise from an event
that is indemnifiable under Sections 9.2 and 9.3 hereof.

                    9.5
Procedure; Notice of Claims.

                    (a)
Any indemnified party (the “Indemnified
Party”) seeking indemnification hereunder shall, within the relevant
limitation period provided for in Section 9.1(b), give to the Party obligated
to provide indemnification to such Indemnified Party (the “Indemnifying Party”) a notice (a “Claim Notice”) describing in reasonable
detail the facts giving rise to any Claims for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such Claim, and a reference to the provision of
this

75

Agreement, or
any agreement, certificate or instrument executed pursuant hereto or in
connection herewith upon which such Claim is based; provided that a Claim Notice
in respect of any action at law or suit in equity by or against a third party
as to which indemnification will be sought shall be given promptly after the
action or suit is commenced; and provided further that failure to give such
notice promptly shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent it actually shall have been prejudiced by such
failure. 

                    (b)
The Indemnifying Party shall have thirty (30) days after the giving of any
Claim Notice pursuant hereto to (i) agree to the amount or method of
determination set forth in the Claim Notice and to pay such amount to the
Indemnified Party in immediately available funds or (ii) provide the
Indemnified Party with written notice that it disagrees (and the reasons
therefor) with the amount or method of determination set forth in the Claim
Notice (the “Dispute Notice”).
The Indemnified Party may commence at any time thereafter such legal action or
proceedings as it deems appropriate to enforce the indemnification obligation
of the Indemnifying Party pursuant to the provisions of this Article IX. The
failure to file a Dispute Notice within the time permitted shall be deemed to
constitute an acknowledgement by the Indemnifying Party of its acquiescence to
the amount and method of determination of the Claim in the Claim Notice. 

                    9.6
Procedure - Third Party Claims.

                    (a)
Promptly after receipt by an Indemnified Party of notice of the commencement of
any proceeding against it by a third party (“Third
Party Claim”), such Indemnified Party will, if a Claim for
indemnification is to be made against an Indemnifying Party, provide to the
Indemnifying Party written notice of the commencement of such Claim (together
with copies of any legal papers served), provided,
however, that the failure to promptly notify the Indemnifying Party
will not relieve the Indemnifying Party of any liability that it may have to
any Indemnified Party, except to the extent that the Indemnifying Party
demonstrates that the defense of such action is prejudiced or made more
expensive by the Indemnified Party’s failure to give such notice.

                    (b)
The Indemnified Party shall take such action, at the Indemnifying Party’s
expense, as the Indemnifying Party may reasonably request to avoid dispute, or
appeal, settle or defend such Third Party Claim; provided, however, that the Indemnified Party shall not
accept or pay or settle or make any submission in respect of such Claims,
without the Indemnifying Party’s prior consent thereto, which shall not be
unreasonably withheld, conditioned or delayed.

                    (c)
If any Indemnifying Party shall receive notice of a claim for indemnity from an
Indemnified Party, the Indemnifying Party shall have the right to assume the
defense of any Third Party Claim at its expense, and through counsel of its
choice, if it gives notice of its intention to do so to the Indemnified Party
within twenty (20) Business Days of the receipt of such notice from the
Indemnified Party, provided, 

76

that the
Indemnified Party shall be entitled to retain its own counsel if (i) a conflict
of interest exists or is reasonably likely to exist that would make it
inappropriate for the same counsel to represent both the Indemnifying Party and
Indemnified Party in connection with a Third Party Claim or (ii) if such Third
Party Claim (A) seeks injunctive or other non-monetary relief, (B) involves
criminal or quasi criminal allegations, (C) involves Losses that are reasonably
expected to exceed the maximum amount for which the Indemnifying Party could be
entitled under this Article IX or (D) is a claim an adverse determination of
which would be detrimental to the Indemnified Party’s reputation or future
business prospects; provided, further that the reasonable
fees and expenses of counsel so retained by the Indemnified Party shall be
reimbursed by the Indemnifying Party as a Loss pursuant to this Article IX. If
the Indemnifying Party fails to make the requisite election to assume the
defense of the Third Party Claim within twenty (20) Business Days after it
receives notice pursuant to this Section 9.6(c), the Indemnified Party shall
have the right to defend such Third Party Claim at the expense of the
Indemnifying Party. The Indemnified Party, at its own expense, shall have the
right to retain its own counsel and participate in the defense of a Third Party
Claim defended by the Indemnifying Party. The Indemnified Party may take any
actions reasonably necessary and in good faith to defend such Third Party Claim
prior to the time that it receives a notice from the Indemnifying Party as
contemplated by this Section 9.6(c). The Indemnified Party shall, and shall
cause its Affiliates and representatives to, cooperate fully with the
Indemnifying Party in such defense and make available to the Indemnifying
Party, at the Indemnifying Party’s expense, all witnesses, pertinent records,
materials and information in the Indemnified Party’s possession or under the
Indemnified Party’s control relating thereto as is reasonably required by the
Indemnifying Party.

                    (d)
If the Indemnifying Party assumes the defense of a Third Party Claim, (A) no
compromise or settlement of such Third Party Claim may be effected by the
Indemnifying Party without the Indemnified Party’s consent which will not be
unreasonably withheld, delayed or conditioned unless (i) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party, (ii)
the compromise or settlement includes a complete release of the Indemnified
Party, and (iii) there is no finding or admission of any violation of Law or
any violation of the rights of any Person by the Indemnified Party. If the
Indemnifying Party fails to undertake the defense against a Third Party Claim
pursuant to Section 9.6(c), the Indemnified Party shall be free to control the
defense of any such claim or proceeding and the Indemnifying Party shall not
have any right to participate in the settlement or assume or reassume the
defense of such claims or proceeding. 

                    9.7
Remedies. Except as otherwise may be provided specifically in this
Agreement, subsequent to the Closing Date, the sole and exclusive remedy of the
Parties for breach of this Agreement shall be restricted to the indemnification
rights set forth in this Article IX; provided,
however, that (a) no Party hereto shall be deemed to have waived any
rights, claims, causes of action or remedies if and to the extent such rights,
claims, causes of action or remedies may not be waived under applicable Laws,
and (b) any party shall be entitled to specific performance as provided in
Section 11.9 with regard to the failure of the other party to perform its 

77

obligations in
accordance with the terms of this Agreement. 

                    9.8
Reliance. Each Party shall be entitled to rely on the representations
and warranties of the other Party set forth herein regardless of any
investigation conducted before or after the Effective Date and before the
Closing Date or the decision of any Party to complete the Closing; provided,
however, neither Party shall have a claim for indemnification in
respect of the breach of any representation or warranty where, after the
Effective Date and prior to the Closing Date, it had actual knowledge of facts
and circumstances that would make such representation or warranty untrue or
inaccurate in the manner claimed.

                    
9.9 Calculation
of Damages.

                    (a) For purposes of this Article IX, “Losses”
shall be calculated in U.S. dollars after making appropriate adjustments for
(i) any other Loss for which an indemnification claim has been made under any
other representation, warranty, covenant or agreement so as to avoid a double
recovery; (ii) net insurance proceeds actually received by an Indemnified Party
after taking into consideration the costs incurred to collect such proceeds and
the premiums paid for the policy under which such recovery is received; (iii)
any net recovery from a third party which is directly relatable to the Loss
claimed after taking into consideration the fees and other costs incurred to
collect such third party recovery; (iv) any other prior or
subsequent recoveries (including under or pursuant to any indemnity,
reimbursement agreement or Contract pursuant to which or under which any Party
is a party or has rights) actually received by any Indemnified Party, in
connection with the facts giving rise to the right of indemnification
(determined after giving effect to any costs of collection suffered and
payments made by such Indemnified Party resulting therefrom) and (v) the exchange rates
existing as of the date of the final determination of the Loss.

                    (b)
In no event shall Seller have any Liability or obligation to any Buyer
Indemnified Party to the extent that any Loss or portion thereof, as
applicable, for which indemnification is sought hereunder is reflected or
reserved for in the Closing Adjusted Net Assets Amount.

                    (c)
Indemnity payments pursuant to this Article IX shall be treated for all income
tax purposes as an adjustment to the Cash Purchase Price.

ARTICLE X

TERMINATION

                    10.1
Termination.

78

                    (a)
Notwithstanding anything herein to the contrary, this Agreement may be
terminated and the Transaction may be abandoned at any time prior to the
Closing (the “Termination Date”) as follows:

                         (i)
by mutual written consent of the Parties hereto;

                         (ii)
by either Parent or the Company, if any Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any injunction, order, decree
or ruling or taken any other action (including the failure to have taken an
action) which, in either such case, has become final and non-appealable and has
the effect of making consummation of the Acquisition Transaction illegal or
otherwise preventing or prohibiting consummation of the Acquisition
Transaction;

                         (iii)
by Parent and Buyers if (A) any of the representations and warranties of
the Seller herein are or become untrue or inaccurate such that Section 7.2(a)
would not be satisfied, or (B) there has been a breach on the part of the
Seller of any of its covenants or agreements herein such that
Section 7.2(b) would not be satisfied, or (C) there shall have occurred a
Seller Material Adverse Effect, or (D) those conditions in Sections 7.2(c),
(h), (i) and (j) shall have become incapable of fulfillment on or prior to the
Outside Date, and in any of such cases, shall either not have been waived by
Parent or are incapable of being waived under applicable Law; provided,
however, the Parent and Buyers shall not then be in material breach
of their representations, warranties, covenants and agreements at the time of
such termination; 

                         (iv)
by the Seller, if (A) any of the representations and warranties of Parent
and the Buyers herein are determined to be untrue or inaccurate such that
Section 7.3(a) would not be satisfied, or (B) there has been a breach
on the part of Parent and the Buyers of any of their covenants or agreements
herein such that Section 7.3(b) would not be satisfied, or (C) there shall
have occurred a Buyer Material Adverse Effect or (D) those conditions in
Section 7.3(c) shall have become incapable of fulfillment on or prior to the
Outside Date, and in any of such cases, shall either have not been waived or
are incapable of being waived under applicable Law; provided, however, the
Seller shall not then be in material breach of its representations, warranties,
covenants and agreements at the time of such termination; or

                         (v)
by either the Seller or the Buyers and the Parent if the Closing does not occur
by June 1, 2010, unless otherwise extended by the Parties (the “Outside
Date”); provided, however, that the party seeking
termination under this Section 10.1(a)(v) is not then in material breach of any
of its representations, warranties, covenants or agreements in this Agreement
and otherwise is not primarily responsible for such delay in Closing.

                    (b)
Notwithstanding the foregoing, if any Party elects to terminate this Agreement
pursuant to Section 10.1(a)(iii)(B) or Section 10.1(a)(iv)(B) based upon the
breach by the other Party of its covenants or agreements under this Agreement
or any of the Related Documents, then, provided such breach was

79

inadvertent or
unintentional and otherwise reasonably curable by such breaching Party through
the exercise of its commercially reasonable efforts, the breaching or
non-terminating Party shall have a period of ten (10) days after receipt
of the notice of termination (the “Cure Period”) within which to cure or
correct such breach, after the elapse of which, if the breach has not been
rectified in all material respects, this Agreement shall be deemed for all
purposes to have been terminated effectively and the Acquisition Transaction
abandoned.

                    (c)
(i) In the event of termination, all documents and other material received by
the Buyers and the Parent from the Seller and by the Seller from the Buyers and
Parent relating to the transactions contemplated hereby shall be returned to
the Party who provided them or on whose behalf they were provided; and 

                              (ii)
all confidential information exchanged by the Parties which relates to their
respective businesses shall be accorded confidential treatment pursuant to the
terms of the of the Confidentiality Agreement between the Parties.

                    10.2
Effect of Termination. If this Agreement is terminated and the
Acquisition Transaction abandoned as described in Section 10.1, this
Agreement shall forthwith become void and of no further force and effect; provided,
however, the provisions set forth in (a) Sections 10.1 and this
10.2, (b) Section 11.6 regarding publicity, (c) Section 11.3 regarding
governing law, jurisdiction and service of process, (d) Section 11.9 regarding
specific performance, and (e) Section 11.13 regarding waiver of jury trial
shall survive and remain in full force and effect. Nothing herein shall be
deemed to release or relieve any Party from liability for any breach of those
of its representations, warranties, covenants or agreements on which such
termination was predicated or otherwise to impair the right of any Party to
compel specific performance by any other Party of its obligations under this
Agreement; provided,
however,
that in the event of termination, the terminating Party shall be entitled to
recover only its actual damages, i. e, the costs and expenses incurred in
connection with the Acquisition Transaction, including reasonable attorneys and
accountants fees, but, absent fraud, not any consequential, punitive or special
damages, including loss of potential profits, loss of business opportunities,
loss of reputation or otherwise. 

ARTICLE
XI

GENERAL PROVISIONS

                    11.1
Bulk Sales Compliance. To the extent permitted by applicable Law, the
Buyers and Parent hereby waive compliance by the Willtek Group with the
provisions of applicable bulk sales Laws or any comparable Laws of any country
or jurisdiction which protect creditors in the event of the sale of
substantially all of the assets of a debtor. The Seller hereby indemnifies the
Buyers and holds the Buyers harmless against any Losses which are caused by, or
arise from, or in connection with, the Willtek Group’s non-compliance with any
such provisions. 

80

                    11.2
Notices. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (i) delivered by hand (with written confirmation of receipt), (ii) sent by
fax (with written confirmation of receipt), (iii) sent by electronic mail, or
(iv) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
business or email addresses or fax numbers set forth below (or to such other
address, attention or fax number as a Party may designate by notice to the
other Parties given in accordance with this Section 11.2):

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 If to the
 Buyers or Parent:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 [Aeroflex Subsidiaries]
 or Aeroflex Incorporated

 
	
  

 	
  

 	
 c/o Aeroflex
 Incorporated

 
	
  

 	
  

 	
 35 South
 Service Road

 
	
  

 	
  

 	
 P.O. Box
 6022

 
	
  

 	
  

 	
 Plainview,
 New York 11803

 
	
  

 	
  

 	
 Telecopier
 No.: 516-694-0658

 
	
  

 	
  

 	
 Telephone
 No.: 516-752-2320

 
	
  

 	
  

 	
 Attention:
 John Adamovich, Senior Vice President and Chief Financial Officer

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 With a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Moomjian,
 Waite, Wactlar & Coleman, LLP

 
	
  

 	
  

 	
 100 Jericho
 Quadrangle

 
	
  

 	
  

 	
 Jericho, New
 York 11753

 
	
  

 	
  

 	
 Telecopier
 No.: 516-937-5050

 
	
  

 	
  

 	
 Telephone
 No.: 516-937-5900

 
	
  

 	
  

 	
 Attention:
 Edward S. Wactlar, Esq.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 If to
 Willtek or any of the Willek Subsidiaries:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Willtek
 Communications GmbH (as renamed)

 
	
  

 	
  

 	
 25 Eastmans
 Road

 
	
  

 	
  

 	
 Parsippany,
 New Jersey 07054-3702

 
	
  

 	
  

 	
 Attention:
 Paul Genova, Chief Executive Officer

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 With a copy
 to:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Greenberg
 Traurig, LLP

 
	
  

 	
  

 	
 MetLife Building

 
	
  

 	
  

 	
 200 Park
 Avenue

 
	
  

 	
  

 	
 New York,
 N.Y. 10166

 
	
  

 	
  

 	
 Telecopier
 No.: 212-801-6400

 

81

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Telephone
 No.: 212-801-6907

 
	
  

 	
  

 	
 Attention:
 Robert H. Cohen, Esq.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 If to the
 Company:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Wireless
 Telecom Group, Inc.

 
	
  

 	
  

 	
 35 Eastmans
 Road

 
	
  

 	
  

 	
 Parsippany,
 New Jersey 07054-3702

 
	
  

 	
  

 	
 Attention:
 Paul Genova, Chief Executive Officer

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 With a copy
 to:

 
	
  

 	
  

 	
 Greenberg
 Traurig, LLP

 
	
  

 	
  

 	
 MetLife
 Building

 
	
  

 	
  

 	
 200 Park
 Avenue

 
	
  

 	
  

 	
 New York,
 N.Y. 10166

 
	
  

 	
  

 	
 Telecopier
 No.: 212-801-6400

 
	
  

 	
  

 	
 Telephone
 No.: 212-801-6907

 
	
  

 	
  

 	
 Attention:
 Robert H. Cohen, Esq.

 

                    11.3
Governing Law; Jurisdiction and Venue. This Agreement shall be
deemed to have been made in New York and shall be governed by, and construed in
accordance with, the laws of the State of New York regardless of the Laws that
otherwise might govern under applicable principles of conflicts of law thereof;
provided,
however, the interpretation, construction and enforceability of the
Bill of Sale, Assumption and Assignment Agreements shall be governed by the
applicable national Laws under which they were written and with respect to
which they were intended to comply. For all actions under or relating to this
Agreement and the Related Documents, the Parties hereby irrevocably and
unconditionally (i) consent to the personal jurisdiction of the United States
District Court for the Eastern District of New York located in Central Islip,
New York, and to the designation of such action as a “Long Island Action,” or
if subject matter jurisdiction is lacking in such Court, to the jurisdiction of
the Supreme Court of the State of New York for the County of Nassau; (ii) agree
not to commence any action, suit or proceeding arising out of or relating to
this Agreement except in such courts, (iii) agree that service of any process,
summons, notice or document sent by U.S. certified mail, return receipt
requested, or by nationally recognized overnight courier service to the Buyers
or Parent or to the Company or Willtek, at their respective addresses herein
provided, shall be legally effective and sufficient for all purposes; and (iv)
waive any defense or objection to proceeding in such court, including those
objections and defenses based on an alleged lack of personal jurisdiction,
improper venue and forum non-conveniens.

                    11.4
Failure or Indulgence, Not Waiver. No failure or delay on the part of
any Party hereto in the exercise of any right hereunder shall impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement herein, nor shall any single or
partial

82

exercise of
any such right preclude other or further exercise thereof or of any other
right.

                    11.5
Entire Agreement; Amendment. This Agreement, including the Schedules
which are integrated in all respects herein, supersedes all prior agreements,
whether written or oral, between or among the Parties with respect to the
subject matter hereof, and constitutes (with the Related Documents) the entire
agreement among the Parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by each of the
Parties hereto.

                    11.6
Publicity. No Party or any Affiliate or representative of such Party
shall issue or cause the publication of any press release or public
announcement or otherwise communicate with any third party in respect of this
Agreement or the transactions contemplated by this Agreement and the Related
Documents without the prior written consent of the other Party (which consent
shall not be unreasonably withheld, conditioned or delayed), except as may be
required by Law or applicable securities exchange rules, in which the case, the
Party required to publish such press release or public announcement shall allow
the other Party a reasonable opportunity to comment on such press release or
public announcement in advance of such publication. Notwithstanding the
foregoing, without prior written consent of the other Party, the Seller and any
of Parent and the Buyers may communicate with customers, vendors, suppliers,
financial analysts, investors and media representatives in the ordinary course
of business in a manner consistent with its past practice and in compliance
with applicable Law.

                    11.7
Assignments; Successors; No Third Party Rights. No Party may assign any
of its rights under this Agreement without the prior written consent of the
other Party, except that the Buyers may assign this Agreement to any of their
Affiliates or successors. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors, heirs, personal representatives, executors and permitted assigns of
the Parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the Parties to this Agreement and the
Persons contemplated by Article IX any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement.

                    11.8
Severability. If any provision of this Agreement or the application of
any such provision to any Party or circumstance shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to any
Party or circumstance other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by Law. If the final
judgment of a court of competent jurisdiction declares that any item or
provision hereof is invalid or unenforceable, the Parties hereto agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration or

83

area of the
term or provision, or to delete specific words or phrases, and 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, and this Agreement shall be
enforceable as so modified.

                    11.9
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.
It is accordingly agreed that the Parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in accordance with this
Agreement, in each case without the requirement of posting a bond or proving
actual damages (which requirements the other Party shall waive), this being in
addition to any other remedy to which such Party is entitled at law or in
equity.

                    11.10
Section Headings; Construction; Disclosure. The headings in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. In this Agreement (i) words denoting the
singular include the plural and vice versa, (ii) “it” or “its” or words
denoting any gender include all genders, (iii) the word “including” shall mean
“including without limitation,” whether or not expressed and (iv) any reference
herein to a Section, Article, Schedule or Exhibit refers to a Section or
Article of, or a Schedule or Exhibit to, this Agreement, unless otherwise
stated. Each Party acknowledges that it has been advised and represented by
counsel in the negotiation, execution and delivery of this Agreement and
accordingly agrees that if an ambiguity exists with respect to any provision of
this Agreement, such provision shall not be construed against any Party because
such Party or its representatives drafted such provision. 

                    11.11 Counterparts. This Agreement may be
executed by facsimile transmission or electronic mail (including in portable
document (PDF) form) and in two or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

                    11.12 Fees and Expenses. Except as set
forth in this Agreement or in a Related Document, or otherwise agreed among the
Parties, all fees, costs and expenses incurred in connection with the
negotiation, execution and delivery of this Agreement, the Related Documents
and the performance of the transactions contemplated hereby and thereby shall
be paid by the Party incurring such fees, costs or expenses.

                    11.13
WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR

84

OTHERWISE) ANY
RIGHT TO TRIAL BY JURY IN RESPECT OF ANY ISSUE OR ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR ANY RELATED DOCUMENT OR THE SUBJECT MATTER HEREOF,
OR THEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 11.13 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

                    11.14
Attorneys’ Fees and Other Fees. In connection with any legal action or
other proceeding arising out of, or related to, this Agreement or any of the
Related Documents, the prevailing Party shall be entitled to recover from the
other Party the fees of its attorneys, accountants and other experts which it
reasonably incurs.

                    11.15
Calculation in U.S. Dollars. Any amounts in this Agreement, in any
Schedule hereto, or in any of the Related Documents that are stated in
Eurodollars or any other foreign currency shall be converted to their United
States dollar equivalent based on the exchange rates in effect as of the
Balance Sheet Date, or such other date as may be specifically stated herein.
All amounts stated herein, unless otherwise indicated, shall be deemed to have
been stated in U.S. dollars.

                    11.16
Authority to Act. Unless prohibited by applicable Laws, whether or not
provided specifically in this Agreement or in any Related Document, any act to
be performed or any action to be taken by any of the Willtek Group or the
Buyers, as the case may be, under this Agreement or any of the Related
Documents, may, but is not required to be, performed or taken by the Company or
Parent, respectively, and any right to enforce this Agreement or any of the
Related Documents, may, but is not required to be implemented by the Company or
Parent, on behalf of the Willtek Group or the Buyers, respectively, as the case
may be.

                    11.17
Schedules. Unless the context otherwise requires, all capitalized terms
used in the Schedules shall have the respective meanings assigned to such terms
in this Agreement. No reference to, or disclosure of, any item or other matter
in the Schedules shall be construed as an admission or indication, or otherwise
imply, that such item or other matter is material or outside of the Ordinary
Course of business. No disclosure in any Schedule relating to any possible
breach or violation of any agreement or Law shall be construed as an admission
or indication that any such breach or violation exists or has actually
occurred. The disclosure of any fact or item in any of such Schedules shall,
should the existence of such fact or item be relevant to any other Schedules,
be deemed to be disclosed with respect to that such other Schedule as long as
the relevance of such disclosure to such other Schedule is reasonably apparent
from the nature of such disclosure. Nothing in the Schedules is intended to
broaden the scope of any representation or warranty of the applicable Party
made herein.

85

          IN
WITNESS WHEREOF, the
Parties hereto have duly executed this Agreement on the date first above
written.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 AEROFLEX
 INCORPORATED

 	
  

 	
 AEROFLEX
 WICHITA, INC.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  /s/ John Adamovich

 	
  

 	
 By: 

 	
  /s/ John Adamovich

 
	
  

 	

 

 	
  

 	
  

 	

 

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name:

 	
 John
 Adamovich

 	
  

 	
 Name:

 	
 John
 Adamovich

 
	
 Title:

 	
 Senior Vice
 President and

 	
  

 	
 Title:

 	
 Vice
 President

 
	
  

 	
 Chief
 Financial Officer

 	
  

 	
  

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 AEROFLEX
 GmbH

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By: 

 	
  /s/ Derek Smith

 
	
  

 	
  

 	
  

 	
  

 	

 

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Name:

 	
 Derek Smith

 
	
  

 	
  

 	
  

 	
 Title:

 	
 Procurist

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 AEROFLEX
 FRANCE SAS

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By: 

 	
  /s/ Derek Smith

 
	
  

 	
  

 	
  

 	
  

 	

 

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Name:

 	
 Derek Smith

 
	
  

 	
  

 	
  

 	
 Title:

 	
 President

 

	 
	 
	 
	 
	 

	WIRELESS TELECOM GROUP, INC.
	 
	WILLTEK COMMUNICATIONS GmbH

	 
	 
	 

	By: 
	 /s/ Paul Genova
	 
	By: 
	 /s/ Paul Genova

	 
	
    	 
	 
	
    
	Name: Paul Genova
	 
	Name: Paul Genova

	Title:   Chief
          Executive Officer, President and Chief Financial Officer
	 
	Title:   Chief
          Executive Officer

	 
	 
	 
	 
	 

	 
	 
	 
	WILLTEK COMMUNICATIONS SARL

	 
	 
	 
	 

	 
	 
	 
	By: 
	 /s/ Paul Genova

	 
	 
	 
	 
	
    
	 
	 
	 
	Name: Paul Genova

	 
	 
	 
	Title:   Authorized
          Signatory

	 
	 
	 
	 

	 
	 
	 
	WILLTEK COMMUNICATIONS, INC.

	 
	 
	 
	 
	 

	 
	 
	 
	By: 
	 /s/ Paul Genova

	 
	 
	 
	 
	
    
	 
	 
	 
	Name: Paul Genova

	 
	 
	 
	Title:   Chief
          Executive Officer and Chief Financial Officer

 [Asset
Purchase Agreement]

86

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