Document:

EX-10.2

    
      

    

     

    Exhibit
      10.2

    

      PATENT
        PURCHASE AGREEMENT

       

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

       

      Background

       

      Seller
        desires to sell and Purchaser desires to purchase substantially all of the
        system and method patents and patent applications related thereto of Seller
        related to digital billboard networks and advertising therewith, all as more
        particularly described in this Agreement.

       

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

       

      1.    CLOSING. 

       

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

       

      2.    ASSETS
        TO BE PURCHASED.
        

       

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

       

      2.1    all
        system or method patents or patent applications (and all patents issuing
        therefrom), owned or licensed by Seller, related to digital billboard networks
        or advertising, and all goodwill associated therewith, including, but not
        limited to, those listed on Exhibit
        A
        and all
        continuations, continuations-in-part, divisionals, reexaminations, reissues,
        extensions, and foreign counterparts, as well as all patents or patent
        applications claiming priority from any of the foregoing, and the right to
        claim
        priority to any of the foregoing (the “Intellectual
        Property”);
        

       

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

       

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

       

      
        
          
          

        

        
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      3.    CONSIDERATION;
        CASH TO CLOSE; DOCUMENTS TO BE DELIVERED AT CLOSING; CLOSING
        PROCEDURE.

       

      In
        exchange for Seller's fulfillment of its obligations hereunder, Purchaser
        agrees
        to pay Seller the following consideration ("Consideration"):

       

      3.1    Initial
        Consideration.
        The
        initial consideration for the Purchased Assets payable hereunder shall be
        $1,000,000.00 (the “Initial
        Consideration”),
        subject to the adjustment expressly set forth below. All adjustments to the
        Initial Consideration shall be set forth on a closing statement that Purchaser
        prepares and delivers to Seller prior to the Closing (the “Closing
        Statement”).
        Purchaser shall pay $1,000.00 of the Initial Consideration to each of the
        Stockholder and Seller as set forth on the Closing Statement pursuant to
        the
        terms and conditions of the non-compete agreements between Purchaser and
        each of
        Seller and Stockholder in the form set forth on Exhibit
        B
        (the
“Noncompete
        Agreements”).
        The
        Initial Consideration as adjusted on the Closing Statement shall be referred
        to
        herein as “Cash
        to Close.”
All
        of
        the Cash to Close shall be paid in immediately available funds to Seller
        in the
        manner set forth on the Closing Statement. The parties hereby agree that
        the
        Closing Statement shall reflect an adjustment in favor of Purchaser in the
        amount of $100,000, which reflects the amount Purchaser has previously paid
        to
        Seller towards the Purchase Price.

       

      3.2    Royalty. 

       

      3.2.1 In
        addition to the Initial Consideration, as further consideration for the
        transactions contemplated hereby, Purchaser shall pay to Seller a royalty
        (the
        "Royalty")
        in the
        amount and pursuant to the terms set forth on Exhibit
        C.

       

      3.2.2 As
        used
        herein, "Licensing
        Revenue"
        shall
        mean all revenues actually received by NOVUS Partners LLC ("Partners")
        from
        third party licensees (whether in the form of a royalty or licensing fee),
        but
        only with respect to activities by any such licensee which fall within the
        scope
        of (including as to term and geography) any issued patent included in the
        Patent
        Package (as defined below).

       

      3.2.3 As
        used
        herein, "Direct
        Expenses"
        shall
        mean any and all expenses incurred by Purchaser and Partners which are related
        to the prosecution, maintenance and defense of the Purchased Assets. Defense
        of
        the Purchased Assets shall include all expenses associated with patent
        reexaminations or oppositions (or similar proceedings), as well as any other
        administrative or court proceeding in which the validity, ownership or
        enforceability of a Purchased Asset is challenged by a third party, whether
        by
        way of direct claim (e.g., a declaratory judgment action), counter claim
        or
        cross claim. Purchaser or its assignee shall be solely responsible for the
        prosecution, maintenance and enforcement of the Patent Package, including
        the
        Purchased Assets. Notwithstanding the foregoing, Direct Expenses will not
        include counterclaims or cross claims made by a third party in response to
        litigation initiated by Partners, including, without limitation, any patent
        infringement litigation brought by Partners against such third party. Such
        litigation expenses and costs shall be included in the litigation expenses
        described in Section 3.2.10
        below.

       

      
        
          
          

        

        
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      3.2.4 As
        used herein, "Patent Package" shall mean the Intellectual Property,
        together with the patents and patent applications (and all patents issuing
        therefrom) identified in Exhibit D hereto, and all continuations,
        continuations-in-part, divisionals, reexaminations, reissues, extensions,
        and
        foreign counterparts, as well as all patents or patent applications claiming
        priority from any of the foregoing. The Patent Package shall further include
        any
        additional patents and patent applications claiming systems or methods for
        networked digital advertising which are developed by Partners. A patent or
        patent application shall be considered to have been developed by Partners
        if all
        of the named inventors, at the time of their invention, had an obligation
        to
        assign their rights in that invention to Partners. Partners may, in its sole
        discretion, offer to add to the Patent Package any additional patent or patent
        application acquired by Partners. Such offer shall be made in writing, and
        Seller may elect, within thirty (30) days after receipt, to accept the offer.
        If
        the offer is accepted by Seller, ******* percent (**%) of the purchase
        price ("Allocated Acquisition Costs") for the added patent or patent
        application shall be deemed a credit against Royalties owed to Seller (including
        future Royalties). 

       

      3.2.5 Royalty
        payments shall be to Seller payable quarterly. Within sixty (60) days of
        the end
        of each calendar quarter, Purchaser shall pay the Royalty to Seller for that
        calendar quarter, and each such payment shall be accompanied by a Royalty
        report
        setting forth the Licensing Revenue as well as deducted Direct Expenses and
        Allocated Acquisition Costs.

       

      3.2.6 Without
        limiting Partners' obligations to pay to Seller all Royalty payments and
        other
        amounts due under Sections 3.2.1, 3.2.8 and 3.2.10, commencing with the calendar
        year 2006, Partners shall pay Seller a minimum royalty (the "Minimum
        Royalty")
        according to the schedule and terms set forth on Exhibit
        C.

       

      3.2.7 In
        the
        event that the Minimum Royalty for any calendar year is not paid in accordance
        with Section 3.2.5
        because
        Partners has not received Licensing Revenue in an amount sufficient to cause
        the
        Minimum Royalty to be paid to Seller, within thirty (30) days of written
        notice
        thereof by Seller, Seller's sole and exclusive remedy, notwithstanding anything
        to the contrary contained herein, is the assignment of the Purchased Assets
        back
        to Seller; provided that, any existing license of the Purchased Assets shall
        continue in force, and Seller shall continue to receive Royalties from Licensing
        Revenue received by Partners from such licenses.

       

      3.2.8 In
        the
        event that Partners, in its sole discretion, sells any patent or patent
        application in the Patent Package, Seller shall receive ****** percent
        (**%) of the sales price allocated to the Patent Package. 

       

      3.2.9 Seller
        shall have the right to inspect Purchaser's and Partners records to confirm
        the
        accuracy of Royalty payments once a year. Such inspection shall occur upon
        reasonable notice and during regular business hours, shall be conducted by
        an
        independent auditor mutually acceptable to the parties hereto at Seller's
        expense, and Purchaser and Partners shall allow the auditor to have full
        access
        to all reasonably necessary information. If the auditor determines that the
        amount of Royalty has been under-paid, Purchaser shall immediately pay Seller
        the amount of any under-paid Royalty. If the Royalty has been under-paid
        by an
        amount of ten percent (10%) or greater and there is not a good faith dispute
        as
        to the amount of Royalty due, Purchaser shall also pay Seller the cost of
        the
        inspection, including the cost of the independent auditor.

       

      ____________

      * 
        Confidential Treatment Requested

      
        
          
          

        

        
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      3.2.10 Should
        Partners, in its sole discretion, institute an action for infringement of
        the
        Patent Package, Seller shall receive **** percent (**%) of any
        recovery, whether that recovery is by way of judgment, award, decree or
        settlement. However, all litigation expenses incurred by Partners with respect
        to the Patent Package shall be deducted from any recovery before Seller's
        **%
        share is calculated.

       

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

       

      3.3.1 At
        the
        Closing, Seller shall deliver to Purchaser:

       

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

       

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

       

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

       

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

       

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

       

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

       

      (g) a
        receipt
        for the Cash to Close.

       

       

      ____________

      * 
        Confidential Treatment Requested

      
        
          
          

        

        
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      3.3.2 At
        the
        Closing, Purchaser will deliver to Seller:

       

      (a) the
        Cash
        to Close;

       

      (b) the
        Closing Statement;

       

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

       

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

       

      (e) a
        certificate that an officer of Purchaser executes, dated as of the Closing
        Date,
        certifying as to the fulfillment of the conditions set forth in Sections
        8.1
        and
8.2;
        and

       

      (f) a
        certificate of good standing of Purchaser from the secretary of state of
        the
        state where Purchaser is incorporated and in each other jurisdiction in which
        Purchaser conducts business.

       

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

       

      (a) the
        Noncompete Agreements; and

       

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

       

      4.    REPRESENTATIONS
        AND WARRANTIES OF SELLER AND STOCKHOLDER. 

       

      Seller
        and Stockholder, jointly and severally, represent and warrant to Purchaser
        and
        Partners that, except as may be set forth in particularity and in detail
        on the
        disclosure schedules attached to this Agreement, which shall be arranged
        in
        paragraphs corresponding to the numbered paragraphs in this Section 4
        (the
“Disclosure
        Schedules”),
        the
        following statements are true and correct as of this date and will be true
        and
        correct as of the Closing Date:

       

      4.1    Organization;
        Good Standing; Ownership. Seller
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware. 

       

      
        
          
          

        

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

       

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

       

      4.4    Marketable
        Title; No Liens. Seller
        has good and marketable title to the Purchased Assets, free and clear of
        all
        Liens, except for Liens set forth in Schedule
        4.4
        to be
        satisfied at Closing. Purchaser shall transfer to Purchaser at Closing good
        and
        marketable title to the Purchased Assets, and the Purchased Assets shall
        be free
        from all Liens.

       

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

       

      4.6    Litigation.
        There
        are
        no claims, lawsuits, actions, arbitrations or other proceedings pending with
        respect to this Agreement and the transactions contemplated hereby. Other
        than
        as set forth on Schedule
        4.6,
        there
        are no claims, lawsuits, actions, arbitrations or other proceedings or
        governmental investigations pending or, to the knowledge of Seller and
        Stockholder, threatened against Seller or any of its officers, directors,
        employees or affiliates involving, affecting or relating to Seller or the
        Purchased Assets (collectively, the “Claims”).
        The
        information contained on each Claim set forth on Schedule
        4.6,
        includes: (i) the name of each party to the Claim; (ii) the monetary amount
        being demanded by each party to the Claim; (iii) if there are demands for
        something other than monetary damages, a description of the relief being
        sought;
        (iv) a caption name and case number for the Claim; (v) the court or
        administrative agency where such Claim is pending; (vi) the status of the
        Claim,
        including if any settlement discussions have occurred; and (vii) if such
        Claim
        is covered by insurance and if so, the name of the insurance carrier, and
        whether or not the insurance carrier has reserved any rights with respect
        to
        such Claim. There are no outstanding judgments, orders, injunctions, decrees,
        stipulations or awards (whether rendered by a court or administrative agency,
        or
        by arbitration) against Seller or the Purchased Assets.

       

      
        
          
          

        

        
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      4.7     Intellectual
        Property. With
        respect to the Intellectual Property:

       

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

       

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

       

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

       

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

       

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

       

      4.7.6 To
        the
        knowledge of Seller or Stockholder, there has been no fraud or inequitable
        conduct during the prosecution of the Intellectual Property; 

       

      4.7.7 Except
        as
        set forth on Schedule
        4.7.7,
        to the
        knowledge of Seller or Stockholder, there is no unauthorized use, disclosure,
        infringement or misappropriation of the Intellectual Property;

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

      4.7.13 Seller
        has secured valid written assignments from all consultants, employees and
        others
        who contributed to the creation or development of Intellectual Property of
        the
        rights to such contributions that Seller does not already own by operation
        of
        law; 

       

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

       

      4.7.15 The
        Intellectual Property is all of the intellectual property used in the system
        or
        method patent business of Seller, and Exhibit
        A
        is a
        complete list of all issued patents and pending patent applications included
        in
        Intellectual Property; and

       

      4.7.16 There
        have been no non-confidential disclosures and no use, offer for sale or sale
        of
        any inventions claimed under the Intellectual Property by Seller or Stockholder
        prior to the filing date thereof.

       

      4.8    Approvals.
        Schedule
        4.8 lists
        all
        registrations, filings, applications, notices, consents, approvals, orders,
        qualifications and waivers required to be made, filed, given or obtained
        by
        Seller or Stockholder with, to or from any person or governmental authority
        in
        order to consummate the transactions contemplated herein (“Approvals”).

       

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

       

      4.10     
        Taxes.
        Seller
        has duly and timely filed (taking into account any extensions granted with
        respect thereto) all Tax Returns (as defined below) required to have been
        filed
        by, or with respect to, Seller. All such Tax Returns are true, complete and
        correct. All Taxes (as defined below) required to have been paid by (or
        presently claimed by any governmental authority to be due from) Seller, or
        with
        respect to a period covered by a Tax Return of Seller, whether or not shown
        on
        any Tax Return of Seller, have been paid or are shown on the balance sheet
        included in the financial statements of Seller that Seller has previously
        delivered to Purchaser.“Tax
        Returns”
means
        any return, report, information return, schedule, certificate, statement
        or
        other document filed or required to be filed with a governmental authority
        in
        connection with any Tax. “Tax”
means:
        (i) any income, alternative or add-on minimum tax, gross income, gross receipts,
        franchise, profits, including estimated taxes relating to any of the foregoing,
        or other similar tax or other like assessment or charge of similar kind
        whatsoever, together with any interest and any penalty, or additional amount
        imposed by any governmental authority responsible for the imposition of any
        such
        Tax (domestic or foreign); or (ii) any sales, use, ad valorem, business license,
        withholding, payroll, employment, excise, stamp, transfer, recording,
        occupation, premium, property, unclaimed property, value added, custom duty,
        severance, windfall profit or license tax, governmental fee or other similar
        assessment or charge, together with any interest and any penalty, or additional
        amount imposed by any governmental authority responsible for the imposition
        of
        any such tax (domestic or foreign).

       

      
        
          
          

        

        
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      4.11      
        Disclosure.
        All
        information, schedules, documents and other materials delivered to the Purchaser
        by or on behalf of the Seller are true, correct and complete in all material
        respects. Seller has provided Purchaser with all material information it
        possesses, whether in written or non-written form, related to the Purchased
        Assets. Seller does not have knowledge of any fact that has specific application
        to Seller or the Purchased Assets (other than general economic or industry
        conditions) and that may materially adversely affect the Purchased Assets
        that
        has not been otherwise set forth in this Agreement. Seller
        has not knowingly provided access to any non-public information associated
        with
        the Purchased Assets to any third party other than its authorized
        representatives.

       

      4.12      
        Seller’s
        and Stockholder’s representations and warranties contained in this Agreement
        will survive the Closing Date for a period of two (2)
        years; provided that the representations and warranties contained in Sections
        4.7,
        and
4.10
        will
        survive the Closing for a period equal to the relevant statute of limitations
        plus sixty days. Seller’s covenants will survive indefinitely unless otherwise
        stated in the individual covenant. The limitations on the survival of
        representations and warranties in this Agreement shall not limit any rights,
        causes of action or other claims Purchaser may have against Seller under
        common
        law, equity, statute or regulation.

       

      4.13      
        For
        purposes of all of the Representations and Warranties made by the Seller
        or
        Stockholder herein, any reference to the word(s) “knowledge” or “to the best of
        Seller’s or Stockholder’s knowledge” shall refer to the actual knowledge of Marc
        Eller, Zvi Yaniv and Douglas Baker, upon reasonable investigation or inquiry,
        as
        of the date of this Agreement

       

      5.    REPRESENTATIONS
        AND WARRANTIES OF PURCHASER.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

      6.    CERTAIN
        PRE-CLOSING COVENANTS.
        

       

      From
        the
        Effective Date through the Closing Date:

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
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      6.7    Representations
        and Warranties. Seller,
        Stockholder and Purchaser shall not take any action which would cause any
        of the
        representations or warranties made in this Agreement not to be true and correct
        in all respects on and as of the Closing Date with the same force and effect
        as
        if such representation or warranty had been made on and as of the Closing
        Date,
        except for changes in any such representation or warranty approved in writing
        by
        Purchaser or Seller (as the case may be). The parties shall not agree to
        take
        any actions prohibited by this Section 6.7.

       

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

       

      7.    COVENANTS
        WHICH INCLUDE POST CLOSING ACTIONS.

       

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

       

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

       

      7.3    Disclosure.
        Except
        as
        required by law, neither Seller, Stockholder nor Purchaser will, without
        the
        prior consent of the other parties, disclose any of the terms of this Agreement
        other than as set forth on Exhibit
        F
        to any
        third party, other than a party’s accountants, attorneys and
        advisors. Notwithstanding
        the foregoing, either party may file any documents it is legally required
        to
        file with the Securities and Exchange Commission upon timely notice to and
        consultation with the other party, it being understood that it is the intent
        of
        the parties to limit the disclosure of confidential information to the extent
        legally possible.

       

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

       

      
        
          
          

        

        
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      7.5    Maintenance
        of Patents.
        Purchaser agrees to prosecute and maintain all Intellectual Property in
        accordance with all applicable laws, rules and regulations; provided that,
        Purchaser shall in no event be obligated to continue prosecution of any
        application contained in the Intellectual Property if Purchaser determines,
        in
        its reasonable judgment, that such prosecution efforts are unlikely to result
        in
        meaningful patent protection.

       

      7.6    Reversion
        upon Liquidation. Upon
        the
        liquidation or dissolution of Purchaser or its assignee, the Purchased Assets
        shall be assigned back to Seller; provided that, any existing license of
        the
        Purchased Assets shall continue in force, and Seller shall continue to receive
        Royalties.

       

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

       

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

       

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

       

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

       

      8.3    Deliverables.
        Seller
        shall have received from Purchaser those items set forth in Sections
3.3.2
        and
3.3.3.

       

      8.4    No
        Proceedings. No
        action
        or proceeding against Purchaser, Seller or Stockholder shall have been
        instituted or, to knowledge of the parties, threatened that, if successful,
        could prohibit consummation or require substantial rescission of the
        transactions contemplated by this Agreement and the Collateral
        Agreements.

       

      8.5    Contemporaneous
        Closing. The
        closing of the transactions contemplated by that certain Asset Purchase
        Agreement, of even date herewith, by and between Seller and NOVUS Displays,
        LLC
        shall have occurred.

       

      
        
          
          

        

        
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      9.    CONDITIONS
        TO PURCHASER’S OBLIGATION TO CLOSE.

       

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

       

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

       

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

       

      9.3    Deliverables.
        Purchaser
        shall have received from Seller and Stockholder those items set forth in
        Sections 3.3.1
        and
3.3.3.

       

      9.4    No
        Proceedings. No
        action
        or proceeding against Purchaser, Seller or Stockholder shall have been
        instituted or, to the knowledge of the parties, threatened that, if successful,
        could prohibit consummation or require substantial rescission of the
        transactions contemplated by this Agreement and the Collateral
        Agreements.

       

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

       

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

       

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

       

      9.8    Due
        Diligence. Purchaser
        shall be satisfied in its reasonable discretion with the results of its due
        diligence investigation of the Purchased Assets.

       

      
        
          
          

        

        
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      9.9    Consent
        by NOVUS Partners LLC. Partners
        shall have consented in writing to the transactions contemplated by this
        Agreement. 

       

      9.10        
        Contemporaneous
        Closing. The
        closing of the transactions contemplated by that certain Asset Purchase
        Agreement, of even date herewith, by and between Seller and NOVUS Displays,
        LLC
        shall have occurred.

       

      10. TERMINATION.

       

      10.1       
        Right
        To Terminate. This
        Agreement may be terminated and the transactions contemplated hereby may
        be
        abandoned at any time prior to the Closing Date:

       

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

       

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

       

      10.1.3 By
        Seller.
        By
        Seller, if any of the conditions set forth in Section 8
        shall
        have become incapable of fulfillment (other than as a result of a breach
        of this
        Agreement by any of the Seller or Stockholder);

       

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

       

      10.1.5 Breach
        of Covenant.
        By
        either Purchaser or Seller, if the other party (or Stockholder, in case of
        a
        termination by Purchaser) shall be in material breach of any of its covenants
        contained in this Agreement and such breach either is incapable of cure or
        is
        not cured within 30 days after notice from the party wishing to terminate;
        provided, that the party seeking such termination (or Stockholder in the
        case of
        Seller) shall not also then be in material breach of this Agreement; and,
        provided, further, that any material breach of the provisions of Section
        7.4
        shall
        entitle Purchaser to an immediate right to termination without any notice
        or
        cure requirement;

       

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

       

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

       

      
        
          
          

        

        
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      10.2    Manner
        and Effect of Termination. Termination
        shall be effected by the giving of written notice to that effect by the party
        seeking termination. If this Agreement is validly terminated and the
        transactions contemplated hereby are not consummated, then this Agreement
        shall
        become null and void and of no further force and effect and no party shall
        be
        obligated to any other party hereunder; provided, however, that termination
        shall not affect (a) the rights and remedies available to a party as a result
        of
        the breach by the other party or parties hereunder or (b) the provisions
        of
        Sections 6.8,
        7.3,
        18
        and
19.11,
        any
        provisions concerning indemnification for broker’s or similar fees, or this
        Section 10.2.

       

      11.    INDEMNIFICATION.
        

       

      11.1    Seller
        Indemnification. Seller
        and Stockholder, jointly and severally, agree to indemnify, defend, release,
        and
        hold Purchaser and Partners and their affiliates, subsidiaries or related
        companies, member and their directors, officers and employees harmless from
        and
        against any and all damages, losses, penalties, interest obligations,
        liabilities (including tax liabilities), claims, judgments, causes of action,
        deficiencies, costs, clean up costs, and expenses (including reasonable
        attorneys’ fees and other costs) (“Damages”)
        asserted against, incurred or required to be paid by Purchaser or Partners
        on
        account of or incident or pursuant to: (i) breach of any representation or
        warranty made by Seller or Stockholder in this Agreement, the Collateral
        Agreements or in any document delivered by Seller or Stockholder pursuant
        to or
        in connection with this Agreement; (ii) breach of any covenant or obligation
        made by Seller or Stockholder in this Agreement, the Collateral Agreements
        or
        any document delivered by Seller or Stockholder pursuant to or in connection
        with this Agreement; (iii) the business or operations of Seller or any conduct
        or failure to act of Seller (or any of its employees or agents) before, at
        or
        after the Closing including any tax liability resulting therefrom; (iv) the
        unauthorized disclosure of any terms of this Agreement or the transaction
        contemplated hereby; and (v) any broker’s or finders fees due and payable to any
        third party arising out of this Agreement or the transactions contemplated
        hereby where such party claims that it entered into an agreement with Seller
        or
        Stockholder.

       

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

       

      
        
          
          

        

        
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      12.    INDEMNIFICATION
        PROCEDURE.

       

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

       

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

       

      
        
          
          

        

        
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      14.    RIGHT
        OF SET OFF.

       

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

       

      14.2    In
        no
        event shall the Seller’s indemnity obligations under Section
        11 
        exceed
        an amount equal to sum of the Initial Consideration and the Royalties actually
        paid to Seller pursuant to Section 3.2
        hereof.

       

      15.    TAXES.
        

       

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

       

      16.    DISCLAIMER
        OF LIABILITIES.

       

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

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      17.    TAX
        ALLOCATION OF INITIAL CONSIDERATION.

       

      For
        purposes of each party’s reporting of the transactions contemplated by this
        Agreement to the United States Department of Internal Revenue Service, prior
        to
        the Closing, the parties shall agree as to a schedule allocating the Initial
        Consideration amongst the Purchased Assets which shall be set forth on
Exhibit
        G
        adjusted
        for additions and deletions of the Purchased Assets between the Effective
        Date
        of this Agreement and the Closing. 

       

      18.    ASSIGNMENT
        BY PURCHASER.
        

       

      Notwithstanding
        anything else to the contrary set forth herein, Purchaser is obligated to
        assign
        this Agreement and the Collateral Agreements and all of its rights and
        obligations herein and thereto to Partners on the Closing Date. Upon such
        assignment and Partners’ assumption of all obligations of Purchaser herein,
        Purchaser shall be fully released from all of its obligations hereunder.
        The
        failure to complete such assignment in accordance herewith shall render the
        transactions contemplated by this Agreement and the Collateral Agreements
        null
        and
        void ab initio. The
        parties hereby agree to cooperate with one another and take whatever action
        may
        be necessary to unwind the transactions contemplated by this Agreement in
        the
        event the foregoing assignment is not completed.  

       

      19.    MISCELLANEOUS.

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

      
        	
                If
                  to Seller or Stockholder:

              	
                Electronic
                  Billboard Technology, Inc.

              
	 	
                c/o
                  Nano-Proprietary, Inc.

              
	 	
                3006
                  Longhorn Boulevard

              
	 	
                Suite
                  107

              
	 	
                Austin,
                  Texas 78758

              
	 	
                Attn:
                  Douglas Baker

              
	 	 
	
                With
                  a copy to:

              	
                Kelley
                  Drye Collier Shannon

              
	 	
                3050
                  K Street, NW

              
	 	
                Suite
                  400

              
	 	
                Washington,
                  DC 20007

              
	 	
                Attn:
                  David Ervin, Esq.

              

      

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      

      
        	
                If
                  to Purchaser:

              	
                NOVUS
                  Communication Technologies, Inc.

              
	 	
                4480
                  Lake Forest Drive

              
	 	
                Suite
                  412

              
	 	
                Cincinnati,
                  OH 45242

              
	 	
                Attn:
                  Scott Wampler

                 

              
	
                with
                  a copy to:

              	
                Dinsmore
                  & Shohl LLP

              
	 	
                1900
                  Chemed Center

              
	 	
                255
                  E. Fifth Street

              
	 	
                Cincinnati,
                  Ohio 45202

              
	 	
                Attn:
                  Martin J. Miller, Esq.

                 

              

      

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

       

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

       

      19.10      
        Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which will
        be
        deemed to be an original but all of which together will constitute one and
        the
        same instrument. Execution of this Agreement via facsimile will be effective,
        and signatures received via facsimile will be binding upon the parties and
        effective as originals. The parties expressly acknowledge that, notwithstanding
        any statutory or decisional law to the contrary, the printed product of a
        facsimile transmittal will be deemed to be “written” and a “writing” for all
        purposes of this Agreement.

       

      19.11      
        Third
        Party Beneficiaries. Except
        as
        otherwise set forth herein, the terms and provisions of this Agreement are
        intended solely for the benefit of each party to this Agreement and their
        respective successors or permitted assigns, and it is not the intention of
        the
        parties to confer third party beneficiary rights, and this Agreement does
        not
        confer any such rights, upon any other person or entity. 

       

      19.12      
        Expenses.
        Seller,
        Stockholder and Purchaser shall each pay their own expenses incidental to
        this
        Agreement, including, without limitation, fees and expenses of their respective
        agents, representatives, counsel, accountants, and other experts. 

       

      19.13      
        Attorneys’
        Fees. If
        any
        party resorts to legal action to enforce any of its rights under this Agreement,
        the prevailing party will be entitled to recover its costs and expenses
        associated with such legal action, including, but not limited to court costs
        and
        reasonable attorneys’ fees at trial or appeal.

       

      19.14      
        Further
        Assurances.
        Before
        and after the Closing, either party shall promptly execute and deliver to
        the
        other party (upon the other party's written request) such other instruments
        or
        documents as the other party reasonably deems necessary or appropriate to
        carry
        out and effect the purpose and intent of this Agreement.

       

      [Signature
        Page To Follow]

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

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

       

      
        	
                SELLER:

                 

              	
                PURCHASER:

                 

              
	
                ELECTRONIC
                  BILLBOARD TECHNOLOGY, INC.

              	
                NOVUS
                  COMMUNICATION

              
	 	
                TECHNOLOGIES,
                  INC.

                 

              
	
                By: 
                  /s/ Douglas P. Baker

                 

              	
                By:  
                  /s/ Scott Wampler

                 

              
	
                Title:  
                  Vice President and Corporate Secretary

                 

              	
                Title:
                  Chief Executive Officer

              
	
                STOCKHOLDER:

                 

              	 
	
                NANO-PROPRIETARY,
                  INC.

                 

              	 
	
                By: 
                  /s/ Douglas P. Baker

                 

              	 
	
                 

                 

              	 

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      LIST
        OF EXHIBITS

      

      
        	
                Exhibit
                  A

                 

              	
                Intellectual
                  Property

                 

              
	
                Exhibit
                  B

                 

              	
                Form
                  of Noncompete Agreement

                 

              
	
                Exhibit
                  C

                 

              	
                Royalty
                  Terms

                 

              
	
                Exhibit
                  D

                 

              	
                Patent
                  Package

                 

              
	
                Exhibit
                  E

                 

              	
                Bill
                  of Sale and Assignment and Assumption Agreement

                 

              
	
                Exhibit
                  F

                 

              	
                Press
                  Release

                 

              
	
                Exhibit
                  G

                 

              	
                Tax
                  Allocation of Initial Consideration

                 

              

      

      

      
        
          
          

        

        
          22<PAGE>

                                                                     EXHIBIT 4.3

** Represents material which has been redacted and will be separately filed with
the Commission pursuant to a Request for Confidential Treatment pursuant to Rule
406 under the Securities Act of 1933, as amended.

                   AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT

       This AMENDMENT NO. 1 to the Stock Purchase Agreement, dated as of
December 8, 2004 (the "AGREEMENT"), by and among DELTA GALIL INDUSTRIES LTD., a
company organized under the laws of the State of Israel ("DELTA"), DELTA GALIL
USA , INC., a Delaware corporation and a wholly owned subsidiary of Delta
("PURCHASER"), and STEVEN KLEIN, KRISTINA NETTESHEIM and GARY BEGGS (the
"SELLING Shareholders"), relating to the purchase by the Purchaser of the shares
of Burlen Corp., a Georgia corporation ("BURLEN" or the "COMPANY").

                               W I T N E S S E T H

       WHEREAS, the Agreement provided for certain post-closing payments from
Purchaser to the Selling Shareholders; and

       WHEREAS, the parties desire to amend the Agreement to take into account
the integration of the certain "back-end" operations of the Company and the
Purchaser in areas such as finance, human resources, logistics, information
technology and, potentially, distribution, thus achieving overall efficiencies;
and

       WHEREAS, it had been the parties' intention to transfer the Purchaser's
**** business to Burlen, but the parties have subsequently decided not to do so,
and the parties wish to amend the Agreement to compensate the Selling
Shareholders for this decision.

       NOW, THEREFORE, the parties hereby agree as follows:

1. Any capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Agreement.

2. Section 1.4 shall be deleted in is entirety and replaced with the following:

         1.4      PERFORMANCE PAYMENT.

                    (a) As used herein:

                            (i) "NET SALES" shall mean net sales, as determined
                  under U.S. GAAP, for all sales by the Company ***** in all
                  cases determined consistent with revenue recognition
                  methodologies employed for the fiscal year ending on December
                  31, 2004;

                           (ii) "EBIT" shall mean earnings before interest and
                  taxes calculated as set forth in ANNEX 1 to the Agreement.

                          (iii) "MARGIN MINIMUM" shall mean EBIT as a
                  percentage of Net Sales of at least ***% for the relevant
                  period.

<PAGE>

                           (iv) "COMBINED SALES" shall mean Net Sales plus net
                  sales by the Purchaser ***********.

                            (v) "BASE NET SALES" shall mean $*******

                           (vi) "BASE COMBINED SALES" shall mean $******

       (b) In addition to the Closing Payment, the Selling Shareholders may be
entitled to aggregate consideration in an amount not to exceed $18,000,000 (the
"PERFORMANCE PAYMENT"). A portion of the total Performance Payment shall be
payable based on the attainment of performance targets for each of 2006, 2007,
2008, 2009, 2010 and 2011 as more fully described below. Any Performance Payment
shall be made to the Selling Shareholders pro rata in proportion to their
shareholdings in the Company as set forth on SCHEDULE 2.2(C) to the Agreement.

       (c) Any payment of the Performance Payments shall be payable as follows:
75% in cash and 25% in either cash or Ordinary Shares of Delta at Delta's
discretion, subject to applicable restrictions on transfer, if any, to which the
Ordinary Shares issuable at Closing are subject. In addition thereto and in
connection with any such issuance, Delta shall make all such disclosures to the
Selling Shareholders as may be required to be made in order to make the previous
public statements not materially misleading. The number of Ordinary Shares
issuable shall be calculated according to the Fair Market Value. Performance
Payments shall be made by Purchaser to the Selling Shareholders within five (5)
business days after Net Sales and EBIT for the applicable year are finally
determined in accordance with Section 1.5. Notwithstanding anything in the
Agreement to the contrary, Delta shall have no right to pay any portion of any
amount owed to the Selling Shareholders (whether as part of the Closing Payment
or Performance Payments) in Ordinary Shares unless at the time payment in
Ordinary Shares is to be made the Ordinary Shares trade on the Tel Aviv Stock
Exchange.

       (d) For each year from 2006 through 2011, each of the Net Sales, EBIT
and Combined Sales for each such year will be compared to the Target Net Sales,
Target EBIT and Target Combined Sales set forth in Table I below. Those amounts
will be analyzed using each of the three methods listed under columns A, B and C
in Table II. In each column, the Performance Payment due will be the aggregate
of the Performance Payment payable in respect of Net Sales, EBIT and Combined
Sales for each relevant year. The method that yields the highest aggregate
payment for such year will be used to calculate the Performance Payment, if any,
to be paid in the aggregate to the Selling Shareholders with respect to such
year.

       (e) The Performance Payment may only be paid with respect to any year if
the Net Sales generate a gross margin that meets the Margin Minimum. A grace
amount of an aggregate shortfall of **% of margin may be used over the course of
all of the years (2006 to 2011) for which a Performance Payment is calculable,
as follows: If, in any year, the Selling Shareholders would be entitled to a
Performance Payment but for the fact that the Margin Minimum requirement has not
been met, the Performance Payment will still be payable if the actual EBIT
margin can be increased to the Margin Minimum using the grace amount, until the
aggregate amount of all such utilizations of the grace amount equals **%. For
example, if the actual EBIT margin in one year is ***%, then **% of the grace
amount could be used to reach the Margin Minimum of ***%, leaving ***% of the
grace amount for future use.

<PAGE>

<TABLE>
<CAPTION>

TABLE I
----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------
                               2006           2007           2008           2009           2010           2011
----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------
<S>               <C>          <C>            <C>            <C>            <C>            <C>            <C>
NET SALES         TARGET  NET  ***% of        ***% of        ***% of        ***% of        ***% of        ***% of
                  SALES        Base Net       Base Net       Base Net       Base Net       Base Net       Base Net
                               Sales          Sales          Sales          Sales          Sales          Sales
                  ------------ -------------- -------------- -------------- -------------- -------------- -------------
                  MINIMUM      $********      $********      $******        $******        $*******       $*******
                  NET SALES
----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------

----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------
EBIT              TARGET       $*****         $******        $*******       $*******       $********      $******
                  EBIT
                  ------------ -------------- -------------- -------------- -------------- -------------- -------------
                  MINIMUM      $*******       $******        $*******       $*******       $*******       $********
                  EBIT
----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------

---------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------
COMBINED          TARGET       ***% of        ***% of        ***% of        ***% of        ***% of        ***% of
SALES             COMBINED     Base           Base           Base           Base           Base           Base
                  SALES        Combined       Combined       Combined       Combined       Combined       Combined
                               Sales          Sales          Sales          Sales          Sales          Sales
                  ------------ -------------- -------------- -------------- -------------- -------------- -------------
                  MINIMUM      $******        $******        $*****         $******        $********      $********
                  COMBINED
                  SALES
----------------- ------------ -------------- -------------- -------------- -------------- -------------- -------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                TABLE II
--------------------------------------------------------------------------------------------------------------------
                                A                               B                                C
--------------------------------------------------------------------------------------------------------------------
MAXIMUM
PAYMENT FOR
NET SALES                    $450,000                        $600,000                        $750,000
<S>                          <C>                             <C>                             <C>
                                                  Maximum Payment for
                Maximum Payment for Net           Net Sales * [(Actual Net       Maximum Payment for Net
                Sales * [(Actual Net Sales        Sales minus Minimum            Sales* [(Actual Net Sales
                minus Minimum Net                 Net Sales)/ Target Net         minus Minimum Net
                Sales)/(Target Net Sales          Sales minus Minimum            Sales)/(Target Net Sales
                minus Minimum Net Sales)]         Net Sales)]                    minus Minimum Net Sales)]
PAYMENT
FOR
MINIMUM
NET SALES                    $187,500                        $250,000                        $312,500
                                        NO PAYMENT FOR NET SALES BELOW MINIMUM
--------------------------------------------------------------------------------------------------------------------
MAXIMUM
PAYMENT FOR
EBIT                        $2,400,000                      $2,250,000                      $2,100,000
                Maximum Payment for               Maximum Payment for            Maximum Payment for EBIT
                EBIT * [(Actual EBIT              EBIT * [(Actual EBIT           *[(Actual EBIT minus
                minus Minimum                     minus Minimum                  Minimum EBIT)/(Target
                EBIT)/(Target EBIT minus          EBIT)/(Target EBIT             EBIT minus Minimum
                Minimum EBIT)]                    minus Minimum EBIT)]           EBIT)]
PAYMENT FOR
MINIMUM
EBIT                        $1,000,000                       $937,500                        $875,000
                                           NO PAYMENT FOR EBIT BELOW MINIMUM
--------------------------------------------------------------------------------------------------------------------
MAXIMUM
PAYMENT FOR
COMBINED
SALES                        $150,000                        $150,000                        $150,000
                                                  Maximum Payment for
                                                  Combined Sales*
                Maximum Payment for               [(Actual Combined              Maximum Payment for
                Combined Sales* [(Actual          Sales minus Minimum            Combined Sales * [(Actual
                Combined Sales minus              Combined                       Combined Sales minus
                Minimum Combined                  Sales)/Target                  Minimum Combined
                Sales)/(Target Combined           Combined Sales minus           Sales)/(Target Combined
                Sales minus Minimum               Minimum Combined               Sales minus Minimum
                Combined Sales)]                  Sales)]                        Combined Sales)]
PAYMENT FOR
MINIMUM
COMBINED
SALES                        $62,500                         $62,500                          $62,500
                                         NO PAYMENT FOR COMBINED SALES BELOW MINIMUM
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     (f) If (I) for any given year the Selling Shareholders were not paid
$3,000,000 in the aggregate pursuant to application of the provisions of Section
1.4(d) of this Agreement and (II) if Net Sales, EBIT or Combined Sales for any
year exceed the

<PAGE>

relevant Target for such year (and the Margin Minimum was met or exceeded on
such Net Sales for such year), such excess of Net Sales, EBIT or Combined Sales
may be added to Net Sales, EBIT or Combined Sales for any previous or subsequent
year and the portion of the Performance Payment payable pursuant to application
of the provisions of Section 1.4(d) of this Agreement shall be recalculated. The
Selling Shareholders shall be entitled to payment of an amount equal to the
difference between the recalculated aggregate amount of the Performance Payment
payable to the Selling Shareholders as a result of such recalculation and the
amounts previously paid in respect of application of the provisions of Section
1.4(d) of this Agreement. In no event shall the aggregate amount of the payments
to be made to the Selling Shareholders in respect of any year pursuant to
application of the provisions of Section 1.4(d), whether initially or upon any
recalculation permitted pursuant to this Section 1.4(f), exceed three million
dollars ($3,000,000).For the avoidance of doubt, any recalculation of the
Performance Payment authorized to be made pursuant to this Section 1.4(f) shall
not include Net Sales for any year in the recalculation if the Margin Minimum
for Net Sales for such year has not been met, PROVIDED that Net Sales or
Combined Sales which utilize the grace amount described in Section 1.4(e) shall
be considered as if such Net Sales had met the Margin Minimum.

     (g) Notwithstanding anything in this Section 1.4 to the contrary or
otherwise in this Agreement, if the employment of any Selling Shareholder with
Burlen is terminated by Burlen without "Cause" (as such term is defined in such
Selling Shareholder's Employment Agreement to be entered into in connection with
the transactions contemplated hereby (the "EMPLOYMENT AGREEMENT")) or if any
Selling Shareholder terminates his or her employment "For Good Reason" (as such
term is defined in the relevant Employment Agreement), and provided that EBIT
for the full 12-month period ending on the calendar month prior to the effective
date of any such termination are not lower than $12,000,000, Delta shall pay the
Selling Shareholders an amount equal to (A) $18,000,000 minus (B) (i) the
aggregate amount of any Performance Payments previously made by Delta to the
Selling Shareholders, and (ii) any Performance Payments not earned for prior
years due to failure to meet the targets set forth above, such payment upon such
termination being in full satisfaction of the Performance Payment.

     (h) On March 15, 2006, the Purchaser shall advance to the Selling
Shareholders an aggregate amount of $1,250,000, pro rata to each Selling
Shareholder in accordance with his or her relative shareholdings in the company
as set forth on Schedule 2.2(c) to the Agreement. The advance will be
non-recourse and will bear interest at 5.0% The advance will be secured by the
Performance Payments due to be paid to the Selling Shareholders with respect to
2007 and 2008. The advance will be repaid by deducting an aggregate of $625,000
from the Performance Payment payable with respect to each of 2007 and 2008, and
if not paid then, to the extent that the Selling Shareholders are entitled to
Performance Payments in respect of any subsequent year, the advance shall be
repaid out of such subsequent Performance Payments.

6. The parties hereby acknowledge that, other than the payments described
herein, neither Delta nor Purchaser shall have any other payment obligations to
the Selling Shareholders under the Agreement.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
the Stock Purchase Agreement to be duly executed as of this 16 day of February,
2006.

                                          DELTA GALIL INDUSTRIES LTD.

                                          By: /s/ YOSSI HAJAJ
                                              ---------------
                                              Name: Yossi Hajaj:
                                              Title: Chief Financial Officer

                                          DELTA GALIL USA, INC.

                                          By: /s/ DAVID KOSTMAN
                                              -----------------
                                              Name: David Kostman
                                              Title: CEO

                                          INDIVIDUAL STOCKHOLDERS:

                                          By: /s/ STEVEN KLEIN
                                              -------------------
                                              Name: Steven Klein

                                          By: /s/ KRISTINA NETTESHEIM
                                              -----------------------
                                              Name: Kristina Nettesheim

                                          By: /s/ GARY BEGGS
                                              -----------------------
                                              Name: Gary Beggs

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