Document:

Exhibit
10.2

 

EXECUTION
COPY

 

 

STOCK
PURCHASE AGREEMENT

 

 

BY
AND BETWEEN

 

 

EVANS &
SUTHERLAND COMPUTER CORPORATION,

 

 

TRANSNATIONAL
INDUSTRIES, INC.,

 

 

AND

 

 

SPITZ,
INC.

 

 

DATED
AS OF FEBRUARY 7, 2006

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1 PURCHASE AND SALE OF STOCK

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  PURCHASE AND SALE OF STOCK

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  CONSIDERATION; SHARE EXCHANGE

  	
   

  	
  1

  
	
  1.3

  	
   

  	
  DELIVERIES OF TRANSNATIONAL AND SPITZ AT SIGNING

  	
   

  	
  2

  
	
  1.4

  	
   

  	
  DELIVERIES OF E&S AT SIGNING

  	
   

  	
  2

  
	
  1.5

  	
   

  	
  CLOSING

  	
   

  	
  3

  
	
  1.6

  	
   

  	
  DELIVERIES AT THE CLOSING.

  	
   

  	
  3

  
	
  1.7

  	
   

  	
  ELECTION TO DECREASE ACCOUNTS RECEIVABLE AND INCREASE THE NUMBER OF
  E&S STOCK

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2
  REPRESENTATIONS AND WARRANTIES OF TRANSNATIONAL AND SPITZ

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  ORGANIZATION AND GOOD STANDING

  	
   

  	
  5

  
	
  2.2

  	
   

  	
  AUTHORITY AND VALIDITY

  	
   

  	
  5

  
	
  2.3

  	
   

  	
  TITLE TO SPITZ STOCK

  	
   

  	
  5

  
	
  2.4

  	
   

  	
  CAPITALIZATION OF SPITZ

  	
   

  	
  5

  
	
  2.5

  	
   

  	
  NO SPITZ SUBSIDIARIES

  	
   

  	
  6

  
	
  2.6

  	
   

  	
  NONCONTRAVENTION

  	
   

  	
  6

  
	
  2.7

  	
   

  	
  ACTIONS AND PROCEEDINGS

  	
   

  	
  6

  
	
  2.8

  	
   

  	
  COMPLIANCE.

  	
   

  	
  7

  
	
  2.9

  	
   

  	
  FILINGS, CONSENTS AND APPROVALS

  	
   

  	
  7

  
	
  2.10

  	
   

  	
  FINANCIAL REPRESENTATIONS.

  	
   

  	
  7

  
	
  2.11

  	
   

  	
  ACCOUNTS

  	
   

  	
  8

  
	
  2.12

  	
   

  	
  ABSENCE OF UNDISCLOSED LIABILITIES

  	
   

  	
  8

  
	
  2.13

  	
   

  	
  TAX MATTERS

  	
   

  	
  8

  
	
  2.14

  	
   

  	
  ABSENCE OF CHANGES

  	
   

  	
  9

  
	
  2.15

  	
   

  	
  PERSONAL PROPERTY

  	
   

  	
  10

  
	
  2.16

  	
   

  	
  RELATED ENTITIES

  	
   

  	
  10

  
	
  2.17

  	
   

  	
  INSURANCE

  	
   

  	
  10

  
	
  2.18

  	
   

  	
  LABOR MATTERS.

  	
   

  	
  11

  
	
  2.19

  	
   

  	
  BENEFIT PLANS AND ARRANGEMENTS

  	
   

  	
  11

  
	
  2.20

  	
   

  	
  INTELLECTUAL PROPERTY

  	
   

  	
  12

  
	
  2.21

  	
   

  	
  REAL PROPERTY.

  	
   

  	
  12

  
	
  2.22

  	
   

  	
  MATERIAL CONTRACTS AND TRANSACTIONS

  	
   

  	
  13

  
	
  2.23

  	
   

  	
  ACCESS TO INFORMATION

  	
   

  	
  14

  
	
  2.24

  	
   

  	
  SECURITIES ACKNOWLEDGEMENT

  	
   

  	
  14

  
	
  2.25

  	
   

  	
  NO BROKERS

  	
   

  	
  14

  
	
  2.26

  	
   

  	
  NO INTER-COMPANY CLAIMS

  	
   

  	
  14

  
	
  2.27

  	
   

  	
  COMPLETENESS OF DISCLOSURE

  	
   

  	
  14

  
	
  2.28

  	
   

  	
  NO OTHER REPRESENTATIONS OR WARRANTIES

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3
  REPRESENTATIONS AND WARRANTIES OF E&S

  	
   

  	
  14

  

 

i

 

	
  3.1

  	
   

  	
  ORGANIZATION AND GOOD STANDING

  	
   

  	
  14

  
	
  3.2

  	
   

  	
  AUTHORITY AND VALIDITY

  	
   

  	
  15

  
	
  3.3

  	
   

  	
  NONCONTRAVENTION

  	
   

  	
  15

  
	
  3.4

  	
   

  	
  SEC REPORTS

  	
   

  	
  15

  
	
  3.5

  	
   

  	
  PRO FORMA FINANCIAL STATEMENTS

  	
   

  	
  16

  
	
  3.6

  	
   

  	
  FILINGS, CONSENTS AND APPROVALS

  	
   

  	
  16

  
	
  3.7

  	
   

  	
  NO BROKERS

  	
   

  	
  16

  
	
  3.8

  	
   

  	
  AUTHORIZATION OF SECURITIES; TITLE TO SECURITIES

  	
   

  	
  16

  
	
  3.9

  	
   

  	
  EXEMPTION FROM REGISTRATION

  	
   

  	
  17

  
	
  3.10

  	
   

  	
  OTHER REGISTRATION RIGHTS

  	
   

  	
  17

  
	
  3.11

  	
   

  	
  REGISTRATION STATEMENT MATTERS

  	
   

  	
  17

  
	
  3.12

  	
   

  	
  NASDAQ LISTING MATTERS

  	
   

  	
  17

  
	
  3.13

  	
   

  	
  COMPLETENESS OF DISCLOSURE

  	
   

  	
  17

  
	
  3.14

  	
   

  	
  NO OTHER REPRESENTATIONS OR WARRANTIES

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4
  CLOSING CONDITIONS

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  CONDITIONS PRECEDENT TO CLOSING BY E&S

  	
   

  	
  17

  
	
  4.2

  	
   

  	
  CONDITIONS PRECEDENT TO CLOSING BY TRANSNATIONAL AND SPITZ

  	
   

  	
  19

  
	
  4.3

  	
   

  	
  PREPARATION AND DELIVERY OF PROXY STATEMENT

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5
  ADDITIONAL COVENANTS OF THE PARTIES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  REGISTRATION OF E&S STOCK

  	
   

  	
  20

  
	
  5.2

  	
   

  	
  PAYMENT OF ACCOUNTS RECEIVABLE AND EXPENSES

  	
   

  	
  20

  
	
  5.3

  	
   

  	
  ACCESS AND INVESTIGATION.

  	
   

  	
  21

  
	
  5.4

  	
   

  	
  CONFIDENTIALITY.

  	
   

  	
  22

  
	
  5.5

  	
   

  	
  PUBLIC ANNOUNCEMENTS

  	
   

  	
  23

  
	
  5.6

  	
   

  	
  NOTIFICATION

  	
   

  	
  23

  
	
  5.7

  	
   

  	
  CONDUCT OF SPITZ PRIOR TO CLOSING

  	
   

  	
  23

  
	
  5.8

  	
   

  	
  DISCLOSURE SCHEDULE UPDATE

  	
   

  	
  24

  
	
  5.9

  	
   

  	
  NON-COMPETITION

  	
   

  	
  24

  
	
  5.10

  	
   

  	
  EMPLOYEE MATTERS

  	
   

  	
  24

  
	
  5.11

  	
   

  	
  RESERVATION OF E&S STOCK SHARES

  	
   

  	
  25

  
	
  5.12

  	
   

  	
  RESPONSIBILITY FOR FILING TAX RETURNS

  	
   

  	
  26

  
	
  5.13

  	
   

  	
  TAX REORGANIZATION; CONSISTENT TAX TREATMENT

  	
   

  	
  26

  
	
  5.14

  	
   

  	
  TRANSFER RESTRICTIONS

  	
   

  	
  26

  
	
  5.15

  	
   

  	
  PREPARATION AND DELIVERY OF PROXY STATEMENT.

  	
   

  	
  27

  
	
  5.16

  	
   

  	
  TRANSNATIONAL CONSENT SOLICITATION

  	
   

  	
  27

  
	
  5.17

  	
   

  	
  TRANSNATIONAL POST-CLOSING OFFICER LETTER AGREEMENTS

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6
  TERMINATION

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  TERMINATION

  	
   

  	
  28

  
	
  6.2

  	
   

  	
  EFFECT OF TERMINATION

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7
  INDEMNIFICATION; REMEDIES; SURVIVAL

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  CERTAIN DEFINITIONS

  	
   

  	
  28

  
	
  7.2

  	
   

  	
  AGREEMENT OF TRANSNATIONAL TO INDEMNIFY E&S

  	
   

  	
  28

  
	
  7.3

  	
   

  	
  AGREEMENT OF E&S TO INDEMNIFY TRANSNATIONAL

  	
   

  	
  29

  

 

ii

 

	
  7.4

  	
   

  	
  PROCEDURES FOR INDEMNIFICATION

  	
   

  	
  29

  
	
  7.5

  	
   

  	
  DEFENSE OF THIRD PARTY CLAIMS

  	
   

  	
  30

  
	
  7.6

  	
   

  	
  SETTLEMENT OF THIRD PARTY CLAIMS

  	
   

  	
  30

  
	
  7.7

  	
   

  	
  LIMITATIONS OF LIABILITY.

  	
   

  	
  31

  
	
  7.8

  	
   

  	
  SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS

  	
   

  	
  31

  
	
  7.9

  	
   

  	
  NET LOSSES; SUBROGATION; MITIGATION.

  	
   

  	
  31

  
	
  7.10

  	
   

  	
  EXCLUSIVE REMEDY

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8
  MISCELLANEOUS PROVISIONS

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  EFFECTIVENESS OF REPRESENTATIONS

  	
   

  	
  32

  
	
  8.2

  	
   

  	
  KNOWLEDGE DEFINED

  	
   

  	
  32

  
	
  8.3

  	
   

  	
  FURTHER ASSURANCES

  	
   

  	
  32

  
	
  8.4

  	
   

  	
  AMENDMENT

  	
   

  	
  32

  
	
  8.5

  	
   

  	
  EXPENSES

  	
   

  	
  32

  
	
  8.6

  	
   

  	
  ENTIRE AGREEMENT

  	
   

  	
  32

  
	
  8.7

  	
   

  	
  SEVERABILITY

  	
   

  	
  32

  
	
  8.8

  	
   

  	
  NOTICES

  	
   

  	
  33

  
	
  8.9

  	
   

  	
  HEADINGS

  	
   

  	
  34

  
	
  8.10

  	
   

  	
  BENEFITS

  	
   

  	
  34

  
	
  8.11

  	
   

  	
  ASSIGNMENT

  	
   

  	
  34

  
	
  8.12

  	
   

  	
  GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS.

  	
   

  	
  34

  
	
  8.13

  	
   

  	
  CONSTRUCTION

  	
   

  	
  34

  
	
  8.14

  	
   

  	
  THIRD PARTY BENEFICIARIES

  	
   

  	
  34

  
	
  8.15

  	
   

  	
  COUNTERPARTS

  	
   

  	
  35

  
	
  8.16

  	
   

  	
  FACSIMILE EXECUTION

  	
   

  	
  35

  
	
  8.17

  	
   

  	
  SCHEDULES AND EXHIBITS

  	
   

  	
  35

  

 

iii

 

STOCK
PURCHASE AGREEMENT

 

THIS STOCK
PURCHASE AGREEMENT (this “Agreement”) is entered into on February 7,
2006, by and among EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah
corporation (“E&S”), SPITZ, INC., a Delaware corporation (“Spitz”),
and TRANSNATIONAL INDUSTRIES, INC., a Delaware corporation (“Transnational”),
being the holder of all the issued and outstanding capital stock of Spitz.

 

BACKGROUND

 

WHEREAS,
Transnational owns all of the shares of the issued and outstanding stock of
Spitz (“Spitz Stock”).

 

WHEREAS,
E&S is a corporation whose stock is quoted on the NASDAQ, that desires to
acquire all of the issued and outstanding Spitz Stock.

 

WHEREAS,
Transnational desires to sell to E&S, and E&S desires to purchase, the
Spitz Stock from Transnational in exchange for shares of E&S’s common
stock, pursuant to the terms and conditions set forth in this Agreement.

 

WHEREAS, Spitz
joins in the execution of this Agreement in consideration of the anticipated
benefit to be provided by its affiliation with E&S.

 

NOW THEREFORE,
In consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:

 

STATEMENT
OF TERMS

 

SECTION 1

PURCHASE AND SALE OF STOCK

 

1.1                                 Purchase
and Sale of Stock.  Transnational
agrees to sell to E&S, and E&S agrees to purchase from Transnational,
all of Transnational’s right, title and interest in the Spitz Stock,
representing 100% of the issued and outstanding stock of Spitz, free and clear
of all mortgages, liens, pledges, security interests, restrictions,
encumbrances, or adverse claims of any nature, other than restrictions on sale,
transfer, offer for sale, pledge, hypothecation or other disposition pursuant
to applicable state and federal securities laws.

 

1.2                                 Consideration;
Share Exchange.  Closing Date.  Subject to the share adjustment provisions of
Section 1.2(b) below, at the Closing (as defined in Section 1.6
below), upon surrender of the certificates evidencing the Spitz Stock duly
endorsed for transfer to E&S, E&S will cause 412,500 shares of common
stock, par value $0.20 (such shares being issued hereunder, together with the
below-defined “Additional E&S Stock,” being referred to collectively
as the “E&S Stock”) to be issued to Transnational free and clear of
all mortgages, liens, pledges, security interests, restrictions, encumbrances,
or adverse claims of any nature, other than restrictions on sale, transfer,
offer for sale, pledge, hypothecation or other disposition pursuant to
applicable state and federal securities laws. 
The issuance of the E&S Stock to Transnational shall be in full
satisfaction of any right or interest which Transnational held in the

 

 

Spitz Stock. 
The E&S Stock will be issued to Transnational, and may be
subsequently distributed by Transnational to its shareholders as provided
herein.  As a result of the exchange of
the Spitz Stock for the E&S Stock, Spitz will become a wholly-owned
subsidiary of E&S.  The number of
shares of E&S being shall be subject to adjustment pursuant to Section 1.2(b) below.

 

(b)                                 The number of shares of E&S
Stock shall be subject to the following post-Closing adjustments:

 

•                                          if
the average daily closing price of E&S’ common stock for the 60 day period
immediately preceding the Registration Date (the “60 Day Average”) equals
$5.15 or less, then the number of shares of E&S Stock shall be increased
by  0.15745 shares for each share of
E&S Stock issued at Closing;

 

•                                          if
the 60 Day Average equals $7.08 or more, then the number of shares of E&S
Stock shall remain at the number of shares of E&S Stock issued at Closing;

 

•                                          if
the 60 Day Average is between $5.15 and $7.08, then the number of shares of
E&S Stock shall be increased for each $0.01 that the 60 Day Average is less
than $7.08 by that number of shares equal to (i) 0.0008145, times (ii) the
number of shares of E&S Stock issued at Closing.

 

Notwithstanding
the above, if the 60 Day Average is less than or equal to $6.12, an additional
20,000 shares of E&S Stock shall be added to the above amount.  The additional shares of E&S Stock to be
delivered to Transnational pursuant to this Section 1.2(b) are
hereinafter referred to as the “Additional E&S Stock”).  Promptly after the Registration Date (but in
no event later than two (2) days after the Registration Date), E&S
will cause the shares of Additional E&S Stock to be issued to Transnational
free and clear of all mortgages, liens, pledges, security interests,
restrictions, encumbrances, or adverse claims of any nature, other than
restrictions on sale, transfer, offer for sale, pledge, hypothecation or other
disposition pursuant to applicable state and federal securities laws.

 

For purposes
of further illustration, Exhibit E contains a detailed analysis of
the calculation of the Additional E&S Stock payable under this Agreement;
provided however, that the calculations in Exhibit E do not give
effect to any issuance pursuant to Section 1.7 hereof.

 

1.3                                 Deliveries
of Transnational and Spitz at Signing. 
On or prior to the date hereof, Transnational and/or Spitz, as
applicable, shall have delivered, or have caused to be delivered, to
E&S  employment agreements, upon
terms agreeable to E&S, duly executed by each of Jon Shaw and Paul Dailey,
each of which shall be effective upon signing, with the employment term of each
to commence immediately following the Closing, with said employment agreements
to contain non-competition agreements duly executed by each of the officers,
each of which shall become effective by its terms immediately following the
Closing.

 

1.4                                 Deliveries
of E&S at Signing.  On or prior
to the date hereof, each of Jon Shaw and Paul Dailey shall have executed and
delivered to Transnational a letter agreement (the

 

 

“Transnational Post-Closing
Officer Letter Agreement”), the terms of which shall be satisfactory to
E&S and Transnational, pursuant to which each of Messrs. Shaw and
Dailey shall agree to continue to serve as officers of Transnational after the
Closing for the limited purpose of orderly winding up and dissolving
Transnational and to take such actions as officers as may be reasonably
necessary or desirable in order to dissolve Transnational in accordance with
the plan of dissolution approved by the Board of Directors and stockholders of
Transnational.  Notwithstanding the
immediately preceding sentence to the contrary, Transnational, E&S, and Messrs. Shaw
and Dailey  agree that none of the
activities of Messrs. Shaw or Dailey on behalf of Transnational shall
unreasonably interfere with their duties owed to Spitz or E&S as officers
of Spitz.  The obligations of Messrs. Shaw
and Dailey to Transnational under the Transnational Post-Closing Officer Letter
Agreement shall not exceed twenty hours per month, nor shall the term of such
Letter Agreement exceed the later to occur of (i) eight months from the
Closing Date; or (ii) two months after registration of the E&S Stock
in accordance with Section 5.1 below.  Prior to Closing, Transnational shall provide
E&S with evidence of the Post-Closing Insurance coverage in accordance with
Section 5.17 below.

 

1.5                                 Closing.  The parties to this Agreement will hold a
closing (the “Closing”) for the purpose of executing all of the
documents contemplated by this Agreement (collectively, the “Transaction Documents”)
and otherwise effecting the transactions contemplated by this Agreement, on the
third business day after fulfillment or waiver of all conditions set forth in Section 4
(other than conditions which by their nature are to be satisfied at the Closing)
or on such other date as the parties may mutually agree upon.  The Closing will be held at the offices of
Spitz, Inc., Route 1 and Brandywine Drive, Chadds Ford, Pennsylvania,
19317, or at such other place as E&S and Transnational may reasonably
agree.  The date on which the Closing
actually occurs is referred to as the “Closing Date.”

 

1.6                                 Deliveries
at the Closing.

 

(a)                                  At
the Closing, Transnational and/or Spitz, as applicable, shall deliver, or cause
to be delivered, to E&S:

 

(i)                                     a
certificate of the Secretary or Assistant Secretary of Transnational as to the
incumbency and signatures of the officers of Transnational executing this
Agreement and the Transaction Documents executed by Transnational on the
Closing Date as contemplated by this Agreement and attaching (a) a copy of
Transnational’s certificate of incorporation, as amended through the Closing
Date certified by the Secretary of State of the State of Delaware, (b) a
true and correct copy of Transnational’s bylaws, as amended, and (c) true
and correct copies of resolutions of Transnational’s board of directors;

 

(ii)                                  a
certificate of the Secretary or Assistant Secretary of Spitz as to the
incumbency and signatures of the officers of Spitz executing this Agreement and
the Transaction Documents executed by Spitz on the Closing Date as contemplated
by this Agreement and attaching (a) a copy of Spitz’s certificate of
incorporation, as amended through the Closing Date certified by the Secretary
of State of the State of Delaware, (b) a true and correct copy of Spitz’s
bylaws, as amended, and (c) true and correct copies of resolutions of
Spitz’s board of directors authorizing this Agreement and the transactions
contemplated herein;

 

 

(iii)                               certificates
representing all of the issued and outstanding Spitz Stock, duly endorsed in
blank (or accompanied by duly executed stock powers duly endorsed in blank), in
each case in proper form for transfer, with signatures guaranteed, and, if
applicable, with all stock transfer and any other required documentary stamps
affixed thereto or appropriate instructions or agreements from Transnational to
allow the shares of Spitz Stock to be legally and beneficially transferred into
the name of E&S; and

 

(iv)                              the
Registration Rights Agreement, in substantially the form of Exhibit B
attached to this Agreement, duly executed by Transnational.

 

(b)                                 At
the Closing, E&S shall deliver, or cause to be delivered, to Transnational:

 

(i)                                     a
certificate of the Secretary or Assistant Secretary of E&S as to the
incumbency and signatures of the officers of E&S executing this Agreement
and any other Transaction Documents executed by E&S on the Closing Date as
contemplated by this Agreement and attaching (a) a copy of E&S’s
certificate of incorporation, as amended through the Closing Date certified by
the Secretary of State of the State of Utah, (b) a true and correct copy
of E&S’s bylaws, as amended, and (c) true and correct copies of
resolutions of E&S’s board of directors authorizing this Agreement and the
transactions contemplated herein;

 

(ii)                                  certificates
representing the E&S Stock, duly executed (or accompanied by duly executed
stock powers) or evidence that E&S has given irrevocable written
instructions to E&S’s transfer agent for the delivery of the certificates
to Transnational, such certificates to contain a legend describing the
restrictions of federal and state securities laws as provided in Section 5.14
hereof; and

 

(iii)                               the
Registration Rights Agreement, in substantially the form of Exhibit B
attached to this Agreement, duly executed by E&S.

 

(c)                                  At
the Closing, Transnational and Spitz, shall deliver to each other, a duly
executed cross release in substantially the form attached hereto as Exhibit A
(the “Cross Release”)

 

1.7                                 Election
to Decrease Accounts Receivable Primary Repayment Amount and Increase the
Number of E&S Stock.  By written
election to E&S in the Accounts Receivable Notice prior to the payment of
the Accounts Receivable Primary Repayment Amount (as those terms are defined in
Section 5.2) by Spitz, Transnational may elect to reduce the Accounts
Receivable Primary Repayment Amount by up to $250,000, and, at the Closing,
receive that number of additional shares of E&S Stock calculated as (i) the
total reduction to the Accounts Receivable Primary Repayment Amount, divided
by, (ii) $7.08 (all such additional shares shall also be considered
“E&S Stock” for all purposes hereunder).

 

 

SECTION 2

REPRESENTATIONS AND WARRANTIES

OF TRANSNATIONAL AND SPITZ

 

Transnational
and Spitz hereby jointly and severally represent and warrant to E&S, and
acknowledge and agree that E&S is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf of E&S,
as follows:

 

2.1                                 Organization
and Good Standing.  Each of
Transnational and Spitz is an entity duly organized, validly existing and in
good standing under the laws of Delaware and has all requisite corporate power
and authority to own, lease and to carry on its business as now being
conducted.  Transnational and Spitz are
each duly qualified to do business and are in good standing as foreign
corporations in each of the jurisdictions in which they own property, lease
property, do business, or are otherwise required to do so, where the failure to
be so qualified would have a Material Adverse Effect (a defined in Section 2.7).

 

2.2                                 Authority
and Validity.  Each of Transnational
and Spitz has all requisite corporate power and authority to enter into this
Agreement and the Transaction Documents to which either is a party and to
perform its obligations thereunder and to consummate the transactions
contemplated thereby.  The execution and
delivery of this Agreement and each of the Transaction Documents to which
either is a party by Transnational or Spitz and the consummation by
Transnational and Spitz of the transactions contemplated thereby, have been
duly authorized by the respective boards of directors of Transnational and
Spitz and no other corporate proceedings on the part of Transnational or Spitz
(or their respective stockholders) are necessary to authorize such documents or
to consummate the transactions contemplated thereby (other than such
shareholder approval as described in Section 4.1(e) hereof).  This Agreement has been, and all the other
Transaction Documents to which it is a party when executed and delivered by
Transnational and Spitz as contemplated by this Agreement will be, duly
executed and delivered by Transnational and Spitz and this Agreement is, and
the other Transaction Documents when executed and delivered by Transnational
and Spitz as contemplated hereby will be, the valid and binding obligation of
Transnational and Spitz enforceable in accordance with their respective terms,
except (1) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally, and (2) as limited by general
legal principles of equity.

 

2.3                                 Title
to Spitz Stock.  Transnational has
full right, power and authority to sell, transfer and deliver the Spitz Stock,
and upon delivery of the certificates therefor as contemplated in this
Agreement, Transnational will transfer to E&S good title to the Spitz
Stock, including all voting and other rights to such Spitz Stock, free and
clear of all pledges, liens, security interests, adverse claims, options,
rights of any third party, or other encumbrances, other than restrictions on
sale, transfer, offer for sale, pledge, hypothecation or other disposition pursuant
to applicable federal and state securities laws.

 

2.4                                 Capitalization
of Spitz.  The entire authorized
capital stock and other equity securities of Spitz consists of 1,000 shares of
common stock, par value $0.01, one hundred of which are issued and outstanding
to Transnational.  There are no
agreements purporting to

 

 

restrict the transfer of the
Spitz Stock, nor any voting agreements, voting trusts or other arrangements
restricting or affecting the voting of the Spitz Stock.  The Spitz Stock held by Transnational is duly
and validly issued, fully paid and non-assessable, and issued in full
compliance with all federal, state, and local laws, rules and
regulations.  There are no subscription
rights, options, warrants, convertible securities, or other rights (contingent
or otherwise) presently outstanding, for the purchase, acquisition, or sale of
the capital stock of Spitz, or any securities convertible into or exchangeable
for capital stock of Spitz or other securities of Spitz, from or by Spitz.  There are no stock appreciation rights,
phantom stock, or similar rights in existence with respect to Spitz.

 

2.5                                 No
Spitz Subsidiaries.  Except as set
forth in Disclosure Schedule 2.5, Spitz and Transnational each
represent and warrant that Spitz has no Subsidiaries.  As used in this Agreement, the term “Subsidiaries”
means, with respect to any person or other entity, any corporation or other
organization, whether incorporated or unincorporated, of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is at
that time directly or indirectly owned or controlled by such person,
corporation or other entity, or by any one or more of its Subsidiaries, or by
such person, corporation or other entity, and one or more of its Subsidiaries.

 

2.6                                 Noncontravention.  Except as set forth in Disclosure Schedule 2.6,
neither the execution, delivery and performance of the Transaction Documents,
nor the consummation of the transactions contemplated thereby nor compliance
with the provisions thereof, will:

 

(a)                                  Result
in a violation of, cause a default under (with or without notice, lapse of time
or both) or give rise to a right of termination, amendment, cancellation or
acceleration of any material obligation contained in or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties or assets
of Transnational or Spitz under any term, condition or provision of any (x)
loan or credit agreement, note, bond, mortgage or indenture, (y) real property
lease, material personal property lease or other material agreement, or (z) any
material permit, or license;

 

(b)                                 Violate
any provision of the articles or certificate of incorporation or by-laws of
either Transnational or Spitz; or

 

(c)                                  Violate
any judgment, order, writ, injunction, decree, statute, rule, or regulation of
any court or governmental or regulatory authority applicable to Transnational
or Spitz or any of its their properties or assets.

 

2.7                                 Actions
and Proceedings.  There is no claim,
charge, arbitration, grievance, action, suit, investigation or proceeding by or
before any court, arbiter, administrative agency or other governmental
authority now pending or, to Transnational’s or Spitz’s knowledge, threatened
against Transnational, Spitz, or which involves any of the business, or the
properties or assets of Transnational or Spitz that, if adversely resolved or
determined, would have a material adverse effect on the business, operations,
assets, properties, prospects, or conditions of Spitz (a “Material Adverse
Effect”), except as set forth on Disclosure Schedule 2.7.  To

 

 

Transnational’s or Spitz’s
knowledge, no event has occurred or circumstance exists that Transnational or
Spitz expect to give rise to or serve as a basis for the commencement of any
such claim, charge, grievance, proceeding, or governmental investigation,
except as set forth on Disclosure Schedule 2.7.  Disclosure Schedule 2.7 also
lists all pending legal claims or proceedings, whether or not such claim or
proceeding would result in a Material Adverse Effect if decided against Spitz.

 

2.8                                 Compliance.

 

(a)                                  Spitz
is in compliance in all material respects with, and not in default or violation
in any material respect under, and has not received any notice or written
communication within the last three (3) years of any material violation by
it of, any statute, law, ordinance, regulation, rule, decree or other
applicable regulation to the business or operations of Spitz.

 

(b)                                 Spitz
is not subject to any judgment, order or decree entered in any lawsuit or
proceeding applicable to its business and operations that would have a Material
Adverse Effect.

 

(c)                                  Spitz
has duly filed all reports and returns required to be filed by it with
governmental authorities and has obtained all governmental permits and licenses
and other governmental consents where the failure to do so would have a
Material Adverse Effect, except as may be required after the execution of this
Agreement.  All of such permits, licenses
and consents are in full force and effect, and no proceedings for the
suspension or cancellation of any of them, and no investigation relating to any
of them, is pending or, to the best knowledge of Spitz and Transnational,
threatened, that would have a Material Adverse Effect.

 

(d)                                 Spitz
has operated in material compliance with all laws, rules, statutes, ordinances,
orders and regulations applicable to its business, including, without
limitation, those applicable to Spitz under the Occupational Safety and Health
Act of 1970, as amended, or any equivalent state law where the failure to do so
would have a Material Adverse Effect. 
Except as set forth in Disclosure Schedule 2.8, neither
Transnational nor Spitz has received any notice of any violation thereof.

 

2.9                                 Filings,
Consents and Approvals.  Except as
listed on Disclosure Schedule 2.9, no filing or registration with,
no notice to and no permit, authorization, consent, or approval of any public
or governmental body or authority is necessary for the consummation by
Transnational and Spitz of the transactions contemplated by this Agreement.

 

2.10                           Financial
Representations.

 

(a)                                  The
books of account and other financial records of Spitz, all of which have been
made available to E&S, are true and correct and have been properly
maintained in all material respects in accordance with sound business and accounting
practices.

 

(b)                                 Included
in Disclosure Schedule 2.10 is the audited balance sheet of Spitz
as of January 31, 2005, and the related audited statements of income, cash
flows, and changes in shareholder’s equity for the fiscal year then ended, as
well as the unaudited balance sheet, and

 

 

the related statements of
income, cash flows, and changes in shareholders equity as of October 31, 2005 prepared and/or
reported on by Stockton and Bates LLP, independent certified public
accountants.  Such balance sheets and
related statements of income and cash flow are herein referred to as the “Financial
Statements.”

 

(c)                                  The
Financial Statements (x) have been prepared from the books of Spitz in
accordance with United States generally accepted accounting principles,
consistently applied (“GAAP”) except that the unaudited interim
Financial Statements do not contain notes and are subject to recurring year end
adjustments that will not have a Material Adverse Effect and (y) present fairly
in all material respects the financial position of the business as of the date
of such statements and the results of operations of the business for the
periods covered thereby.

 

2.11                           Accounts.  Disclosure Schedule 2.11 sets
forth and describes (a) all bank accounts owned or maintained by Spitz and
all authorized signatories with respect thereto, and (b) all safety
deposit boxes maintained by Spitz and all persons who have access with respect
thereto.

 

2.12                           Absence
of Undisclosed Liabilities.  Except
as set forth in Disclosure Schedule 2.12, Spitz has no liabilities
or obligations either direct or indirect, matured or unmatured, absolute,
contingent or otherwise, except (a) such liabilities or obligations as are
reserved against or reflected in the Financial Statements or of a nature not
otherwise required pursuant to GAAP to be reserved against or reflected
therein, (b) such liabilities or obligations as have been incurred in the
ordinary course of business since October 31,
2005 and have been disclosed to E&S, or (c) other liabilities that
are, individually and in the aggregate, immaterial.  For purposes of this Agreement, the term “liabilities”
includes, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.

 

2.13                           Tax
Matters.  “Tax” or “Taxes”
means any and all taxes, charges, fees, levies, duties or other assessments
whether federal, state, local or foreign, based upon or measured by income,
capital, net worth or gain and any other tax including, recapture, gross
receipts, profits, sales, use, occupation, use and occupancy, value added, ad
valorem, customers, transfer, franchise, shares, withholding, payroll,
employment, excise, or property taxes with respect to Spitz or for which Spitz
has liability under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), together with any interest, fines,
penalties and additions to tax imposed with respect thereto.  “Tax Returns” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.  “Code”
means the Internal Revenue Code of 1986, as amended, or any successor statute
thereto.  “Treasury Regulation”
means those regulations promulgated by the Internal Revenue Service under the
Code.

 

Except as set
forth in Disclosure Schedule 2.13:

 

(a)                                  As
of the date hereof, (i) Transnational and Spitz have each timely filed all
income Tax Returns and all other material Tax Returns which are required to be
filed on or prior

 

 

to the date hereof, taking into
account any extensions of the filing deadlines which have been validly granted
to them; and (ii) all such returns are true and correct in all material
respects.

 

(b)                                 Transnational
and Spitz have each paid all income and other material Taxes that have become
or are due with respect to any period ended on or prior to the date hereof, and
have established an adequate reserve therefore on each of their balance sheets
for those Taxes not yet due and payable.

 

(c)                                  Neither
Transnational nor Spitz is presently under, nor has either received notice of,
any contemplated investigation or audit by the Internal Revenue Service or any
foreign or state agency concerning any fiscal year or period ended prior to the
date hereof.

 

(d)                                 All
Taxes required to be withheld by Transnational or Spitz on or prior to the date
hereof from employees for income Taxes, social security Taxes, unemployment
Taxes and other similar withholding Taxes have been properly withheld and, if
required on or prior to the date hereof, have been deposited with the appropriate
governmental agency.

 

(e)                                  Neither
Transnational nor Spitz is a party to any tax-sharing agreements or similar
contracts or arrangements.

 

2.14                           Absence
of Changes.  Except as set forth in Disclosure
Schedule 2.14 and except for the transactions contemplated by this
Agreement (including, without limitation, the transactions contemplated by Section 5.2
below), since January 31, 2005, Spitz has not:

 

(i)                                     (A) incurred
any liabilities in excess of $10,000 other than liabilities incurred in the
ordinary course of business consistent with past practice, (B) discharged
or satisfied any lien or encumbrance, or paid any liabilities, in excess of
$10,000 other than in the ordinary course of business consistent with past
practice, or (C) failed to pay or discharge when due any liabilities of
which the failure to pay or discharge has caused or will cause any material
damage or risk of material loss to it;

 

(ii)                                  sold,
encumbered, assigned or transferred any material assets or properties, except
for ordinary course of business transactions consistent with past practice;

 

(iii)                               created,
incurred, assumed or guaranteed any indebtedness for money borrowed in excess
of $10,000 (excluding trade payables), or mortgaged, pledged or subjected any
of the assets or properties of Spitz to any mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any nature
whatsoever;

 

(iv)                              made
or suffered any amendment or termination of any material agreement, contract,
commitment, lease or plan to which it is a party or by which it is bound, or
cancelled, modified or waived any substantial debts or claims held by it or
waived any rights of substantial value, whether or not in the ordinary course
of business;

 

(v)                                 declared,
set aside or paid any dividend or made or agreed to make any other distribution
or payment in respect of its capital shares or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or acquire any of its capital shares or
equity securities;

 

 

(vi)                              suffered
any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting its business, operations, assets, properties
or prospects;

 

(vii)                           suffered
any material adverse change in its business, operations, assets, properties,
prospects or condition (financial or otherwise);

 

(viii)                        received
notice or had knowledge of any actual or threatened labor trouble, termination,
resignation, strike or other occurrence, event or condition of any similar
character which has had or might have an adverse effect on its business,
operations, assets, properties or prospects;

 

(ix)                                made
commitments or agreements for capital expenditures or capital additions or
betterments exceeding in the aggregate $10,000.00, except such as may be
involved in ordinary repair, maintenance or replacement of its assets;

 

(x)                                   other
than in the ordinary course of business, increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its employees
may be entitled;

 

(xi)                                changed
any of the accounting principles followed or the methods of applying such
principles; or

 

(xii)                             agreed,
whether in writing or orally, to do any of the foregoing.

 

2.15                           Personal
Property.  Disclosure Schedule 2.15
contains a list of all material equipment, furniture, fixtures and other
tangible personal property and assets (but excluding inventory) owned or leased
by Spitz with a current value as reflected in the Financial Statements in
excess of $20,000.00.  Except as
disclosed on Disclosure Schedule 2.15, Spitz possesses all property
and items necessary for the continued operation of the business of Spitz as
presently conducted.  All of such items
are in good operating condition (normal wear and tear excepted), and are
reasonably fit for the purposes for which the such item is presently used.

 

2.16                           Related
Entities.  Except as set forth on Disclosure
Schedule 2.16, neither Spitz, nor its stockholder, directors, officers
or employees of Spitz, or any member of his or her immediate family or any
other of its, his or her affiliates, owns or has an ownership interest in any
corporation or other entity that is or was during the last three years a party
to, or in any property which is or was during the last three years the subject
of, any material contract, agreement or understanding, business arrangement or
relationship with Spitz.  Disclosure Schedule 2.16
provides a description of each such related entity and the interest held
therein.

 

2.17                           Insurance.  The assets, properties and operations of
Spitz are insured under various policies of general liability and other forms
of insurance consistent with prudent business practices.  All such policies are in full force and
effect in accordance with their terms, no written notice of cancellation has
been received, and there is no existing default by Spitz or event which, with
the giving of notice, the lapse of time or both, would constitute a default thereunder.  All premiums that are due and payable have
been paid in full.

 

 

2.18                           Labor
Matters.

 

(a)                                  Except
as set forth in Disclosure Schedule 2.18, no employee of Spitz is
covered by any collective bargaining agreement.

 

(b)                                 Spitz
has complied, and is currently in compliance, in all material respects with
applicable laws, rules and regulations relating to the employment of
labor, including without limitation those relating to wages, hours, unfair
labor practices, discrimination and payment of social security and similar
taxes.

 

(c)                                  There
is no claim, charge, arbitration, grievance, action, suit, investigation or
proceeding by or before any court, arbiter, administrative agency or other
governmental authority now pending or, to Transnational’s or Spitz’s knowledge,
threatened against Spitz relating to employment issues or the Benefit Plans.

 

(d)                                 With
respect to its business, Spitz is not delinquent in payment to any employee for
any unpaid wages, bonuses, commissions, or other compensation, or any tax, penalty,
assessment, or forfeiture for failure to comply with any of the foregoing.  Other than as set forth on Disclosure Schedule 2.18,
all officers and employees of Spitz are employees at-will, and for indefinite
terms and there is no outstanding agreement or arrangement with respect to
severance payments.

 

(e)                                  Spitz
has delivered to E&S a complete and accurate list of the following
information for each officer, employee, consultant, independent contractor,
temporary non-employee, leased employee, member or director of Spitz, including
each employee on leave of absence or layoff status describing: employee’s name;
job title; full or part-time (and temporary or regular) status; date of hire;
date of birth; current compensation paid or payable and any change in
compensation since January 31, 2005; benefits elected; vacation accrued;
and service credited for purposes of vesting and eligibility to participate and
terms of participation under any of the Benefit Plans (as defined in Section 2.19
of this Agreement).

 

(f)                                    Spitz
has delivered to E&S a complete and accurate list of employees not actively
at work and the reason for each absence.

 

2.19                           Benefit
Plans and Arrangements.  Disclosure
Schedule 2.19 contains a list of all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 (“ERISA”)), and all other deferred compensation or fringe
benefit plans, arrangements or practices of Spitz, including without
limitation, severance pay, stock options and similar plans or arrangements and
other benefit obligations of Spitz, whether oral or written, to any of its
employees (the “Benefit Plans”). 
A true and complete copy of each Benefit Plan has been provided to
E&S.  The Benefit Plans are the only
Benefit Plans maintained by or contributed to by Spitz for the benefit of its
stockholder, officers, directors, employees or former employees which are
related to the assets of Spitz, or the business of Spitz.  Each such Benefit Plan, which is subject to
ERISA and the Code, is and always has been in material compliance with the
provisions of ERISA and the Code, and they, and all other such plans are in
material compliance with all other laws applicable thereto.  Spitz maintains no plan or program that
provides post-retirement medical or death benefits or other post-retirement
health or welfare

 

 

benefits.  Spitz has never contributed to nor been
obligated to contribute to any multiemployer plan as said term is defined in Section 4001(a)(3) of
ERISA.  The consummation of the transactions
contemplated by this Agreement will not accelerate or increase any liability,
or accelerate or increase any right or benefit to which employees may be
entitled to, under any of the Benefit Plans. 
Except as specifically disclosed in Disclosure Schedule 2.19,
there are no actions, audits, investigations, suits or claims pending, or, to
the knowledge of Spitz, threatened against Spitz, its Subsidiaries, or any of
the Benefit Plans and they have no liabilities with respect to any of the
Benefit Plans.

 

2.20                           Intellectual
Property.  Listed on Disclosure Schedule 2.20
are all intellectual property assets used by Spitz in the operation of its
business, including trade names, patents, service marks, registered copyrights,
and any applications for any of the foregoing (the “Intellectual Property
Assets”).  The Intellectual Property
Assets include all those necessary for the operation of the business of Spitz
as they are currently conducted.  Unless
stated otherwise on Disclosure Schedule 2.20, Spitz is the owner of
all right, title, and interest in and to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use without payment to
a third party all of the Intellectual Property Assets.  Spitz does not infringe upon or unlawfully or
wrongfully use any trademarks, patents, copyrights or trade secrets owned or
claimed by another.  Disclosure Schedule 2.20
lists all confidentiality or non-disclosure agreements to which Spitz or any of
its employees is a party.  No employee,
director, officer or stockholder of Spitz owns, directly or indirectly, in
whole or in part, any Intellectual Property Asset used by Spitz.  Except as set forth on Disclosure Schedule 2.20,
Spitz possesses Confidentiality and Invention Assignment agreements for each of
its employees, agents, and contractors.

 

2.21                           Real
Property.

 

(a)                                  Disclosure
Schedule 2.21 contains a true and correct list of each parcel of real
property owned by Spitz.  Transnational
and Spitz have delivered or made available to E&S copies of the deeds or
other instruments evidencing the ownership of such real property.  Spitz owns, with good and marketable title,
each property that it purports to own, including the property reflected in the
Financial Statements, subject only to those mortgages or liens detailed in the
Financial Statements.

 

(b)                                 Disclosure
Schedule 2.21 also contains a true and correct list of each parcel of
real property leased by Spitz, detailing the expiration date of each lease, and
the monthly rent payable thereunder.  All
of the leases detailed in Disclosure Schedule 2.21 are in full
force and effect, and, to the knowledge of Spitz, no event has occurred which
with the passing of time, the giving of notice, or both, would constitute a
default under any of the leases.

 

(c)                                  Spitz
has not received written notice of any pending or threatened eviction
proceedings, condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
the leased real property, except as set forth in Disclosure Schedule 2.21.  There are no material past due ad valorem or
other real estate taxes, assessments, or other charges affecting the leased
real property.

 

 

2.22                           Material
Contracts and Transactions.  Disclosure
Schedule 2.22 contains a list of all material contracts, agreements,
licenses, permits, arrangements, commitments, instruments, understandings or
contracts, whether written or oral, express or implied, contingent, fixed or
otherwise, to which Spitz is a party (collectively, the “Contracts”).

 

(a)                                  Except
as listed on Disclosure Schedule 2.22, Spitz is not a party to any
written or oral:

 

(i)                                     contract
for the purchase, sale or lease of any capital assets, or continuing contracts
for the purchase or lease of any materials, supplies, equipment, real property
or services;

 

(ii)                                  agreement
regarding sales agency, distributorship, or the payment of commissions;

 

(iii)                               agreement
for the employment or consultancy of any person or entity;

 

(iv)                              note,
debenture, bond, trust agreement, letter of credit agreement, loan agreement,
or other contract or commitment for the borrowing or lending of money, or
agreement or arrangement for a line of credit or guarantee, pledge, or
undertaking of the indebtedness of any other person;

 

(v)                                 agreement,
contract, or commitment for any charitable or political contribution;

 

(vi)                              agreement,
contract, or commitment limiting or restraining Spitz, their business or any
successor thereto from engaging or competing in any manner or in any business
or from hiring any employees, nor is any employee of Spitz subject to any such
agreement, contract, or commitment;

 

(vii)                           material
agreement, contract, or commitment not made in the ordinary course of business;

 

(viii)                        agreement
establishing or providing for any joint venture, partnership, or similar
arrangement with any other person or entity;

 

(ix)                                agreement,
contract or understanding containing a “change in control,” “potential change in
control” or similar provision;

 

(x)                                   agreement,
contract or understanding requiring the guarantee or assurance of Transnational
or any other third party; or

 

(xi)                                power
of attorney or similar authority to act.

 

(b)                                 (A) each
Contract is in full force and effect and (B) there exists no material
breach or violation of or default by Spitz under any Contract nor by any other
party to a Contract, or any event that with notice or the lapse of time, or
both, will create a material breach

 

 

or violation thereof or default
under any Contract by Spitz, nor, to the knowledge of Spitz, by any other party
to a Contract.  Except as listed on Disclosure
Schedule 2.22, the consummation of the transaction contemplated by
this Agreement shall not effect the continuation, validity, and effectiveness
of any Contract.  Except as listed on Disclosure
Schedule 2.22, to the knowledge of Spitz or Transnational, there
exists no actual or threatened termination, cancellation, or limitation of, or
any amendment, modification, or change to (except for the performance thereof
in the ordinary course of business), any Contract.  A true, correct and complete copy (and if
oral, a description of material terms) of each Contract, as amended to date,
has been furnished to E&S.

 

2.23                           Access
to Information.  Transnational and
Spitz have had access to all documents and information about E&S and have
reviewed sufficient information to allow them to evaluate the merits and risks
of the acquisition of the E&S Stock.

 

2.24                           Securities
Acknowledgement.  Transnational
acknowledges and agrees that the E&S Stock has not been registered pursuant
to the Securities Act or any state securities law.  Transnational acknowledges that the E&S
Stock may not be transferred other than pursuant to a valid registration or an
exemption from the registration requirements of the federal or state securities
laws.

 

2.25                           No
Brokers.  Neither Transnational nor
Spitz has incurred any obligation or liability to any party for any brokerage
fees, agent’s commissions, or finder’s fees in connection with the transactions
contemplated by this Agreement for which E&S would be responsible.

 

2.26                           No Inter-Company Claims.  To the knowledge of Spitz, Spitz possesses no
material causes of action, claims, charges, grievances, actions, suits, potential
actions, or potential suits against Transnational.

 

2.27                           Completeness
of Disclosure.  No representation or
warranty by Transnational or Spitz in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be furnished to
E&S pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not materially misleading.

 

2.28                           No
Other Representations or Warranties. 
Except for the representations and warranties of Transnational and Spitz
expressly set forth in this Section 2, neither Transnational nor
Spitz makes any other express or implied representation or warranty.

 

SECTION 3

REPRESENTATIONS AND WARRANTIES OF E&S

 

E&S hereby
represents and warrants to Transnational and Spitz, and acknowledges and agrees
that Transnational and Spitz are relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf of
Transnational or Spitz, as follows:

 

3.1                                 Organization
and Good Standing.  E&S is a
corporation duly organized, validly existing and in good standing under the
laws of Utah and has all requisite corporate power and

 

 

authority to own, lease and
operate its properties and to carry on its business as now being conducted.

 

3.2                                 Authority
and Validity.  E&S has all
requisite corporate power and authority to enter into this Agreement and the
Transaction Documents to which it is a party and to perform its obligations
thereunder and to consummate the transactions contemplated thereby.  The execution and delivery of this Agreement
and each of the Transaction Documents to which it is a party by E&S and the
consummation by E&S of the transactions contemplated thereby, have been
duly authorized by the board of directors of E&S and no other corporate
proceedings on the part of E&S (or its stockholders) are necessary to
authorize such documents or to consummate the transactions contemplated
thereby.  This Agreement has been, and
all the other Transaction Documents to which it is a party when executed and
delivered by E&S as contemplated by this Agreement will be, duly executed
and delivered by E&S and this Agreement is, and the other Transaction
Documents when executed and delivered by E&S as contemplated hereby will
be, the valid and binding obligation of E&S enforceable in accordance with
their respective terms, except (1) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally, and (2) as limited
by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

 

3.3                                 Noncontravention.  Neither the execution, delivery and
performance of the Transaction Documents, nor the consummation of the
transactions contemplated thereby nor compliance with the provisions thereof,
will:

 

(a)                                  Result
in a violation of, cause a default under (with or without notice, lapse of time
or both) or give rise to a right of termination, amendment, cancellation or
acceleration of any material obligation contained in or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties or assets
of E&S under any term, condition or provision of any (x) loan or credit
agreement, note, bond, mortgage or indenture, (y) lease or other material
agreement, or (z) any material permit, or license;

 

(b)                                 Violate
any provision of the articles of incorporation or by-laws of E&S; or

 

(c)                                  Violate
any order, writ, injunction, decree, statute, rule, or regulation of any court or
governmental or regulatory authority applicable to E&S or any of its
properties or assets.

 

3.4                                 SEC
Reports.  E&S has filed all
reports required to be filed by it under the Securities Act of 1933, as amended
(the “Securities Act”) and the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”) for the twelve months preceding the Closing
Date (the foregoing materials being collectively referred to herein as the “SEC
Reports”) on a timely basis or has timely filed a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of
any such extension.  As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Securities and Exchange Commission (the

 

 

“SEC”) promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.  The financial statements of E&S included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
as in effect at the time of filing.  Such
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of E&S as of and for the dates thereof and the results of
operations and cash flows for the periods then ended.

 

3.5                                 Pro
Forma Financial Statements.  E&S
has delivered to Transnational the following financial projections
(collectively, the “Financial Projections”): (i) pro forma
consolidated balance sheet of E&S as of December 31,
2006 and December 31, 2007 and (ii) the related pro forma
consolidated statement of income as of December 31, 2006 and December 31,
2007, which Financial Projections reflect the consummation of the Flight
Simulator Divestiture and the transactions contemplated hereunder.  The Financial Projections (x) were prepared
by management of E&S in good faith and based on good faith estimates and
assumptions believed by management of E&S to be reasonable at the time and
(y) as of the date hereof, to the knowledge of E&S, the assumptions on
which the Financial Projections are based are reasonable and consistent with
all facts known to the management of E&S and such projections are
reasonably based on such assumptions and are considered by management of
E&S to be the most likely financial scenario; provided, however, that
E&S makes no representation to Transnational that such projections are
accurate.  The Parties acknowledge and
agree that various material changes may occur, including  but not limited to the Flight Simulator Divestiture
transaction being terminated, which could make the Financial Projections
inaccurate and irrelevant.  The expenses
related to the flight simulator business of E&S which are eliminated in the
Financial Projections are not anticipated by E&S’s management to be
incurred by E&S or necessary after the Closing of the transactions
contemplated by the Flight Simulator Purchase Agreement in order for E&S to
operate its other business lines in the ordinary course of business.

 

3.6                                 Filings,
Consents and Approvals.  Except as
listed on Disclosure Schedule 3.6, no filing or registration with,
no notice to and no permit, authorization, consent, or approval of any public
or governmental body or authority or other person or entity is necessary for
the consummation by E&S of the transactions contemplated by this Agreement.

 

3.7                                 No
Brokers.  E&S has not incurred
any obligation or liability to any party for any brokerage fees, agent’s
commissions, or finder’s fees in connection with the transactions contemplated
by this Agreement for which Spitz or Transnational would be responsible.

 

3.8                                 Authorization
of Securities; Title to Securities. 
The E&S Stock, when issued and delivered in accordance with this
Agreement shall be validly issued, fully paid, and nonassessable and shall not
be issued in violation of any preemptive rights of E&S’s stockholders.  When the certificates representing the
E&S Stock have been duly delivered in accordance with this Agreement,
Transnational shall receive good title to the E&S Stock.  All such title shall be free and clear of all
pledges, liens, security interests, adverse claims, options,

 

 

rights of any third party, or other encumbrances other than
restrictions on sale, transfer, offer for sale, pledge, hypothecation or other
disposition pursuant to applicable federal and state securities laws.

 

3.9                                 Exemption
from Registration.  Subject to the
accuracy of the representations and warranties of Transnational contained in Sections
2.23 and 2.24 above, the offer and sale of the E&S Stock to
Transnational pursuant to the terms of this Agreement is exempt from the
registration requirements of the Securities Act and rules and regulations
promulgated thereunder.

 

3.10                           Other
Registration Rights.  Except as set
forth in Disclosure Schedule 3.10, E&S is not currently subject
to any agreement providing any person or entity any rights (including piggyback
registration rights) to have any securities of E&S registered with the SEC
or registered or qualified with any other governmental authority.

 

3.11                           Registration
Statement Matters.  E&S meets the
eligibility requirements for use of a Form S-3 Registration Statement for
the resale of the E&S Stock.

 

3.12                           NASDAQ
Listing Matters.  The Common Stock of
E&S is registered and designated for quotation on the Nasdaq Stock Market
under the ticker symbol “ESCC.”  E&S
is not in violation of the listing requirements of the Nasdaq Stock Market and
has no knowledge of any facts which would reasonably lead to delisting or
suspension of E&S’s common stock. 
The issuance and sale of the E&S Stock in accordance with this
Agreement does not contravene the rules and regulations of the Nasdaq
Stock Market.

 

3.13                           Completeness
of Disclosure.  No representation or
warranty by E&S in this Agreement nor any certificate, schedule, statement,
document or instrument furnished or to be furnished to Transnational or Spitz
pursuant hereto contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
herein or therein or necessary to make any statement herein or therein not
materially misleading.

 

3.14                           No
Other Representations or Warranties. 
Except for the representations and warranties of E&S expressly set
forth in this Section 3, E&S does not make any other express or
implied representation or warranty.

 

SECTION 4

CLOSING CONDITIONS

 

4.1                                 Conditions
Precedent to Closing by E&S. 
E&S’s obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the conditions set forth below
and/or the delivery of all of the documents, items, certificates and
instruments described below, all of which documents, items, certificates and
instruments must be in form and substance reasonably satisfactory to E&S,
unless any such condition is waived by E&S at the Closing.  The Closing of the transactions contemplated
by this Agreement will be deemed to mean a waiver of all conditions to Closing.

 

(a)                                  Representations
and Warranties.  The representations
and warranties of Transnational and Spitz set forth in this Agreement will have
been true, correct and complete in all respects as of the date hereof.

 

 

(b)                                 Performance.  All of the covenants and obligations that
Transnational and Spitz are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), must have been
performed and complied with in all material respects.  Transnational and Spitz must have delivered
each of the documents required to be delivered by it pursuant to this Agreement
and all such documents are reasonably satisfactory to E&S.

 

(c)                                  No
Registration or Reports.  Neither
Transnational nor Spitz shall be registered under the Exchange Act, nor shall
Transnational or Spitz be required to file any reports under the Exchange Act
or the Securities Act.

 

(d)                                 Approval
by Transnational’s Shareholders.  The
shareholders of Transnational will have validly approved the transactions
contemplated by this Agreement as required by the Delaware General Corporation
Law.

 

(e)                                  Approval
by Spitz’s Shareholders.  The
shareholder of Spitz will have validly approved the transactions contemplated
by this Agreement as required by the Delaware General Corporation Law.

 

(f)                                    No
Legal Impediment.  No suit, action,
or proceeding will be pending or threatened before any governmental or
regulatory authority wherein an unfavorable judgment, order, decree,
stipulation, injunction or charge would (1) prevent consummation of any of
the transactions contemplated by this Agreement as reasonably determined by
E&S (2) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, or (3) adversely affect the right
of E&S to own, operate or control the business or assets of Spitz.

 

(g)                                 Opinion
of Counsel.  Transnational shall
furnish E&S with an opinion of counsel, dated as of the Closing Date, in
substantially the form of Exhibit C attached to this Agreement.

 

(h)                                 No
Material Adverse Effect.  From the
date hereof to the Closing Date, Spitz shall not have suffered a Material
Adverse Effect caused or contributed by Spitz’s conducting of business other
than in the ordinary course of business (and without the prior consent of
E&S to conduct business other than in the ordinary course) consistent with
past practice.  It is hereby agreed and
understood that for purposes of this Section 4.1(h), a Material
Adverse Effect shall be strictly construed in accordance with the preceding
sentence and, for the avoidance of doubt, shall not result from (x) downward
movements in the stock price of Transnational, (y) adverse changes in the business,
assets or prospects of Spitz incurred in the ordinary course of business
consistent with past practice and not caused, or contributed to by, the actions
of Transnational or Spitz, or (z) adverse changes in the business, assets or
prospects of Spitz arising solely from the announcement of the transactions
contemplated by this Agreement. 
Transnational and Spitz will each have delivered to E&S a
certificate dated as of the Closing Date, to the effect that no Material
Adverse Effect caused or contributed to by Spitz’s conducting of business other
than in the ordinary course of business shall have occurred, or if that is not
the case, including a description of the extent to which such Material Adverse
Effect does exist.

 

 

(i)                                     Bank
Accounts and Loans.  Transnational,
E&S and First Keystone Bank shall have executed and delivered new line of
credit documents on commercially reasonable terms and conditions as
substantially set forth in the commitment letter agreement attached hereto as Exhibit D.

 

4.2                                 Conditions
Precedent to Closing by Transnational and Spitz.  Transnational’s and Spitz’s obligation to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the conditions set forth below and/or the delivery of all of the
documents, items, certificates and instruments described below, all of which
documents, items, certificates and instruments must be in form and substance
reasonably satisfactory to Transnational, unless such condition is waived by
Transnational at the Closing.  The
Closing of the transactions contemplated by this Agreement will be deemed to
mean a waiver of all conditions to Closing.

 

(a)                                  Representations
and Warranties.  The representations
and warranties of E&S set forth in this Agreement will have been true,
correct and complete in all respects as of the date hereof.

 

(b)                                 Performance.  All of the covenants and obligations that
E&S is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants
and obligations (considered individually), must have been performed and
complied with in all material respects. 
E&S must have delivered each of the documents required to be
delivered by it pursuant to this Agreement and all such documents are
reasonably satisfactory to Transnational and Spitz.

 

(c)                                  No
Legal Impediment.  No suit, action,
or proceeding will be pending or threatened before any governmental or
regulatory authority wherein an unfavorable judgment, order, decree, stipulation,
injunction or charge would (1) prevent consummation of any of the
transactions contemplated by this Agreement as reasonably determined by
Transnational (2) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation or (3) adversely affect
the right of Transnational to own the E&S Stock.

 

(d)                                 No
Material Adverse Effect.  From the
date hereof to the Closing Date, E&S shall not have suffered a Material
Adverse Effect caused or contributed by E&S’s conducting of business other
than in the ordinary course of business (and without the prior consent of
Transnational to conduct business other than in the ordinary course) consistent
with past and regular practices, except as otherwise provided in this
Agreement, including but not limited to the Flight Simulator Divestiture.    It is hereby agreed and understood that for
purposes of this Section 4.1(d), a Material Adverse Effect shall be
strictly construed in accordance with the preceding sentence and, for the
avoidance of doubt, a Material Adverse Effect shall not result from (w) the
announcement, consummation, or termination of the Flight Simulator Divestiture,
(x) downward movements in the stock price of E&S, (y) adverse changes in
the business, assets or prospects of E&S in the ordinary course of business
not caused or contributed to by E&S or (z) adverse changes in the business,
assets or prospects of E&S arising solely from the announcement of the
transactions contemplated by this Agreement. 
E&S will have delivered to Transnational and Spitz a certificate
dated as of the Closing Date, to the effect that no Material Adverse Effect
caused or contributed to by E&S’s conducting of business other than in the
ordinary course of business shall have occurred, or if that is not the case,
including a description

 

 

of the extent to which such
Material Adverse Effect does exist. 
Notwithstanding the immediately preceding provisions to the contrary,
Transnational and Spitz agree that E&S intends to pursue the Flight
Simulator Divestiture. Pursuant to the Flight Simulator Purchase Agreement and
the proposed Flight Simulator Divestiture, E&S intends to materially effect
and change the assets, business and affairs of E&S.  Accordingly, neither E&S’s execution of
the Flight Simulator Purchase Agreement, nor the Flight Simulator Divestiture
shall be deemed to constitute activity outside the “ordinary course” for
purposes of this Agreement.

 

4.3                                 Preparation
and Delivery of Proxy Statement. 
E&S shall promptly provide copies to Transnational of the Proxy
Statement (as defined in Section 5.15) and any amendments thereto
which are filed by E&S prior to the Closing Date in connection with the Asset Purchase Agreement (the “Flight
Simulator Purchase Agreement”) between E&S and Rockwell Collins, Inc.
(the “Flight Simulator Prospective Purchaser”) pursuant to which the
Flight Simulator Prospective Purchaser shall purchase, and E&S shall sell,
transfer and assign, substantially all of the flight simulator business of
E&S (such purchase and sale being referred to as the “Flight Simulator
Divestiture”).  The Proxy shall
attach a copy of the Flight Simulator Purchase Agreement, and shall be amended
or updated by E&S as necessary in accordance with the requirements of the
SEC and good corporate practices.

 

SECTION 5

ADDITIONAL COVENANTS OF THE PARTIES

 

5.1                                 Registration
of E&S Stock.  Upon the Closing,
E&S agrees to use its best efforts to fulfill its obligations under the
Registration Rights Agreement in substantially the form attached hereto as Exhibit B
(the “Registration Rights Agreement”). 
The end of the last trading day before the Company seeks effectiveness
of the registration statement pursuant to the Registration Rights Agreement shall
be referred to as the “Registration Date.”

 

5.2                                 Payment
of Accounts Receivable and Expenses

 

(a)                                  Accounts Receivable Primary
Repayment Amount.  Between the date of this Agreement and the
Closing Date, Spitz may transfer to Transnational an amount equal to Five
Hundred Thousand Dollars ($500,000) (or in such lesser amount in accordance
with Section 1.7) in partial payment of the outstanding accounts
receivable payable to Transnational by Spitz (such payment amount being
referred to as the “Accounts Receivable Primary Repayment Amount”).  With the prior written consent of E&S,
which consent shall not be unreasonably withheld, Spitz may borrow the Accounts
Receivable Primary Repayment Amount to be paid to Transnational, provided that (i) any
such loan or borrowing must be immediately re-payable by Spitz or its
successor, and (ii) any fees, interest, or other costs incurred as a
result of, or associated with, such borrowing must be offset against and reduce
the Accounts Receivable Primary Repayment Amount payable to Transnational as
specified above.  Prior to the payment of
the Accounts Receivable Primary Repayment Amount, Transnational shall deliver
to E&S written notice (the “Accounts Receivable Notice”) of (i) the
Accounts Receivable Primary Repayment Amount paid by Spitz to Transnational, (ii) the
form of payment of the Accounts Receivable Primary Repayment Amount, and (iii) if
financed by Spitz, the method of financing of such Accounts Receivable Primary
Repayment Amount together with a request that E&S consent to such financing
in accordance with the preceding sentence.

 

 

(b)                                 Accounts Receivable Costs and
Expenses Repayment Amount.  Spitz shall be permitted to transfer to
Transnational from time to time sufficient cash for Transnational to pay for
its costs and expenses in the ordinary course as incurred (which costs and
expenses shall not exceed Three Hundred Twenty Five Thousand Dollars ($325,000))
between February 21, 2005 and the Closing Date, including, without
limitation, (i) legal fees and disbursements and other costs and expenses
in connection with the transactions contemplated hereby, and (ii) the
payment of up to $5,000 of the legal expenses incurred by Messrs. Shaw and
Dailey in connection with the negotiation of their employment arrangements with
E&S.  Such transfers shall be applied
as payments of the outstanding accounts receivable payable to Transnational by
Spitz (the aggregate amount of such payments being referred to as the “Accounts
Receivable Costs and Expenses Repayment Amount”).

 

(c)                                  No other Transfers.  Except for (x) the payment of the Accounts Receivable
Primary Repayment Amount pursuant to Section 5.2(a) and (y)
the payment of the Accounts Receivable Costs and Expenses Payment Amount
pursuant to Section 5.2(b), Transnational will not take any cash or
other material consideration from Spitz prior to Closing.  The parties agree that, for Tax purposes, the
payment of the Accounts Receivable Primary Repayment Amount and the Accounts
Receivable Costs and Expenses Repayment Amount as contemplated by this Section 5.2
shall be treated as an event independent and separate from the exchange of
Spitz Stock for E&S Stock as contemplated hereby, and that they will take
no action inconsistent with the position that the transfer of the Accounts
Receivable Primary Repayment Amount and the Accounts Receivable Costs and
Expenses Repayment Amount shall be treated as partial repayment of the
outstanding accounts receivable payable to Transnational by Spitz.  The parties hereto agree and acknowledge that
the portion of the accounts receivable payable by Spitz to Transnational remaining
as of the Closing after giving effect to the payment of the Accounts Receivable
Primary Repayment Amount (including any portion that is paid by the issuance of
additional shares of E&S Stock in accordance with Section 1.7) and
the Accounts Receivable Costs and Expenses Repayment Amount shall be
automatically contributed to the capital of Spitz by Transnational immediately
prior to the Closing (and, for the avoidance of doubt, prior to the
effectiveness of the Cross Release).  Such contribution to capital shall be
documented in writing in a form reasonably satisfactory to E&S.

 

5.3                                 Access
and Investigation.

 

(a)                                  Between
the date of this Agreement and the Closing Date, Transnational and Spitz will,
and will cause their respective representatives to, (i) afford E&S and
its representatives access to their personnel, properties, contracts, books and
records, and other documents and data, as reasonably requested by E&S; (ii) furnish
E&S and its representatives with copies of all such contracts, books and
records, and other existing documents and data as E&S may reasonably
request in connection with the transaction contemplated by this Agreement; and (iii) furnish
E&S and its representatives with such additional financial, operating, and
other data and information as E&S may reasonably request.  With the prior consent of Spitz, which
consent will not be unreasonably withheld, E&S and its respective
representatives, may communicate in connection with its examination of Spitz
with any person having business dealings with Spitz.  All of such access, investigation and
communication by E&S and its representatives will be conducted after
reasonable advance notice and in a manner designed not to interfere unduly with
the normal business operations of Transnational or Spitz.

 

 

As an
accommodation to Transnational, unless otherwise agreed by E&S (as provided
below), for a period not to exceed the later of (i) eight months from the
Closing Date; or (ii) two months after registration of the E&S Stock
in accordance with Section 5.1 above, E&S and Spitz will, and will
cause their respective representatives to, afford Transnational and its
representatives access to the books and records, and other documents and data,
related to Transnational (including, without limitation, records and other
information necessary to prepare and file tax returns and other documents
required to be filed with governmental authorities) that is in the possession
or control of Spitz and/or E&S, as reasonably requested by Transnational.  Such information shall be requested and
provided on a “need to know” basis for the purposes of orderly winding up and
dissolving the operations of Transnational, including but not limited to the
preparation and filing of final tax returns and the settlement of any claims or
causes of action against Transnational. 
Notwithstanding the immediately foregoing, additional access to the
books, records, and other documentation of Transnational may be provided for
reasonable purposes upon obtaining the consent of E&S, which consent will
not be unreasonably withheld, conditioned, or delayed.  E&S or Spitz may require Transnational
and its representatives to execute confidentiality agreements, and
Transnational and its representatives shall take reasonable precautions to
maintain the confidentiality of such information.

 

5.4                                 Confidentiality.

 

(a)                                  Between
the date of this Agreement and the Closing Date (or for a period of two years
from the date hereof if the Closing does not occur), Transnational, Spitz and
E&S will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Transnational, Spitz and E&S to maintain
in confidence, and not use to the detriment of another party any written, oral,
or other information obtained in confidence (“Confidential Information”)
from another party in connection with this Agreement or the transactions
contemplated hereby, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of
such information is necessary or appropriate in making any filing or obtaining
any consent or approval required for the consummation of the transaction
contemplated by this Agreement, (c) the furnishing or use of such
information is required by legal proceedings provided that the party making
disclosure provides reasonable advance notice to the other party, or (d) the
furnishing of such information is to professional advisors under a duty of
confidentiality, as necessary to consummate the transactions contemplated by
this Agreement.  Transnational, Spitz and
E&S agree that the Confidential Information will be used solely for the
purposes of evaluating the other parties hereto in connection with the
transactions contemplated in connection with this Agreement and that such
information will not be used or disclosed other than in furtherance of such
purpose under the terms of this Agreement. 
In the event that this Agreement is terminated, then each of the parties
agrees to promptly return any Confidential Information belonging to the other
party.

 

(b)                                 Upon
the Closing and for a period of two years following the Closing, each of
Transnational, Spitz and E&S shall use its best efforts to cause its
directors, officers, employees, agents, and advisors to, (a) hold in
strict confidence and not disclose to any person any and all Confidential
Information and (b) refrain from using any such Confidential Information
for any personal advantage; provided, that each of Transnational, Spitz and
E&S shall be free to disclose and use all or any of such Confidential
Information which can be shown

 

 

to have been a matter of public
knowledge other than as a result of any action or omission by or on behalf of
such party; provided, further, that the provisions of this Section 5.4(b) shall
not bind E&S after the Closing from using any of the information of the
business of Spitz in any respect whatsoever.

 

5.5                                 Public
Announcements.  Transnational, Spitz
and E&S agree that they will not make any public announcements relating to
this Agreement or the transactions contemplated herein without the prior
written consent of the other party, except as may be required upon the written
advice of counsel to comply with applicable laws or regulatory requirements
after consulting with the other party hereto and seeking their consent to such
announcement.

 

5.6                                 Notification.  Between the date of this Agreement and the
Closing Date, each of the parties to this Agreement will promptly notify the
other parties in writing if it becomes aware of any fact or condition that
causes or constitutes a material breach of any of its representations and
warranties as of the date of this Agreement, if it becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
cause or constitute a material breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.  During
the same period, each party will promptly notify the other parties of the
occurrence of any material breach of any of its covenant in this Agreement or
of the occurrence of any event that may make the satisfaction of the conditions
to close in Section 4 impossible or unlikely.

 

5.7                                 Conduct
of Spitz Prior to Closing.  From the
date of this Agreement to the Closing Date or the earlier termination of this
Agreement, other than the consummation of the transactions contemplated by this
Agreement (including, without limitation, the payment of the Accounts
Receivable Primary Repayment Amount and the Accounts Receivable Costs and
Expenses Repayment Amount), Transnational and Spitz agree that Spitz will (i) conduct
its business only in a normal and ordinary course and in substantially the same
manner as historically conducted, (ii) use its best efforts to preserve
intact the business organization and goodwill of Spitz and maintain the
relationships of persons having business relationship with Spitz, (iii) make
no change in its Board of Directors or senior management without the approval
of E&S, (iv) keep E&S advised of developments in its business and
of any significant decisions concerning the operation of its business, (v) not
issue any additional shares of Spitz Stock or any other class of stock,
securities convertible into common stock or any other class of stock, or issue
or grant any option, warrants or rights concerning the same, for consideration
or otherwise or issue any other securities however denominated, (vi) not
make any change to any material agreement or incur any material liabilities
without E&S’s consent, (vii) not pay (except in the ordinary course of
business after disclosing the same to E&S) any bonuses or increases in
compensation to any director, officer or any employee, (viii) not incur
any liability, obligation or indebtedness other than trade payables in the
ordinary course of business or encumber or permit the encumbrance of any
properties or assets of Spitz, without E&S’s consent, (ix) not dispose
of or contract to dispose of any property or assets of Spitz except in the
ordinary course of business consistent with past practice, (x) provide E&S
with interim financial statements, prepared in no event less frequently than
monthly, within thirty (30) days of the end of the applicable month (it being
agreed and understood that, as to monthly interim financial statements that are
not quarterly interim financial statements, revenue will be shown as $0.00
because Spitz only

 

 

calculates revenue under the
cost of completion method on a quarterly basis), or (xi) enter into any related
party transaction other than as permitted by this Agreement.

 

5.8                                 Disclosure
Schedule Update.  Transnational
and Spitz shall update, as necessary, each Disclosure Schedule prepared by
Transnational or Spitz and attached to this Agreement, between the date of this
Agreement and the Closing Date to reflect information that would be required to
be set forth on said Disclosure Schedule in order for the representations
and warranties contained in the corresponding section of this Agreement to
be true and correct on and as of the date of such updated Disclosure Schedule (it
being agreed and understood that such representations and warranties are not
being made on and as of such date).

 

5.9                                 Non-Competition.  As a material inducement to E&S’s
entering into this Agreement and its acquisition of Spitz, Transnational agrees
that for a period of three years following the Closing Date, without the prior
written consent of E&S, it will not as a principal or agent, or through any
person, company, partnership, association or other entity:

 

(a)                                  employ,
engage or seek to employ or engage any person who is employed or engaged by
Spitz or E&S;

 

(b)                                 cause
or attempt to cause any supplier, customer, client, employee, consultant,
officer, director or person having a business relationship with Spitz or
E&S to terminate or materially reduce its relationship with either Spitz or
E&S; or

 

(c)                                  participate
or engage in (other than through the ownership of 5% or less of any class of
securities registered under the Securities Exchange Act of 1934, as amended) or
assist, financially or otherwise any person who participates or who is engaged
in, the business or activities of Spitz as conducted immediately prior to the
date of this Agreement, including but not limited to the activities of
designing, manufacturing or producing planetarium theaters, simulators,
projection domes, architectural domes, entertainment theaters, or custom
theater attractions.  The parties
recognize that the law and public policies of the various states of the United
States may differ as to the validity and enforceability of covenants similar to
those set forth in this Section 5.8.  It is the intention of the parties that the
provisions of this Section 5.8 be enforced to the fullest extent
permissible under the law and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the modification
to conform to such laws or policies) of any provisions of this section will
not render unenforceable, or impair, the remainder of the provisions of this
section.  The parties further agree that
any remedy at law for any violation of the provisions of this section would
be inadequate, and Transnational hereby consent to the granting by any court of
an injunction or other equitable relief without the necessity of actual
monetary loss being provided, in order that the breach or threatened breach of
such provisions may be effectively restrained.

 

5.10                           Employee Matters.

 

(a)                                  On
and after the Closing Date, E&S shall, or shall cause Spitz to, promptly
pay or provide when due all compensation and benefits as provided pursuant to
the terms of, and to honor in accordance with their currently existing terms
(except to the extent amended or terminated in accordance with such terms), all
compensation arrangements, employment

 

 

agreements and employee or
director benefit plans, programs and policies which are in existence and
disclosed to E&S as of the date hereof for all employees (and former
employees) and directors (and former directors) of Spitz.  Nothing in this Section 5.9 shall
be deemed or construed to (i) create any direct or indirect rights to the
employees, officers, or directors of Spitz, (ii) require the continued
employment of any person, or (iii) preclude E&S or Spitz (following
the Closing Date) from entering into employment agreements or instituting
benefits plans for Spitz similar to those agreements and benefits plans
currently offered by E&S to its employees.

 

(b)                                 Employees
of Spitz who continue as employees of E&S or Spitz after the Closing shall
be given credit for all service with Spitz and Transnational, to the same
extent as such service was credited for such purpose by Spitz, under each
employee benefit plan, program, or arrangement of E&S and/or its
subsidiaries in which such employees are eligible to participate for all
purposes, except for purposes of benefit accrual, under defined benefit pension
plans, and, in all cases, except to the extent such credit would result in
duplication of benefits, or except to the extent that any such benefits have
been frozen or terminated.  If employees
of Spitz become eligible to participate in a medical, dental or health plan of
Spitz, E&S or its other subsidiaries, E&S shall cause such plan to (i) waive
any preexisting condition limitations for conditions covered under the
applicable medical, health or dental plans of Spitz and/or Transnational for
employees and their beneficiaries enrolled in such plans of Spitz on the
Closing Date; and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation (e.g.,
if converted to E&S medical plan effective March 1, 2006, Spitz
employees would be given credit for deductible and out-of-pocket expenses
incurred in January and February 2006).  Notwithstanding the foregoing, in no event
shall the employees be entitled to any credit for service, deductibles or out
of pocket expenses to the extent that it would result in a duplication of
benefits with respect to the same period of service, deductible or out of
pocket expenses.

 

(c)                                  Employees
of Spitz whose employment is not continued by E&S shall be entitled to such
termination compensation and benefits as in place as of the date of this
Agreement, and shall not be entitled to compensation under any plan maintained
by E&S.

 

(d)                                 Employees
of Spitz who are to be employed by E&S shall be required to execute E&S’s
standard employment forms, including but not limited to, Confidentiality and
Invention agreements.

 

5.11                           Reservation
of E&S Stock Shares.  In order to
secure the rights of E&S pursuant to those indemnification provisions
contained in Section 7 below, Transnational covenants and agrees to
hold, and to refrain from transferring, pledging, or otherwise encumbering, that
number of shares of the E&S Stock calculated by dividing One Million
Dollars ($1,000,000) by the 60 Day Average defined above, which shares shall be
held for a period of six (6) months following the Closing Date.  Such shares shall be held by Transnational,
free and clear of any liens, in order to offset and satisfy any Losses (as that
term is defined in Section 7 below).  If any action or proceeding is instituted by
E&S pursuant to the terms of this Agreement prior to the expiration of the
six (6) months following the Closing Date, Transnational agrees to hold
such shares of the E&S Stock as reasonably required in order to resolve
such arbitration, action or proceeding.

 

 

5.12                           Responsibility
for Filing Tax Returns.  E&S
shall prepare or cause to be prepared in accordance with past practices and
applicable tax statutes, laws, and regulations, and shall file or cause to be
filed all income Tax Returns for Spitz which are required to be filed after the
Closing Date pursuant to applicable tax laws, other than income Tax Returns
with respect to periods for which a consolidated, unitary or combined income
Tax Return of Transnational will include the operations of Spitz.  Any consolidated, unitary, or combined income
Tax Return to be filed by Transnational shall be filed in accordance with past
practices.  E&S shall permit
Transnational to review and comment on each such income Tax Return described in
the preceding sentence prior to filing and shall make such revisions to such
income Tax Returns as are reasonably requested by Transnational.

 

5.13                           Tax
Reorganization; Consistent Tax Treatment. 
The parties to this Agreement agree to treat the transaction
contemplated by this Agreement and the Transaction Documents as a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Code for U.S.
Tax purposes.  None of the parties to
this Agreement shall take any action inconsistent with this Section 5.13,
except as otherwise required by law or determination of the Internal Revenue
Service.  In any proceeding related to
the determination of any Tax, none of E&S, Spitz nor Transnational shall
contend or represent that such treatment is not the correct treatment.  Notwithstanding any provision of this
Agreement to the contrary, Transnational agrees to indemnify and hold E&S
harmless from any Losses (as defined in Section 7.1 below) incurred as a
result of Transnational’s reorganization pursuant to Section 368(a)(1)(C) of
the Code.

 

5.14                           Transfer
Restrictions.  Transnational hereby
authorizes E&S to place the following legend denoting the restriction on
the E&S Stock:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY STATE
SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE
HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY
PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND RULES.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
(AND/OR THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE HEREOF) MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

In addition,
Transnational agrees that E&S may place stop transfer orders with its transfer
agent with respect to such certificates in order to implement the restrictions
on transfer set forth in this Agreement. 
The legend set forth above shall be removed and E&S shall issue a
certificate without such legend to the holder of the E&S Stock upon which
it is stamped, if, unless otherwise required by state securities laws, (i) such
shares of E&S Stock are registered for resale under the Securities Act, (ii) such
holder provides E&S with an opinion of counsel, in a form

 

 

reasonably acceptable to
E&S, to the effect that a sale, assignment or transfer of the E&S Stock
may be made without registration under the Securities Act and the transferee
agrees to be bound by the terms and conditions of this Agreement, or (iii) such
holder provides E&S with reasonable assurances (in the form of seller and
broker representation letters) that the E&S Stock can be sold pursuant to Rule 144
of the Securities Act.  Following the
date the Registration Statement (as defined in the Registration Rights
Agreement) is declared effective by the SEC or at such earlier time as a legend
is no longer required, E&S will no later than three (3) business days
following the receipt by E&S’s transfer agent of a legended certificate
from such holder representing such holder’s shares of E&S Stock, deliver or
cause to be delivered to such holder a certificate representing such shares of
E&S Stock that is free from all restrictive and other legends.

 

5.15                           Preparation
and Delivery of Proxy Statement.

 

(a)                                  E&S
shall prepare and file with the SEC proxy materials, and any amendments or
supplements thereof relating to the matters to be submitted to the holders of
the Common Stock of E&S in connection with the Flight Simulator Divestiture
and, to the extent applicable, the transactions contemplated hereunder (such
proxy statement, and any amendments or supplements thereto, are collectively
referred to herein as the “Proxy Statement”).  E&S shall promptly provide copies to
Transnational of the Proxy Statement (and all amendments and supplements
thereto) upon filing with the SEC. 
Transnational and Spitz shall cooperate and promptly provide E&S
with all information regarding Transnational and Spitz as E&S shall
reasonably request in connection with the filing or approval of the Proxy
Statement.

 

(b)                                 In
the event that the Flight Simulator Purchase Agreement is terminated in
accordance with its terms, E&S shall promptly deliver a copy of any Proxy
filed with the SEC, as well as a written notice to Transnational (the “Flight
Simulator Divestiture Termination Notice”) (x) stating that the Flight
Simulator Purchase Agreement has been terminated, and (y) setting forth the
reasons for the termination.  For the
avoidance of doubt, upon the delivery of the Flight Simulator Divestiture
Termination Notice, E&S shall have no further obligations under Section 5.15(a) to
the extent that stockholder consent is not required in connection with the
transactions contemplated hereunder.

 

5.16                           Transnational
Consent Solicitation.  Upon receipt
of the first draft of the Proxy Statement filed with the SEC or the Flight
Simulator Termination Notice from E&S pursuant to Section 5.15
above, Transnational and Spitz shall promptly prepare and deliver a consent
solicitation to each entity’s stockholders and use commercially reasonable
efforts to obtain the shareholders’ consent, which consent solicitation shall
seek the consent of the stockholders to the transaction contemplated hereunder.
Transnational shall promptly provide copies to E&S of the consent
solicitation (and all amendments and supplements thereto) upon delivery to the
stockholders of Transnational, and the consent solicitation shall constitute
valid consent under Transnational’s bylaws.

 

5.17                           Transnational
Post-Closing Officer Letter Agreements. 
E&S acknowledges and agrees that Jon Shaw and Paul Dailey shall
continue to serve as officers of Transnational after the Closing pursuant to
their respective Transnational Post-Closing Officer Letter Agreement in such
capacity as described in Section 1.4 above.  E&S hereby further agrees that after the
Closing it shall not directly or indirectly prevent, or otherwise interfere
with, the satisfaction of

 

 

the obligations of Messrs. Shaw
and Dailey under their respective Transnational Post-Closing Officer Letter
Agreement.  Transnational covenants and
agrees to procure or maintain fully-paid insurance policies providing Directors
and Officers and Errors and Omission coverage for Messrs. Shaw’s and
Dailey’s work on behalf of Transnational following Closing (“Post-Closing Insurance”).  Such Post-Closing Insurance shall be in
amounts and upon terms reasonably agreeable to E&S in accordance with
E&S’s insurance policies and procedures.

 

SECTION 6

TERMINATION

 

6.1                                 Termination.  This Agreement may be terminated at any time
prior to the Closing Date by:

 

(a)                                  mutual
agreement in writing of Transnational and E&S;

 

(b)                                 Transnational,
upon written notice to E&S, if any of the conditions set forth in Section 4.2
will not be able to be fulfilled by E&S on or before the Termination Date

 

(c)                                  E&S,
upon written notice to Transnational, if any of the conditions set forth in Section 4.1
will not be able to be fulfilled on or before the Termination Date

 

(d)                                 Transnational
or E&S, upon written notice to the other, if any permanent injunction or other
order of a governmental entity of competent authority preventing the
consummation of the transactions contemplated by this Agreement has become
final and non-appealable.

 

(e)                                  Transnational
or E&S, upon written notice to the other, if for any reason the Closing has
not occurred within three (3) months of the date of this Agreement (the “Termination
Date”).

 

6.2                                 Effect
of Termination.  In the event of the
termination of this Agreement as provided in Section 6.1, this
Agreement will be of no further force or effect; provided, however,
that no termination of this Agreement will relieve any party of liability for
any breach of this Agreement that is based on a wrongful refusal or failure to
perform any obligations or for any covenant that by its nature survives
termination of this Agreement.

 

SECTION 7

INDEMNIFICATION; REMEDIES; SURVIVAL

 

7.1                                 Certain
Definitions.  For the purposes of
this Section 7, the terms “Loss” and “Losses” means
any and all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs, and expenses, including without limitation,
interest, penalties, fines and reasonable attorneys’, accountants’ and other
professional fees and expenses, but excluding any indirect, consequential or
punitive damages suffered by E&S, Transnational, or Spitz including damages
for lost profits or lost business opportunities.

 

7.2                                 Agreement
of Transnational to Indemnify E&S. 
From and after the Closing, subject to the terms and conditions of this Section 7,
Transnational will indemnify, defend, and

 

 

hold harmless E&S, its
officers, directors, shareholders, employees, counsel and affiliates from,
against, and in respect of any and all Losses asserted against, relating to,
imposed upon, or incurred by E&S by reason of, resulting from, based upon
or arising out of:

 

(a)                                  the
breach by Transnational or Spitz of any representation or warranty of
Transnational or Spitz contained in or made pursuant to this Agreement, any
Transaction Document or certificate or instrument delivered pursuant to this
Agreement; and

 

(b)                                 the
breach or partial breach by Transnational or Spitz of any covenant or agreement
of Transnational or Spitz made in or pursuant to this Agreement, or any
Transaction Document or other certificate or instrument delivered pursuant to
this Agreement.

 

7.3                                 Agreement
of E&S to Indemnify Transnational. 
From and after the Closing, subject to the terms and conditions of this Section 7,
E&S will indemnify, defend, and hold harmless Transnational, its officers,
directors, shareholders, employees, counsel and affiliates from, against, and
in respect of any and all Losses asserted against, relating to, imposed upon,
or incurred by Transnational by reason of, resulting from, based upon or
arising out of:

 

(a)                                  the
breach by E&S of any representation or warranty of E&S contained in or
made pursuant to this Agreement, any Transaction Document or certificate or
instrument delivered pursuant to this Agreement; and

 

(b)                                 the
breach or partial breach by E&S of any covenant or agreement of E&S made
in or pursuant to this Agreement, or any Transaction Document or other
certificate or instrument delivered pursuant to this Agreement.

 

7.4                                 Procedures
for Indemnification.  As used herein,
the term “Indemnitor” means the party against whom indemnity hereunder
is sought, and the term “Indemnitee” means the party seeking
indemnification hereunder.

 

(a)                                  A
claim for indemnification hereunder (“Indemnification Claim”) must be
made by Indemnitee by delivery of a written notice to Indemnitor requesting
indemnification and specifying the basis on which indemnification is sought and
the amount of asserted Losses and, in the case of a Third Party Claim (as
defined in Section 7.5), containing such other information as
Indemnitee has concerning such Third Party Claim.

 

(b)                                 If
the Indemnification Claim involves a Third Party Claim, the procedures set
forth in Section 7.5 hereof must be observed by Indemnitee and
Indemnitor.

 

(c)                                  If
the Indemnification Claim involves a matter other than a Third Party Claim,
Indemnitor will have 30 business days to object to such Indemnification Claim
by delivery of a written notice of such objection to Indemnitee specifying in
reasonable detail the basis for such objection. 
Failure to timely so object will constitute acceptance of the Indemnification
Claim by Indemnitor and the Indemnification Claim will be paid in accordance
with Section 7.4(d).  If an
objection is timely interposed by Indemnitor and the dispute is not resolved
within 30 business days from the date Indemnitee receives such objection, such
dispute may be resolved in accordance with Section 8.12 hereof.

 

 

(d)                                 Upon
a final determination of the amount of an Indemnification Claim, whether by
agreement between Indemnitor and Indemnitee or by a court of competent
jurisdiction, Indemnitor will pay the amount of such finally determined
Indemnification Claim within ten days of the date such amount is determined.

 

7.5                                 Defense
of Third Party Claims.  Should any
claim be made, or suit or proceeding (including, without limitation, a binding
arbitration or an audit by any taxing authority) be instituted by a third party
against Indemnitee which, if prosecuted successfully, would be a matter for
which Indemnitee is entitled to indemnification under this Agreement (a “Third
Party Claim”), the obligations and liabilities of the parties hereunder
with respect to such Third Party Claim will be subject to the following terms
and conditions:

 

(a)                                  Indemnitee
must give Indemnitor written notice of any such claim promptly after receipt by
Indemnitee of actual notice thereof, and Indemnitor shall undertake the defense
thereof by representatives of its own choosing reasonably acceptable to
Indemnitee.  If Indemnitor undertakes the
defense of such claim, Indemnitor will have the exclusive right to defend,
contest and litigate the Third Party Claim, and the exclusive right, subject to
the terms of Section 7.6 below, in its discretion, in good faith,
and upon the advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such terms as its
deems fair and reasonable; provided that at least 10 days prior written notice
of the intended settlement must be provided to Indemnitee.  If, however, Indemnitor fails or refuses to
undertake the defense of such claim within 30 business days after written
notice of such claim has been given to Indemnitor by Indemnitee, Indemnitee
will have the right to undertake the defense, compromise and settlement of such
claim with counsel of its own choosing. 
In the circumstances described in the preceding sentence, Indemnitee
will, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 7.4(a).

 

(b)                                 Indemnitee
and Indemnitor will cooperate with each other in all reasonable respects in
connection with the defense of any Third Party Claim, including making
available records relating to such claim and furnishing, without expense to
Indemnitor, management employees of Indemnitee as may be reasonably necessary
for the preparation of the defense of any such claim or for testimony as
witness in any proceeding relating to such claim.

 

7.6                                 Settlement
of Third Party Claims.  In connection
with any settlement of a Third Party Claim negotiated by Indemnitor, Indemnitee
will not be required to take any of the following actions:

 

(a)                                  enter
into any settlement that does not include the delivery by the claimant or
plaintiff to Indemnitee of an unconditional release from all liability with
respect to the Third Party Claim.

 

(b)                                 enter
into any settlement that requires Indemnitee to take any affirmative action as
a condition of the settlement.

 

(c)                                  consent
to the entry of judgment that does not include a full dismissal of the
litigation or proceedings against Indemnitee with prejudice.

 

 

7.7                                 Limitations
of Liability.

 

(a)                                  The
parties agree that Transnational’s and Spitz’s possible liability under Section 7.2(a) and
E&S’s possible liability under Section 7.3(a) will be
expressly limited to an amount not to exceed One Million Dollars ($1,000,000.00).

 

(b)                                 No
claims for indemnification under Sections 7.2(a) or 7.3(a) will
be made after that date which is six (6) months after the date of the
Closing Date.

 

7.8                                 Survival
of Representations and Warranties and Covenants.  The representations and warranties made by
the parties will survive the Closing for a period of six (6) months from
the Closing Date.

 

7.9                                 Net
Losses; Subrogation; Mitigation.

 

(a)                                  Notwithstanding
anything contained herein to the contrary, the amount of any Losses incurred or
suffered by an Indemnitee shall be calculated after giving effect to (i) any
insurance proceeds received by the Indemnitee (or any of its affiliates) with
respect to such Losses and (ii) any recoveries obtained by the Indemnitee
(or any of its affiliates) from any other third party.  Each Indemnitee shall exercise reasonable
best efforts to obtain such proceeds, benefits and recoveries.  If any such proceeds, benefits or recoveries
are received by an Indemnitee (or any of its affiliates) with respect to any Losses
after an Indemnitor has made a payment to the Indemnitee with respect thereto,
the Indemnitee (or such affiliate) shall pay to the Indemnitor the amount of
such proceeds, benefits or recoveries (up to the amount of the Indemnitor’s
payment).

 

(b)                                 Upon
making any payment to an Indemnitee in respect of any Losses, the Indemnitor
shall, to the extent of such payment, be subrogated to all rights of the
Indemnitee (and its affiliates) against any third party in respect of the
Losses to which such payment relates. 
Such Indemnitee (and its affiliates) and Indemnitor shall execute upon
request all instruments reasonably necessary to evidence or further perfect
such subrogation rights.

 

(c)                                  To
the extent that any breach of any representation or warranty contained in this
Agreement or any other provision of this Agreement is capable of remedy, the
Indemnitee shall afford the Indemnitor a reasonable opportunity to remedy the
matter complained of.

 

7.10                           Exclusive
Remedy.  The parties hereby agree
that, notwithstanding any provision in this Agreement to the contrary, the
foregoing provisions of this Section 7 shall be the sole and
exclusive means of recovery of a party hereto or any other person or entity
entitled to indemnification under this Section 7 with respect to
any claim made hereunder, and shall preclude the exercise of any other rights
or remedies available to a party hereto or any other person or entity
hereunder.  Notwithstanding the
foregoing, the indemnification provisions of this Section 7 do not
limit (i) any other potential remedies of any party with respect to fraud
or willful misrepresentation or (ii) any party’s ability to seek specific
performance or injunctive or other equitable relief.

 

 

SECTION 8

MISCELLANEOUS PROVISIONS

 

8.1                                 Effectiveness
of Representations.  Each party is
entitled to rely on the representations, warranties and agreements of each of
the other parties and all such representation, warranties and agreement will be
effective regardless of any investigation that any party has undertaken or
failed to undertake.

 

8.2                                 Knowledge
Defined.  As used herein, the term “knowledge”
shall refer only to the actual knowledge of the person or party
referenced.  An entity will be deemed to
have “knowledge” of a particular fact or other matter if any individual who is
serving as a director, president, vice president, secretary, or treasurer of
such entity (or in any similar capacity) has knowledge of such fact or other
matter.

 

8.3                                 Further
Assurances.  Each of the parties
hereto will cooperate with the others and execute and deliver to the other
parties hereto such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence, and confirm the intended purposes of this
Agreement.

 

8.4                                 Amendment.  This Agreement may not be amended except by
an instrument in writing signed by each of the parties.

 

8.5                                 Expenses.  Except for those expenses of Transnational
that may be paid by Spitz pursuant to Section 5.2 hereof, each
party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
agents, representatives, counsel, and accountants.

 

8.6                                 Entire
Agreement.  This Agreement, the
exhibits, schedules attached hereto and the other Transaction Documents contain
the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior arrangements and understandings, both written
and oral, expressed or implied, with respect thereto.  The Letter of Intent between E&S, Spitz,
and Transnational dated February 21, 2005 as well as any preceding
correspondence or offers is expressly superseded and terminated by this
Agreement.

 

8.7                                 Severability.  It is the desire and intent of the parties
that the provisions of the Transaction Documents be enforced to the fullest
extent permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. 
Accordingly, in the event that any provision of the Transaction
Documents would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, will be
ineffective, without invalidating the remaining provisions of the Transaction
Documents or affecting the validity or enforceability of such provision in any
other jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly construed so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it will, as to such
jurisdiction, be so narrowly construed, without invalidating the remaining
provisions of the Transaction Documents or affecting the validity or enforceability
of such provision in any other jurisdiction.

 

 

8.8                                 Notices.  All notices and other communications required
or permitted under to this Agreement must be in writing and will be deemed
given if sent by personal delivery, faxed with electronic confirmation of
delivery, nationally-recognized overnight courier or registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as will be specified
by like notice):

 

If to
Transnational or Spitz (prior to the Closing):

 

Transnational
Industries, Inc.

U.S. Route 1
and Brandyvine Drive

Chadds Ford,
Pennsylvania 19317

	
  Attention:

  	
   

  	
  Jon Shaw

  
	
  Telephone:

  	
   

  	
  (610) 459-5200

  
	
  Facsimile:

  	
   

  	
  (610) 459-3830

  

 

With a copy
(which will not constitute notice) to:

 

Finn Dixon &
Herling LLP

One Landmark
Square, Suite 1400

Stamford,
Connecticut 06901

	
  Attention:

  	
   

  	
  David I.
  Albin, Esq.

  
	
  Telephone:

  	
   

  	
  (203) 325-5031

  
	
  Facsimile:

  	
   

  	
  (203) 348-5777

  

 

If to E&S
or Spitz (after the Closing):

 

Evans &
Sutherland Computer Corporation

600 Komas
Drive

Salt Lake
City, Utah 84108

	
  Attention:

  	
   

  	
  David H.
  Bateman

  
	
  Telephone:

  	
   

  	
  (801) 588-1000

  
	
  Facsimile:

  	
   

  	
  (801) 588-4500

  

 

With a copy
(which will not constitute notice) to:

 

Powell
Goldstein LLP

901 New York
Avenue, N.W.

Third Floor

Washington,
D.C. 20001

	
  Attention:

  	
   

  	
  J.
  Christopher Rodgers, Esq.

  
	
  Telephone:

  	
   

  	
  (202) 347-0066

  
	
  Facsimile:

  	
   

  	
  (202) 624-7222

  

 

All such
notices and other communications will be deemed to have been received (a) in
the case of personal delivery, on the date of such delivery, (b) in the
case of a fax, when the party sending such fax has received electronic
confirmation of its delivery, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch
and (d) in the case of mailing, on the third business day following
mailing.

 

 

8.9                                 Headings.  The headings contained in this Agreement are
for convenience purposes only and will not affect in any way the meaning or
interpretation of this Agreement.

 

8.10                           Benefits.  This Agreement is and will only be construed
as for the benefit of or enforceable by those persons party to this Agreement.

 

8.11                           Assignment.  This Agreement may not be assigned (except by
operation of law) by any party without the consent of the other parties.

 

8.12                           Governing
Law; Jurisdiction; Service of Process.

 

(a)                                  This
Agreement will be governed by and construed in accordance with the laws of the
State of Delaware applicable to contracts made and to be performed therein
without giving effect to conflict of laws principles thereof.

 

(b)                                 Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in the
courts of the States of Delaware, or, if it has or can acquire federal
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties to this Agreement consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or proceeding
and waives any objection to venue laid therein.

 

(c)                                  Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.

 

8.13                           Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.  Any reference to any federal, state, local,
or foreign statute or law will be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.  The parties intend that each representation,
warranty, and covenant contained herein will have independent
significance.  If any party has breached
any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating
to the same subject matter (regardless of the relative levels of specificity)
which the party has not breached will not detract from or mitigate the fact
that the party is in breach of the first representation, warranty, or
covenant.  The disclosures in the
Disclosure Schedules hereto, and those in any supplement thereto, shall
expressly refer to a section of this Agreement; provided, however,
that any fact or circumstance disclosed with respect to a particular section shall
likewise be deemed to be a disclosure with respect to another section if
the relevance of the facts or circumstances disclosed is reasonably apparent on
its face to such other section.

 

8.14                           Third
Party Beneficiaries.  Except as expressly
set forth in Section 7.2, Section 7.3 and this Section 8.14,
this Agreement shall not confer any rights or remedies upon any

 

 

individual or entity other than
the parties hereto and their respective successors and permitted assigns,
personal representatives, heirs and estates, as the case may be.

 

8.15                           Counterparts.  This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

8.16                           Facsimile
Execution.  This Agreement may be
executed by delivery of executed signature pages by fax and such fax
execution will be effective for all purposes.

 

8.17                           Schedules
and Exhibits.  The following
schedules and exhibits are attached to this Agreement and incorporated herein.

 

	
  Disclosure Schedule 2.5

  	
   

  	
  No Spitz
  Subsidiaries

  
	
  Disclosure Schedule 2.6

  	
   

  	
  Noncontravention

  
	
  Disclosure Schedule 2.7

  	
   

  	
  Legal
  Proceedings

  
	
  Disclosure Schedule 2.9

  	
   

  	
  Filings,
  Consents, and Approvals

  
	
  Disclosure Schedule 2.10

  	
   

  	
  Spitz
  Financial Statements

  
	
  Disclosure Schedule 2.11

  	
   

  	
  Bank
  Accounts

  
	
  Disclosure Schedule 2.12

  	
   

  	
  Undisclosed
  Liabilities

  
	
  Disclosure Schedule 2.13

  	
   

  	
  Tax Matters

  
	
  Disclosure Schedule 2.14

  	
   

  	
  Absence of
  Changes and Events

  
	
  Disclosure Schedule 2.15

  	
   

  	
  Personal
  Property

  
	
  Disclosure Schedule 2.16

  	
   

  	
  Related
  Entities

  
	
  Disclosure Schedule 2.18

  	
   

  	
  Labor

  
	
  Disclosure Schedule 2.19

  	
   

  	
  Benefit Plans

  
	
  Disclosure Schedule 2.20

  	
   

  	
  Intellectual
  Property

  
	
  Disclosure Schedule 2.21

  	
   

  	
  Real
  Property

  
	
  Disclosure Schedule 2.22

  	
   

  	
  Material
  Contracts

  
	
  Disclosure Schedule 3.6

  	
   

  	
  E&S
  Filings, Consents and Approvals

  
	
  Disclosure Schedule 3.10

  	
   

  	
  Other
  Registration Rights

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Cross
  Release

  
	
  Exhibit B

  	
   

  	
  Registration
  Rights Agreement

  
	
  Exhibit C

  	
   

  	
  Opinion

  
	
  Exhibit D

  	
   

  	
  First
  Keystone Commitment Letter Agreement

  
	
  Exhibit E

  	
   

  	
  E&S
  Stock Calculation

  
					

 

[Signatures
begin on the following page.]

 

 

	
  EXECUTED on February 7,
  2006.

  
	
   

  	
   

  
	
   

  	
  E&S:

  	
   

  
	
   

  	
   

  
	
   

  	
  EVANS & SUTHERLAND COMPUTER CORPORATION,

  
	
   

  	
  A Utah
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  David A. Bateman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David A.
  Bateman

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRANSNATIONAL:

  
	
   

  	
   

  
	
   

  	
  TRANSNATIONAL INDUSTRIES, INC.,

  
	
   

  	
  A Delaware
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  

  	
  Johnathan
  Shaw

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Johnathan
  Shaw

  
	
   

  	
   

  	
  Title:

  	
  President/CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SPITZ:

  
	
   

  	
   

  
	
   

  	
  SPITZ, INC.,

  
	
   

  	
  A Delaware
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  

  	
  Johnathan
  Shaw

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Johnathan
  Shaw

  
	
   

  	
   

  	
  Title:

  	
  President/CEOExhibit 10.1

 

SEPARATION
AGREEMENT AND RELEASE

 

THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement
and Release”) is made and entered into as of the 8th day of February, 2006, by
and between Kaiser Group Holdings, Inc., a Delaware corporation (the “Company”),
and Marian P. Hamlett, an individual (the “Executive”) (hereinafter
collectively referred to as the “Parties”).

 

WHEREAS, the Company and the Executive have agreed
that the Executive will resign from her position as Executive Vice-President
and Chief Financial Officer of the Company and thereby terminate her employment
relationship with the Company under the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the foregoing, the
mutual promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties, intending
to be legally bound, agree as follows:

 

1.             (a) 
The Executive agrees to resign her position as Executive Vice-President and
Chief Financial Officer of the Company effective March 31, 2006 (the “Separation
Date”).  Subject to the Executive’s
compliance with the terms of this Agreement and Release, and subject to the
Executive’s not revoking her agreement to the provisions hereof during the
revocation period set forth in Paragraph 16, the Company will continue to
employ the Executive, at her current salary, as Executive Vice-President and
Chief Financial Officer of the Company until the Separation Date, and to pay
the Executive all amounts earned or accrued through the Separation Date,
including (i) base salary, and (ii) reimbursement for any and all
monies advanced or expenses incurred in connection with the Executive’s
employment for reasonable and necessary expenses incurred by the Executive on
behalf of the Company for the period ending on the Separation Date within thirty (30) days after the
Separation Date.

 

(b)           Subject
to the Executive’s compliance with the terms of this Agreement and Release, and
subject to the Executive’s not revoking her agreement to the provisions hereof
during the revocation period set forth in Paragraph 16, the Company shall pay
the Executive the sum of $35,000 on the 16th day of February, 2006, which is
the eighth (8th) day following the execution of this Agreement and Release.

 

(c)           Subject
to the Executive’s compliance with the terms of this Agreement and Release, and
the Executive’s execution of the addendum attached hereto as Exhibit A
(the “Addendum”) on or within twenty one (21) days following the Separation
Date, the Company agrees to provide the Executive with the additional payments
set forth in the Addendum.  Regardless of
whether the Executive executes the Addendum, the provisions of Paragraphs 1(a) and
1(b) and Paragraphs 2 through 22 of this original Agreement and Release
will remain in full force and effect.

 

2.             All
benefits shall cease upon the Separation Date; provided, however, that the
Executive may by timely election continue health insurance coverage under the
provisions of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) at
her own expense.  (The Executive is
entitled to continue health insurance coverage at her own expense under the
provisions of COBRA whether or not this Agreement and Release is signed.  A separate notice will be provided to the
Executive outlining her rights under that law, which are not dependent upon the
execution of this Agreement and Release.)

 

 

3.             The
Company shall withhold from any benefits payable under this Agreement and
Release all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling; provided however, that
Executive is solely responsible for the payment of all personal federal, state,
city or other taxes, and Executive agrees not to seek reimbursement or indemnification
from the Company for any such personal taxes, that may be due from her as a
result of the benefits payable under this Agreement and Release, including but
not limited to any tax amounts exceeding those withheld by the Company.

 

4.             (a)           In return for the Company’s agreement
to provide the Executive with the consideration referred to in Paragraph 1(b),
the Executive, for herself and her heirs, beneficiaries, devisees, privies,
executors, administrators, attorneys, representatives, and agents, and her and
their assigns, successors and predecessors, hereby releases and forever
discharges the Company, its subsidiaries and its affiliates, its and their
officers, directors, employees, members, agents, attorneys and representatives,
and the predecessors, successors and assigns of the foregoing (collectively,
the “Released Parties”) of and from any and all actions, causes of action,
suits, debts, claims, complaints, charges, contracts, controversies,
agreements, promises, damages, counterclaims, cross-claims, claims for
contribution and/or indemnity, claims for costs and/or attorneys’ fees,
judgments and demands whatsoever, in law or in equity, known or unknown, that
she ever had, now has, or may have against the Released Parties as of the date
of her signing this Agreement and Release, including, but not limited to:
claims alleging breach of express or implied contract, wrongful discharge,
constructive discharge, breach of an implied covenant of good faith and fair
dealing, negligent or intentional infliction of emotional distress, retaliation
or a violation of Title VII of the Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the Older Workers
Benefit Protection Act, the Americans with Disabilities Act of 1990, the
Virginia Human Rights Act, the Fairfax County Human Rights Ordinance or the
Texas Commission on Human Rights Act; claims pursuant to any other federal,
state or local law regarding discrimination based on age, race, sex, religion,
national origin, marital status, disability or any other unlawful basis; claims
for alleged violation of any other local, state or federal law, regulation,
ordinance, public policy or common-law duty arising out of the Executive’s
employment relationship with the Company and/or the termination thereof, claims
of tortious or wrongful conduct, defamation, battery or assault, negligence,
invasion of privacy, or any other claim or cause of action whatsoever having
any bearing whatsoever upon the terms and conditions of, and/or the cessation
of her employment with and by the Company that she ever had, now has or shall
have as of the date of her signing of this Agreement and Release.

 

(b)           In
return for the promises and releases on the part of the Executive set forth
herein, the Company, for itself and its subsidiaries and its affiliates, its
and their officers, directors, employees, members, agents, attorneys and
representatives, and the predecessors, successors and assigns of the foregoing
(each only in their capacity as such) hereby releases and forever discharges
the Executive, her heirs, beneficiaries, devisees, privies, executors,
administrators, attorneys, representatives, and agents, and her and their
assigns, successors and predecessors of and from any and all actions, causes of
action, suits, debts, claims, complaints, charges, contracts, controversies,
agreements, promises, damages, counterclaims, cross-claims, claims for
contribution and/or indemnity, claims for costs and/or attorneys’ fees,
judgments and demands whatsoever, in law or in equity, known or unknown, that
the Company ever had, now has, or may have against the Executive as of the date
of the Company signing this Agreement and Release, including, but not limited
to:  claims alleging breach of express or

 

2

 

implied
contract, breach of an implied covenant of good faith and fair dealing; claims
for alleged violation of any local, state or federal law, regulation,
ordinance, public policy or common-law duty arising out of the Executive’s
employment relationship with the Company and/or the termination thereof, claims
of tortious or wrongful conduct, defamation, negligence, or any other claim or
cause of action whatsoever having any bearing whatsoever upon the terms and
conditions of, and/or the cessation of the Executive’s employment with and by
the Company that the Company ever had, now has or shall have as of the date of
its signing of this Agreement and Release; provided, however, that the release
set forth in this paragraph 4(b) shall not apply to acts or omissions that
involve willful or intentional misconduct or gross negligence by the Executive
in the course of her employment with and by the Company.

 

5.             The
Executive agrees not only to release and discharge the Released Parties from
any and all claims against the Released Parties that she could make on her own
behalf, but also those that may have been or may be made by any other person or
organization on her behalf.  She specifically
waives any right to become, and promises not to become, a member of any class
in a case in which any claim or claims are asserted against any of the Released
Parties involving any event which has occurred as of the date of her signing of
this Agreement and Release.  If she is
asserted to be a member of a class in a case against any of the Released
Parties involving any events occurring as of the date of her signing of this
Agreement and Release, she shall immediately withdraw with prejudice in writing
from said class, if permitted by law to do so.

 

6.             The
Executive hereby affirms that there are no outstanding administrative or
judicial proceedings, actions, charges, complaints, or claims against the
Released Parties to which she is a party or which involve or relate to her.  In the event that there is outstanding any
such proceeding, action, charge, complaint or claim filed against the Released
Parties by or on behalf of the Executive, she agrees to cause the immediate
withdrawal and dismissal with prejudice of each such charge, complaint, claim,
action or proceeding to the extent permitted by law.  In the event that any agency, court or other
forum does not dismiss with prejudice any such charge, complaint, claim, action
or proceeding, the Executive agrees that she will not voluntarily give
testimony or evidence against the Released Parties with respect to any such
matter, except as required by law. 
Neither this Paragraph 6 nor the preceding Paragraphs 4(a) or 5 are
intended to interfere with the Executive’s exercise of any protected, nonwaivable
right.  By entering into this Agreement
and Release, however, the Executive acknowledges that the consideration set
forth herein is in full satisfaction of any amounts to which she might be
entitled on any claim and she is forever discharging the Released Parties from
any liability to her for acts occurring on or before the date of her signing of
this Agreement and Release.

 

7.             Neither
this Agreement and Release, nor anything contained herein, shall be construed
as an admission by the Released Parties or the Executive of any liability or
unlawful conduct whatsoever.  The Parties
hereto agree and understand that the consideration herein is in excess of that
which the Company is obligated to provide to the Executive, and that it is
provided solely in consideration of the Executive’s execution of this Agreement
and Release.  The Company and the
Executive agree that the consideration referred to in Paragraph 1(b) is
sufficient consideration for the release being given by the Executive in
Paragraphs 4(a), 5, and 6 hereof.

 

8.             The
Company agrees to respond to requests for references concerning the Executive
in accordance with its policy – it will confirm the Executive’s job title, dates of employment, and, with
written authorization, salary at the time of separation from the Company.  The Company will also disclose, upon
reasonable request of the Executive, that the Executive separated from the
Company amicably.

 

3

 

9.             The
Executive agrees that she will refrain from making statements that may
reasonably be construed as negative or in any manner disparaging of the
Released Parties.  The Company agrees
that it will refrain from making statements that may reasonably be construed as
negative or in any manner disparaging of the Executive.

 

10.           The
Executive agrees not to use, disclose to others, or permit anyone access to any
of the Company’s confidential, competitive or proprietary information that is
not generally available to the public, including, without limitation, financial
information, personnel information and the like (collectively, “Confidential
Information”).  The Executive hereby
acknowledges the Company’s exclusive ownership of such Confidential
Information.

 

11.           The
Executive hereby agrees to return immediately to the Company all Company
property upon the Separation Date; provided, however, that Company agrees to
allow the Executive to permanently retain possession of the following Company
equipment issued to the Executive for her home office:  Sony laptop computer; HP LaserJet Printer
3030; HP Desktop computer and monitor; all manuals related to the foregoing
equipment; and two five-drawer lateral file cabinets; provided further,
however, that the Executive hereby covenants to deliver to the Company copies
of all files containing Company information, including all Confidential
Information, that exist on the computers to be retained by her and to erase all
such files, including all Confidential Information from such computers on or
prior to the Separation Date.  The
Executive shall not retain any copy or other reproduction whatsoever of any
Company property after the Separation Date.

 

12.           Each
Party shall bear such Party’s own costs and attorneys’ fees incurred in
connection with this Agreement and Release.

 

13.           This
Agreement and Release contains the full agreement of the Parties and supersedes
all prior agreements, understandings and arrangements, oral or written, if any,
between the Parties with respect to the subject matter hereof.

 

14.           The
Executive acknowledges and agrees that:  (a) no
promise or inducement for this Agreement and Release has been made except as
set forth in this Agreement and Release; (b) this Agreement and Release is
executed by the Executive without reliance upon any statement or representation
by the Company except as set forth herein; and (c) she is legally
competent to execute this Agreement and Release and to accept full
responsibility therefor.  The Company
hereby advises the Executive to consult an attorney prior to executing this
Agreement and Release.

 

15.           The
Executive acknowledges and agrees that:  (a) she
has been given at least twenty-one (21) days within which to consider this
Agreement and Release;  (b) she has
used all or as much of that twenty-one day period as she deemed necessary to
consider fully this Agreement and Release and, if she has not used the entire
twenty-one day period, she waives that period not used;  (c) she has read and fully understands
the meaning of each provision of this Agreement and Release;  (d) the Company has advised her to
consult with counsel concerning this Agreement and Release;  and (e) she freely and voluntarily
enters into this Agreement and Release. 
The Executive further agrees that no fact, evidence, event, or
transaction currently unknown to her but which may hereafter become known to
her shall affect in any manner the final and unconditional nature of the
release stated above.

 

4

 

16.           This
Agreement and Release shall become effective and enforceable on the eighth
(8th) day following execution hereof by the Executive unless she revokes it by
so advising the Company in writing received by the President and Chief
Executive Officer of the Company before the end of the seventh (7th) day after its
execution by the Executive.

 

17.           This Agreement and
Release shall be governed by and construed in accordance with the substantive
laws of the Commonwealth of Virginia without regard to principles of conflicts
of laws.  Each of the Parties hereby (a) consents
to personal jurisdiction in any suit, claim, action or proceeding relating to
or arising under this Agreement and Release that is brought in the United
States District Court for the Northern District of Texas or, if that court
lacks jurisdiction, in any Civil District Court for the State of Texas that has
jurisdiction, (b) consents to service of process upon such Party in the
manner set forth in paragraph 18 hereof, and (c) waives any objection
such Party may have to venue in any such Texas court or to any claim that any
such Texas court is an inconvenient forum.

 

18.           For
the purposes of this Agreement and Release, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by certified mail,
return receipt requested or by overnight carrier, addressed to the respective
addresses last given by each Party to the other, provided that all notices to
the Company shall be directed to the attention of the President and Chief
Executive Officer of the Company.  All
notices and communications shall be deemed to have been received on the date of
delivery thereof, except that notice of change of address shall be effective
only upon receipt.

 

19.           (a)           This Agreement shall be binding upon
and shall inure to the benefit of the Company, its successors and assigns, and
the Company shall require any successor or assign to expressly assume and agree
to perform this Agreement and Release in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
assignment had taken place.  The term “the
Company” as used herein shall include such successors and assigns.  The term “successors and assigns” as used
herein shall mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this Agreement and
Release) whether by operation of law or otherwise.

 

(b)           Neither
this Agreement and Release nor any right or interest hereunder shall be assignable
or transferable by the Executive, her beneficiaries or legal representatives,
except by will or by the laws of descent and distribution.  This Agreement and Release shall inure to the
benefit of and be enforceable by the Executive’s legal personal representative.

 

20.           No
provision of this Agreement and Release may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and the Company. 
No waiver by either Party at any time of any breach by the other Party
of, or compliance with, any condition or provision of this Agreement and
Release to be performed by such other Party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either Party that are not expressly set
forth in this Agreement and Release.

 

21.           The
provisions of this Agreement and Release are severable.  Should any provision herein be declared
invalid by a court of competent jurisdiction, the remainder of the agreement
will continue in force, and the Parties agree to renegotiate the invalidated
provision in good faith to accomplish its objective to the extent permitted by
law.

 

5

 

22.           This
Agreement and Release may be signed in counterparts, and each counterpart shall
be considered an original agreement for all purposes.

 

IN WITNESS WHEREOF, the Company has caused this
Agreement and Release to be executed by its duly authorized officer and the
Executive has executed this Agreement and Release as of the day and year first
above written.

 

	
   

  	
  KAISER GROUP HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Douglas W. McMinn

  	
   

  
	
   

  	
  Name:

  	
  Douglas W. McMinn

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARIAN P. HAMLETT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/ Marian
  P. Hamlett

  	
   

  
						

 

6

 

EXHIBIT A

 

ADDENDUM TO
AGREEMENT AND RELEASE

 

This Addendum to the Agreement and Release (this “Addendum”)
is made and entered into as of
the        day of           ,
2006.

 

23.           All
of the provisions set forth above will continue in full force and effect.

 

24.           Subject
to the Executive’s compliance with the terms of this Agreement and Release, and
subject to the Executive executing this Addendum and not revoking her agreement
to the provisions hereof during the revocation period set forth in Paragraph
27, the Company agrees (i) to pay to the Executive the sum of $100,000
promptly upon the expiration of the revocation period set forth in Paragraph 27
and (ii) retain the Executive as a consultant for a period of three months
following the Separation Date (the “Consulting Period”) and to pay to the Executive
$3,000 per month (less applicable payroll taxes) consulting retainer during the
Consulting Period in exchange for up to twenty hours of the Executive’s
services per month.  In the event the
Company requires the services of the Executive for more than twenty hours in
any month, the Company agrees to pay the Executive an additional $150 per hour
for each hour that exceeds twenty in any such month.  The payments set forth in this Paragraph 24 are inclusive of any and
all amounts, including but not limited to attorneys’ fees, that may be claimed
by the Executive or on her behalf against the Company.  The Company and the Executive agree that, for
purposes of Paragraph 11 above, references to the “Separation Date” shall be to
the last day of the Consulting Period.

 

25.           (a)           In
return for the Company’s agreement to provide the Executive with the
consideration referred to in Paragraph 24, the sufficiency of which is hereby acknowledged, the Executive
agrees that, for purposes of the release set forth above in Paragraphs 4(a), 5
and 6, the “date of her signing” of this Agreement and Release shall be deemed
to be the date she signs this Addendum, so that she is now releasing any claims
she may have as of the date she signs this Addendum, and all references to this
Agreement and Release shall include this Addendum.

 

(b)           In
return for the releases on the part of the Executive set forth herein, the sufficiency of which is hereby
acknowledged, the Company agrees that, for purposes of the release set forth
above in Paragraph 4(b), the “date of its signing” of this Agreement and
Release shall be deemed to be the date it signs this Addendum, so that it is
now releasing any claims it may have as of the date it signs this Addendum, and
all references to this Agreement and Release shall include this Addendum.

 

26.           The
Executive acknowledges and agrees that:  (a) no
promise or inducement for this Agreement and Release has been made except as
set forth in this Agreement and Release; (b) this Agreement and Release is
executed by the Executive without reliance upon any statement or representation
by the Company except as set forth herein; and (c) she is legally
competent to execute this Agreement and Release and to accept full
responsibility therefor.  The Company
hereby advises the Executive to consult an attorney prior to executing this
Agreement and Release.

 

27.           The
Executive acknowledges and agrees that:  (a) she
has been given at least twenty-one (21) days within which to consider this
Agreement and Release; (b) she has used all or as much of that twenty-one
day period as she deemed necessary to consider fully this

 

 

Agreement
and Release and, if she has not used the entire twenty-one day period, she
waives that period not used; (c) she has read and fully understands the
meaning of each provision of this Agreement and Release; (d) the Company
has advised her to consult with counsel concerning this Agreement and Release;
and (e) she freely and voluntarily enters into this Agreement and
Release.  The Executive further agrees
that no fact, evidence, event, or transaction currently unknown to her but
which may hereafter become known to her shall affect in any manner the final
and unconditional nature of the release stated above.

 

28.           This
Agreement and Release shall become effective and enforceable on the eighth
(8th) day following execution hereof by the Executive unless she revokes it by
so advising the Company in writing received by the President and Chief
Executive Officer of the Company before the end of the seventh (7th) day after
its execution by the Executive.

 

8

 

IN WITNESS WHEREOF, the Company has caused this
Addendum to the Agreement and Release to be executed by its duly authorized
officer and the Executive has executed this Addendum to the Agreement and
Release as of the day and year first above written.

 

	
   

  	
  KAISER GROUP HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Douglas W. McMinn

  
	
   

  	
   

  	
  Title:President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARIAN P. HAMLETT

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]