Document:

Exhibit
        4.1

       

      

      

      SECOND
        SUPPLEMENTAL INDENTURE

       

      SECOND
        SUPPLEMENTAL INDENTURE
        (this
“Supplemental
        Indenture”)
        dated
        as of July 5, 2007, between Otelco Inc., a Delaware corporation (the
“Company”),
        each
        subsidiary of the Company listed on the signature pages hereto (the
“Guarantors”) and Wells Fargo Bank, National Association, a national banking
        association, as trustee under the Indenture defined below (the “Trustee”).

       

      WITNESSETH:

       

      WHEREAS,
        the
        Company and Guarantors (as defined in the Indenture) have heretofore executed
        and delivered to the Trustee an Indenture (the “Indenture”)
        dated
        as of December 21, 2004, as supplemented by the First Supplemental Indenture
        referred to below, providing for the issuance of an unlimited aggregate
        principal amount of 13% senior subordinated notes due 2019 (the “Notes”);

      

      WHEREAS,
        $81,075,497.50 in aggregate principal amount of the Notes have been issued
        and
        are outstanding under the Indenture (the “Original
        Notes”);

       

      WHEREAS,
        the
        Company and Guarantors have heretofore executed and delivered to the Trustee
        a
        First Supplemental Indenture (“First
        Supplemental Indenture”)
        dated
        as of July 3, 2006, providing for the guarantee of the Company’s obligations
        under the Indenture and the Original Notes by certain additional Guarantors;
        

      

      WHEREAS,
        the
        Company has decided to issue up to $22,500,000
        ($25,875,000
        if the
        over-allotment option of the underwriters is exercised in full)
        in
        aggregate principal amount of additional notes (the “Additional
        Notes”)
        pursuant to Section 4.14 of the Indenture; and

       

      WHEREAS,
        the
        execution and delivery of this Supplemental Indenture has been authorized
        by the
        Board of Directors of the Company.

       

      NOW
        THEREFORE,
        in
        consideration of the foregoing and for other good and valuable consideration,
        the receipt of which is hereby acknowledged, the Company and the Trustee
        mutually covenant and agree for the equal and ratable benefit of the holders
        of
        the Notes as follows:

       

      1.            
        The
        Additional Notes. 
        The Additional Notes shall be issued in an aggregate principal amount of
        up to
        $22,500,000
        ($25,875,000
        if the
        over-allotment option of the underwriters is exercised in full).

       

      2.            
        Ratification of Indenture; Supplemental Indentures Part of
        Indenture. 
        Except as expressly amended hereby and by the First Supplemental Indenture,
        the
        Indenture is in all respects ratified and confirmed and all the terms,
        conditions and provisions thereof shall remain in full force and effect.
        This
        Second Supplemental Indenture shall form a part of the Indenture, as
        supplemented by the First Supplemental Indenture, for all purposes, and every
        holder of Notes heretofore or hereafter authenticated and delivered shall
        be
        bound hereby.

       

       3.            
        Governing Law. 
        THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
        ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
        THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY
        THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION
        OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
        OF 
        MANHATTAN, IN THE CITY OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT
        OF
        OR RELATING TO THE INDENTURE OR THE NOTES.

       

      4.            
        Trustee Makes No Representation. 
        The Trustee makes no representation as to the validity or sufficiency of
        this
        Second Supplemental Indenture.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      5.            
        Counterparts. 
        The parties may sign any number of copies of this Second Supplemental Indenture.
        Each signed copy shall be an original, but all of them together represent
        the
        same agreement.

       

      6.            
        Effect of Headings. 
        The Section headings herein are for convenience only and shall not effect
        the
        construction thereof.

       

      7.            
        Definitions. 
        Capitalized terms used but not defined herein shall have the meanings given
        to
        them in the Indenture.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
        Indenture to be duly executed as of the date first above written.

      

      

      OTELCO
        INC.

      

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      BRINDLEE
        HOLDINGS LLC 

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      BRINDLEE
        MOUNTAIN TELEPHONE COMPANY 

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      BLOUNTSVILLE
        TELEPHONE COMPANY, INC. 

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      HOPPER
        HOLDING COMPANY, INC.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      HOPPER
        TELECOMMUNICATIONS COMPANY, INC.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      Second
        Supplemental Indenture - 1

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      IMAGINATION,
        INC.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      MID-MAINE
        COMMUNICATIONS, INC.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Vice
        President

       

      MID-MAINE
        TELPLUS

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Vice
        President

       

      MID-MISSOURI
        HOLDING CORP.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      OTELCO
        TELECOMMUNICATIONS LLC

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      OTELCO
        TELEPHONE LLC

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

       

      Second
        Supplemental Indenture - 2

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      PAGE
        & KISER COMMUNICATIONS, INC.

      (As
        Guarantor)

      

      By: __/s/
        Curtis L. Garner, Jr.______________

      Name:
        Curtis L. Garner, Jr.

      Title:
        Chief Financial Officer

      

       

      WELLS
        FARGO BANK, N.A., AS TRUSTEE

      

      

      By: _/s/
        Jane Y. Schweiger_______________________

      Name:
        Jane Y. Schweiger 

      Title:
        Vice President

      

      Second
        Supplemental Indenture - 3ASSET
      PURCHASE AGREEMENT

     

    This
      Asset Purchase Agreement (“Agreement”) is entered into as of August
      4,
      2006
      by and
      among Novatrix Biomedical, Inc., a California corporation (the “Purchaser”);
      Integrated Surgical Systems, Inc., a Delaware corporation (“Seller”). Certain
      capitalized terms used in this Agreement are defined on Exhibit A (“Certain
      Definitions”).

     

    RECITALS

     

    The
      Seller wishes to provide for the sale of substantially all of the Assets of
      the
      Seller to the Purchaser on the terms set forth in this Agreement.

     

    The
      parties to this Agreement, intending to be legally bound, agree as
      follows:

     

    AGREEMENT

     

    SECTION
      1. SALE
      OF ASSETS; RELATED TRANSACTIONS.

     

    1.1. Sale
      of Assets. The
      Seller shall cause to be sold, assigned, transferred, conveyed and delivered
      to
      the Purchaser, at the Closing (as defined below), good and valid title to the
      Assets (as defined below), free of any Encumbrances, on the terms and subject
      to
      the conditions set forth in this Agreement. For purposes of this Agreement,
      “Assets” shall mean and include: all of the properties, rights, interests and
      other tangible and intangible assets of the Seller (wherever located and whether
      or not required to be reflected on a balance sheet prepared in accordance with
      generally accepted accounting principles), including any assets acquired by
      the
      Seller during the Pre-Closing Period. Without limiting the generality of the
      foregoing, the Assets shall include:

     

    (a) all
      accounts receivable, notes receivable and other receivables of the Seller
      (including all accounts receivable identified in Part 2.8 of the Disclosure
      Schedule and all accounts receivable of the Seller that have arisen since August
      4, 2006;

     

    (b) all
      inventories and work-in-progress of the Seller, and all rights to collect from
      customers (and to retain) all fees and other amounts payable, or that may become
      payable, to the Seller with respect to services performed on behalf of the
      Seller on or prior to the Closing Date;

     

    (c) all
      equipment, materials, prototypes, tools, supplies, vehicles, furniture,
      fixtures, improvements and other tangible Assets of the Seller (including the
      tangible Assets identified in Part 2.10 of the Disclosure
      Schedule);

     

    (d) all
      advertising and promotional materials possessed by the Seller;

     

    (e) all
      Proprietary Assets and goodwill of the Seller (including the right to use the
      names “ROBODOC” and “ORTHODOC” and variations thereof, and the Proprietary
      Assets identified in Part 2.12 of the Disclosure Schedule);

     

    (f) all
      rights of the Seller under the Seller Contracts (including the Seller Contracts
      identified in Part 2.13 of the Disclosure Schedule);

     

    (g) all
      Governmental Authorizations held
      by
      the Seller (including the Governmental Authorizations identified in Part 2.16
      of
      the Disclosure Schedule);

     

    (h) all
      claims (including claims for past infringement of Proprietary Assets) and causes
      of action of the Seller against other Persons (regardless of whether or not
      such
      claims and causes of action have been asserted by the Seller), and all rights
      of
      indemnity, warranty rights, tights of contribution, rights to refunds, rights
      of
      reimbursement and other rights of recovery possessed by the Seller (regardless
      of whether such rights are currently exercisable). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2. Purchase
      Price.

     

    (a) As
      consideration for the sale of the Assets to the Purchaser:

     

    (i) at
      the
      Closing, the Purchaser shall pay to the Seller, in cash, an amount equal to
      $2,000,000; 

     

    (ii) Purchaser
      shall pay to Seller an additional $2,000,000 by wire transfer of immediately
      available funds to an account or accounts designated by Seller upon the earlier
      to occur of (i) completion of the milestone set forth in Schedule 1.2(a)(ii)
      or
      (ii) March 1, 2008. 

     

    (iii) Purchaser
      agrees to continue to fund an additional three million three hundred thousand
      dollars ($3,300,000) as working capital in Purchaser’s business for the
      development of the Products, unless Seller otherwise agrees in
      writing.

     

    1.3. Sales
      Taxes. The
      Seller shall bear and pay, and shall reimburse the Purchaser and the Purchaser’s
      affiliates for, any sales taxes, use taxes, transfer taxes, documentary charges,
      recording fees or similar taxes, charges, fees or expenses that may become
      payable in connection with the sale of the Assets to the Purchaser or in
      connection with any of the other Transactions.

     

    1.4. Closing.

     

    (a) The
      closing of the sale of the Assets to the Purchaser (the “Closing”) shall take
      place at the offices of Soden & Steinberger, LLP, 550 West C Street, Suite
      1710, at 10:00 a.m. on the date which is five (5) business days following the
      satisfaction of all of the conditions set forth in Sections 6 and 7 hereof,
      or
      at such other time or place as may be agreed to by the parties. For purposes
      of
      this Agreement, “Scheduled Closing Time” shall mean the time and date as of
      which the Closing is required to take place pursuant to this Section 1.4(a);
      and
“Closing Date” shall mean the time and date as of which the Closing actually
      takes place.

     

    (b) At
      the
      Closing:

     

    (i) the
      Seller shall execute and deliver to the Purchaser such bills of sale,
      endorsements, assignments and other documents as may (in the reasonable judgment
      of the Purchaser or its counsel) be necessary or appropriate to assign, convey,
      transfer and deliver to the Purchaser good and valid title to the Assets free
      of
      any Encumbrances;

     

    (ii) the
      Purchaser shall pay to the Seller two million dollars ($2,000,000) in cash
      by
      wire transfer of immediately available funds to an account or accounts
      designated by Seller;

     

    (iii) the
      Seller shall execute and deliver to the Purchaser a certificate (the “Closing
      Certificate”) setting forth the representations and warranties of the Seller
      that (A) each of the representations and warranties made by the Seller in this
      Agreement was accurate in all respects as of the date of this Agreement, (B)
      except as expressly set forth in the Closing Certificate, each of the
      representations and warranties made by the Seller in this Agreement is accurate
      in all respects as of the Closing Date as if made on the Closing Date, (C)
      each
      of the covenants and obligations that the Seller is required to have complied
      with and performed in all respects, and (D) except as expressly set forth in
      the
      Closing Certificate, each of the Conditions set forth in Section 6.4 and 6.5
      has
      been satisfied in all respects.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    SECTION
      2. REPRESENTATIONS
      AND WARRANTIES OF SELLER 

     

    Seller
      represents and warrants to the Purchaser, as follows:

     

    2.1. Due
      Organization; No Subsidiaries; Etc.

     

    (a) Seller
      is
      a corporation duly organized, under the laws of the State of Delaware and has
      all necessary corporate power and authority:

     

    (i) to
      conduct its business in the manner in which its business is currently being
      conducted and in the manner in which its business is proposed to be
      conducted;

     

    (ii) to
      own
      and use its Assets in the manner in which its Assets are currently owned and
      used and in the manner in which its Assets are proposed to be owned and used;
      and 

     

    (iii) to
      perform its obligations under all Seller Contracts.

     

    (b) Seller
      is
      not, and none of the Seller has ever been, required to be qualified, authorized,
      registered or licensed to do business as a foreign corporation in any
      jurisdiction other than the jurisdictions identified in Part 2.1 of the
      Disclosure Schedule.

     

    (c) Part
      2.1
      of the Disclosure Schedule accurately sets forth (i) the names of the members
      of
      Seller’s board of directors, (ii) the names of the members of each committee of
      Seller’s board of directors, and (iii) the names and titles of Seller’s
      officers.

     

    (d) Seller
      has no subsidiaries, and Seller has never owned, beneficially or otherwise,
      any
      shares or other securities of, or any direct or indirect interest of any nature
      in, any Entity other than the Prior Subsidiary. The Prior Subsidiary was validly
      dissolved on December 23, 2003, in full compliance with all applicable Legal
      Requirements. Except as set forth in Part 2.1 of the Disclosure Schedule, the
      Prior Subsidiary conducted no business and had no Liabilities prior to their
      dissolution. Seller has delivered to the Purchaser accurate and complete copies
      of the certificates of dissolution and all other documents relating to the
      dissolution of the Prior Subsidiary.

     

    2.2. Reserved.

     

    2.3. Capitalization,
      Etc. Except
      as
      set forth in Part 2.3 of the Disclosure Schedule, there is no: (a)
      outstanding subscription,
      option, call, warrant or right (whether or not currently
      exercisable)
      to
      acquire any shares of the capital stock or other securities of the Seller;
      (b)
      outstanding security, instrument or obligation that is or may become convertible
      into or exchangeable for any shares of the capital stock or other securities
      of
      the Seller; or (c) Contract under which the Seller is or may become obligated
      to
      sell or otherwise issue any shares of its capital stock or any other securities.
      

     

    2.4. Financial
      Statements.

     

    (a) Seller
      has delivered to the Purchaser the following financial statements and notes
      (collectively, the “Seller Financial Statements”): 

     

    (i) the
      audited balance sheets of Seller as of December 31, 2001 to December 31, 2004,
      of Seller and the Prior Subsidiary as of December 31, 2002, and the related
      audited, consolidated statements of operations, changes in Stockholders’ equity
      and cash flows of Seller for the year then ended, together with the notes
      thereto and the unqualified report and certification of
      ____________________________________ relating thereto; and

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (ii) the
      unaudited balance sheets of Seller from January 1, 2005 through May 31, 2006
      (the “Unaudited Interim Balance Sheet”), and the related unaudited statements of
      operations, changes in Stockholders’ equity and cash flows of
      Seller.

     

    (b) All
      of
      the Seller Financial Statements are accurate and complete in all material
      respects, and the dollar amount of each line item included in the Seller
      Financial Statements is accurate in all material respects. The financial
      statements and notes referred to in Section 2.4(a)(i) present fairly the
      consolidated financial position of Seller as of December 31, 2004, and the
      consolidated results of operations, changes in Stockholders’ equity and cash
      flows of Seller for the period then ended. The financial statements and notes
      referred to in 2.4(a)(iii) present fairly the financial position of Seller
      as of
      the respective dates thereof and the results of operations, changes in
      Stockholders’ equity and cash flows of Seller for the periods covered thereby.
      The Seller Financial Statements have been prepared in accordance with generally
      accepted accounting principles, applied on a consistent basis throughout the
      periods covered. 

     

    2.5. Absence
      of Changes. Except
      as
      set forth in Part 2.5 of the Disclosure Schedule, since May 31,
      2006:

     

    (a) there
      have not been any material adverse changes and no material event has occurred
      that would materially adversely effect the Assets or Seller’s business or
      financial condition; 

     

    (b) there
      has
      not been any material loss, damage or destruction to, or any interruption in
      the
      use of, any of Seller’s Assets (whether or not covered by
      insurance);

     

    (c) Seller
      has not purchased or otherwise acquired any other asset from any other person,
      except for supplies acquired by the Seller in the Ordinary Course of
      Business;

     

    (d) Seller
      has not leased or licensed any asset from any other Person;

     

    (e) Seller
      has not made any capital expenditure;

     

    (f) Seller
      has not sold or otherwise transferred, and has not leased or licensed, any
      asset
      to any other Person except for products sold by Seller from its inventory in
      the
      Ordinary Course of Business;

     

    (g) Seller
      has not written off as uncollectible, or established any extraordinary reserve
      with respect to, any account receivable or other indebtedness;

     

    (h) Seller
      has not pledged or hypothecated any of its Assets or otherwise permitted any
      of
      its Assets to become subject to any Encumbrance;

     

    (i) Seller
      has not made any loan or advance to any other Person;

     

    (j) Seller
      has not (i) established or adopted any Employee Benefit Plan, or (ii) paid
      any
      bonus or made any profit-sharing or similar payment to, or increased the amount
      of the wages, salary, commissions, fringe benefits or other compensation or
      remuneration payable to, any of its directors, officers or
      employees;

     

    (k) no
      Contract by which Seller or any of the Assets owned or used by Seller is or
      was
      bound, or under which Seller has or had any rights or interest has been amended
      or terminated;

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (l) Seller
      has not incurred, assumed or otherwise become subject to any Liability, other
      than accounts payable (of the type required to be reflected as current
      liabilities in the “liabilities” column of a balance sheet prepared in
      accordance with GAAP) incurred by Seller in the Ordinary Course of
      Business;

     

    (m) Seller
      has not discharged any Encumbrance or discharged or paid any indebtedness or
      other Liability, except for accounts payable that: (i) are reflected as current
      liabilities in the “liabilities” column of the Unaudited Interim Balance Sheet
      or have been incurred by Seller since May 31, 2006, in the Ordinary Course
      of
      Business, and (ii) have been discharged or paid in the Ordinary Course of
      Business;

     

    (n) Seller
      has not changed any of its methods of accounting or accounting practices in
      any
      respect;

     

    (o) Seller
      has not entered into any transaction or taken any other action outside the
      Ordinary Course of Business; and

     

    (p) Seller
      has not agreed, committed or offered (in writing or otherwise), and has not
      attempted, to take any of the actions referred to in clauses “(c)” through “(p)”
above.

     

    2.6. Title
      to Assets.

     

    (a) Seller
      owns, and has good, valid and marketable title to, all Assets purported to
      be
      owned by it, including:

     

    (i) all
      Assets reflected on the Unaudited Interim Balance Sheet (except for inventory
      sold by Seller since May 31, 2006, in the Ordinary Course of
      Business);

     

    (ii) all
      Assets acquired by Seller since May 31, 2006 (except for inventory sold by
      Seller since June 30, 2006, in the Ordinary Course of Business);

     

    (iii) all
      Assets referred to in Parts 2.8, 2.9, 2.10 and 2.12 of the Disclosure
      Schedule-and all of Seller’s rights under Seller Contracts; and

     

    (iv) all
      other
      Assets reflected in Seller’s books and records as being owned by
      Seller.

     

    Except
      as
      set forth in Part 2.6 of the Disclosure Schedule, all of said Assets are owned
      by Seller free and clear of any Encumbrances.

     

    (b) Part
      2.6
      of the Disclosure Schedule identifies all Assets that are being leased or
      licensed to Seller. The Assets will collectively constitute, as of the Closing
      Date, all of the properties, rights, interest, and other tangible and intangible
      Assets necessary to enable the Seller to conduct its business in the manner
      in
      which such business is currently being conducted and in the manner in which
      such
      business is proposed to be conducted.

     

    2.7. Bank
      Accounts. Part
      2.7
      of the Disclosure Schedule accurately sets forth, with respect to each account
      maintained by or for the benefit of Seller at any bank or other financial
      institution:

     

    (a) the
      name
      and location of the institution at which such account is
      maintained;

     

    (b) the
      name
      in which such account is maintained and the account number of such
      account;

     

    (c) a
      description of such account and the purpose for which such account is
      used;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (d) the
      current balance in such account;

     

    (e) the
      rate
      of interest being earned on the funds in such account; and

     

    (f) the
      names
      of all individuals authorized to draw on or make withdrawals from such
      account.

     

    There
      are
      no safe deposit boxes or similar arrangements maintained by or for the benefit
      of Seller.

     

    2.8. Receivables;
      Major Customers.

     

    (a) Part
      2.8
      of the Disclosure Schedule provides an accurate and complete breakdown and
      aging
      of all accounts receivable, notes receivable and other receivables of Seller
      as
      of May 31, 2006.

     

    (b) Except
      as
      set forth in Part 2.8 of the Disclosure Schedule, all existing accounts
      receivable of Seller (including those accounts receivable reflected on the
      Unaudited Interim Balance Sheet that have not yet been collected and those
      accounts receivable that have arisen since May 31, 2006, and have not yet been
      collected):

     

    (i) represent
      valid obligations of customers of Seller arising from bona fide transactions
      entered into in the Ordinary Course of Business; and

     

    (ii) are
      current and are collectable under the rules of GAAP in full (without any
      counterclaim or setoff) on or before the Closing Date.

     

    (c) Part
      2.8
      of the Disclosure Schedule accurately identifies, and provides in all material
      respects an accurate and complete breakdown of the revenues received from,
      each
      customer or other Person that accounted for: (i) more than $10,000 of the
      consolidated gross revenues of Seller, (ii) more than $10,000 of Seller’s gross
      revenues in the Seller through December 31, 2006, or (iii) more than $25,000
      of
      Seller’s gross revenues through December 31, 2006, Seller has not received any
      notice or other communication (in writing or otherwise), and has not received
      any other information, indicating that any customer or other Person identified
      in Part 2.8 of the Disclosure Schedule may cease dealing with Seller. Seller
      has
      represented that there are currently no unfilled orders.

     

    2.9. Inventory.
      Part
      2.9
      of the Disclosure Schedule provides an accurate and complete breakdown in all
      material respects of all inventories (including raw materials, work in process
      and finished goods) of Seller as of June 30, 2006. All of Seller’s existing
      inventory (including all inventory that is reflected on the Unaudited Interim
      Balance Sheet and that has not been disposed of by Seller since May 31,
      2006.

     

    (a) is
      of
      such quality and quantity as to be usable and saleable by Seller in the Ordinary
      Course of Business;

     

    (b) has
      been
      priced at the lower of cost or market value using the “last-in. first-out”
method; and

     

    (c) is
      free
      of any defect or deficiency.

     

    The
      inventory levels maintained by Seller (i) are not excessive in light of Seller’s
      normal operating requirements, and (ii) are adequate for the conduct of Seller’s
      operations in the Ordinary Course of Business. 

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    2.10. Equipment,
      Etc.

     

    (a) Part
      2.10
      of the Disclosure Schedule accurately identifies all equipment, furniture,
      fixtures, improvements and other tangible Assets (other than inventory) owned
      by
      Seller, and accurately sets forth the date of acquisition, original cost and
      book value of each of said Assets. Part 2.10 also accurately identifies all
      tangible Assets leased to Seller.

     

    (b) Each
      asset identified or required to be identified in Part 2.10 of the Disclosure
      Schedule:

     

    (i) is
      structurally sound, free of defects and deficiencies and in good condition
      and
      repair (ordinary wear and tear excepted);

     

    (ii) complies
      in all respects with, and is being operated and otherwise used in full
      compliance with, all applicable Legal Requirements; and

     

    (iii) is
      adequate for the uses to which it is being put.

     

    The
      Assets identified in Part 2.10 of the Disclosure Schedule are adequate for
      the
      conduct of Seller’s business in the manner in which such business is currently
      being conducted and in the manner in which such business is proposed to be
      conducted.

     

    2.11. Real
      Property. Seller
      does not own any real property or any interest in real property, except for
      the
      leaseholds created under the real property leases identified in Part 2.13 of
      the
      Disclosure Schedule. Part 2.11 of the Disclosure Schedule provides an accurate
      and complete description in all material respects of the premises covered by
      said leases and the facilities located on such premises. Seller enjoys peaceful
      and undisturbed possession of such premises.

     

    2.12. Proprietary
      Assets.

     

    (a) Disclosure
      Schedule 2.12 identifies and provides a brief description of all Proprietary
      Assets: (i) owned by the Seller, and (ii) owned by any other Person and that
      is
      licensed to or used by the Seller (except for any Proprietary Asset that is
      licensed to Seller under any third party software license that: (1) is generally
      available to the public, and (2) imposes no future monetary obligation on the
      Seller) and identifies the license agreement or other agreement under which
      such
      Proprietary Asset is being licensed to or used by the Seller. Except as set
      forth on Part 2.12 of the Disclosure Schedule, the Seller has good and valid
      title to all of the Proprietary Assets and the Assets are free of any
      Encumbrances, and, Seller’s Knowledge, has a valid right to use and otherwise
      exploit, and to license others to use and otherwise exploit, all Proprietary
      Assets identified in Disclosure Schedule 2.12. Except as otherwise identified
      in
      Disclosure Schedule 2.12, the Seller is not obligated to make any payment to
      any
      Person for the use or other exploitation of any Proprietary Asset and Seller
      is
      free to use, modify, copy, distribute, sell, license or otherwise exploit each
      of the Seller Proprietary Assets on an exclusive basis (other than Proprietary
      Assets consisting of software licensed to the Seller under third party licenses
      generally available to the public, with respect to which the Seller’s rights are
      not exclusive).

     

    (b) The
      Seller has taken all reasonable measures and precautions necessary to protect
      and maintain the confidentiality and secrecy of all Seller Proprietary Assets
      (except Seller
      Proprietary Assets whose value would be unimpaired by public disclosure) and
      otherwise to
      maintain and protect the value of all Seller Proprietary Assets. The Seller
      has
      not disclosed or delivered or permitted to be disclosed or delivered to any
      Person, and no Person (other than the Seller)
      has access to or has any rights with respect to, the source code, or any portion
      or aspect of
      the
      source code, of any Seller Proprietary Asset.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (c) All
      patents, trademarks, service marks and copyrights that are registered with
      any
      Governmental Body and held by the Seller are valid and subsisting. To Seller’s
      Knowledge, None of the Seller Proprietary Assets infringes or conflicts with
      any
      Proprietary Asset owned or used by any other Person. To the best of Seller’s
      Knowledge, the Seller is not infringing, misappropriating or making any unlawful
      use of, and the Seller has not at any time infringed, misappropriated or made
      any unlawful use of, or received any notice or other communication of any
      actual, alleged, possible or potential infringement, misappropriation or
      unlawful use of, any Proprietary Asset owned or used by any other Person. To
      Seller’s Knowledge, no other Person is infringing, misappropriating or making
      any unlawful use of, and no Proprietary Asset owned or used by any other Person
      infringes or conflicts with, any Seller Proprietary Asset. 

     

    (d) The
      Proprietary Assets constitute all the Proprietary Assets necessary to enable
      the
      Seller to conduct its business in the manner in which such business is being
      conducted and in the manner in which such business is proposed to be conducted.
      The Seller has not licensed any of the Seller Proprietary Assets to any Person
      on an exclusive basis. The Seller has not entered into any covenant not to
      compete or Contract limiting its ability to exploit fully any of the Seller
      Proprietary Assets or to transact business in any market or geographical area
      or
      with any Person. The Seller has, and the Purchaser will acquire at the Closing,
      the right to use all of Sellers trademarks and copyrights listed in Disclosure
      Schedule 2.12 and variations thereof.

     

    (e) Except
      as
      set forth in Disclosure Schedule 2.12, the Seller has not entered into and
      is
      not bound by any Contract under which any Person has the right to distribute
      or
      license any Proprietary Asset. The Seller has not disclosed or delivered to
      any
      Person, or permitted the disclosure or delivery to any Person, of the source
      code, or any portion or
      aspect
      of the source code, or any proprietary information or algorithm contained in
      any
      source
      code, of
      any Proprietary Asset. No event has occurred, and no circumstance or condition
      exists, that (with or without notice or lapse of time) will, or could reasonably
      be expected to, result in the
      disclosure or delivery to any Person of the source code, or any portion or
      aspect of the source
      code, or
any
      proprietary
      information or algorithm contained in any source code, of any Proprietary
      Asset.

     

    (f) Except
      as
      set forth in Part 2.12 of the Disclosure Schedule, to Seller’s Knowledge, there
      is no Proprietary Asset that is owned by or licensed to Seller or that is
      otherwise used or useful in connection with Seller’s business. 

     

    (g) Seller
      represents and warrants that it has full right, title and interest in and to
      all
      Proprietary Assets listed in Part 2.12 of the Disclosure Schedule, including
      any
      and all referenced documents thereto. Seller has taken all reasonable measures
      and precautions necessary to protect the confidentiality and value of each
      Proprietary Asset identified or required to be identified in Part 2.12 of the
      Disclosure Schedule.

     

    (h) To
      Seller’s Knowledge, Seller is not infringing, and none of the Seller has at any
      time infringed or received any notice or other communication (in writing or
      otherwise) of any actual, alleged, possible or potential infringement of, any
      Proprietary Asset owned or used by any other Person. To Seller’s Knowledge, no
      other Person is infringing, and no Proprietary Asset owned or used by any other
      Person infringes or conflicts with, any Proprietary Asset owned or used by
      Seller.

     

    (i) The
      Proprietary Assets identified in Part 2.12 of the Disclosure Schedule constitute
      all of the Proprietary Assets necessary to enable Seller to conduct its business
      in the manner in which its business is currently being conducted and in the
      manner in which its business is proposed to be conducted. 

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    2.13. Contracts.

     

    (a) Seller
      has provided to Purchaser through its due diligence all material contracts,
      except for the Seller Contracts identified in Part 2.13 of the Disclosure
      Schedule, including all amendments thereto. Each Seller Contract is valid and
      in
      full force and effect, and is enforceable by Seller in accordance with its
      terms.

     

    (b) Except
      as
      set forth in Part 2.13 of the Disclosure Schedule, and except where no material
      adverse effect on the Assets or Seller’s business or financial condition would
      be likely to occur individually or in the aggregate (an “MAE”): (i) no Person
      has violated or breached, or declared or committed any default under, any Seller
      Contract; (ii) no event has occurred, and no circumstance or condition exists,
      that might (with or without notice or lapse of time): (A) result in a violation
      or breach of any of the provisions of any Seller Contract, (B) give any Person
      the right to declare a default or exercise any remedy under any Seller Contract,
      (C) give any Person the right to accelerate the maturity or performance of
      any
      Seller Contract, or (D) give any Person the right to cancel, terminate or modify
      any Seller Contract; (iii) Seller has not received any notice or other
      communication (in writing or otherwise) regarding any actual, alleged, possible
      or potential violation or breach of, or default under, any Seller Contract;
      and
      (iv) Seller has not waived any of its rights under any Seller
      Contract.

     

    (c) To
      the
      Seller’s Knowledge, each Person against which Seller has or may acquire any
      rights under any Seller Contract is solvent and is able to satisfy all of such
      Person’s current and future monetary obligations and other obligations and
      Liabilities to Seller.

     

    (d) Except
      as
      set forth in Part 2.13 of the Disclosure Schedule and to Seller’s Knowledge,
      Seller has never guaranteed or otherwise agreed to cause, insure or become
      liable for, and Seller has ever pledged any of its Assets to secure, the
      performance or payment of any obligation or other Liability of any other
      Person.

     

    (e) Except
      as
      set forth in Part 2.15 of the Disclosure Schedule, the performance of the Seller
      Contracts will not result in any violation of or failure to comply with any
      Legal Requirements.

     

    (f) No
      Person
      is renegotiating, or has the right to renegotiate, any amount paid or payable
      to
      Seller under any Seller Contract or any other term or provision of any Seller
      Contract.

     

    (g) The
      Seller has no knowledge of any basis upon which any party to any Seller
      Contracts may object to: (i) the assignment to the Purchaser of any right under
      such Seller Contract, or (ii) the delegation to or performance by the Purchaser
      of any obligation under such Seller Contract.

     

    (h) The
      Contracts identified in Part 2.13 of the Disclosure Schedule and the Excluded
      Contracts collectively constitute all of the Contracts necessary to enable
      Seller to conduct its business in the manner in which its business is currently
      being conducted and in the manner in which its business is proposed to be
      conducted.

     

    (i) Part
      2.13
      of the Disclosure Schedule identifies and provides an accurate and complete
      description, in all material respects of each proposed Contract as to which
      any
      bid, offer, written proposal, term sheet or similar document has been submitted
      or received by Seller. 

     

    2.14. Liabilities;
      Major Suppliers.

     

    (a) Except
      as
      set forth in Part 2.14 of the Disclosure Schedule, Seller has no material
      Liabilities, except for: (i) liabilities identified as such in the “liabilities”
column of the Unaudited Interim Balance Sheet; (ii) accounts payable (of the
      type required to be reflected as current liabilities in the “liabilities” column
      of a balance sheet prepared in accordance with GAAP) incurred by Seller in
      the
      Ordinary Course of Business since May 31, 2006; and (iii) Seller’s obligations
      under the Contracts listed in Part 2.13 of the Disclosure Schedule and under
      Excluded Contracts, to the extent that the existence of such obligations is
      ascertainable solely by reference to such Contracts.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (b) Part
      2.14
      of the Disclosure Schedule: (i) provides an accurate and complete breakdown
      and
      aging in all material respects of Seller’s accounts payable as of June 30, 2006;
      (ii) provides an accurate and complete breakdown of all customer deposits and
      other deposits held by Seller in all material respects as of the date of this
      Agreement; and (iii) Provides an accurate and complete breakdown in all material
      respects of all notes payable and other indebtedness of the Seller as of the
      date of this Agreement.

     

    (c) Except
      as
      set forth in Part 2.14 of the Disclosure Schedule, Seller has not paid, and
      Seller is not and will not become liable for the payment of, any fees, costs
      or
      expenses of the type referred to in Section 11.1(a).

     

    (d) Part
      2.14
      of the Disclosure Schedule accurately identifies, and provides an accurate
      and
      complete breakdown in all material respects of all of the accounts payable
      as of
      June 13, 2006.

     

    2.15. Compliance
      With Legal Requirements.

     

    (a) Except
      as
      set forth in Part 2.15 of the Disclosure Schedule: (i) Seller is in all material
      respects, in full compliance with each Legal Requirement that is applicable
      to
      it or to the conduct of its business or the ownership or use of any of its
      Assets; (ii) no event has occurred, and no condition or circumstance exists,
      that might (with or without notice or lapse of time) constitute or result
      directly or indirectly in a violation by Seller of, or a failure on the part
      of
      Seller to comply with, any Legal Requirement; and (iii) Seller has not received,
      at any time, any notice or other communication (in writing or otherwise) from
      any Governmental Body or any other Person regarding: (1) any material actual,
      alleged, possible or potential violation of, or failure to comply with, any
      Legal Requirement, or (2) any material actual, alleged, possible or potential
      obligation on the part of Seller to undertake, or to bear all or any portion
      of
      the cost of, any cleanup or any remedial, corrective or response action of
      any
      nature. 

     

    (b) Seller
      has delivered to the Purchaser an accurate and complete copy of each report,
      study, survey or other document to which Seller has access that addresses or
      otherwise relates to the compliance of Seller with, or the applicability to
      Seller of, any Legal Requirement.

     

    (c) To
      the
      Seller’s Knowledge, no Governmental Body has proposed or is considering any
      Legal Requirement that, if adopted or otherwise put into effect, (i) may have
      an
      adverse effect on the Assets or Seller’s business or financial condition or on
      the ability of Seller to comply with or perform any covenant or obligation
      under
      any of the Transactional Agreements, or (ii) may have the effect of preventing,
      delaying, making illegal or otherwise interfering with any of the
      Transactions.

     

    2.16. Governmental
      Authorizations.

     

    (a) Part
      2.16
      of the Disclosure Schedule identifies: (i) each Governmental Authorization
      that
      is held by Seller; and (ii) each other Governmental Authorization that, to
      Seller’s Knowledge, is held by any employee of the Seller or any independent
      contractor and relates to or is useful in connection with Seller’s
      business.

     

    (b) Seller
      has delivered to the Purchaser accurate and complete copies of all of the
      Governmental Authorizations identified in Part 2.16 of the Disclosure Schedule,
      including all renewals thereof and all amendments thereto. Each Governmental
      Authorization identified or required to be identified in Part 2.16 of the
      Disclosure Schedule is valid and in full force and effect.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (c) Except
      as
      set forth in Part 2.16 of the Disclosure Schedule: (i) To Seller’s Knowledge,
      its employees and independent contractors are, and the Seller and their
      respective employees have at all times been, in full compliance with all of
      the
      terms and requirements of each Governmental Authorization identified or required
      to be identified in Part 2.16 of the Disclosure Schedule; (ii) no event has
      occurred, and no condition or circumstance exists, that might (with or without
      notice or lapse of time) (A) constitute or result directly or indirectly in
      a
      violation of or a failure to comply with any term or requirement of any
      Governmental Authorization identified or required to be identified in Part
      2.16
      of the Disclosure Schedule, or (B) result directly or indirectly in the
      revocation, withdrawal, suspension, cancellation, termination or modification
      of
      any Governmental Authorization identified or required to be identified in Part
      2.16 of the Disclosure Schedule; (iii) Seller has never received, and, of CFO
      ,
      no employee of Seller has ever received, any notice or other communication
      (in
      writing or otherwise) from any Governmental Body or any other Person regarding:
      (A) any actual, alleged, possible or potential violation of or failure to comply
      with any term or requirement of any Governmental Authorization, or (B) any
      actual, proposed, possible or potential revocation, withdrawal, suspension,
      cancellation, termination or modification of any Governmental Authorization;
      and
      (iv) all applications required to have been filed for the renewal of the
      Governmental Authorizations required to be identified in Part 2.16 of the
      Disclosure Schedule have been duly filed on a timely basis with the appropriate
      Governmental Bodies, and each other notice or filing required to have been
      given
      or made with respect to such Governmental Authorizations has been duly given
      or
      made on a timely basis with the appropriate Governmental Body, except, with
      respect to (i), (ii) or (iii) above, where an MAE would not be likely to
      occur.

     

    (d) The
      Governmental Authorizations identified in Part 2.16 of the Disclosure Schedule
      constitute all of the Governmental Authorizations necessary: (i) to enable
      Seller to conduct its business in the manner in which its business is currently
      being conducted and in the manner in which its business is proposed to be
      conducted, and (ii) to permit Seller to own and use its Assets in the manner
      in
      which they are currently owned and used and in the manner in which they are
      proposed to be owned and used.

     

    2.17. Tax
      Matters.

     

    (a) Each
      Tax
      required to have been paid by Seller (whether pursuant to any Tax Return or
      otherwise) has been duly paid in full or on a timely basis. Any Tax required
      to
      have been withheld or collected by Seller has been duly withheld and collected;
      and (to the extent required) each such Tax has been paid to the appropriate
      Governmental Body.

     

    (b) Part
      2.17
      of the Disclosure Schedule accurately identifies each examination or audit
      of
      any Tax Returns of the Seller that has been conducted since December 31, 2002.
      The Seller has delivered to the Purchaser accurate and complete copies of all
      audit reports and similar documents (to which the Seller has access) relating
      to
      such Tax Returns.

     

    (c) Except
      as
      set forth in Part 2.17 of the Disclosure Schedule, to Seller’s Knowledge, no
      claim or other
      Proceeding is pending or has been threatened against or with respect to the
      Seller in respect
      of any
      Tax. There are no unsatisfied Liabilities for Taxes (including liabilities
      for
      interest, additions to tax and penalties thereon and related expenses) with
      respect to any notice of deficiency
      or similar document received by the Seller. The Seller has not entered into
      or
      become
      bound by
      any agreement or
      consent pursuant to Section 341(f) of the Code.

     

    (d) There
      is
      no agreement, plan, arrangement or other Contract covering any employee or
      independent contractor or former employee or independent contractor of the
      Seller that, individually or collectively, could give rise directly or
      indirectly to the payment of any amount that would not be deductible pursuant
      to
      Section 280G or Section 162 of the Code.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (e) The
      Seller has delivered to (or made available for inspection by) the Purchaser
      accurate and complete copies of all material Tax Returns that have been filed
      on
      behalf of or with respect to the Seller for taxable years 2001, 2002 and 2003.
      The information contained in such Tax
      Returns
      is accurate and complete in all material respects.

     

    2.18. Employee
      and Labor Matters.

     

    (a) Part
      2.18
      of the Disclosure Schedule accurately sets forth, with respect to each employee
      of Seller (including any employee of Seller who is on a leave of absence or
      on
      layoff status): (i) the name of such employee and the date as of which such
      employee was originally hired by Seller or one of the Prior Subsidiary; (ii)
      such employee’s title, and a description of such employee’s duties and
      responsibilities; (iii) the aggregate dollar amount of the compensation
      (including wages, salary, commissions, director’s fees, fringe benefits,
      bonuses, profit-sharing payments and other payments or benefits of any type)
      received by such employee from Seller with respect to services performed in;
      (iv) such employee’s annualized compensation as of the date of this Agreement;
      (v) each Current Benefit Plan in which such employee participates or is eligible
      to participate; and (vi) any Governmental Authorization that is held by such
      employee and that relates to or is useful in connection with Seller’s
      business.

     

    (b) Except
      as
      set forth in Part 2.18 of the Disclosure Schedule, Seller is not a party to
      or
      bound by, and none of the Seller’s employees have ever been a party to or bound
      by, any employment agreement or any union contract, collective bargaining
      agreement or similar Contract.

     

    (c) The
      employment of the employees of the Seller is terminable by Seller at will and
      no
      employee is entitled to any severance pay or other benefits following
      resignation or termination, except as provided by law. The Seller has delivered
      to the Purchaser accurate and complete copies of all employee manuals and
      handbooks, disclosure materials, policy statements and other materials relating
      to the employment of the current and former employees of each of the
      Seller.

     

    (d) To
      the
      Seller’s Knowledge: (i) no employee of Seller intend to terminate his
      employment; (ii) no employee of Seller has received an offer to join a business
      that may be competitive with Seller’s business; and (iii) no employee of Seller
      is a party to or is bound by any confidentiality agreement, noncompetition
      agreement or other Contract (with any Person) that may have any material adverse
      effect on (A) the performance by such employee of any of his duties or
      responsibilities as an employee of Seller, or (B) Seller’s business or
      operations.

     

    (e) Seller
      is
      not engaged, and none of the Seller has ever been engaged, in any unfair labor
      practice of any nature. There has never been any slowdown, work stoppage, labor
      dispute or union organizing activity, or any similar activity or dispute,
      affecting Seller or any of their employees. There is not now pending, and to
      Seller’s Knowledge, no Person has threatened to commence, any such slowdown,
      work stoppage, labor dispute or union organizing activity or any similar
      activity or dispute. No event has occurred, and no condition or circumstance
      exists, that might directly or indirectly give rise to or provide a basis for
      the commencement of any such slowdown, work stoppage, labor dispute or union
      organizing activity or any similar activity or dispute.

     

    (f) Part
      2.18
      of the Disclosure Schedule sets forth the name of, and a general description
      of
      the services performed by, each independent contractor to whom the Seller has
      made any payments since December 31, 2004.

     

    
      
         

      

      
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    2.19. Benefit
      Plans; ERISA.

     

    (a) Part
      2.19
      of the Disclosure Schedule identifies and provides an accurate and complete
      description of each Current Benefit Plan and each Past Benefit Plan. None of
      the
      Seller has ever established, adopted, maintained, sponsored, contributed to,
      participated in or incurred any Liability with respect to any Employee Benefit
      Plan, except for the Company Plans identified in Part 2.19 of the Disclosure
      Schedule; and none of the Seller has ever provided or made available any fringe
      benefit or other benefit of any nature to any of its employees, except as set
      forth in Part 2.19 of the Disclosure Schedule. 

     

    (b) No
      Company Plan: (i) provides or provided any benefit guaranteed by the Pension
      Benefit Guaranty Corporation; (ii) is or was a “multiemployer plan” as defined
      in Section 4001(a)(3) of ERISA; or (iii) is or was subject to the minimum
      funding standards of Section 412 of the Code or Section 302 of
      ERISA.

     

    There
      is
      no Person that (by reason of common control or otherwise) is or has at any
      time
      been treated together with Seller or any of the Prior Subsidiary as a single
      employer within the meaning of Section 414 of the Code. 

     

    (c) Seller
      has delivered to the Purchaser, with respect to each Company Plan: (i) an
      accurate and complete copy of such Company Plan and all amendments thereto
      (including any amendment that is scheduled to take effect in the future); (ii)
      an accurate and complete copy of each Contract (including any trust agreement,
      funding agreement, service provider agreement, insurance agreement, investment
      management agreement or record keeping agreement) relating to such Company
      Plan;
      (iii) an accurate and complete copy of any description, summary, notification,
      report or other document that has been furnished to any employee of Seller
      with
      respect to such Company Plan; (iv) an accurate and complete copy of any form,
      report, registration statement or other document that has been filed with or
      submitted to any Governmental Body with respect to such Company Plan; and (v)
      an
      accurate and complete copy of any determination letter, notice or other document
      that has been issued by, or that has been received by Seller from, any
      Governmental Body with respect to such Company Plan.

     

    (d) Except
      as
      set for in Section 2.19 of the Disclosure Schedule and except where an MAE
      would
      not be likely to occur, each Current Benefit Plan is being operated and
      administered in full compliance with the provisions thereof, and each Company
      Plan has at all times been operated and administered in full compliance with
      the
      provisions thereof. Each contribution or other payment that is required to
      have
      been accrued or made under or with respect to any Company Plan has been duly
      accrued and made on a timely basis. Each Current Benefit Plan complies and
      is
      being operated and administered in full compliance with, and each Company Plan
      has at all times complied and been operated and administered in full compliance
      with, all applicable reporting, disclosure and other requirements of ERISA
      and
      the Code and all other applicable Legal Requirements in all material respects.
      None of the Seller has ever incurred any Liability to the Internal Revenue
      Service or any other Governmental Body with respect to any Company Plan; and
      no
      event has occurred, and no condition or circumstance exists, that might (with
      or
      without notice or lapse of time) give rise directly or indirectly to any such
      Liability. The Seller, and no Person that is or was an administrator or
      fiduciary of any Company Plan (or any such administrator or fiduciary), has
      engaged in any transaction or has otherwise acted or failed to act in a manner
      that has subjected or may subject Seller to any Liability for breach of any
      fiduciary duty or any other duty. No Company Plan, and no Person that is or
      was
      an administrator or fiduciary of any Company Plan (or any such administrator
      or
      fiduciary): (i) has engaged in a “prohibited transaction” within the meaning of
      Section 406 of ERISA or Section 4975 of the Code; (ii) has failed to perform
      any
      of the responsibilities or obligations imposed upon fiduciaries under Title
      I of
      ERISA; or (iii) has taken any action that (A) may subject such Company Plan
      or
      such Person to any Tax, penalty or Liability relating to any “prohibited
      transaction,” or (B) may directly or indirectly give rise to or serve as a basis
      for the assertion (by any employee or by any other Person) of any claim under,
      on behalf of or with respect to such Company Plan.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (e) No
      inaccurate or misleading representation, statement or other communication has
      been made or directed (in writing or otherwise) to any current or former
      employee of Seller (i) with respect to such employee’s participation,
      eligibility for benefits, vesting, benefit accrual or coverage under any Company
      Plan or with respect to any other matter relating to any Company Plan, or (ii)
      with respect to any proposal or intention on the part of Seller to establish
      or
      sponsor any Employee Benefit Plan or to provide or make available any fringe
      benefit or other benefit of any nature.

     

    (f) Except
      as
      set forth in Part 2.19 of the Disclosure Schedule, Seller has not advised any
      of
      its employees (in writing or otherwise) that it intends or expects to establish
      or sponsor any Employee Benefit Plan or to provide or make available any fringe
      benefit or other benefit of any nature in the future.

     

    2.20. Environmental
      Matters.

     

    (a) Seller
      is
      not liable or to Seller’s Knowledge potentially liable for any response cost or
      natural resource damages under Section 107(a) of CERCLA, or under any other
      so-called “superfund” or “superlien” law or similar Legal Requirement, at or
      with respect to any site.

     

    (b) The
      Seller has never received any notice or other communication (in writing or
      otherwise) from any Governmental Body or other Person regarding any actual,
      alleged, possible or potential Liability arising from or relating to the
      presence, generation, manufacture, production, transportation, importation,
      use,
      treatment, refinement, processing, handling, storage, discharge, release,
      emission or disposal of any Hazardous Material. No Person has ever commenced
      or
      to Seller’s Knowledge threatened to commence any contribution action or other
      Proceeding against Seller in connection with any such actual, alleged, possible
      or potential Liability; and to Seller’s Knowledge, no event has occurred, and no
      condition or circumstance exists, that may directly or indirectly give rise
      to,
      or result in Seller becoming subject to, any such Liability.

     

    (c) Except
      as
      set forth in Part 2.20 of the Disclosure Schedule, none of the Seller has ever
      generated, manufactured, produced, transported, imported, used, treated,
      refined, processed, handled, stored, discharged, released or disposed of any
      Hazardous Material (whether lawfully or unlawfully). Except as set forth in
      Part
      2.20 of the Disclosure Schedule, none of the Seller has ever permitted
      (knowingly or otherwise) any Hazardous Material to be generated, manufactured,
      produced, used, treated, refined, processed, handled, stored, discharged,
      released or disposed of (whether lawfully or unlawfully): (i) on or beneath
      the
      surface of any real property that is, or that has at any time been, owned by,
      leased to, controlled by or used by Seller; (ii) in or into any surface water,
      groundwater, soil or air associated with or adjacent to any such real property;
      or (iii) in or into any well, pit, pond, lagoon, impoundment, ditch, landfill,
      building, structure, facility, improvement, installation, equipment, pipe,
      pipeline, vehicle or storage container that is or was located on or beneath
      the
      surface of any such real property or that is or has at any time been owned
      by,
      leased to, controlled by or used by Seller.

     

    (d) To
      Seller’s Knowledge, all property that is owned by, leased to, controlled by or
      used by Seller, and all surface water, groundwater, soil and air associated
      with
      or adjacent to such property: (i) is in clean and healthful condition; is free
      of any Hazardous Material and any harmful chemical or physical conditions;
      and
      (ii) is free of any environmental contamination of any nature.

     

    (e) Each
      storage tank or other storage container that is or has been owned by, leased
      to,
      controlled by or used by Seller, or that is located on or beneath the surface
      of
      any real property owned by, leased to, controlled by or used by Seller: (i)
      is
      in sound condition; and (i) has been demonstrated by accepted testing
      methodologies to be free of any corrosion or leaks.

     

    
      
         

      

      
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    2.21. Sale
      of Products; Performance of Services.
      To
      Seller’s Knowledge:

     

    (a) Each
      product that has been sold by Seller to any Person: (i) conformed and complied
      in all material respects with the terms and requirements of any applicable
      warranty or other Contract and with all applicable Legal Requirements; and
      (ii)
      was free of any material design defects, construction defects or other defects
      or deficiencies at the time of sale. 

     

    (b) All
      repair services and other services that have been performed by the Seller were,
      in all material respects, performed properly and in full conformity with the
      terms and requirements of all applicable warranties and other Contracts and
      with
      all applicable Legal Requirements.

     

    (c) Seller
      will not incur or otherwise become subject to any material Liability arising
      directly or indirectly from any product manufactured or sold, or any repair
      services or other services performed by, Seller on or at any time prior to
      the
      Closing Date.

     

    (d) Except
      as
      set forth in Schedule 2.21 of the Disclosure Schedule, no product manufactured
      or sold by Seller has been the subject of any recall or other similar action;
      and no event has occurred, and no condition or circumstance exists, that might
      (with or without notice or lapse of time) directly or indirectly give rise
      to or
      serve as a basis for any such recall or other similar action relating to any
      such product.

     

    (e) Except
      as
      set forth in Part 2.21 of the Disclosure Schedule, no customer or other Person
      has ever asserted or threatened to assert any claim against Seller (i) under
      or
      based upon any warranty provided by or on behalf of Seller, or (ii) under or
      based upon any other warranty relating to any product sold by Seller or any
      services performed by Seller. To Seller’s Knowledge, no event has occurred, and
      no condition or circumstance exists, that might (with or without notice or
      lapse
      of time) directly or indirectly give rise to or serve as a basis for the
      assertion of any such claim.

     

    2.22. Insurance.

     

    (a) Part
      2.22
      of the Disclosure Schedule accurately sets forth, with respect to each insurance
      policy maintained by or at the expense of, or for the direct or indirect benefit
      of, Seller: (i) the name of the insurance carrier that issued such policy and
      the policy number of such policy; (ii) whether such policy is a “claims made” or
      an “occurrences” policy; (ii) a description of the coverage provided by such
      policy and the material terms and provisions of such policy (including all
      applicable coverage limits, deductible amounts and co-insurance arrangements
      and
      any non-customary exclusions from coverage); (iv) the annual premium payable
      with respect to such policy, and the cash value (if any) of such policy; and
      (v)
      a description of any claims pending, and any claims that have been asserted
      in
      the past, with respect to such policy. Part 2.22 of the Disclosure Schedule
      also
      identifies: (1) each pending application for insurance that has been submitted
      by or on behalf of Seller, (2) each self-insurance or risk-sharing arrangement
      affecting Seller or, any of its Assets, and (3) all material risks (of the
      type
      customarily insured by comparable entities) for which the Seller does not
      maintain insurance coverage. Seller has delivered to the Purchaser accurate
      and
      complete copies of all of the insurance policies identified in Part 2.22 of
      the
      Disclosure Schedule (including all renewals thereof and endorsements thereto)
      and all of the pending applications identified in Part 2.22 of the Disclosure
      Schedule.

     

    (b) Each
      of
      the policies identified in Part 2.22 of the Disclosure Schedule is valid,
      enforceable and in full force and effect, and has been issued by an insurance
      carrier that, to Seller’s Knowledge, is solvent, financially sound and
      reputable. All of the information contained in the applications submitted in
      connection with said policies was (at the times said applications were
      submitted) accurate and complete in all material respects, and all premiums
      and
      other amounts owing with respect to said policies have been paid in full on
      a
      timely basis. The nature, scope and dollar amounts of the insurance coverage
      provided by said policies are sufficient to adequately insure Seller’s business,
      Assets, operations, key employees, services and potential liabilities; and
      said
      insurance coverage is at least as comprehensive as the insurance coverage
      customarily maintained by Comparable Entities.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    (c) Except
      as
      set forth in Part 2.22 of the Disclosure Schedule, there is no pending claim
      under or based upon any of the policies identified in Part 2.22 of the
      Disclosure Schedule; and no event has occurred, and no condition or circumstance
      exists, that might (with or without notice or lapse of time) directly or
      indirectly give rise to or serve as a basis for any such claim.

     

    (d) None
      of
      the Seller has received: (i) any notice or other communication (in writing
      or
      otherwise) regarding the actual or possible cancellation or invalidation of
      any
      of the policies identified in Part 2.22 of the Disclosure Schedule or regarding
      any actual or possible adjustment in the amount of the premiums payable with
      respect to any of said policies; (ii) any notice or other communication (in
      writing or otherwise) regarding any actual or possible refusal of coverage
      under, or any actual or possible rejection of any claim under, any of the
      policies identified in Part 2.22 of the Disclosure Schedule; or (iii) any
      indication that the issuer of any of the policies identified in Part 2.22 of
      the
      Disclosure Schedule may be unwilling or unable to perform any of its obligations
      thereunder.

     

    2.23. Related
      Party Transactions. Except
      as
      set forth in Part 2.23 of the Disclosure Schedule and to Seller’s
      Knowledge:

     

    (a) no
      Related Party has, and no Related Party has at any time since June 30, 2006,
      had, any direct or indirect interest of any nature in any asset used in or
      otherwise relating to the business of any of Seller;

     

    (b) no
      Related Party is, or has at any time since June
      30,
      2006 been,
      nor
      will any Related Party be indebted to Seller;

     

    (c) since
      June 30, 2006, no Related Party has entered into, or will be entering into
      up
      until the time of the Closing, or has had any direct or indirect financial
      interest in, any Contract, transaction or business dealing of any nature
      involving Seller;

     

    (d) no
      Related Party is competing or will be competing up until the time of the
      Closing, or has at any time since June 30, 2006 competed, directly or
      indirectly, with Seller in any market served by Seller;

     

    (e) no
      Related Party has any claim or right against Seller; and

     

    (f) no
      event
      has occurred, and no condition or circumstance exists, that might (with or
      without notice or lapse of time) directly or indirectly give rise to or serve
      as
      a basis for any claim or right in favor of any Related Party against
      Seller.

     

    2.24. Certain
      Payments, Etc. Seller,
      and to Seller’s Knowledge, no officer, employee, or other Person associated with
      or acting for or on behalf of Seller, has at any time, directly or
      indirectly:

     

    (a) used
      any
      corporate funds: (i) to make any unlawful political contribution or gift or
      for
      any other unlawful purpose relating to any political activity, (ii) to make
      any
      unlawful payment to any governmental official or employee, or (iii) to establish
      or maintain any unlawful or unrecorded fund or account of any
      nature;

     

    (b) made
      any
      false or fictitious entry, or failed to make any entry that should have been
      made, in any of the books of account or other records of Seller;

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    (c) made
      any
      payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
      Person;

     

    (d) performed
      any favor or given any gift which was not deductible for federal income tax
      purposes;

     

    (e) made
      any
      payment (whether or not lawful) to any Person, or provided (whether lawfully
      or
      unlawfully) any favor or anything of value (whether in the form of property
      or
      services, or in any other form) to any Person, for the purpose of obtaining
      or
      paying for (i) favorable treatment in securing business, or (ii) any other
      special concession; or

     

    (f) agreed,
      committed, offered or attempted to take any of the actions described in clauses
      “(a)” through “(e)” above.

     

    2.25. Proceedings;
      Orders.

     

    (a) Except
      as
      set forth in Part 2.25 of the Disclosure Schedule and to Seller’s Knowledge,
      there is no pending Proceeding, and no Person has threatened to commence any
      Proceeding: (i) that involves Seller or that otherwise relates to or might
      affect Seller’s business or any of the Assets owned or used by Seller (whether
      or not Seller is named as a party thereto); or (ii) that challenges, or that
      may
      have the effect of preventing, delaying, making illegal or otherwise interfering
      with, any of the Transactions. 

     

    (b) Except
      as
      set forth in Part 2.25 of the Disclosure Schedule, no event has occurred, and
      no
      claim, dispute or other condition or circumstance exists, that might directly
      or
      indirectly give rise to or serve as a basis for the commencement of any such
      Proceeding.

     

    (c) Except
      as
      set forth in Part 2.25 of the Disclosure Schedule, no Proceeding has ever been
      commenced by or against Seller; and no Proceeding otherwise involving or
      relating to Seller has been pending or to Seller’s Knowledge threatened at any
      time.

     

    (d) Seller
      has delivered to the Purchaser accurate and complete copies of all pleadings,
      correspondence and other written materials to which Seller has access that
      relate to the Proceedings identified in Part 2.25 of the Disclosure Schedule.
      

     

    (e) There
      is
      no Order to which Seller or any of the Assets owned or used by Seller, is
      subject to any Order that relates to Seller’s business or to any of the Assets
      owned or used by Seller.

     

    (f) To
      Seller’s Knowledge, Ramesh Trivedi, Leland Witherspoon and David Adams are not
      subject to any Order that prohibits them from engaging in or continuing any
      conduct, activity or practice relating to Seller’s business.

     

    (g) There
      is
      no proposed Order that, if issued or otherwise put into effect: (i) would have
      any material adverse effect on the Assets or Seller’s business or financial
      condition,, or on the ability of Seller to comply with or perform any covenant
      or obligation under any of the Transactional Agreements, or (ii) would, to
      Seller’s Knowledge, have the effect of preventing, delaying, making illegal or
      otherwise interfering with any of the Transactions.

     

    2.26. Authority;
      Binding Nature of Agreements.

     

    (a) Subject
      to Stockholder approval, Seller has the absolute and unrestricted right, power
      and authority to enter into and to perform its obligations under this Agreement;
      and the execution, delivery and performance by Seller of this Agreement have
      been duly authorized by all necessary action on the part of Seller and its
      Stockholders, board of directors and officers. This Agreement constitutes the
      legal, valid and binding obligation of Seller, enforceable against Seller in
      accordance with its terms, except as the same may be limited by applicable
      bankruptcy or insolvency laws. 

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    2.27. Non-Contravention;
      Consents. Except
      as
      set forth in Part 2.27 of the Disclosure Schedule, neither the execution and
      delivery of any of the Transactional Agreements, nor the consummation or
      performance of any of the Transactions, will directly or indirectly materially
      (with or without notice or lapse of time):

     

    (a) contravene,
      conflict with or result in a violation of (i) any of the provisions of Seller’s
      certificate of incorporation or bylaws, or (ii) any resolution adopted Seller’s
      board of directors or any committee of Seller’s board of directors;

     

    (b) contravene,
      conflict with or result in a violation of, or give any Governmental Body or
      other Person the right to challenge any of the Transactions or to exercise
      any
      remedy or obtain any relief under, any Legal Requirement or any Order to which
      Seller, or any of the Assets owned or used by Seller, is subject;

     

    (c) cause
      Seller, the Purchaser or any affiliate of the Purchaser to become subject to,
      or
      to become liable for the payment of, any Tax;

     

    (d) contravene,
      conflict with or result in a violation of any of the terms or requirements
      of,
      or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
      terminate or modify, any Governmental Authorization that is held by Seller
      or
      any of its employees or that otherwise relates to Seller’s business or to any of
      the Assets owned or used by Seller;

     

    (e) contravene,
      conflict with or result in a violation or breach of, or result in a default
      under, any provision of any Seller Contract;

     

    (f) give
      any
      Person the right to (i) declare a default or exercise any remedy under any
      Seller Contract, (ii) accelerate the maturity or performance of any Seller
      Contract, or (iii) cancel, terminate or modify any Seller Contract;
      or

     

    (g) result
      in
      the imposition or creation of any Encumbrance upon or with respect to any asset
      owned or used by Seller.

     

    Except
      as
      set forth in Part 2.27 of the Disclosure Schedule, Seller has made all filings
      with or given the necessary notices to, or to obtain any Consent from, any
      Person in connection with the execution and delivery of any of the Transactional
      Agreements or the consummation or performance of any of the
      Transactions.

     

    2.28. Brokers.
      Seller
      has not agreed or become obligated to pay, or has taken any action that might
      result in any Person claiming to be entitled to receive, any brokerage
      commission, finder’s fee or similar commission or fee in connection with any of
      the Transactions.

     

    2.29. Full
      Disclosure.

     

    (a) None
      of
      the Transactional Agreements contains or will contain any material untrue
      statement of fact; and none of the Transactional Agreements omits or will omit
      to state any material fact necessary to make any of the representations,
      warranties or other statements or information contained therein not
      misleading.

     

    (b) Except
      as
      set forth in Part 2.30 of the Disclosure Schedule, there is no fact within
      the
      Knowledge of Seller (other than publicly known facts relating exclusively to
      political or economic matters of general applicability that will adversely
      affect all Comparable Entities) that: (i) may have any material adverse effect
      on the Assets or Seller’s business or financial condition, or on the ability of
      Seller to comply with or perform any covenant or obligation under any of the
      Transactional Agreements, or (ii) may have the effect of preventing, delaying,
      making illegal or otherwise interfering with any of the
      Transactions.

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    (c) All
      of
      the information set forth in the Disclosure Schedule, and all other information
      regarding the Seller and the Assets and the Seller’s business and financial
      condition that has been furnished to the Purchaser or any of its Representatives
      by or on behalf of Seller or any of Seller’s Representatives, is accurate and
      complete in all respects.

     

    (d) Seller
      has provided the Purchaser and the Purchaser’s Representatives with full and
      complete access to all of Seller’s records and other documents and data and to
      all records and other documents and data of the Prior Subsidiary.

     

    SECTION
      3. REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    The
      Purchaser represents and warrants to Seller as follows:

     

    3.1. Authority;
      Binding Nature of Agreement.

     

    Purchaser
      has the absolute and unrestricted right, power and authority to enter into
      and
      to perform its obligations under this Agreement; and the execution, delivery
      and
      performance by Purchaser of this Agreement have been duly authorized by all
      necessary action on the part of Purchaser and its board of directors and
      officers. This Agreement constitutes the legal, valid and binding obligation
      of
      Purchaser, enforceable against Purchaser in accordance with its terms, except
      as
      the same may be limited by applicable bankruptcy or insolvency
      laws;

     

    3.2. Brokers.
      The
      Purchaser has not agreed or become obligated to pay, and has not taken any
      action that might result in any Person claiming to be entitled to receive,
      any
      brokerage commission, finder’s fee or similar commission or fee in connection
      with any of the Transactions.

     

    SECTION
      4. PRE-CLOSING
      COVENANTS 

     

    4.1. Access
      and Investigation. Seller
      shall ensure will use commercially reasonable efforts to ensure that, at all
      times during the pre-closing period:

     

    (a) Seller
      and its Representatives provide the Purchaser and its Representatives with
      free
      and complete access during normal business hours to personnel and Assets and
      to
      all existing books, records, Tax Returns, work papers and other documents and
      information relating to the Seller;

     

    (b) Seller
      and its Representatives provide the Purchaser and its Representatives with
      such
      copies of existing books, records, Tax Returns, work papers and other documents
      and information relating to the Seller as the Purchaser may request in good
      faith; and

     

    (c) Seller
      and its Representatives compile and provide the Purchaser and its
      Representations with such additional financial, operating and other data and
      information regarding the Seller as the Purchaser may request in good
      faith.

     

    4.2. Operation
      of Business. Seller
      shall ensure that, during the Pre-Closing Period:

     

    (a) Seller
      conducts its operations exclusively in the Ordinary Course of Business and
      in
      the same manner as such operations have been conducted prior to the date of
      this
      Agreement;

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    (b) Seller
      preserves intact its current business organization, keeps available the services
      of its current officers and employees and maintains its relations and good
      will
      with all suppliers, customers, landlords, creditors, licensors, licensees,
      employees and other Persons having business relationships with
      Seller;

     

    (c) Seller
      to
      use all reasonable efforts and within a reasonable time to execute all necessary
      documents to put into place all reasonable and necessary insurance policies
      as
      required under Section 2.22(b) prior to Closing;

     

    (d) Seller’s
      officers confer with the Purchaser regularly to the Purchaser concerning the
      status of the Assets or Seller’s business or financial condition;

     

    (e) Seller
      immediately notifies the Purchaser of any inquiry, proposal or offer from any
      Person relating to any Acquisition Transaction;

     

    (f) Seller
      and its officers use commercially reasonable efforts to cause the Company to
      operate profitably and to maximize its net income;

     

    (g) Seller
      does not form any subsidiary or acquire any equity interest or other interest
      in
      any other Entity;

     

    (h) Seller
      does not enter into or permit any of the Assets owned or used by Seller to
      become bound by any Contract, except for any Excluded Contract;

     

    (i) Seller
      does not incur, assume or otherwise become subject to any Liability, except
      for
      current liabilities (of the type required to be reflected in the “liabilities”
column of a balance sheet prepared in accordance with GAAP) incurred in the
      Ordinary Course of Business;

     

    (j) Seller
      does not enter into any transaction or take any other action of the type
      referred to in Section 2.5;

     

    (k) Seller
      does not enter into any transaction or take any other action outside the
      Ordinary Course of Business;

     

    (l) Seller
      does not enter into any transaction or take any other action that might cause
      or
      constitute a Breach of any representation or warranty made by Seller in this
      Agreement or in the Closing Certificate; and

     

    (m) Seller
      does not agree, commit or offer (in writing or otherwise), and does not attempt,
      to take any of the actions described in clauses “(i)” through “(v)” of this
      Section 4.2.

     

    4.3. Filings
      and Consents. Seller
      shall ensure that:

     

    (a) as
      soon
      as possible after the date of this Agreement, Seller files with the appropriate
      Governmental Bodies the notification form required to be filed by Seller with
      respect to the Transactions, together with a request for early termination
      of
      the applicable waiting period;

     

    (b) after
      consultation with the Purchaser, Seller promptly makes any additional filing
      required to be made by Seller under th and promptly furnishes to the appropriate
      Governmental Bodies such additional information as may be requested under the
      

     

    (c) each
      other filing or notice required to be made or given (pursuant to any applicable
      Legal Requirement, Order or Contract, or otherwise) by Seller in connection
      with
      the execution and delivery of any of the Transactional Agreements or in
      connection with the consummation or performance of any of the Transactions
      (including each of the filings and notices identified in Part 2.28 of the
      Disclosure Schedule) is made or given as soon as possible after the date of
      this
      Agreement;

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    (d) each
      Consent required to be obtained (pursuant to any applicable Legal Requirement,
      Order or Contract, or otherwise) by Seller in connection with the execution
      and
      delivery of any of the Transactional Agreements or in connection with the
      consummation or performance of any of the Transactions (including each of the
      Consents identified in Part 2.28 of the Disclosure Schedule) is obtained as
      soon
      as possible after the date of this Agreement and remains in full force and
      effect through the Closing Date;

     

    (e) Seller
      promptly delivers to the Purchaser a copy of each filing made, each notice
      given
      and each Consent obtained by Seller during the Pre-Closing Period;
      and

     

    (f) during
      the Pre-Closing Period, Seller and its Representatives cooperate with the
      Purchaser and with the Purchaser’s Representatives, and prepare and make
      available such documents and take such other actions as the Purchaser may
      request in good faith, in connection with any filing, notice or Consent that
      the
      Purchaser is required or elects to make, give or obtain.

     

    4.4. Notification;
      Updates to Disclosure Schedule.

     

    (a) During
      the Pre-Closing Period, Seller shall promptly notify the Purchaser in writing
      of: (i) the discovery by Seller of any event, condition, fact or circumstance
      that occurred or existed on or prior to the date of this Agreement and that
      caused or constitutes a Breach of any representation or warranty made by Seller
      in this Agreement; (ii) any event, condition, fact or circumstance that occurs,
      arises or exists after the date of this Agreement and that would cause or
      constitute a Breach of any representation or warranty made by Seller in this
      Agreement if (A) such representation or warranty had been made as of the time
      of
      the occurrence, existence or discovery of such event, condition, fact or
      circumstance, or (B) such event, condition, fact or circumstance had occurred,
      arisen or existed on or prior to the date of this Agreement; (iii) any Breach
      of
      any covenant or obligation of Seller: and (iv) any event, condition, fact or
      circumstance that may make the timely satisfaction of any of the conditions
      set
      forth in Section 6 or Section 7 impossible or unlikely.

     

    (b) If
      any
      event, condition, fact or circumstance that is required to be disclosed pursuant
      to Section 4.4(a) requires any change in the Disclosure Schedule, or if any
      such
      event, condition, fact or circumstance would require such a change assuming
      the
      Disclosure Schedule were dated as of the date of the occurrence, existence
      or
      discovery of such event, condition, fact or circumstance, then Seller shall
      promptly deliver to the Purchaser an update to the Disclosure Schedule
      specifying such change. No such update shall be deemed to supplement or amend
      the Disclosure Schedule for the purpose of (i) determining the accuracy of
      any
      of the representations and warranties made by Seller in this Agreement or in
      the
      Closing Certificate, or (ii) determining whether any of the conditions set
      forth
      in Section 6 has been satisfied.

     

    4.5. No
      Negotiation.
      Seller
      shall ensure that, during the Pre-Closing Period, neither Seller nor any of
      Seller’s Representatives directly or indirectly:

     

    (a) solicits
      or encourages the initiation of any inquiry, proposal or offer from any Person
      (other than the Purchaser) relating to any Acquisition Transaction;

     

    (b) participates
      in any discussions or negotiations with, or provides any non-public information
      to, any Person (other than the Purchaser) relating to any Acquisition Proposal;
      or

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    (c) except
      as
      otherwise required by applicable law, rule or regulation or through the exercise
      of appropriate fiduciary duty, considers the merits of any unsolicited inquiry,
      proposal or offer from any Person (other than the Purchaser) relating to any
      Acquisition Transaction.

     

    4.6. Best
      Efforts; Stockholder Approval.
      Both
      parties shall use their best efforts to mutually cooperate with each other
      and
      ensure that all closing conditions are satisfied on a timely basis. The Board
      of
      Directors of Seller shall recommend to the Stockholders that the Stockholders
      approve the Transaction and take any other action reasonably necessary to
      effectuate such approval.

     

    4.7. Employment
      Offers.
      Purchaser and Seller shall mutually negotiate in good faith the terms and
      conditions of employment with Purchaser for each of Ramesh Trivedi, Leland
      Witherspoon, and Dave Adams.

     

    4.8. Confidentiality.
      Purchaser
      and Seller shall ensure that, during the Pre-Closing Period:

     

    (a) Purchaser,
      Seller and their respective Representatives keep strictly confidential the
      existence and terms of this Agreement;

     

    (b) neither
      party nor any of its Representatives issues or disseminates any press release
      or
      other publicity or otherwise makes any disclosure of any nature (to any of
      Seller’s suppliers, customers, landlords, creditors or employees or to any other
      Person) regarding any of the Transactions, except in each Parties reasonable
      discretion and to the extent that either party is required by law, rule or
      regulation to make any such disclosure regarding the Transactions:
      and

     

    (c) if
      either
      party is required by law to make any disclosure regarding the Transactions,
      the
      disclosing party shall advise the non-disclosing party, the nature and content
      of the intended disclosure within a reasonable time either before or after
      such
      disclosure. 

     

    SECTION
      5. RESERVED

     

    SECTION
      6. CONDITIONS
      PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE

     

    The
      Purchaser’s obligation to purchase the Assets and to take the other actions
      required to be taken by the Purchaser at the Closing is subject to the
      satisfaction, at or prior to the Closing, of each of the following conditions
      (any of which may be waived by the Purchaser, in whole or in part, in accordance
      with Section 11.10):

     

    6.1. Accuracy
      of Representations.

     

    (a) Each
      of
      the Specified Representations shall have been accurate in all material respects
      as of the date of this Agreement, and shall be accurate in all respects as
      of
      the Scheduled Closing Time as if made at the Scheduled Closing Time, without
      giving effect to any update to the Disclosure Schedule.

     

    (b) All
      of
      the other representations and warranties made by Seller in this Agreement
      (considered collectively), and each of said representations and warranties
      (considered individually), shall have been accurate in all material respects
      as
      of the date of this Agreement, and shall be accurate in all material respects
      as
      of the Scheduled Closing Time as if made at the Scheduled Closing Time, without
      giving effect to any update to the Disclosure Schedule.

     

    6.2. Performance
      of Obligations.

     

    (a) Seller
      shall have executed and delivered each of the agreements required to be executed
      and delivered by Seller pursuant to Section 1.4(b).

     

    
      
         

      

      
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    (b) All
      of
      the other covenants and obligations that Seller is required to comply with
      or to
      perform at or prior to the Closing (considered collectively), and each of said
      covenants and obligations (considered individually), shall have been duly
      complied with and performed in all material respects.

     

    6.3. Consents.
      

     

    Each
      of
      the Consents identified in Part 2.28 of the Disclosure Schedule shall have
      been
      obtained and shall be in full force and effect.

     

    6.4. Additional
      Documents.
      Purchaser shall have received the following documents:

     

    (a) an
      opinion letter from law firm of Snow Becker Krauss P.C. dated the Closing Date,
      in the form of Exhibit E;. 

     

    (b) a
      letter
      from _________________________________, dated as of a date not more than three
      days prior to the Closing Date, in the form of Exhibit F;

     

    (c) such
      other documents as the Purchaser may reasonably request in good faith for the
      purpose of (i) evidencing the accuracy of any representation or warranty made
      by
      Seller, (ii) evidencing the compliance by Seller , or the performance by Seller
      of, any covenant or obligation set forth in this Agreement, (iii) evidencing
      the
      satisfaction of any condition set forth in this Section 6, or (iv) otherwise
      facilitating the consummation or performance of any of the
      Transactions.

     

    6.5. No
      Proceedings.
      Since
      the date of this Agreement, there shall not have been commenced or threatened
      against the Purchaser, or against any Person affiliated with the Purchaser,
      any
      Proceeding (a) involving any challenge to, or seeking damages or other relief
      in
      connection with, any of the Transactions, or (b) that may have the effect of
      preventing, delaying, making illegal or otherwise interfering with any of the
      Transactions.

     

    6.6. No
      Prohibition. Neither
      the consummation nor the performance of any the Transactions will, directly
      or
      indirectly (with or without notice or lapse of time), contravene or conflict
      with or result in a violation of, or cause the Purchaser or any Person
      affiliated with the Purchaser to suffer any adverse consequence under, (a)
      any
      applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
      that has been proposed by or before any Governmental Body.

     

    SECTION
      7. CONDITIONS
      PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

     

    The
      Seller’s obligation to Sell the Assets and to take the other actions required to
      be taken by the Seller at the Closing is subject to the satisfaction, at or
      prior to the Closing, of each of the following conditions (any of which may
      be
      waived by the Seller, in whole or in part, in writing):

     

    7.1. Accuracy
      of Representations. Each
      of
      said representations and warranties (considered individually), shall have been
      accurate in all material respects as of the date of this Agreement and shall
      be
      accurate in all material respects as of the Scheduled Closing Time as if made
      at
      the Scheduled Closing Time.

     

    7.2. Purchaser’s
      Performance.

     

    All
      of
      the covenants and obligations that the Purchaser is required to comply with
      or
      to perform pursuant to this Agreement at or prior to the Closing (considered
      collectively), and each of said covenants and obligations (considered
      individually), shall have been complied with and performed in all material
      respects.

     

    
      
         

      

      
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    7.3. Additional
      Documents.
      Seller
      shall have received the following documents:

     

    (a) an
      opinion letter from law firm of Soden & Steinberger, LLP dated the Closing
      Date, in the form of Exhibit F;. 

     

    (b) such
      other documents as the Seller may request in good faith for the purpose of
      (i)
      evidencing the accuracy of any representation or warranty made by Purchaser,
      (ii) evidencing the compliance by Purchaser with, or the performance by
      Purchaser of, any covenant or obligation set forth in this Agreement, (iii)
      evidencing the satisfaction of any condition set forth in this Section 7, or
      (iv) otherwise facilitating the consummation or performance of any of the
      Transactions.

     

    7.4 Stockholder
      Approval.
      Stockholders of Seller representing not less than a majority of the issued
      and
      outstanding shares of capital stock of Seller shall have approved this Agreement
      and the transactions contemplated hereby at a meeting of stockholders of Seller
      for which due notice has been provided.

     

    SECTION
      8. TERMINATION

     

    8.1. Termination
      Events. This
      Agreement may be terminated prior to the Closing:

     

    (a) by
      the
      Purchaser if (i) there is a material Breach of any representation, warranty,
      covenant or obligation of Seller, or (ii) the Purchaser reasonably determines
      that the timely satisfaction of any condition set forth in Section 6 has become
      impossible, or impractical (other than as a result of any failure on the part
      of
      the Purchaser to comply with or perform its covenants and obligations under
      this
      Agreement);

     

    (b) by
      the
      Seller if (i) there is a material Breach of any representation, warranty,
      covenant or obligation of the Purchaser, or (ii) the Seller reasonably
      determines that the timely satisfaction of any condition set forth in Section
      7
      has become impossible or impractical (other than as a result of any failure
      on
      the part of the Seller to comply with or perform its covenants and obligations
      under this Agreement);

     

    (c) by
      the
      Purchaser, at Purchaser’s sole discretion if the Closing has not taken place on
      or before June 30, 2007, (other than as a result of any failure on the part
      of
      the Purchaser to comply with or perform its covenants and obligations under
      this
      Agreement); 

     

    (d) by
      the
      mutual consent of the Purchaser and the Seller.

     

    8.2. Termination
      Procedures. If
      the
      Purchaser wishes to terminate this Agreement pursuant to Section 8.1(a) or
      Section 8.1(c), the Purchaser shall deliver to the Seller a written notice
      stating that the Purchaser is terminating this Agreement and setting forth
      a
      brief description of the basis on which the Purchaser is terminating this
      Agreement. If the Seller wishes to terminate this Agreement pursuant to Section
      8.1(b), the Seller shall deliver to the Purchaser a written notice stating
      that
      the Seller is terminating this Agreement and setting forth a brief description
      of the basis on which the Seller is terminating this Agreement.

     

    8.3. License
      Agreement.
      In the
      event that this Agreement is terminated by Purchaser pursuant to Section 8.1(c)
      or by Seller for any reason other than pursuant to Section 8.1(b) or (d) hereof,
      and provided that Purchaser is not in default of any provision of this
      Agreement, Seller agrees to execute in favor of Purchaser an exclusive license
      to use, manufacture, market and sell the ROBODOC Surgical Assist System and
      ORTHODOC Pre-Surgical Planning Station, including any and all Licensed Software
      as defined in the License Agreement annexed as Exhibit A to that certain Loan
      Agreement and Secured Promissory Note of even date herewith by and between
      the
      parties.

     

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

    8.4. Termination
      Fee.

     

    (a) In
      the
      event that the Closing does not occur as a result of the material breach of
      this
      Agreement by Seller (that cannot be cured upon reasonable notice and an
      opportunity to cure), then Seller shall, within thirty (30) days after
      termination of this Agreement, pay to Purchaser, as liquidated damages and
      not
      as a penalty, an amount equal to $240,000.

     

    (b) Seller
      acknowledges that the termination fee pursuant to this Section 8.3(b) is an
      integral part of the transactions contemplated by this Agreement, and that,
      without such fee, Purchaser would not enter into this Agreement. Seller further
      acknowledges that damages resulting from the failure to consummate the Closing
      as a result of a breach by Seller hereto would be difficult to determine and
      the
      termination fee payable pursuant to clause (i) above is the parties’ best
      estimate of such damages. 

     

    8.5. Effect
      of Termination. If
      this
      Agreement is terminated pursuant to Section 8.1, all further obligations of
      the
      parties under this Agreement shall terminate; provided, however,
      that:

     

    (a) no
      party
      shall be relieved of any obligation or other Liability arising from any Breach
      by such party of any provision of this Agreement; and

     

    (b) the
      parties shall, in all events, remain bound by and continue to be subject to
      the
      provisions set forth in Section 10; and

     

    (c) all
      parties shall, in all events, remain bound by and continue to be subject to
      Section 4.8.

     

    8.6. Nonexclusivity
      of Termination Rights. The
      termination rights provided in Section 8.1 shall not be deemed to be exclusive.
      Accordingly, the exercise by any party of its right to terminate this Agreement
      pursuant to Section 8.1 shall not be deemed to be an election of remedies and
      shall not be deemed to prejudice, or to constitute or operate as a waiver of,
      any other right or remedy that such party may be entitled to exercise (whether
      under this Agreement, under any other Contract, under any statute, rule or
      other
      Legal Requirement, at common law, in equity or otherwise).

     

    SECTION
      9. INDEMNIFICATION,
      ETC.

     

    9.1. Survival
      of Representations and Covenants.

     

    (a) The
      representations, warranties, covenants and obligations of each party to this
      Agreement shall survive: (i) the Closing and the sale of the Assets to the
      Purchaser; (ii) any sale or other disposition of any or all of the Assets by
      the
      Purchaser; and (iii) the death or dissolution of any party to this Agreement,
      in
      each case for a period of six (6) months from the date of the Closing,
provided that,
      the
      representations and warranties contained in Section 2.17 shall survive the
      Closing for a period of six (6) years.

     

    (b) In
      the
      event that a Claim Notice (as defined below) relating to any representation,
      warranty, covenant or obligation is given to any party on or prior to the
      applicable survival period set forth in subsection (a) above, then,
      notwithstanding anything to the contrary contained in this Section 9.1, such
      representation or warranty shall not so expire with respect to the specific
      claim so asserted.

     

    (c) For
      purposes of this Agreement, a “Claim Notice” relating to a particular
      representation, warranty, covenant or obligation shall be deemed to have been
      given if any party, acting in good faith, delivers to the other party a written
      notice stating that such party believes that there is or has been a possible
      Breach of such representation, warranty, covenant or obligation and containing
      (i) a brief description of the circumstances supporting such party’s belief that
      there is or has been such a possible Breach, and (ii) a non-binding, preliminary
      estimate of the aggregate dollar amount of the actual and potential Damages
      that
      have arisen and may arise as a direct or indirect result of such possible
      Breach.

     

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

    (d) For
      purposes of this Agreement, each statement or other item of information set
      forth in the Disclosure Schedule or in any update to the Disclosure Schedule
      shall be deemed to be a representation and warranty made by the Seller in this
      Agreement.

     

    9.2. Indemnification
      By The Seller.

     

    (a) The
      Shareholders and the Seller, jointly and severally, shall hold harmless and
      indemnify each of the Indemnitees from and against, and shall compensate and
      reimburse each of the Indemnitees for, any Damages that are directly or
      indirectly suffered or incurred by any
      of
      the Indemnitees or
      to
      which any
      of
      the Indemnitees may otherwise
      become subject
      at any
      time
      (regardless of whether or not such Damages relate to any third-party claim)
      and
      that arise directly or indirectly from or as a direct or indirect
      result of, or are directly or indirectly connected with:

     

    (i) any
      Breach of any of the representations or warranties made by the Seller
      in
      this Agreement (without giving effect to any update to the Disclosure
      Schedule) or in the Closing Certificate or any of the other Transactional
      Agreements;

     

    (ii) any
      Breach of any covenant or obligation of the Seller contained in any of the
      Transactional Agreements;

     

    (iii) any
      Liability of the Seller arising prior to the Closing, other than the Assumed
      Liabilities; or

     

    (iv) any
      Proceeding relating directly or indirectly to any Breach, alleged Breach,
      Liability or matter of the type referred to in clause “(i),”
      “(ii),”
      or “(iii),” above
      (including any Proceeding commenced by any party for the purpose of enforcing
      any of its rights under this Section 9.2).

     

    (b) The
      Seller shall not be required to make any indemnification payment pursuant to
      Section 9.2(a) until such time as the total amount of all Damages that have
      been
      directly or indirectly suffered or incurred by any one or more of the
      Indemnitees, or to which any one or more of the Indemnitees has or have
      otherwise become subject, exceeds $25,000. (If the total amount of such Damages
      exceeds the $25,000, the Indemnitees shall be entitled to be indemnified against
      and compensated and reimbursed for the entire amount of such Damages, and not
      merely the portion of such Damages exceeding $25,000.)

     

    9.3. Indemnification
      By Purchaser.

     

    (a) The
      Purchaser shall hold harmless and indemnify the Seller from and against, and
      shall compensate and reimburse the Seller for, any Damages that are directly
      or
      indirectly suffered or incurred by the Seller or to which the Seller may
      otherwise become subject at any time (regardless of whether or not such Damages
      relate to any third-party claim) and that arise directly or indirectly from
      or
      as a direct or indirect result of, or are directly or indirectly connected
      with:

     

    (i) any
      failure on the part of the Purchaser to perform and discharge the Assumed
      Liabilities on a timely basis;

     

    (ii) any
      Breach of any representation or warranty made by the Purchaser in this Agreement
      or any of the Transactional Agreements;

     

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    (iii) any
      Breach of any covenant or obligation of the Purchaser contained in this
      Agreement or any of the Transactional Agreements; or

     

    (iv) any
      Proceeding relating directly or indirectly to any failure or Breach of the
      type
      referred to in clause “(i)”, “(ii)” or “(iii)” above (including any Proceeding
      commenced by the Seller for the purpose of enforcing its rights under this
      Section 9.3).

     

    (b) Subject
      to Section 9.3(c), the Purchaser shall not be required to make any
      indemnification payment pursuant to Section 9.3(a) for any Breach of any of
      its
      representations and warranties until such time as the total amount of all
      Damages (including the Damages arising from such Breach and all other Damages
      arising from any other Breaches of its representations or warranties) that
      have
      been directly or indirectly suffered or incurred by the Seller, or to which
      the
      Seller have otherwise become subject, exceeds $25,000 in the aggregate. (If
      the
      total amount of such Damages exceeds $25,000 in the aggregate, the Seller shall
      be entitled to be indemnified against and compensated and reimbursed for the
      entire amount of such Damages, and not merely the portion of such Damages
      exceeding $25,000.)

     

    (c) The
      limitation on the indemnification obligations of the Purchaser that is set
      forth
      in Section 9.3(b) shall not apply to any Breach arising directly or indirectly
      from any circumstance of which the Purchaser had knowledge on or prior to the
      Closing Date.

     

    9.4. Nonexclusivity
      Of Indemnification Remedies. The
      indemnification remedies and
      other remedies
      provided in this Section 9 shall not be
      deemed
      to be
      exclusive. Accordingly,
      the
      exercise by any Person of any of its rights under this Section 9 shall not
      be
      deemed to be an election of remedies and shall not be deemed to prejudice,
      or to
      constitute or operate as a waiver of, any other right or remedy that such Person
      may be entitled to exercise (whether under this Agreement, under any other
      Contract, under any statute, rule or other Legal Requirement, at common law,
      in
      equity or otherwise).

     

    (a) Defense
      Of Third Party Claims.
      In the
      event of the assertion or commencement by any Person of any claim or Proceeding
      (whether against the Purchaser, against any other Indemnitee or against any
      other Person) with respect to which any of the Seller may become obligated
      to
      indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to
      this Section 9, the Purchaser shall have the right, at its election, to assume
      the defense of such claim or Proceeding at the sole expense of the Seller.
      

     

    If
      the
      Purchaser so proceeds with the defense of any such claim or Proceeding on its
      own:

     

    (i) all
      expenses relating to the defense of such claim or Proceeding (whether or not
      incurred by the Purchaser) shall be borne and paid exclusively by the
      Purchaser;

     

    (ii) the
      Seller shall make available to the Purchaser any documents and materials in
      the
      possession or control of any of the Seller that may be necessary to the defense
      of such claim or Proceeding;

     

    (iii) the
      Purchaser shall keep the Seller informed of all material developments and events
      relating to such claim or Proceeding; and

     

    (iv) the
      Purchaser shall have the right to settle, adjust or compromise such claim or
      Proceeding with the consent of the Seller; provided, however, that the Seller
      shall not unreasonably withhold such consent.

     

    9.5. Exercise
      of Remedies by Indemnitees Other Than Purchaser. No
      Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
      shall be permitted to
      assert
      any indemnification claim or exercise any other remedy under this Agreement
      unless the Purchaser (or any successor thereto or assign thereof) shall have
      consented to the assertion of such indemnification claim or the exercise of
      such
      other remedy.

     

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

    SECTION
      10. CERTAIN
      POST-CLOSING COVENANTS.

     

    10.1. Further
      Actions.
      From and
      after the Closing Date, the Seller shall cooperate with the Purchaser and the
      Purchaser’s affiliates and Representatives, and shall execute and deliver such
      documents and take such other actions as the Purchaser may reasonably request,
      for the purpose of evidencing the Transactions and putting the Purchaser in
      possession and control of all of the Assets.

     

    10.2. Publicity.
      Without
      limiting the generality of anything contained in Section 4.7, Purchaser and
      Seller shall ensure that, on and at all times after the Closing Date: (a) no
      press release or other publicity concerning any of the Transactions is issued
      or
      otherwise disseminated by or on behalf of Purchaser and Seller without the
      prior
      written consent of the other party; (b) the terms of this Agreement and the
      other Transactional Agreements are kept strictly confidential; and (c) no
      disclosure shall be made to any other Person of any non-public document or
      other
      information that relates directly or indirectly to the business of the Seller,
      the Purchaser or any affiliate of the either party.

     

    SECTION
      11. MISCELLANEOUS
      PROVISIONS

     

    11.1. Fees
      and Expenses. 

     

    (a) Seller
      shall bear and pay all fees, costs and expenses (including all legal fees and
      expenses payable to the law firm of Snow Becker Krauss P.C.) that have been
      incurred or that are in the future incurred by, on behalf of or for the benefit
      of Seller in connection with: (i) the negotiation, preparation and review of
      any
      term sheet or similar document relating to any of the Transactions; (ii) the
      investigation and review conducted by the Purchaser and its Representatives
      with
      respect to Seller’s business (and the furnishing of information to the Purchaser
      and its Representatives in connection with such investigation and review);
      (iii)
      the negotiation, preparation and review of this Agreement (including the
      Disclosure Schedule), the other Transactional Agreements and all certificates,
      opinions and other instruments and documents delivered or to be delivered in
      connection with the Transactions; (iv) the preparation and submission of any
      filing or notice required to be made or given in connection with any of the
      Transactions, and the obtaining of any Consent required to be obtained in
      connection with any of the Transactions; and (v) the consummation and
      performance of the Transactions.

     

    (b) Subject
      to the provisions of Section 9 (including the indemnification and other
      obligations of the Seller thereunder), the Purchaser shall bear and pay all
      fees, costs and expenses (including all legal fees and expenses payable to
      Soden
& Steinberger, LLP) that have been incurred or that are in the future
      incurred by or on behalf of the Purchaser in connection with: (i) the
      negotiation, preparation and review of any term sheet or similar document
      relating to any of the Transactions; (ii) the investigation and review conducted
      by the Purchaser and its Representatives with respect to Seller’s business;
      (iii) the negotiation, preparation and review of this Agreement, the other
      Transactional Agreements and all certificates, opinions and other instruments
      and documents delivered or to be delivered in connection with the Transactions;
      and (iv) the consummation and performance of the Transactions.

     

    11.2. Attorneys’
      Fees. If
      any
      legal action or other legal proceeding relating to any of the Transactional
      Agreements or the enforcement of any provision of any of the Transactional
      Agreements is brought against any party hereto, the prevailing party shall
      be
      entitled to recover reasonable attorneys’ fees, costs and disbursements (in
      addition to any other relief to which the prevailing party may be
      entitled).

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

    11.3. Notices.
      Any
      notice or other communication required or permitted to be delivered to any
      party
      under this Agreement shall be in writing and shall be deemed properly delivered,
      given and received when delivered (by hand, by registered mail, by courier
      or
      express delivery service or by facsimile) to the address or facsimile number
      set
      forth beneath the name of such party below (or to such other address or
      facsimile number as such party shall have specified in a written notice given
      to
      the other parties hereto):

     

    If
      to
      Seller:

     

    Integrated
      Surgical Systems, Inc.

    6220
      Belleau Wood Lane, Suite 4

    Sacramento,
      CA 95822

    Phone:
      (916) 391-0420

    Fax:
      (916) 391-0420

    

    Copy
      to:

    Snow
      Becker Krauss P.C.

    605
      Third
      Avenue

    New
      York,
      New York 10158

    Attention:
      Jack Becker, Esq.

    Fax:
      (212) 949-7052

    

    if
      to the
      Purchaser:

    Novatrix
      Biomedical, Inc.

    16259
      Laguna Canyon Rd.

    Irvine,
      CA 92618

    Attention:
      Dr. Soonkap Hahn

    Fax: (949)
      502-6786

     

    With
      Copy
      to: 

    Soden
      & Steinberger, LLP

    550
      West
      C Street, Suite 1710

    San
      Diego, CA, 92101

    Attention:
      Stephen R. Soden. Esq.

    Fax:
      (619) 238-4581

     

    11.4. Time
      of the Essence.
      Time is
      of the essence of this Agreement.

     

    11.5. Headings.
      The
      underlined headings contained in this Agreement are for convenience of reference
      only, shall not be deemed to be a part of this Agreement and shall not be
      referred to in connection with the construction or interpretation of this
      Agreement.

     

    11.6. Counterparts.
      This
      Agreement may be executed in several counterparts, each of which shall
      constitute an original and all of which, when taken together, shall constitute
      one agreement.

     

    11.7. Governing
      Law; Venue.

     

    (a) This
      Agreement shall be construed in accordance with, and governed in all respects
      by, the internal laws of the State of California (without giving effect to
      principles of conflicts of laws).

     

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

    (b) Any
      legal
      action or other legal proceeding relating to this Agreement or the enforcement
      of any provision of this Agreement may be brought or otherwise commenced in
      any
      state or federal court located in the County of Orange, California. Each party
      to this Agreement:

     

    (i) expressly
      and irrevocably consents and submits to the jurisdiction of each state and
      federal court located in the County of Orange, California (and each appellate
      court located in the State of California) in connection with any such legal
      proceeding;

     

    (ii) agrees
      that each state and federal court located in the County of Orange, California
      shall be deemed to be a convenient forum; and

     

    (iii) agrees
      not to assert (by way of motion, as a defense or otherwise), in any such legal
      proceeding commenced in any state or federal court located in the County of
      Orange, California, any claim that such party is not subject personally to
      the
      jurisdiction of such court, that such legal proceeding has been brought in
      an
      inconvenient forum, that the venue of such proceeding is improper or that this
      Agreement or the subject matter of this Agreement may not be enforced in or
      by
      such court.

     

    (c) Seller
      agrees that, if any Proceeding is commenced against any Indemnitee by any Person
      in or before any court or other tribunal anywhere in the world, then such
      Indemnitee may proceed against Seller, or any Stockholder of Seller, in such
      court or other tribunal with respect to any indemnification claim or other
      claim
      arising directly or indirectly from or relating directly or indirectly to such
      Proceeding or any of the matters alleged therein or any of the circumstances
      giving rise thereto.

     

    (d) The
      Parties irrevocably waive the right to a jury trial in connection with any
      legal
      proceeding relating to this Agreement or the enforcement of any provision of
      this Agreement.

     

    11.8. Successors
      and Assigns, Parties in Interest. 

     

    (a) This
      Agreement shall be binding upon: Seller and the Purchaser and its successors
      and
      assigns (if any). This Agreement shall inure to the benefit of: Seller; the
      Purchaser; the other Indemnitees (subject to Section 9.7); and the respective
      successors and assigns (if any) of the foregoing. 

     

    (b) The
      Purchaser may freely assign any or all of its rights under this Agreement
      (including its indemnification rights under Section 9), in whole or in part,
      to
      any other Person without obtaining the prior written consent or approval of
      any
      other party hereto or of any other Person. Seller shall not be permitted to
      assign any of their rights or delegate any of their obligations under this
      Agreement without the Purchaser’s prior written consent.

     

    (c) Except
      for the provisions of Section 9 hereof, none of the provisions of this Agreement
      is intended to provide any rights or remedies to any Person other than the
      parties to this Agreement and their respective successors and assigns (if any).
      Without limiting the generality of the foregoing: (i) no employee of the Seller
      shall have any rights under this Agreement or any of the other Transactional
      Agreements, and (ii) no creditor of the Seller shall have any rights under
      this
      Agreement or any of the other Transactional Agreements.

     

    11.9. Remedies
      Cumulative; Specific Performance. The
      rights and remedies of the parties hereto shall be cumulative (and not
      alternative). Seller agrees that:

     

    (a) in
      the
      event of any Breach or threatened Breach by such Seller of any covenant,
      obligation or other provision set forth in this Agreement, the Purchaser shall
      be entitled (in addition to any other remedy that may be available to it) to
      (i)
      a decree or order of specific performance or mandamus to enforce the observance
      and performance of such covenant, obligation or other provision, and (ii) an
      injunction restraining such Breach or threatened Breach; and

     

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

    (b) neither
      the Purchaser nor any other Indemnitee shall be required to provide any bond
      or
      other security in connection with any such decree, order or injunction or in
      connection with any related action or Proceeding.

     

    11.10. Waiver.

     

    (a) No
      failure on the part of any Person to exercise any power, right, privilege or
      remedy under this Agreement, and no delay on the part of any Person in
      exercising any power, right, privilege or remedy under this Agreement, shall
      operate as a waiver of such power, right, privilege or remedy; and no single
      or
      partial exercise of any such power, right, privilege or remedy shall preclude
      any other or further exercise thereof or of any other power, right, privilege
      or
      remedy.

     

    (b) No
      Person
      shall be deemed to have waived any claim arising out of this Agreement, or
      any
      power, right, privilege or remedy under this Agreement, unless the waiver of
      such claim, power, right, privilege or remedy is expressly set forth in a
      written instrument duly executed and delivered on behalf of such Person; and
      any
      such waiver shall not be applicable or have any effect except in the specific
      instance in which it is given.

     

    11.11. Amendments.
      This
      Agreement may not be amended, modified, altered or supplemented other than
      by
      means of a written instrument duly executed and delivered on behalf of the
      Purchaser and the Seller.

     

    11.12. Severability.
      In
      the
      event that any provision of this Agreement, or the application of any such
      provision to any Person or set of circumstances, shall be determined to be
      invalid, unlawful, void or unenforceable to any extent, the remainder of this
      Agreement, and the application of such provision to Persons or circumstances
      other than those as to which it is determined to be invalid, unlawful, void
      or
      unenforceable, shall not be impaired or otherwise affected and shall continue
      to
      be valid and enforceable to the fullest extent permitted by law.

     

    11.13. Entire
      Agreement. The
      Transactional Agreements set forth the entire understanding of the parties
      relating to the subject matter thereof and supersede all prior agreements and
      understandings among or between any of the parties relating to the subject
      matter thereof.

     

    11.14. Construction.

     

    (a) For
      purposes of this Agreement, whenever the context requires: the singular number
      shall include the plural, and vice versa; the masculine gender shall include
      the
      feminine and neuter genders; the feminine gender shall include the masculine
      and
      neuter genders; and the neuter gender shall include the masculine and feminine
      genders.

     

    (b) The
      parties hereto agree that any rule of construction to the effect that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the construction or interpretation of this Agreement.

     

    (c) As
      used
      in this Agreement, the words “include” and “including and variations thereof,
      shall not be deemed to be terms of limitation, but rather shall be deemed to
      be
      followed by the words “without limitation.”

     

    (d) Except
      as
      otherwise indicated, all references in this Agreement to “Sections” and
“Exhibits” are intended to refer to Sections of this Agreement and Exhibits to
      this Agreement.

     

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

    The
      parties hereto have caused this Agreement to be executed and delivered as of
      August 4, 2006.

    

    
      	 	 	 
	
              “PURCHASER”:  

            	
              NOVATRIX
                BIOMEDICAL, INC.,

              
                a
                  California corporation

              

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Soonkap Hahn
	 	
              

              Soonkap
                Hahn, President

            

    

    
      

      
        	 	 	 
	
              	By:  	/s/
                Patrick Roycroft
	 	
                

                
                  Patrick
                    Roycroft, Secretary

                

              

      

       

      
        	
              	 	 
	
                “SELLER”: 

              	
                
                  Integrated
                    Surgical Systems, Inc.

                  a
                    Delaware corporation

                  6220
                    Belleau Wood Lane, Suite4

                  Sacramento,
                    CA 95822

                

              
	 
 	 
 	 
 
	
              	By:  	 /s/
                Ramesh Trivedi
	 	
                

                
                  Ramesh
                    Trivedi, Director and Acting
                    CEO

                

              

        
           

          
            
               

            

            
              -32-

              
                

              

            

            
               

            

          

        

      

    

    EXHIBIT
      A

     

    CERTAIN
      DEFINITIONS

     

    For
      purposes of the Agreement (including this Exhibit A):

     

    Acquisition
      Transaction. “Acquisition
      Transaction” shall mean any transaction involving:

     

    (a) the
      sale
      or other disposition of all or any portion of Seller’s business or Assets (other
      than in the Ordinary Course of Business); or

     

    (b) any
      merger, consolidation, business combination, share exchange, reorganization
      or
      similar transaction involving Seller.

     

    Agreement.
      “Agreement” shall mean the Stock Purchase Agreement to which this Exhibit A is
      attached (including the Disclosure Schedule), as it may be amended from time
      to
      time.

     

    Best
      Efforts.
“Best
      Efforts” shall mean the efforts that a prudent Person desiring to achieve a
      particular result would use in order to ensure that such result is achieved
      as
      expeditiously as possible.

     

    Breach.
      There
      shall be deemed to be a “Breach” of a representation, warranty, covenant,
      obligation or other provision if there is or has been (a) any material
      inaccuracy in or material breach of, or any material failure to comply with
      or
      perform, such representation, warranty, covenant, obligation or other provision,
      or (b) any material claim (by any Person) or other circumstance that is
      inconsistent with such representation, warranty, covenant, obligation or other
      provision; and the term “Breach” shall be deemed to refer to any such
      inaccuracy, breach, failure, claim or circumstance.

     

    CERCLA.
      “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
      Liability Act.

     

    Closing.
      “Closing” shall have the meaning specified in Section 1.3(a) of the
      Agreement.

     

    Closing
      Certificate.
      “Closing Certificate” shall have the meaning specified in Section 1.3(b)(v) of
      the Agreement.

     

    Closing
      Date.
      “Closing Date” shall have the meaning specified in Section 1.4(a) of the
      Agreement.

     

    Code.
“Code”
      shall mean the Internal Revenue Code of 1986.

     

    Seller.
      “Seller” shall mean Seller and the Prior Subsidiary.

     

    Company
      Plan.
      “Company Plan” shall mean any Current Benefit Plan or Past Benefit
      Plan.

     

    Comparable
      Entities.
      “Comparable Entities” shall mean Entities (other than Seller) that are engaged
      in businesses similar to Seller’s business.

     

    Consent.
      “Consent” shall mean any approval, consent, ratification, permission, waiver or
      authorization (including any Governmental Authorization).

     

    Contract.
      “Contract” shall mean any written, oral, implied or other agreement, contract,
      understanding, arrangement, instrument, note, guaranty, indemnity,
      representation, warranty, deed, assignment, power of attorney, certificate,
      purchase order, work order, insurance policy, beneft plan, commitment, covenant,
      assurance or undertaking of any nature.

     

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

    Current
      Benefit Plan. “Current
      Benefit Plan” shall mean any Employee Benefit Plan that is currently in effect
      and:

     

    (a) that
      was
      established or adopted by Seller or any ERISA Affiliate or is maintained or
      sponsored by Seller;

     

    (b) in
      which
      Seller participates;

     

    (c) with
      respect to which Seller or any ERISA Affiliate is or may be required or
      permitted to make any contribution; or

     

    (d) with
      respect to which Seller or any ERISA Affiliate is or may become subject to
      any
      Liability.

     

    Damages.
      “Damages” shall include any loss, damage, injury, decline in value, lost
      opportunity, Liability, claim, demand, settlement, judgment, award, fine,
      penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
      advisory fee), charge, cost (including any cost of investigation) or expense
      of
      any nature.

     

    Disclosure
      Schedule.
      “Disclosure Schedule” shall mean the schedules (dated as of the date of the
      Agreement) together with the Due Diligence book delivered to the Purchaser
      on
      behalf of Seller, a copy of which is attached to the Agreement and incorporated
      into the Agreement by reference.

     

    Employee
      Benefit Plan.
      “Employee Benefit Plan” shall have the meaning specified in Section 3(3) of
      ERISA.

     

    Encumbrance.
      “Encumbrance” shall mean any lien, pledge, hypothecation, charge, mortgage,
      security interest, encumbrance, equity, trust, equitable interest, claim,
      preference, right of possession, lease, tenancy, license, encroachment,
      covenant, infringement, interference, Order, proxy, option, right of first
      refusal, preemptive right, community property interest, legend, defect,
      impediment, exception, reservation, limitation, impairment, imperfection of
      title, condition or restriction of any nature (including any restriction on
      the
      voting of any security, any restriction on the transfer of any security or
      other
      asset, any restriction on the receipt of any income derived from any asset,
      any
      restriction on the use of any asset and any restriction on the possession,
      exercise or transfer of any other attribute of ownership of any
      asset).

     

    Entity.
      “Entity” shall mean any corporation (including any non-profit corporation),
      general partnership, limited partnership, limited liability partnership, joint
      venture, estate, trust, cooperative, foundation, society, political party,
      union, company (including any limited liability company or joint stock company),
      firm or other enterprise, association, organization or entity. 

     

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

     

    ERISA
      Affiliate. “ERISA
      Affiliate” shall mean any Person that is, was or would be treated as a single
      employer with Seller under Section 414 of the Code.

     

    Excluded
      Contract. “Excluded
      Contract” shall mean any Seller Contract that:

     

    (a) Seller
      has entered into in the Ordinary Course of Business;

     

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

    (b) is
      identical in all material respects to one of the Standard Form
      Agreements;

     

    (c) has
      a
      term of less than 90 days or may be terminated by Seller (without penalty)
      within 90 days after the delivery of a termination notice by Seller;
      and

     

    (d) does
      not
      contemplate or involve the payment of cash or other consideration in an amount
      or having a value in excess of $10,000.

     

    GAAP.
“GAAP”
      shall mean generally accepted accounting principles, applied on a basis
      consistent with the basis on which the Seller Financial Statements were
      prepared.

     

    Governmental
      Authorization. “Governmental
      Authorization” shall mean any:

     

    (a) permit,
      license, certificate, franchise, concession, approval, consent, ratification,
      permission, clearance, confirmation, endorsement, waiver, certification,
      designation, rating, registration, qualification or authorization that is,
      has
      been or may in the future be issued, granted, given or otherwise made available
      by or under the authority of any Governmental Body or pursuant to any Legal
      Requirement; or

     

    (b) right
      under any Contract with any Governmental Body.

     

    Governmental
      Body. “Governmental
      Body” shall mean any:

     

    (a) nation,
      principality, state, commonwealth, province, territory, county, municipality,
      district or other jurisdiction of any nature;

     

    (b) federal,
      state, local, municipal, foreign or other government;

     

    (c)
      governmental or quasi-governmental authority of any nature (including any
      governmental division, subdivision, department, agency, bureau, branch, office,
      commission, council, board, instrumentality, officer, official, representative,
      organization, unit, body or Entity and any court or other
      tribunal);

     

    (d) multi-national
      organization or body; or

     

    (e)
      individual, Entity or body exercising, or entitled to exercise, any executive,
      legislative, judicial, administrative, regulatory, police, military or taxing
      authority or power of any nature.

     

    Hazardous
      Material.
      “Hazardous Material” shall include:

     

    (a) any
      petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated
      biphenyl;

     

    (b) any
      waste, gas or other substance or material that is explosive or
      radioactive;

     

    (c)
      any
“hazardous substance,” “pollutant,” “contaminant,” “hazardous waste,” “regulated
      substance,” “hazardous chemical” or “toxic chemical” as designated, listed or
      defined (whether expressly or by reference) in any statute, regulation or other
      Legal Requirement (including CERCLA, any other so-called “superfund” or
“superlien” law, the Resource Conservation Recovery Act, the Federal Water
      Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning
      and Community Right-to-Know Act and the respective regulations promulgated
      thereunder);

     

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

    (d)
      any
      other substance or material (regardless of physical form) or form of energy
      that
      is subject to any Legal Requirement which regulates or establishes standards
      of
      conduct in connection with, or which otherwise relates to, the protection of
      human health, plant life, animal life, natural resources, property or the
      enjoyment of life or property from the presence in the environment of any solid,
      liquid, gas, odor, noise or form of energy; and

     

    (e)
      any
      compound, mixture, solution, product or other substance or material that
      contains any substance or material referred to in clause “(a)”, “(b)”, “(c)” or
“(d)” above.

     

    Indemnitees.
      “Indemnitees”
      shall mean the following Persons:

     

    (a) the
      Purchaser;

     

    (b) the
      Purchaser’s current and future affiliates;

     

    (c) the
      respective Representatives of the Persons referred to in clauses “(a)” and “(b)”
above; and

     

    (d) the
      respective successors and assigns of the Persons referred to in clauses “(a)”,
“(b)” and “(c)” above; provided, however, that (i) Seller shall not be entitled
      to exercise any rights as an Indemnitee prior to the Closing, and (ii) the
      Stockholders shall not be deemed to be “ Indemnitees.”

     

    Knowledge.
      An
      individual shall be deemed to have “Knowledge” of a particular fact or other
      matter if:

     

    (a) such
      individual is actually aware of such fact or other matter; or

     

    (b) a
      prudent
      individual could be expected to discover or otherwise become aware of such
      fact
      or other matter in the normal course of conduct upon reasonable
      inquiry.

     

    Seller
      shall be deemed to have “Knowledge” of a particular fact or other matter if any
      executive officer of Seller has Knowledge of such fact or other
      matter.

     

    Legal
      Requirement. “Legal
      Requirement” shall mean any federal, state, local, municipal, foreign or other
      law, statute, legislation, constitution, principle of common law, resolution,
      ordinance, code, edict, decree, proclamation, treaty, convention, rule,
      regulation, ruling, directive, pronouncement, requirement, specification,
      determination, decision, opinion or interpretation that is, has been or may
      in
      the future be issued, enacted, adopted, passed, approved, promulgated, made,
      implemented or otherwise put into effect by or under the authority of any
      Governmental Body.

     

    Liability.
      “Liability”
      shall mean any debt, obligation, duty or liability of any nature (including
      any
      unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
      conditional, implied, vicarious, derivative, joint, several or secondary
      liability), regardless of whether such debt, obligation, duty or liability
      would
      be required to be disclosed on a balance sheet prepared in accordance with
      generally accepted accounting principles and regardless of whether such debt,
      obligation, duty or liability is immediately due and payable.

     

    Order.
      “Order”
      shall mean any:

     

    (a) order,
      judgment, injunction, edict, decree, ruling, pronouncement, determination,
      decision, opinion, verdict, sentence, subpoena, writ or award that is, has
      been
      or may in the future be issued, made, entered, rendered or otherwise put into
      effect by or under the authority of any court, administrative agency or other
      Governmental Body or any arbitrator or arbitration panel; or

     

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

    (b) Contract
      with any Governmental Body that is, has been or may in the future be entered
      into in connection with any Proceeding.

     

    Ordinary
      Course of Business.
      An
      action taken by or on behalf of Seller shall not be deemed to have been taken
      in
      the “Ordinary Course of Business” unless:

     

    (a) such
      action is consistent with Seller’s past practices and is taken in the ordinary
      course of Seller’s normal day-to-day operations;

     

    (b) such
      action is not required to be authorized by Seller’s Stockholders, Seller’s board
      of directors or any committee of Seller’s board of directors and does not
      require any other separate or special authorization of any nature.

     

    Past
      Benefit Plan.
“Past
      Benefit Plan” shall mean any Employee Benefit Plan (other than a Current Benefit
      Plan):

     

    (a) of
      which
      Seller or any ERISA Affiliate has ever been a “plan sponsor” (as defined in
      Section 3(16)(B) of ERISA) or that otherwise has at any time been established,
      adopted, maintained or sponsored by Seller or by any ERISA
      Affiliate;

     

    (b) in
      which
      Seller or any ERISA Affiliate has ever participated;

     

    (c) with
      respect to which Seller or any ERISA Affiliate has ever made, or has ever been
      required or permitted to make, any contribution; or

     

    (d) with
      respect to which Seller or any ERISA Affiliate has ever been subject to any
      Liability.

     

    Person.
      “Person” shall mean any individual, Entity or Governmental Body.

     

    Pre-Closing
      Period.
      “Pre-Closing Period” shall mean the period commencing as of the date of the
      Agreement and ending on the Closing Date.

     

    Prior
      Subsidiary. “Prior
      Subsidiary” shall mean Innovative Medical Machine International, Lyon France.
      This entity was dissolved in 2003.

     

    Proceeding.
      “Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
      (including any civil, criminal, administrative, investigative or appellate
      proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
      inquest, audit, examination or investigation that is, has been or may in the
      future be commenced, brought, conducted or heard by or before, or that otherwise
      has involved or may involve, any Governmental Body or any arbitrator or
      arbitration panel.

     

    Proprietary
      Asset.
      “Proprietary Asset” shall mean any patent, patent application, trademark
      (whether registered or unregistered and whether or not relating to a published
      work), trademark application, trade name, fictitious business name, service
      mark
      (whether registered or unregistered), service mark application, copyright
      (whether registered or unregistered), copyright application, maskwork, maskwork
      application, trade secret, know-how, franchise, system, computer software,
      invention, design, blueprint, proprietary product, technology, proprietary
      right
      or other intellectual property right or intangible asset.

     

    Purchase
      Price.
      “Purchase Price” shall have the meaning specified in Section 1.2 of the
      Agreement.

     

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

    Purchaser.
      “Purchaser” shall mean Purchaser Corporation, a Delaware
      corporation.

     

    Related
      Party.
      Each
      individual who is, or who has at any time been, an officer of Seller shall
      be
      deemed to be a “Related Party”:

     

    Representatives.
      “Representatives” shall mean officers, directors, employees, attorneys,
      accountants, advisors and representatives. 

     

    Scheduled
      Closing Time.
      “Scheduled Closing Time” shall have the meaning specified in Section 1.3(a) of
      the Agreement.

     

    Seller.
      “Seller” shall mean Integrated Surgical Systems, Inc., a Delaware
      corporation.

     

    Seller
      Material Contract.
“Seller
      Material Contract” shall mean any Contract:

     

    (a) to
      which
      Seller is a party;

     

    (b) by
      which
      Seller or any of its material Assets is or may become bound or under which
      Seller has, or may become subject to, any obligation; or

     

    (c) under
      which Seller has or may acquire any material right or interest.

     

    Seller Financial
      Statements. “Seller
      Financial Statements” shall have the meaning specified in Section 2.4(a) of the
      Agreement.

     

    Seller
      Returns. “Seller
      Returns” shall have the meaning specified in Section 2.17(a) of the
      Agreement.

     

    Stockholders.
      “Stockholders” shall mean all of the stockholders of Integrated Surgical
      Systems, Inc., a Delaware corporation.

     

    Specified
      Representations. “Specified
      Representations” shall mean the representations and warranties set forth in
      Sections 2.1, 2.3, 2.4 and 2.27 of the Agreement.

     

    Tax.
“Tax”
      shall mean any tax (including any income tax, franchise tax, capital gains
      tax,
      estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad
      valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
      tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll
      tax), levy, assessment, tariff, impost, imposition, toll, duty (including any
      customs duty), deficiency or fee, and any related charge or amount (including
      any fine, penalty or interest), that is, has been or may in the future be (a)
      imposed, assessed or collected by or under the authority of any Governmental
      Body, or (b) payable pursuant to any tax-sharing agreement or similar
      Contract.

     

    Tax Return.
      “Tax
      Return” shall mean any return (including any information return), report,
      statement, declaration, estimate, schedule, notice, notification, form,
      election, certificate or other document or information that is, has been or
      may
      in the future be filed with or submitted to, or required to be filed with or
      submitted to, any Governmental Body in connection with the determination,
      assessment, collection or payment of any Tax or in connection with the
      administration, implementation or enforcement of or compliance with any Legal
      Requirement relating to any Tax.

     

    Transactional
      Agreements.
      “Transactional Agreements” shall mean:

     

    
      	 	
              (a)

            	
              the
                Agreement;

            

    

     

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

       

    

    
      	 	
              (b)

            	
              the
                Noncompetition Agreement referred to in Section 1.3(b)(iii) of the
                Agreement;

            

    

     

    
      	 	
              (c)

            	
              the
                Employment Agreement referred to in Section 1.3(b)(iv) of the Agreement;
                and

            

    

     

    
      	 	
              (d)

            	
              the
                Closing Certificate.

            

    

     

    Transactions.
      “Transactions” shall mean 

     

    (a) the
      execution and delivery of the respective Transactional Agreements, and

     

    (b) all
      of
      the transactions contemplated by the respective Transactional Agreements,
      including the performance by Seller and the Purchaser of their respective
      obligations under the Transactional Agreements and the exercise by Seller and
      the Purchaser of their respective rights under the Transactional
      Agreements.

     

    Unaudited
      Interim Balance Sheet. “Unaudited
      Interim Balance Sheet” shall have the meaning specified in Section 2.4(a)(ii) of
      the Agreement.

     

    
      
         

      

      
        -39-

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