Document:

Exhibit
10.3

 

ASSET PURCHASE AGREEMENT

by and
among

AXSYS TECHNOLOGIES IR SYSTEMS, INC.,

AXSYS TECHNOLOGIES, INC.,

CINEFLEX, LLC,

HELINET AVIATION SERVICES, LLC,

JOHN COYLE

and

ALAN D. PURWIN

 

Dated as
of April 13, 2007

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1:

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2: 

  	
   

  	
  PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
  LIABILITIES 

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Purchase and Sale of Assets

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Excluded Assets

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Assumption of Liabilities

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Excluded Liabilities

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Purchase Price

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6

  	
  Earnout

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7

  	
  Post-Earnout Bookings

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.8

  	
    Default

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.9

  	
  Working Capital Adjustment

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.10

  	
  Allocation of Consideration

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3:

  	
   

  	
  DELIVERIES AND OTHER ACTIONS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Closing

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Deliveries by Seller Group

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Deliveries by Buyer

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4:

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF SELLER GROUP

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization; Standing; Corporate Power

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Capacity; Authority; Enforceability

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Conflicts; Consents

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Compliance with Applicable Laws; Litigation

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Employee Benefit Plans

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Taxes

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Environmental Matters

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Property

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9

  	
  Intellectual Property

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Labor Agreements and Employee Issues

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.11

  	
  Contracts

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.12

  	
  Insurance

  	
   

  	
  26

  
								

 

 i
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13

  	
  Conduct of Business

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.14

  	
  Permits

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.15

  	
  Financial Statements

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.16

  	
  Undisclosed Liabilities; Indebtedness

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.17

  	
  Inventories

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.18

  	
  Product Liability and Warranty

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.19

  	
  Customers and Suppliers

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.20

  	
  Related Party Transactions

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.21

  	
  Brokers

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.22

  	
  Government Contracts

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5:

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Organization and Power

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Authority; Enforceability

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Conflicts; Consents

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Financial Capacity

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Brokers

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Actions; Orders

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Condition of Assets

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6:

  	
   

  	
  CERTAIN COVENANTS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Confidentiality

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Public Announcements

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Pre-Closing Accounts Receivable

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Name Change Filings; Certain Other Post-Closing
  Covenants

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Employees

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Licensed Intellectual Property

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.7

  	
  Further Assurances

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8

  	
  Tax Audits; Cooperation

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.9

  	
  Tax Clearances; Bulk Sales Laws; Proration of
  Certain Taxes

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10

  	
  Noncompetition; Nonsolicitation

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Retention and Access to Records

  	
   

  	
  38

  
							

 

 ii
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7:

  	
   

  	
  REMEDIES

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  General Indemnification Obligations

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Notice and Opportunity to Defend

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Survivability; Limitations

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Specific Performance

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Adjustment to Purchase Price

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.6

  	
  Mitigation

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.7

  	
  Insurance Benefits; Tax Benefits

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.8

  	
  Exclusive Remedy

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.9

  	
  Excluded Damages

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8:

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Expenses; Transfer Taxes

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  No Assignment

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Headings

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  No Third-Party Beneficiaries

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Integration, Modification and Waiver

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Construction

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7

  	
  Severability

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8

  	
  Notices

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9

  	
  Consent to Jurisdiction; Waiver of Jury Trial

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.10

  	
  Governing Law

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.11

  	
  Counterparts; Facsimile Signatures

  	
   

  	
  47

  
								

 

 iii

LIST OF EXHIBITS

	
  Exhibit A

  	
  Form of Assignment of Assumed Contracts

  
	
   

  	
   

  
	
  Exhibit B

  	
  Form of Assumption Agreement

  
	
   

  	
   

  
	
  Exhibit C

  	
  Form of Bill of Sale and Assignment

  
	
   

  	
   

  
	
  Exhibit D

  	
  Form of Consulting Agreement

  
	
   

  	
   

  
	
  Exhibit E

  	
  Form of Domain Name Assignment

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Employment Agreement

  
	
   

  	
   

  
	
  Exhibit G

  	
  Form of Facility Lease Agreement

  
	
   

  	
   

  
	
  Exhibit H

  	
  Form of Noncompetition Agreement

  
	
   

  	
   

  
	
  Exhibit I

  	
  Form of Trademark Assignment

  
	
   

  	
   

  
	
  Exhibit J

  	
  Form of Transition Services Agreement

  
	
   

  	
   

  
	
  Exhibit K

  	
  Form of Escrow Agreement

  
	
   

  	
   

  
	
  Exhibit L

  	
  Form of Helicopter Services Agreement

  
	
   

  	
   

  
	
  Exhibit M

  	
  Form of Reseller Agreement

  

 

 i
 

LIST OF SCHEDULES

	
  Schedule 2.2

  	
  Excluded Assets

  
	
   

  	
   

  
	
  Schedule 2.6(d)

  	
  Sales Commissions

  
	
   

  	
   

  
	
  Schedule 2.10

  	
  Allocation of Consideration

  
	
   

  	
   

  
	
  Schedule 3.2(g)

  	
  Consents related to Nonassignable Items

  
	
   

  	
   

  
	
  Schedule 4.1

  	
  Seller’s Jurisdiction Qualifications

  
	
   

  	
   

  
	
  Schedule 4.4

  	
  Compliance with Applicable Laws; Litigation

  
	
   

  	
   

  
	
  Schedule 4.5(a)

  	
  Seller’s Employee Benefit Plans

  
	
   

  	
   

  
	
  Schedule 4.8(b)

  	
  Leased Real Property

  
	
   

  	
   

  
	
  Schedule 4.8(c)

  	
  Tangible Personal Property

  
	
   

  	
   

  
	
  Schedule 4.9(a)

  	
  Intellectual Property

  
	
   

  	
   

  
	
  Schedule 4.9(b)

  	
  Infringement

  
	
   

  	
   

  
	
  Schedule 4.9(d)

  	
  Third Party Information Systems

  
	
   

  	
   

  
	
  Schedule 4.11(a)

  	
  Assumed Contracts

  
	
   

  	
   

  
	
  Schedule 4.11(b)

  	
  Excluded Contracts

  
	
   

  	
   

  
	
  Schedule 4.14

  	
  Permits

  
	
   

  	
   

  
	
  Schedule 4.15(a)

  	
  Financial Statements

  
	
   

  	
   

  
	
  Schedule 4.16

  	
  Indebtedness

  
	
   

  	
   

  
	
  Schedule 4.18(a)

  	
  Standard Warranty

  
	
   

  	
   

  
	
  Schedule 4.19(a)

  	
  Material Customers

  
	
   

  	
   

  
	
  Schedule 4.19(b)

  	
  Material Suppliers

  
	
   

  	
   

  
	
  Schedule 4.20

  	
  Related Party Transactions

  
	
   

  	
   

  
	
  Schedule 6.5

  	
  Employees

  

 

 ii

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as
of April 13, 2007, is by and among Axsys Technologies IR Systems, Inc., a New
York corporation (“Buyer”),
Axsys Technologies, Inc., a Delaware corporation and the parent corporation of
Buyer (“Axsys”),
Cineflex, LLC, a California limited liability company (“Seller”), and Helinet
Aviation Services, LLC, a Delaware limited liability company (“Helinet”), John Coyle
and Alan D. Purwin  (Helinet, Coyle
and Purwin, collectively, “Shareholders”).  Seller and Shareholders are collectively
referred to as “Seller
Group”.

RECITALS

WHEREAS, Seller conducts the business of designing,
building, marketing and supporting multi-axis gyro-stabilized camera systems
(the “Business”);

WHEREAS, Seller desires to sell substantially all of
its assets, properties, rights and interests relating to the Business to Buyer;
and

WHEREAS, Buyer desires to purchase and acquire from
Seller, upon the terms and subject to the conditions set forth herein, substantially
all of such assets, properties, rights and interests of Seller relating to the
Business, in consideration of certain payments by Buyer and the assumption by
Buyer of certain liabilities and obligations of Seller as specifically set
forth in this Agreement.

STATEMENT
OF AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and agreements set forth
in this Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, upon the terms and subject to
the conditions set forth herein, the parties hereto hereby agree as follows:

ARTICLE
1:  DEFINITIONS

The terms defined in this Article 1, whenever used in this
Agreement, shall have the respective meanings indicated below for all purposes
of this Agreement.

“Acquired Assets” has
the meaning set forth in Section 2.1(a).

“Acquired
Intellectual Property”  means
all Acquired Assets that constitute Intellectual Property owned by or licensed
to Seller and used or held for use in connection with the Business, together
with all income, royalties, damages and payments due or payable to Seller as of
the Closing or thereafter (including damages and payments for past, present or
future infringements, misappropriations or other violations thereof) and the
rights to sue and collect damages for past, present or future infringements,
misappropriations or other violations thereof, and any corresponding,
equivalent or counterpart rights, title or interest that now exist or may be
secured

hereafter anywhere in the world, and all copies and
tangible embodiments of the foregoing, including the Intellectual Property
required to be listed on  Schedule 4.9(a).

“Action”
means any action, suit, claim, demand, charge, inquiry, investigation,
arbitration, mediation, or other dispute resolution or proceeding.

“Affiliate”
of any Person means any person directly or indirectly controlling, controlled
by, or under common control with, any such Person and any officer, director or
controlling person of such Person.

“Agreement” has the
meaning set forth in the preamble.

“Annual Financial Statements”
has the meaning set forth in Section
4.15(a).

“Applicable
Rate” means the “Prime Rate” as set forth from time to time in The Wall Street Journal, Eastern Edition, “Money
Rates” column (or similar publication if such rate ceases to be published
therein) plus 2%.

“Arbitration Firm” has
the meaning set forth in Section 2.6(b).

“Assignment
of Assumed Contracts” means the Assignment of Assumed Contracts,
by and between Seller and Buyer, substantially in the form of Exhibit A.

“Assumed Contracts”
has the meaning set forth in Section 4.11.

“Assumed Liabilities”
has the meaning set forth in Section 2.3.

“Assumption
Agreement” means the Assumption Agreement, by Buyer in favor of
Seller, substantially in the form of Exhibit
B.

“Axsys” has the
meaning set forth in the preamble.

“Bill
of Sale and Assignment” means the General Assignment and Bill of
Sale, by Seller in favor of Buyer, substantially in the form of Exhibit C.

“Business” has the
meaning set forth in the recitals.

“Business Day” means a
day, other than Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Law to close.

“Business
Revenue” means all of the revenue generated by the Business and
recognized as revenue in accordance with GAAP (including all revenue generated
from sales by Buyer or any of its Affiliates of multi-axis gyro-stabilized
camera systems included in the Business, including such revenue generated by
acquired companies or businesses as contemplated by Section 2.6, but excluding all revenue
generated from sales of gyro-stabilized pan and tilt camera systems controlled
by the APS-50, the APS-100 or any variant thereof; provided, however,
that, notwithstanding the foregoing, Business Revenue, as determined for the
applicable Earnout Period, shall include revenue in respect of any sales that
otherwise would have been included in

 2
 

revenue for such Earnout Period but for the failure of
Buyer and/or its Affiliates (excluding the Business) to provide to the Business
within four months of the Business’s order therefor any component products
purchased by the Business from Buyer and/or its Affiliates and used in products
sold by the Business (as long as the applicable component product has been
previously purchased from Buyer and/or its Affiliates and remains in
production).

“Buyer” has the
meaning set forth in the preamble.

“Cap” has the meaning
set forth in Section 7.3(c).

“Cash Amount” has the
meaning set forth in Section 2.5.

“Claim Response” has
the meaning set forth in Section 7.2(a).

“Claims Notice” has
the meaning set forth in Section 7.2(a).

“Closing” means the
consummation of the Contemplated Transactions. 

“Closing Date” has the
meaning set forth in Section 3.1.

“Code” means the
Internal Revenue Code of 1986, as amended. 

“Competitive Activities”
has the meaning set forth in Section 6.10.

“Confidentiality
Agreement” means that certain Confidentiality Agreement, dated
as of November 3, 2006, executed by Axsys in favor of Seller.

“Consulting
Agreement” means the Consulting Agreement, by and between Buyer
and Alan D. Purwin, substantially in the form of Exhibit D.

“Contemplated
Transactions” means the transactions contemplated by this
Agreement and the Transaction Agreements.

“Contracts”
means all contracts, agreements, leases (whether real or personal property),
commitments, instruments, guarantees, bids, orders and proposals and all oral
understandings.

“Controlled Group” had
the meaning set forth in Section 4.5(a).

“Copyrights”
means all copyrights, whether in published or unpublished works; databases,
data collections and rights therein, mask work rights, software, web site
content; rights to compilations, collective works and derivative works of any
of the foregoing and moral rights in any of the foregoing; registrations and
applications for registration for any of the foregoing and any renewals or
extensions thereof; and moral rights and economic rights of others in any of
the foregoing.

“Deductible” has the
meaning set forth in Section 7.3(b).

“$” or “dollars” means lawful
money of the United States of America.

 3
 

“Domain
Name Assignment” means the Domain Name Assignment, from Seller
to Buyer, substantially in the form of Exhibit
E.

“Domain
Names” means Internet electronic addresses, uniform resource
locators and alphanumeric designations associated therewith registered with or
assigned by any domain name registrar, domain name registry or other domain
name registration authority as part of an electronic address on the Internet
and all applications for any of the foregoing.

“Earnout Income Statement”
has the meaning set forth in Section
2.6(a).

“Earnout
Payment” means any contingent payment required to be made by
Axsys or Buyer to Seller pursuant to Section
2.6.

“Earnout
Period” means the First Earnout Period, the Second Earnout
Period, the Third Earnout Period and the Fourth Earnout Period, as applicable.

“Earnout Schedule” has
the meaning set forth in Section 2.6(a).

“Employee Plans” has
the meaning set forth in Section 4.5(a).

“Employment
Agreements” means the employment agreements, each substantially
in the form of Exhibit F,
by and between Buyer and each of John Coyle and Alex Giuffrida.

“Environmental
Law” means, collectively, any Law relating to the protection of
human health and safety or the protection of the environment, including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et  seq.), the Hazardous Materials Transportation Act (49
U.S.C. App. § 1801 et  seq.), the Resource Conservation and
Recovery Act (42 U.S.C. § 6901 et  seq.), the Clean Water Act (33
U.S.C. § 1251 et  seq.), the Clean Air Act (42 U.S.C. § 7401 et
seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et  seq.),
and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et
seq.). 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

“Escrow
Agreement” means the Escrow Agreement, by and among Seller,
Buyer and escrow agent party thereto, substantially in the form of Exhibit K.

“Escrow Amount” has
the meaning set forth in Section 2.5.

“Excluded Assets” has
the meaning set forth in Section 2.2.

“Excluded Liabilities”
has the meaning set forth in Section 2.4.

“Excluded Representations”
has the meaning set forth in Section
7.3(a). 

“Expiration Date” has
the meaning set forth in Section 7.3(a).

“Facility
Lease Agreement” means the Lease Agreement, by and between Buyer
and Gimbal Partners, LLC, a limited liability company owned solely by John
Coyle and Alan D.

 4
 

Purwin, substantially in
the form of Exhibit G, for
the lease by Buyer of certain land and building facilities located at 380 Crown
Point Circle, Grass Valley, California 95945.

“Family
Affiliate” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships, of any Person.

“Final Working Capital”  has the meaning set forth in Section 2.9(a).

“Final Working Capital Statement”
has the meaning set forth in Section
2.9(a).

“Financial Statements”
has the meaning set forth in Section
4.15(a).

“First
Earnout Period” means the period beginning on the Closing Date
and ending on December 31, 2007.

“First Period Tier One Threshold”
has the meaning set forth in Section
2.6(d).

“First Period Tier Two Threshold”
has the meaning set forth in Section
2.6(d)(ii).

“Fourth
Earnout Period” means the period beginning on January 1, 2010,
and ending on the three-year anniversary of the Closing Date.

“Fourth Period Tier One Threshold”
has the meaning set forth in Section
2.6(g).

“Fourth Period Tier Two Threshold”
has the meaning set forth in Section
2.6(g)(ii).

“GAAP”
means United States generally accepted accounting principles, consistently
applied.

“Governmental
Authority” means any government or political subdivision or
regulatory authority, whether federal, state, local or foreign, or any agency
or instrumentality of any such government or political subdivision or
regulatory authority, or any federal, state, local or foreign court or
arbitrator.

“Helinet” has the
meaning set forth in the preamble.

“Helicopter
Services Agreement” means the Helicopter Services Agreement, by
and between Helinet and Buyer, in substantially the form of Exhibit L.

“Indebtedness”
of any Person means either:  (a) any
liability of any Person (i) for borrowed money (including the current portion
thereof), or (ii) under any reimbursement obligation relating to a letter of
credit, bankers’ acceptance or note purchase facility, or (iii) evidenced by a
bond, note, debenture or similar instrument (including a purchase money
obligation), or (iv) for the payment of money relating to leases that are
required to be classified as a capitalized lease obligation in accordance with
GAAP, or (v) for all or any part of the deferred purchase price of property or
services (other than trade payables), including any “earnout” or similar
payments or any non-compete payments, or (vi) under interest rate swap,

 5
 

hedging or similar agreements; or (b) any liability of
others described in the preceding clause (a) that such Person has guaranteed,
that is recourse to such Person or any of its assets or that is otherwise its
legal liability or that is secured in whole or in part by the assets of such
Person.  For purposes of this Agreement,
Indebtedness includes (A) any and all accrued interest, success fees,
prepayment premiums, make-whole premiums or penalties and fees or expenses
actually incurred (including attorneys’ fees) associated with the prepayment of
any Indebtedness, (B) all “cut” but uncashed checks issued by Seller that are
outstanding as of the Closing Date and (C) any and all amounts owed by Seller
to any of its Affiliates, including any of the Shareholders or their respective
Family Affiliates.

“Indemnified Party”
has the meaning set forth in Section
7.2(a).

“Indemnifying Party”
has the meaning set forth in Section
7.2(a).

“Information
Systems” means all computer hardware, databases and data storage
systems, computer, data, database and communications networks (other than the
Internet), architecture interfaces and firewalls (whether for data, voice,
video or other media access, transmission or reception) and other apparatus
used to create, store, transmit, exchange or receive information in any form.

“Initial Purchase Price”
has the meaning set forth in Section 2.5.

“Intellectual
Property”  means,
collectively, all Copyrights, Patents, Trademarks, Domain Names and Trade
Secrets.

“Interim Financial Statements”
has the meaning set forth in Section
4.15(a).

“IRS” means the United
States Internal Revenue Service.

“knowledge”
of Seller or Seller Group means the actual knowledge of Alan D. Purwin, John
Coyle and Stephanie Snyder after due inquiry of all of their direct reports
likely to have knowledge of the applicable subject matter.

“Law”
means any law, statute, code, ordinance or regulation of any Governmental
Authority.

“Leased Real Property”
has the meaning set forth in Section
4.8(b).

“Leases” has the meaning
set forth in Section 4.8(b).

“Liability”
means any direct or indirect liability, obligation, guaranty, claim, loss
(including loss in value), damage, deficiency, cost or expense, whether
relating to payment, performance or otherwise, known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not such liability or obligation would be required to be reflected
or reserved against on financial statements of the obligor under GAAP.

 6
 

“Liability Claim” has
the meaning set forth in Section 7.2(a).

“Licensed
Intellectual Property” means, collectively, all Intellectual
Property of Seller that constitutes an Excluded Asset and all Intellectual
Property of Helinet or any of its Affiliates (other than Seller), in each case,
that is primarily used in connection with the operation of the Business.

“Liens”
means any mortgage, pledge, hypothecation, rights of others, claim, security
interest, encumbrance, title defect, title retention agreement, voting trust
agreement, interest, option, lien, charge or similar restrictions or
limitations, whether absolute, accrued, contingent or otherwise.

“Losses” has the
meaning set forth in Section 7.1(a).

“material
adverse effect” with respect to any Person means a material
adverse effect on the business, financial condition or results of operations of
such Person taken as a whole; provided, however, that a material
adverse effect shall not be deemed to have occurred solely as a result of any
effect or change occurring as a consequence of (a) the disclosure of the
Contemplated Transactions in accordance with the terms hereof or (b) general
economic or financial conditions, except to the extent that such Person is
affected in a disproportionate manner as compared to other similar Persons in
the industry in which such Person operates.

“Material
Customers” has the meaning set forth in Section 4.19(a).

“Material
Suppliers” has the meaning set forth in Section 4.19(b).

“Multi-Year
Contract” has the meaning set for in Section 2.7.

“Net Working Capital”
means, with respect to the Business:  (a)
inventory and prepaid expenses; minus (b) accounts payable, accrued
expenses, deferred warranties and other accrued expenses and current
liabilities (including deferred revenue), in each case of clauses (a) and (b),
as calculated in accordance with GAAP in accordance with Seller’s past
practice.

“Nonassignable Items”
has the meaning set forth in Section
2.1(b).

“Noncompetition
Agreement” means the Noncompetition Agreement, by and among
Buyer and the Shareholders, substantially in the form of Exhibit H.

“Order”
means any order, judgment, injunction, award, decree, ruling, charge or writ of
any Governmental Authority.

“Ordinary
Course of Business” means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).

“Overdue Amount” has
the meaning set forth in Section 2.6(b).

“Patents”
means all patents, industrial and utility models, industrial designs, petty
patents, patents of importation, patents of addition, certificates of
invention, and any other

 7
 

indicia of invention ownership issued or granted by
any Governmental Authority, including all provisional applications, priority
and other applications, divisionals, continuations (in whole or in part),
extensions, reissues, re-examinations or equivalents or counterparts of any of
the foregoing; and moral and economic rights of inventors in any of the
foregoing.

“Permit”
means any permit, license, approval, consent or authorization issued by a
Governmental Authority.

“Permitted
Liens” means (a) Liens for Taxes not yet due as of the Closing
Date or that are being contested in good faith and by appropriate proceedings
diligently conducted and (b) statutory Liens relating to workers’ compensation,
unemployment insurance or other social security legislation imposed by the
State of California under applicable Law.

“Person” means any
individual, sole proprietorship, partnership, corporation, limited liability
company, unincorporated society or association, trust or other entity,
including any Governmental Authority.

“Personal Property Taxes”
means ad valorem taxes with respect to the Acquired Assets.

“Purchase Price” has
the meaning set forth in Section 2.5.

“Reseller
Agreement” means the Reseller Agreement, to be entered into by
and between Buyer and Helinet, substantially in the form of Exhibit M.

“Returns”
means all returns, statements, reports, elections, schedules, claims for refund
and forms (including estimated Tax or information returns and reports) relating
to Taxes, including any amendments or supplements thereto.

“Sales Commission Plans”
has the meaning set forth in Section
2.6(d).

“Sales Commissions”
has the meaning set forth in Section
2.6(d).

“Second
Earnout Period” means the period beginning on January 1, 2008,
and ending on December 31, 2008.

“Second Period Tier One Threshold”
has the meaning set forth in Section
2.6(e). 

“Second Period Tier Two Threshold”
has the meaning set forth in Section
2.6(e)(ii).

“Seller” has the
meaning set forth in the preamble. 

“Seller Group” has the
meaning set forth in the preamble. 

“Shareholders” has the
meaning set forth in the preamble. 

“Tangible Personal Property”
has the meaning set forth in Section
4.8(c).

“Target Working Capital”
means $880,000.

 8
 

“Tax”
means:  (a) net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, unclaimed property, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, intangible,
real or personal property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or additional
amount imposed by any Law or Taxing Authority, whether disputed or not; (b) any
liability for the payment of any amounts of any of the foregoing types as a
result of being a member of an affiliated, consolidated, combined or unitary
group or being a party to any agreement or arrangement whereby liability for
payment of such amounts was determined or taken into account with reference to
the liability of any other Person; and (c) any liability for the payment of any
amounts of any of the foregoing types as a result of being a party to any tax
sharing agreements or arrangements (whether or not written) or with respect to
the payment of any amounts of any of the foregoing types as a result of any
express or implied obligation to indemnify any other Person or to otherwise
assume or succeed to the liability of any other Person for any of the foregoing
types.

“Taxing
Authority” means any Governmental Authority responsible for the
administration or the imposition of any Tax.

“Third
Earnout Period” means the period beginning on January 1, 2009,
and ending on December 31, 2009.

“Third Period Tier One Threshold”
has the meaning set forth in Section
2.6(f).

“Third Period Tier Two Threshold”
has the meaning set forth in Section
2.6(f)(ii).

“Total
Earnout Period” means the period beginning on the Closing Date
and ending on the last day of the Fourth Earnout Period.

“Trade
Secrets”  means
anything that would constitute a “trade secret” under applicable Law, and all
other inventions (whether patentable or not), industrial designs, discoveries,
improvements, ideas, designs, models, formulae, patterns, compilations, data
collections, drawings, blueprints, mask works, devices, methods, techniques,
processes, know-how, confidential information, proprietary information,
customer lists, software and technical information; and moral and economic
rights of authors and inventors in any of the foregoing.

“Trademark
Assignment” means the Trademark Assignment, by Seller in favor
of Buyer, substantially in the form of Exhibit
I.

“Trademarks”  means trademarks, service marks, fictional
business names, trade names, commercial names, certification marks, collective
marks and other proprietary rights to any words, names, slogans, symbols,
logos, devices or combinations thereof used to identify, distinguish and
indicate the source or origin of goods or services; registrations, renewals,
applications for registration, equivalents and counterparts of the foregoing;
and the goodwill of the business associated with each of the foregoing.

“Transaction
Agreements” means, collectively, the Assignment of Assumed
Contracts, the Assumption Agreement, the Bill of Sale and Assignment, the
Consulting Agreement, the

 9
 

Domain Name Assignment, the Employment Agreements, the
Escrow Agreement, the Facility Lease Agreement, the Noncompetition Agreement,
the Helicopter Services Agreement, the Trademark Assignment, the Transition
Services Agreement, the Reseller Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
Buyer, Seller or any Shareholder(s) in connection with the consummation of the
transactions contemplated by this Agreement, in each case only as applicable to
the relevant party or parties to such Transaction Agreement, as indicated by
the context in which such term is used.

“Transfer Taxes” has
the meaning set forth in Section 8.1.

“Transferred Employees”
has the meaning set forth in Section
6.5(a).

“Transition
Services Agreement”  means
the Transition Services Agreement, by and among Buyer, Helinet and Seller,
substantially in the form of  Exhibit J.

“US
Export Control Laws” means the Commerce Department’s Export
Administration Regulations, the State Department’s International Traffic in
Arms Regulations, all regulations administered by the Office of Foreign Assets
Control (“OFAC”)
(including the Cuban Assets Control Regulations, the Federal Republic of
Yugoslavia (Serbia and Montenegro) Kosovo Sanctions Regulations, the Foreign
Assets Control Regulations, the Iraqi Sanctions Regulations, the Iranian
Transactions Regulations and the Iranian Assets Control Regulations, the Syrian
Sanctions Regulations, the Sudanese Sanctions Regulations, and restrictions
maintained against persons identified on OFAC’s List of Specially Designated
Nationals and Other Blocked Persons), and the Justice Department’s Bureau of
Alcohol, Tobacco, Firearms and Explosives import regulations.

“Working Capital Excess”
has the meaning set forth in Section
2.9(e).

“Working Capital Shortfall”
has the meaning set forth in Section
2.9(d).

ARTICLE
2:  PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES

2.1       Purchase and Sale of Assets.

(a)           At
the Closing, Buyer is purchasing from Seller, and Seller is selling,
transferring, conveying, assigning and delivering to Buyer, free and clear of
all Liens, other than Permitted Liens, all of Seller’s right, title and
interest in and to all of the assets and properties owned by or licensed to
Seller and used or held for use in connection with the Business, including any
goodwill associated with such assets and properties, other than the Excluded
Assets (collectively, the “Acquired
Assets”).

(b)           Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
sell, transfer, convey, assign or deliver to Buyer any of the Acquired Assets,
including Assumed Contracts and Permits, if an attempted sale, transfer,
conveyance, assignment or delivery thereof, without the consent of another
Person, would constitute a breach of, or in any way affect the rights of Seller
or Buyer with respect to, such Acquired Assets (any such Acquired Assets, the

 10
 

“Nonassignable Items”).  Seller shall use its commercially reasonable
efforts and Buyer shall cooperate in all reasonable respects with Seller to
obtain and satisfy all of the consents listed on Schedule 3.2(g)  and to resolve all impracticalities of
sale, transfer, conveyance, assignment and delivery necessary to convey to
Buyer all Nonassignable Items.  Seller
agrees that on and after the Closing Date, it will, at the request and under
the direction of Buyer, use its commercially reasonable efforts to (i) provide
Buyer with the benefits of and to preserve for the benefit of Buyer the rights
of Seller under such Nonassignable Items, (ii) facilitate receipt of the
consideration to be received by Seller in and under every such Nonassignable
Item, which consideration shall be held for the benefit of, and shall promptly
be delivered to, Buyer, and (iii) enforce at the request of Buyer and for the
account of Buyer any rights of Seller arising from such Nonassignable Item and
to take all such other actions as are necessary to enable Seller to convey or
assign good and marketable title, free and clear of Liens, to all the Acquired
Assets to Buyer.  Nothing in this Section2.1(b)  will be deemed a waiver
by Buyer of its right to receive on the Closing Date an effective assignment of
all of the Acquired Assets, nor will this Section2.1(b)
be deemed to constitute an agreement to exclude from the Acquired Assets any
assets described in Section 2.1(a).

2.2       Excluded
Assets.  Anything in Section 2.1 or elsewhere in this
Agreement to the contrary notwithstanding, Seller shall retain the following
assets (collectively, the “Excluded
Assets”), and Buyer shall in no way be construed as having
agreed to purchase or acquire any interest whatsoever in any such Excluded
Assets:

(a)           the lease for the prior facility
leased by Seller in connection with the Business and located at 13025 Grass
Valley Ave., Unit 2, Grass Valley, California 95945;

(b)           cash and cash equivalents of Seller as
of the Closing Date;

(c)           all
accounts and notes receivable of Seller arising on or prior to the Closing
Date;

(d)           the minute books, limited liability
company books and seal of Seller;

(e)           any
amounts due from Affiliates of Seller with respect to the Business as of the
Closing Date;

(f)            all of Seller’s insurance policies and
rights thereunder;

(g)           all
personnel records and other records that Seller is required by Law to retain in
its possession;

(h)           all rights in connection with, and
assets of, the Employee Plans, including all assets, funding media, reserves,
credits and records of Seller relating thereto, and any insurance policies and
service agreements relating to the Employee Plans;

(i)            the
benefit of any insurance policies and service agreements in relation to the
Employee Plans;

 11
 

(j)            all
Returns and Tax books and records of Seller and all claims for refund of Taxes
of Seller and other governmental charges of whatever nature of Seller;

(k)           any Domain Names of Seller not
including the word “Cineflex”;

(l)            all rights of Seller in connection
with the Contemplated Transactions; and

(m)          the properties and assets set forth on Schedule 2.2.

2.3       Assumption
of Liabilities.  Except as otherwise
specifically provided in this Section 2.3,
on the Closing Date, Buyer shall assume and, on and after the Closing Date,
Buyer shall pay, discharge and perform, as appropriate, only (a) all
Liabilities under the Assumed Contracts set forth on Schedule 4.11(a); (b) to the extent not
included in (a) above, any Liability accrued for on the Final Working Capital
Statement, as finally determined; and (c) all warranty obligations arising out
of sales of products by the Business prior to the Closing (whether or not
accrued for on the Final Working Capital Statement) (collectively, the “Assumed Liabilities”).

2.4       Excluded
Liabilities.  Notwithstanding
anything in this Agreement to the contrary and except as provided in Section 2.3, Buyer shall not assume and
shall not become responsible for any Liability of Seller Group (whether or not
related to the operations of Seller or the Business) other than the Assumed
Liabilities (collectively, the “Excluded Liabilities”).

2.5       Purchase
Price.  In full consideration for the
transfer of the Acquired Assets, Axsys shall or shall cause Buyer to deliver
and pay to Seller an initial purchase price of $27,000,000 (the “Initial Purchase Price,”
and, as adjusted pursuant to Section 2.6,
Section 2.7 and Section 2.9, the “Purchase Price”).  The Initial Purchase Price will be payable on
the Closing Date as follows:  (a) Axsys
shall or shall cause Buyer to pay to Seller $24,850,000 (the “Cash Amount”) in
immediately available funds by bank wire transfer to such account or accounts
designated in writing for this purpose by Seller to Buyer at least two Business
Days prior to the Closing Date; and (b) Axsys shall or shall cause Buyer to
transfer $2,150,000 in immediately available funds to the escrow agent named in
the Escrow Agreement (the “Escrow
Amount”), which will expire in accordance with its terms.

2.6       Earnout.

(a)           Axsys
shall or shall cause Buyer to, as promptly as possible, but not later than five
days after the earlier of (i) the filing by Axsys of its Annual Report on Form
10-K for the preceding fiscal year ended December 31 or (ii) the date an
earnings press release, which contains revenue numbers, is issued by Axsys for
the preceding fiscal year ended December 31, deliver to Seller an income
statement in respect of the Business (each such income statement, an “Earnout Income Statement”)
for the most recently completed Earnout Period showing all Business Revenue thereon.  Together with the Earnout Income Statement,
Buyer shall deliver a schedule (each such schedule, an “Earnout Schedule”)
setting forth Business Revenue for the relevant Earnout Period, which shall
include a calculation of any Earnout Payment proposed to be paid for the
relevant Earnout Period, in each case derived from the information contained in
the applicable Earnout Income Statement but calculated in accordance with the
terms of this

 12
 

Agreement. 
Concurrently with the delivery of the Earnout Income Statement and the
Earnout Schedule for the applicable Earnout Period, Buyer shall pay the amount
of any Earnout Payment shown as due thereon to Seller by wire transfer of
immediately available funds to an account designated in writing by Seller.

(b)           Within
30 days following Seller’s receipt of the Earnout Income Statement and Earnout
Schedule for the relevant Earnout Period, Seller shall deliver written notice
to Buyer of any dispute it has with respect to the preparation or content of
such Earnout Income Statement or Earnout Schedule, which notice must specify
the disputed item or items and Seller’s proposed revision(s) to such Earnout
Income Statement and/or Earnout Schedule and the reason(s) therefor.  If Seller does not notify Buyer of a dispute
with respect to such Earnout Income Statement or Earnout Schedule within such
30-day period, such Earnout Income Statement and Earnout Schedule will be
deemed final, conclusive and binding on the parties.  If Seller delivers a notice of dispute within
such 30-day period, Buyer and Seller shall negotiate in good faith to resolve
such dispute.  If Buyer and Seller,
notwithstanding such good faith effort, fail to resolve such dispute within 30
days after Seller advises Buyer of its objections, then Buyer and Seller shall
jointly engage a mutually acceptable nationally recognized independent
accounting firm, other than Buyer accountant or Seller’s accountant (the “Arbitration Firm”),
to resolve such dispute.  As promptly as
practicable thereafter, Buyer and Seller shall each prepare and submit a
presentation detailing each party’s complete statement of proposed resolution
of all disputed matters to the Arbitration Firm, and the Arbitration Firm can
only consider those items in dispute based solely upon the presentations by
Buyer and Seller.  The parties shall
share the expenses of the Arbitration Firm equally.  All determinations made by the Arbitration
Firm will be final, conclusive and binding on the parties.  The Arbitration Firm shall have the power to
compel compliance with this Section 2.6,
including compliance with provisions requiring access and disclosure.

(c)           For
purposes of complying with the terms set forth in this Section 2.6, Buyer and Seller shall
cooperate with and make available to the other party and its representatives
and the Arbitration Firm (if applicable) all information, records, data and
working papers, books and records reasonably required to confirm the Business
Revenue, including Buyer’s financial statements, its general ledger and
invoices, in each case as related to the Business, and will permit access to
its facilities and personnel, including meeting with the appropriate senior
officers of Buyer and Axsys for the purpose of understanding the computation of
Business Revenue, in each case, as may be reasonably required in connection
with the preparation and analysis of the applicable Earnout Income Statement
and Earnout Schedule and the resolution of any disputes under this Section 2.6.

(d)           Subject
to Sections 2.6(h) and 2.6(k), if, for the First Earnout
Period, Business Revenue (as finally determined pursuant to Section 2.6(b)) exceeds $11,844,000
(the “First Period Tier
One Threshold”), then Axsys shall pay or cause to be paid to
Seller the sum of:

(i)            45%
of all Business Revenue for the First Earnout Period in excess of the First
Period Tier One Threshold; plus

 13
 

(ii)           30%
of all Business Revenue for the First Earnout Period in excess of $15,777,000
(the “First Period Tier
Two Threshold”);

provided,
however, that the Earnout Payment for the First Earnout Period otherwise
payable hereunder shall be reduced by an amount equal to the aggregate of all
sales commissions and employee bonuses on the revenue of the Business prior to
the Closing earned under the sales commission and non-sales employee bonus
plans of the Business (the “Sales Commission Plans”) based on sales by Seller
between January 1, 2007 through the Closing Date and not paid to any
Transferred Employee on or prior to the Closing Date or accrued for on the
Final Working Capital Statement, calculated as set forth on Schedule 2.6(d) (“Sales Commissions”),
which Sales Commissions shall be paid in full, irrespective of the period
relative to the Closing to which such Sales Commissions relate, by Axsys or
Buyer to the applicable Transferred Employee(s) entitled thereto under the
terms of the Sales Commission Plans. 
Buyer will not amend or nullify in any material respect (including as to
thresholds or amounts due) the Sales Commission Plans as set forth on Schedule 2.6(d).

(e)           Subject
to Sections 2.6(h) and 2.6(k), if, for the Second Earnout
Period, Business Revenue (as finally determined pursuant to Section 2.6(b)) exceeds $17,218,000
(the “Second Period Tier
One Threshold”), then Axsys shall pay or cause to be paid to
Seller the sum of:

(i)            the
lesser of (A) 45% of all Business Revenue for the Second Earnout Period in
excess of the Second Period Tier One Threshold, and (B) 45% of the aggregate
Business Revenue for the First and Second Earnout Periods in excess of the sum
of the First Period Tier One Threshold and the Second Period Tier One
Threshold; plus

(ii)           the
lesser of (A) 30% of all Business Revenue for the Second Earnout Period in
excess of $26,488,000 (the “Second Period Tier Two Threshold”), and (B) 30% of the
aggregate Business Revenue for the First and Second Earnout Periods in excess
of the sum of the First Period Tier Two Threshold and the Second Period Tier
Two Threshold.

(f)            Subject
to Sections 2.6(h) and 2.6(k), if, for the Third Earnout
Period, Business Revenue (as finally determined pursuant to Section 2.6(b)) exceeds $16,208,000
(the “Third Period Tier
One Threshold”), then Axsys shall pay or cause to be paid to
Seller the sum of:

(i)            the
lesser of (A) 45% of all Business Revenue for the Third Earnout Period in excess
of the Third Period Tier One Threshold and (B) 45% of the aggregate Business
Revenue for the First, Second and Third Earnout Periods in excess of the sum of
the First Period Tier One Threshold, the Second Period Tier One Threshold and
the Third Period Tier One Threshold; plus

(ii)           the
lesser of (A) 30% of all Business Revenue for the Third Earnout Period in
excess of $33,816,000 (the “Third Period Tier Two

 14
 

Threshold”) and (B) 30% of the
aggregate Business Revenue for the First, Second and Third Earnout Periods in
excess of the sum of the First Period Tier Two Threshold, the Second Period
Tier Two Threshold and the Third Period Tier Two Threshold.

(g)           Subject
to Sections 2.6(h) and 2.6(k), if, for the Fourth Earnout
Period, Business Revenue (as finally determined pursuant to Section 2.6(b)) exceeds $4,430,000 (the
“Fourth Period Tier One
Threshold”), then Axsys shall pay or cause to be paid to Seller
the sum of:

(i)            the
lesser of (A) 45% of all Business Revenue for the Fourth Earnout Period in
excess of the Fourth Period Tier One Threshold and (B) 45% of the aggregate
Business Revenue for the Total Earnout Period in excess of the sum of the First
Period Tier One Threshold, the Second Period One Threshold, the Third Period
Tier One Threshold and the Fourth Period Tier One Threshold; plus

(ii)           the
lesser of (A) 30% of all Business Revenue for the Fourth Earnout Period in
excess of $10,159,000 (the “Fourth Period Tier Two Threshold”) and (B) 30% of the
aggregate Business Revenue for the Total Earnout Period in excess of the sum of
the First Period Tier Two Threshold, the Second Period Tier Two Threshold, the
Third Period Tier Two Threshold and the Fourth Period Tier Two Threshold.

(h)           Notwithstanding
anything herein to the contrary, in no event shall the aggregate Earnout
Payments paid, or caused to be paid, by Axsys to Seller pursuant to this Section 2.6 exceed a maximum amount
equal to $42,500,000 minus the aggregate amount of any Sales Commissions
actually paid pursuant to Section 2.6(d).

(i)            Any
payments due to Seller under the foregoing provisions of this Section 2.6 not paid upon delivery of
the applicable Earnout Income Statement and Earnout Schedule under Section 2.6(a) are to be made within
five  Business Days of the final
determination of Business Revenue in accordance with Section 2.6(b) by wire transfer of
immediately available funds to an account designated in writing by Seller to
Buyer at least two Business Days prior to the date payment is required to be
made to Seller hereunder.

(j)            Each
member of Seller Group acknowledges that, effective as of the Closing, Buyer
owns and controls the Business and the Acquired Assets, and that Buyer may
operate the Business and the Acquired Assets in such manner as it determines in
its sole discretion to be in its best interests.  Without limiting the generality of the
foregoing, from and after the Closing, Seller Group agrees and acknowledges
that, for each Earnout Period, Buyer shall not be obligated to expend more than
5% of Business Revenue on sales and marketing expenses relating to the
Business.

(k)           In
the event that, prior to the end of the Third Earnout Period, Buyer or its
Affiliate acquires another company or business and combines such other company
or business with the Business, then each of the First Period Tier One
Threshold, the First

 15

Period Tier Two
Threshold, the Second Period Tier One Threshold, the Second Period Tier Two
Threshold, the Third Period Tier One Threshold, the Third Period Tier Two
Threshold, the Fourth Period Tier One Threshold and the Fourth Period Tier Two
Threshold shall, as of the effective date of such acquisition, be increased by
an amount equal to the actual Business Revenue of such acquired company or
business for the trailing twelve-month period immediately preceding the
effective date of such acquisition (prorated as necessary and appropriate for a
partial Earnout Period), and, for purposes of this Section 2.6, Seller shall be credited
with all revenue generated by such acquired company or business that
constitutes Business Revenue.

(l)            If, prior to the end of the Fourth
Earnout Period, Buyer sells the Business or any material portion thereof to a
Person that is not an Affiliate of Axsys (other than in ordinary course
transactions involving sales of inventory or the replacement of equipment and
other tangible personal property used in the Business), then Axsys shall pay or
cause to be paid to Seller a liquidated amount, if any, in complete discharge
of Axsys’ obligations under this Section
2.6 and under Section 2.7,
equal to the sum of:  (i) 50% of the net
proceeds realized by Buyer upon such sale in excess of (A) any amounts paid by
or caused to be paid by Axsys to Seller in connection with the acquisition of
the Business and after the Closing pursuant to this Article 2, (B) any amounts paid by or
caused to be paid by Axsys or any of its Affiliates in connection with the
consummation of any acquisition contemplated by Section 2.6(k), (C) any amounts paid by Buyer or any of
its Affiliates for capital expenditures for the benefit of the Business between
the Closing and the consummation of such sale, and (D) any Sales Commissions,
subject to a maximum payment under this clause (i) of $42,500,000; plus
(ii) 5% of any net proceeds (as calculated under clause (i)) in excess of
$85,000,000.  Notwithstanding anything to
the contrary contained herein, except to the extent provided in this Section 2.6(l), Buyer shall have no
further obligation under this Section 2.6
or under Section 2.7 from
and after the consummation of any such sale of the Business or material portion
thereof other than earnout obligations accrued prior to such sale but unpaid.

(m)          Upon written notice to Buyer, Seller
may designate Helinet and John Coyle to be the direct recipients of any
payments otherwise owed by Buyer or Axsys to Seller under this Section 2.6 or Section 2.7, with Helinet being
entitled to 75% of the aggregate amount of any such payments and John Coyle
being entitled to 25% of the aggregate amount of any such payments.  If Buyer or Axsys makes payment to Helinet
and/or John Coyle in accordance with such written notice from Seller, such
payment shall fully discharge Buyer’s and Axsys’s obligations under this Section 2.6 and/or Section 2.7 to make such payment to
Seller, and neither Buyer nor Axsys shall have any further liability to any
member of Seller Group with respect thereto.

2.7       Post-Earnout
Bookings.  If (a) during the period
beginning on the Closing Date and ending on the third anniversary of the
Closing Date, the Business has entered into any Contracts that provide for the
delivery of products in multiple twelve-month periods after the end of the
Earnout Period (the “Multi-Year
Contracts”) and, as of the third anniversary of the Closing
Date, the Multi-Year Contracts have an aggregate backlog (i.e.,
contractually committed orders) in excess of $10,000,000 of Business Revenue
and (b) such Multi-Year Contracts generate Business Revenue in any future
twelve-month period (ending on the last

 16
 

day of the month closest
to the Closing Date) in which the Business recognizes at least $40,000,000 of
Business Revenue excluding Business Revenue generated by the Multi-Year
Contracts, then Axsys shall pay or cause to be paid to Seller, as soon as
practicable after the end of each such future twelve-month period, an amount
calculated in accordance with the following schedule:

 

	
  Business Revenue Generated by Multi-Year Contracts over $40 million

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0 – $1 million

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $1 - $2 million

  	
   

  	
  8.4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $2 - $3 million

  	
   

  	
  8.8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $3 - $4 million

  	
   

  	
  9.2

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $4 - $5 million

  	
   

  	
  9.6

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  $5 million and above

  	
   

  	
  10.0

  	
  %

  

 

2.8       Default.  Any payment due to Seller under Section 2.6 or Section 2.7 is to be made (a) with
respect to any payment due under Section
2.6, concurrently with Buyer’s delivery of the Earnout Schedule
pursuant to Section 2.6(a)
or (b) the remainder under Section 2.6
or any amount payable under Section 2.7
within five Business Days of the final determination of Business Revenue for
the relevant measurement period in accordance with Section 2.6 or Section 2.7, as applicable, by wire
transfer of immediately available funds to an account designated by Seller to
Buyer at least two Business Days prior to the date payment is otherwise
required to be made to Seller hereunder. 
If Buyer has failed to pay or cause to be paid any amounts otherwise due
to Seller pursuant to Section 2.6
or Section 2.7 on the date
such payments are due (any such due and unpaid amounts, the “Overdue Amounts”),
then such Overdue Amounts shall bear interest at the Applicable Rate for the
period from the date such Overdue Amount was otherwise due and payable
hereunder to the date that such Overdue Amount is fully paid.

2.9       Working Capital Adjustment.

(a)           Final Working Capital Statement.  Within 60 days after the Closing Date, Buyer
shall cause to be prepared and delivered to Seller a working capital statement
(the “Final Working
Capital Statement”) setting forth the Net Working Capital as of
the Closing Date (the “Final
Working Capital”).  The
Final Working Capital Statement shall be prepared in accordance with GAAP.

(b)           Dispute.  Within 30 days following receipt by Seller of
the Final Working Capital Statement, Seller shall deliver written notice to
Buyer of any dispute it has with respect to the preparation or content of the
Final Working Capital Statement.  If Seller
does not notify Buyer of a dispute with respect to the Final Working Capital
Statement within such 30-day period, such Final Working Capital Statement will
be final, conclusive and binding on the parties.  In the event of such notification of a dispute,

 17
 

Buyer and Seller
shall negotiate in good faith to resolve such dispute.  If Buyer and Seller, notwithstanding such
good faith effort, fail to resolve such dispute within 15 days after Seller
advises Buyer of Seller’s objections, then Buyer and Seller jointly shall
engage the Arbitration Firm to resolve such dispute.  As promptly as practicable thereafter, Buyer
and Seller shall each prepare and submit a presentation detailing each party’s
complete statement of proposed resolution of all disputed matters to the
Arbitration Firm, and the Arbitration Firm can only consider those items in
dispute based solely upon the presentations by Buyer and Seller.  The parties shall share the expenses of the
Arbitration Firm equally.  All
determinations made by the Arbitration Firm will be final, conclusive and
binding on the parties.

(c)           Access.  For purposes of complying with the terms set
forth in this Section 2.9(c),
each party shall cooperate with and make available to the other parties and
their respective representatives all information, records, data and working
papers, including books and records reasonably required to confirm the assets
and liabilities set forth on the Final Working Capital Statement, and will
permit access to its facilities and personnel, including meeting with the
appropriate senior officers of Buyer or Axsys, as may be reasonably required in
connection with the preparation and analysis of the Final Working Capital
Statement and the resolution of any disputes hereunder.

(d)           Downward Adjustment.  If the Final Working Capital (as finally
determined pursuant to Section 2.9(b))
is less than the Target Working Capital, then the Purchase Price will be
adjusted downward by the amount of the shortfall (the “Working Capital Shortfall”),
and Seller shall pay or cause to be paid to Buyer an amount in cash equal to
the Working Capital Shortfall, by wire transfer of immediately available funds
to an account or accounts designated in writing by Buyer to Seller.  Any such payment is to be made within five Business
Days of the date on which the Final Working Capital is finally determined
pursuant to Section 2.9(b).

(e)           Upward Adjustment.  If the Final Working Capital (as finally
determined pursuant to Section 2.9(b))
is greater than the Target Working Capital, then the Purchase Price will be
adjusted upward by the amount by which the Final Working Capital exceeds the
Target Working Capital (the “Working Capital Excess”), and Axsys shall pay or cause
to be paid to Seller an amount in cash equal to the Working Capital Excess, by
wire transfer of immediately available funds to an account or accounts
designated in writing by Seller to Axsys. 
Any such payment is to be made within five Business Days of the date on
which the Final Working Capital is finally determined pursuant to Section 2.9(b).

2.10     Allocation
of Consideration.  After the Final
Working Capital Statement is finally determined pursuant to Section 2.9(b), Seller and Buyer shall
allocate the Purchase Price and, to the extent required, Assumed Liabilities
and relevant transaction costs among the Acquired Assets and any other rights
being purchased by Buyer pursuant to this Agreement in accordance with the fair
market values determined pursuant to the methodology set forth on Schedule 2.10 and Section 1060 of the
Code.  Once finalized, each of the
parties hereto shall report the purchase and sale of the Acquired Assets in
accordance with this Section 2.10
for all income Tax and Transfer Tax purposes.  Once finalized, Buyer and Seller shall adopt
and utilize the fair market values determined pursuant to the methodology set
forth in this

 18
 

Section
2.10 for purposes of filing IRS Form 8594 and all other
Returns filed by each of them (unless otherwise required by Law), and each of
them will not voluntarily take any position inconsistent therewith upon
examination of any such Return, in any judicial or administrative proceeding or
otherwise with respect to such Returns. 
Buyer and Seller Group each agrees to provide the other promptly with
any other information required to complete IRS Form 8594.  Schedule
2.10 shall be amended in accordance with applicable Law as the
parties jointly agree in writing.

ARTICLE
3:  DELIVERIES AND OTHER ACTIONS

3.1       Closing.  The payment of the Cash Amount in accordance
with Section 2.5, the
transfer of the Acquired Assets to Buyer and the assumption by Buyer of the
Assumed Liabilities is taking place concurrently with the execution and
delivery of this Agreement on the date of this Agreement, and the term “Closing Date” means
the date on which the last of the parties executes and delivers this
Agreement.  All transfers and assumptions
hereunder will be deemed to have been made simultaneously and will become
effective, and legal and equitable title and risk of loss with respect to the
Acquired Assets will pass to Buyer, as of 11:59 p.m. (Eastern Time) on the
Closing Date.

3.2       Deliveries
by Seller Group.  At the Closing,
Seller Group shall deliver, or cause to be delivered, to Buyer the following
items:

(a)           possession of the Acquired Assets,
including the Leased Real Property;

(b)           a receipt, duly executed by Seller,
evidencing receipt by Seller of the Cash Amount;

(c)           each of the Transaction Agreements to
which Seller, any of the

Shareholders,
Gimbal Partners, LLC or Alex Giuffrida is a party, duly executed by each such
party thereto;

(d)           appropriate
termination statements under the Uniform Commercial Code and other instruments
as may be requested by Buyer to extinguish all Indebtedness and all security
interests and other Liens relating to the Acquired Assets;

(e)           (i) a reasonably current long-form
good standing certificate (or equivalent document) for Seller issued by the
Secretary of State of California and for each state in which Seller is
qualified to do business as a foreign corporation, (ii) a copy of the articles
of organization of Seller, certified by the Secretary of State of California,
(iii) a copy of the operating agreement of Seller and (iv) a copy of the
resolutions of the members of Seller approving the Contemplated Transactions;
each of (iii) and (iv) to be certified in writing by an officer of Seller,
which writing shall include a certification as to the incumbency of the
officers executing and delivering this Agreement and each of the Transaction
Agreements;

(f)            a non-foreign person affidavit that
complies with the requirements of Section 1445 of the Code, duly executed by
Seller;

 19
 

(g)           the consents listed on Schedule 3.2(g);

(h)           estoppel certificates, waivers,
collateral access agreements and non-disturbance agreements relating to the
Leased Real Property, as requested by Buyer or its lenders, each in a form
reasonably acceptable to Buyer and its lenders;

(i)            a quitclaim of assets used in
connection with the Business from Helinet to Seller, duly executed by Helinet;

(j)            tax clearance certificates with
respect to Seller from the California State Board of Equalization and the
California Employment Development Department showing no Taxes due; and

(k)           such other documents and instruments
as Buyer shall reasonably request to consummate the Contemplated Transactions.

3.3       Deliveries
by Buyer.  At the Closing, Buyer
shall deliver, or cause to be delivered, to Seller Group, the following items:

(a)           the Cash Amount, payable as set forth
in Section 2.5;

(b)           (i) a reasonably current long-form
subsistence certificate for Buyer issued by the Secretary of State of New York;
(ii) a copy of the certificate of incorporation of Buyer, certified by the
Secretary of State of New York; (iii) a copy of the by-laws of Buyer; and (iv)
a copy of the resolutions of the board of directors of Buyer approving the
Contemplated Transactions; each of (iii) and (iv) to be certified in writing by
an officer of Buyer, which writing shall include a certification as to the
incumbency of the officers executing and delivering this Agreement and each of
the Transaction Agreements;

(c)           each of the Transaction Agreements to
which Buyer is a party, duly executed by Buyer; and

(d)           such other documents and instruments
as Seller shall reasonably request to consummate the Contemplated Transactions.

ARTICLE
4:  REPRESENTATIONS AND WARRANTIES OF
SELLER GROUP

Each of the members of Seller Group jointly and
severally represents and warrants to Buyer as follows:

4.1       Organization;
Standing; Corporate Power.  Seller is
a limited liability company duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize such concept) under the
Laws of the jurisdiction in which it is organized and has the requisite
corporate power and authority to carry on the Business as now being
conducted.  Seller is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
that recognize such concept) under the Laws of each jurisdiction in which the
nature of the Business or the ownership, leasing or operation of its properties
(including the Acquired Assets) makes such qualification or licensing
necessary, and each such jurisdiction is

 20
 

set forth on Schedule 4.1.  Seller has made available to Buyer prior to
the execution of this Agreement complete and correct copies of its articles of
organization and operating agreement, each as amended to date.  Each Shareholder that is not an individual is
duly organized, validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the Laws of the jurisdiction
in which it is organized.

4.2       Capacity;
Authority; Enforceability.  Each
member of Seller Group has the capacity or requisite power and authority, as
applicable, to execute, deliver and perform such Person’s obligations under
this Agreement and the Transaction Agreements and to consummate the
Contemplated Transactions.  The execution
and delivery of this Agreement and the Transaction Agreements by each member of
Seller Group and the consummation by each such Person of the Contemplated
Transactions have been, to the extent applicable to such Person, duly
authorized by all necessary corporate action on the part of each such
Person.  This Agreement and each of the
Transaction Agreements have been duly executed and delivered by each member of
Seller Group and, assuming due authorization, execution and delivery by each of
the other parties hereto and thereto, represent the legal, valid and binding
obligation of each such Person, enforceable against each such Person in
accordance with their respective terms. 
No further action on the part of any member of Seller Group is or will
be required in connection with the Contemplated Transactions.

4.3       Conflicts;
Consents.  The execution and delivery
of this Agreement and the Transaction Agreements does not, and the consummation
of the Contemplated Transactions and compliance with the provisions of this
Agreement and the Transaction Agreements will not, as applicable to each member
of Seller Group, (a) conflict with the organizational documents of any member
of Seller Group, (b) result in any breach, violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or creation or acceleration of any obligation or
right of a third party or loss of a benefit under, or result in the creation of
any Lien upon any of the properties or assets of any member of Seller Group
under, any loan or credit agreement, note, bond, mortgage, indenture, lease or
other material Contract, Permit, concession, franchise, license or other
authorization applicable to any such Person or its respective properties or
assets, or (c) conflict with or violate any Law or Order applicable to any such
Person or its respective properties or assets.  No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Person is required by any member of Seller Group in connection
with the execution and delivery of this Agreement and the Transaction
Agreements by such Person or the consummation by such Person of the
Contemplated Transactions.

4.4       Compliance with Applicable Laws;
Litigation.  Except as set forth on Schedule 4.4:

(a)           The operations of Seller, including
the Business and the Acquired Assets, have not been and are not being conducted
in violation of any Law.  Seller has not
received any written notice of, and has no knowledge of, any claim alleging any
such violation.  No member of Seller
Group has any knowledge of any proposed Law or Order that would apply to the
Business or the Acquired Assets and that would adversely affect the Business or
the Acquired Assets.

 21
 

(b)           No Action by any Person with respect
to Seller, the Business, any of the Acquired Assets or the Contemplated
Transactions is pending or, to the knowledge of Seller Group, threatened.  There are no judgments unsatisfied against
Seller or consent decrees or injunctions to which Seller, the Business or any
of the Acquired Assets is subject.

4.5       Employee Benefit Plans.

(a)           Schedule4.5(a)
sets forth a complete list of (i) all “employee benefit plans,” as defined in
Section 3(3) of ERISA, (ii) all other severance pay, salary continuation,
bonus, incentive, stock option, retirement, pension, profit sharing or deferred
compensation plans, contracts, programs, funds, or arrangements of any kind,
and (iii) all other employee benefit plans, contracts, programs, funds, or
arrangements (whether written or oral, qualified or nonqualified, funded or
unfunded, foreign or domestic, currently effective or terminated) and any
trust, escrow, or similar agreement related thereto, whether or not funded, in
respect of any present or former employees, directors, officers, shareholders,
consultants or independent contractors of Seller (or, where indicated below,
any trade or business (whether or not incorporated) (A) under common control
within the meaning of Section 4001(b)(1) of ERISA with Seller or (B) which
together with Seller is treated as a single employer under Section 414(t) of the
Code (the “Controlled
Group”)) or with respect to which Seller (or, where indicated
below, the Controlled Group) has made or is required to make payments,
transfers, or contributions (all of the above being hereinafter referred to as “Employee Plans”).  Seller has no liability with respect to any
plan, arrangement or practice of the type described in the preceding sentence
other than the Employee Plans.

(b)           Copies of the following materials have
been made available to Buyer:  (i) all
current and prior plan documents for each Employee Plan or, in the case of an
unwritten Employee Plan, a written description thereof; (ii) all determination
letters from the IRS with respect to any of the Employee Plans; (iii) all
current and prior summary plan descriptions, summaries of material
modifications, annual reports and summary annual reports; (iv) all current and
prior trust agreements, insurance contracts, and other documents relating to
the funding or payment of benefits under any Employee Plan; and (v) any other
documents, forms or other instruments relating to any Employee Plan reasonably
requested by Buyer.

(c)           Each
Employee Plan has been maintained, operated and administered in compliance with
its terms and any related documents or agreements and in compliance with all
applicable Laws.

(d)           Each Employee Plan intended to be
qualified under Section 401(a) of the Code is so qualified and has heretofore
been determined by the IRS to be so qualified, and each trust created
thereunder has heretofore been determined by the IRS to be exempt from Tax
under the provisions of Section 501(a) of the Code, and nothing has occurred
since the date of any such determination that could reasonably be expected to
give the IRS grounds to revoke such determination.

 22
 

(e)           Neither Seller nor any member of the
Controlled Group currently has or at any time in the past has had an obligation
to contribute to a “defined benefit plan” as defined in Section 3(35) of ERISA,
a pension plan subject to the funding standards of Section 302 of ERISA or
Section 412 of the Code, a “multiemployer plan” as defined in Section 3(37) of
ERISA or Section 414(f) of the Code, or a “multiple employer plan” within the
meaning of Section 210(a) of ERISA or Section 413(c) of the Code.

(f)            With respect to each group health
plan benefiting any current or former employee of Seller or any member of the
Controlled Group that is subject to Section 4980B of the Code, Seller and each
member of the Controlled Group has complied with the continuation coverage
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I
of ERISA.

4.6           Taxes.  Seller
has timely filed all Returns that it was required to file.  All such Returns were correct and complete in
all respects.  All Taxes owed by Seller
have been paid.  No member of Seller
Group expects any Governmental Authority to assess any additional Taxes against
Seller or the Business for any period for which Returns have been filed.  Seller has no liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Law), as a transferee or successor, whether by contract
or otherwise.  Seller has not granted or
had granted on its behalf any extension or waiver of the statute of limitations
period applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired. 
There are no Liens on any of the Acquired Assets that arose in
connection with any failure (or alleged failure) to pay any Tax.  Seller is not a foreign person within the
meaning of Section 1445 of the Code.  No
member of Seller Group has received written notice of any claim by a
Governmental Authority in a jurisdiction where Seller does not file Returns
that Seller is or may be subject to taxation by any Governmental
Authority.  Seller has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
payable or owing to any employee, independent contractor, creditor, shareholder
or other third party, and all Forms W-2 and 1099 required with respect thereto
have been properly completed and filed.

4.7       Environmental Matters.

(a)           Seller is not required to hold any
health and safety or other similar Permit. 
There is no existing practice, action or activity of Seller and no existing
condition of the Acquired Assets or the Business that could reasonably be
expected to give rise to any Liability under, or violate or prevent compliance
with, any health or occupational safety or other applicable Environmental Law.  Seller has not received any notice from any
Governmental Authority revoking, canceling, rescinding, materially modifying or
refusing to renew any environmental Permit or providing written notice of any
violation under Environmental Law related to the Acquired Assets or the
Business.

(b)           Seller has provided Buyer with, or
access to, true, correct and complete copies of environmental reports
documenting the results of inspections, investigations, studies or tests
conducted in relation to the Leased Real Property or the Business, including
Phase I and Phase II environmental site assessments, if any, prepared by or on
behalf of Seller, any lender or financing source of Seller or otherwise in
Seller Group’s

 23
 

possession or
control, relating to the Leased Real Property or the operation of the Business.

4.8       Property.

(a)           Owned Real Property.  Seller does not own any real property that is
in any way used or held for use in connection with the Business.

(b)           Leased Real Property.  Schedule
4.8(b) contains a true and complete list and brief description,
including the address thereof, the annual fixed rental, the expiration of the
term, any extension options and any security deposits, of all real property
leased by Seller and used or held for use in the Business, all of which are hereinafter
referred to as the “Leased
Real Property.”  The
Leased Real Property constitutes all of the real property occupied or used by
Seller in connection with the operation of the Business as currently
conducted.  Seller has a valid leasehold
interest in or valid rights to all Leased Real Property.  Seller has made available to Buyer true,
correct and complete copies of all leases of the Leased Real Property (the “Leases”).  No option, extension or renewal has been
exercised under any Lease except options, extensions or renewals whose exercise
has been evidenced by a written document, a true and complete copy of which has
been made available to Buyer with the corresponding Lease.  Seller has complied with the terms of all
Leases to which it is a party and under which it is in occupancy, and all such
Leases are in full force and effect.  To
Seller’s knowledge, the lessors under the Leases to which Seller is a party
have complied in all material respects with the terms of their respective
Leases.  Seller enjoys peaceful and
undisturbed possession under all such Leases.

(c)           Tangible Personal Property.  Schedule
4.8(c) sets forth a true and complete list, by category, of all
equipment, machinery and other similar tangible personal property, with an
individual original cost of $10,000 or more, that is owned or leased by Seller
or Helinet and used in the Business (the “Tangible Personal Property”).  Seller is in possession of all the Tangible
Personal Property.

(d)           Liens.  None of the Leased Real Property is subject
to any Liens (other than Permitted Liens).

(e)           Absence of Violations.  None of the Leased Real Property, nor the
leasing, occupancy or use of any of the Leased Real Property, is in violation
of any Law, including any building, zoning, environmental or other ordinance,
code, rule or regulation.  The condition
and use of the Leased Real Property conforms to each applicable certificate of
occupancy and all other Permits required to be issued in connection with the Leased
Real Property.  Seller has obtained all
Permits necessary for the operation of the Business at the Leased Real
Property.

(f)            Condition of Property.  There are no material defects in, mechanical
failure of, or damage to, the Leased Real Property.  The mechanical, electrical and HVAC systems
serving the Leased Real Property are in good working condition, normal wear and
tear excepted.

 24
 

(g)           Title; Adequacy of Property.  Seller has good and valid title to, or a
valid leasehold in, or license to, all of the Acquired Assets and the Licensed
Intellectual Property.  Except for the
Excluded Assets, the Acquired Assets comprise all of the assets, properties and
rights, tangible and intangible, required  for
the conduct of the Business as now being conducted.  All Acquired Assets are adequate for the purposes
for which such assets are currently used or held for use, and the tangible
assets therein are in reasonable good repair and operating condition (subject
to normal wear and tear).  After giving
effect to the quitclaim of assets used in connection with the Business from
Helinet to Seller, Seller is the only entity through which the Business is
conducted, and, other than each Shareholder’s ownership interest in Seller, the
Excluded Assets and the assets reflected in the services to be provided under the
Transition Services Agreement, no Shareholder has any right, title or interest
in or to any asset or property in any way used by, or held for use in
connection with, the Business.  There are
no other owners of equity in Seller other than Helinet and John Coyle.

4.9       Intellectual Property.

(a)           Schedule
4.9(a) sets forth, with the application number, application
date, registration/issue number, registration/issue date, title or mark,
country or other jurisdiction and owner(s), as applicable, a complete and
correct list of all the following items of the Acquired Intellectual
Property:  (i) registered Patents and
applications therefor; (ii) registered Trademarks and applications therefor;
(iii) registered Copyrights and applications therefor; (iv) Domain Names
containing the word “Cineflex”, including the Domain Name cineflex.com that is
owned or jointly owned by Seller and a Shareholder and is included in Acquired
Intellectual Property; and (v) software that has a material effect on the
operation of the Business.  Any and all
renewal and maintenance fees, Taxes, annuities or other fees payable in respect
of the Acquired Intellectual Property and due before the Closing have been paid
in full through the Closing.  All actions
required to record each owner throughout the entire chain of title of all of
the Acquired Intellectual Property required to be listed on Schedule 4.9(a) with each applicable
Governmental Authority up through the Closing have been taken, including
payment of all costs, fees, Taxes and expenses associated with such recording
activities.

(b)           Except as set forth on Schedule 4.9(b), the operation of the
Business as conducted by Seller and the possession or use of the Acquired
Assets (including the Acquired Intellectual Property) and the Licensed Intellectual
Property have not infringed, misappropriated, violated or otherwise conflicted
with, and do and will not infringe, misappropriate, violate or otherwise
conflict with, any Intellectual Property right of any other Person when the
Business is conducted by Buyer as it was operated by Seller.  Except as set forth on Schedule 4.9(b), to the knowledge of
Seller, none of the Acquired Intellectual Property or the Licensed Intellectual
Property is being infringed or otherwise used or available for use by any
Person other than Seller, except pursuant to a Contract set forth on  Schedule 4.11(a) or Schedule 4.11(b).

(c)           There is no Action pending or, to the
knowledge of Seller Group, threatened that (i) challenges the rights of Seller
in respect of, or the scope of, any of the Acquired Intellectual Property or
the Licensed Intellectual Property or is otherwise

 25
 

adverse to the
use, registration, right to use, validity, enforceability or sole and exclusive
ownership of any of the Acquired Intellectual Property or the Licensed
Intellectual Property or (ii) asserts that the operation of the Business as
conducted by Seller is, was or will be infringing or otherwise in violation of
any Intellectual Property right of any other Person.  None of the Acquired Intellectual Property or
the Licensed Intellectual Property is subject to any Order or, in the past six
years, has been the subject of any Action.

(d)           Except as set forth on  Schedule 4.9(d), all Information
Systems used by Seller in the conduct of the Business are owned, controlled and
operated by Seller and are not wholly or partly dependent upon any Information
System of any other Person, other than the Internet.

4.10     Labor
Agreements and Employee Issues.  There is no collective bargaining
agreement or other labor agreement with any union or labor organization to
which Seller is a party relating to the Business.  Seller has no knowledge of any effort,
activity or proceeding of any labor organization (or representative thereof) to
organize any of its or their employees. 
Seller is not and has not been subject to any pending, or, to the
knowledge of Seller, threatened (a) unfair labor practice charge and/or
complaint, (b) grievance proceeding or arbitration proceeding arising under any
labor agreement, (c) Action relating to employees, including discrimination,
wrongful discharge or violation of any Law relating to employment practices,
(d) strike, lockout or dispute, slowdown or work stoppage or (e) Action in
respect of which any director, officer, employee or agent of Seller is or may
be entitled to claim indemnification from Seller.  Seller is not a party to, or otherwise bound
by, any consent decree with any Governmental Authority relating to employees or
the employment practices of Seller.

4.11     Contracts.  Schedule
4.11(a) lists all of the Contracts, other than those Contracts
listed on Schedule 4.11(b)
(which are not Assumed Contracts), to which Seller is a party that relate to
the Business or by which any of the Acquired Assets are bound (the “Assumed Contracts”)
which, together with the Contracts set forth on Schedule 4.11(b), constitute all of the Contracts
necessary to conduct the Business as currently conducted.  Seller has provided to Buyer true and
complete copies of each Assumed Contract, as amended to date.  Each Assumed Contract is a valid, binding and
enforceable obligation of Seller, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
marshaling or other laws and rules of law affecting the enforcement generally
of creditors’ rights and remedies.  With
respect to the Contracts set forth on Schedule
4.11(a) (or required to be set forth on Schedule 4.11(a)):  (a) neither Seller nor, to Seller’s
knowledge, any other party thereto is in default under or in violation of any
such Contract; (b) no event has occurred which, with notice or lapse of time or
both, would constitute such a default or violation by Seller and, to Seller’s
knowledge, there is no such default or violation by the other party to any such
Contract; and (c) Seller has not released any of its rights under any such
Contract.  Seller is not restricted by
any Contract with any other Person from carrying on the Business anywhere in
the world.

4.12     Insurance.  Seller has made available to Buyer prior to
the date of this Agreement complete and accurate copies of all insurance
policies that are owned by Seller or which name Seller as an insured (or loss
payee) and relate to the Business or the Acquired Assets.  All such insurance policies are in full force
and effect, are, to the knowledge of Seller

 26
 

Group, in such amounts
and cover such losses and risks as are consistent with industry practice and,
in the reasonable judgment of senior management of Seller, are adequate to
protect the Acquired Assets and the Business and all premiums due thereunder
have been paid.  Seller has not received
notice of cancellation of any such insurance policies.  To the knowledge of Seller, (a) no event
relating to Seller, the Business or the Acquired Assets has occurred that could
reasonably be expected to result in a retroactive upward adjustment in premiums
under any of the insurance policies and (b) no insurance carrier providing
insurance related to the Business or the Acquired Assets is in receivership,
conservatorship, liquidation or similar proceedings, and no such proceeding
with respect to any such carrier is imminent.

4.13     Conduct of Business.

(a)           Since December 31, 2006, (i) the
Business has been conducted only in the Ordinary Course of Business, (ii) there
has not been any adverse change in the operation of the Business or the
Acquired Assets or the performance or financial condition of Seller, (iii)
subject to inventory sold in the Ordinary Course of Business, the Acquired
Assets have not been transferred and are in substantially the same condition as
they were on December 31, 2006, normal wear and tear excepted, (iv) no loss,
damage, theft or destruction has been suffered with respect to the Acquired
Assets or to the Business, and (v) no member of Seller Group has received
written  notice from any customer
or supplier that it has ceased, will cease or may cease to do business with the
Business.

(b)           Without limiting the generality of Section 4.13, since January 1, 2007
Seller has not:

(i)            borrowed any amount or incurred or
become subject to any Liability, except (A) current Liabilities incurred in the
Ordinary Course of Business, (B) Liabilities under Contracts entered into in
the Ordinary Course of Business, and (C) borrowings under lines of credit
existing on the date hereof;

(ii)           mortgaged, pledged or subjected to
any Lien, other than Permitted Liens, any of the Acquired Assets;

(iii)          declared
or paid any in-kind dividends or made any other distributions of any assets
otherwise constituting Acquired Assets;

(iv)          sold, assigned or transferred
(including transfers to any employees or Shareholders, or to any Affiliate of
Seller or any such employee or Shareholder) any Acquired Assets, except for
sales of inventory in the Ordinary Course of Business, or canceled any debts or
claims of customers of the Business;

(v)           taken any other action or entered
into any other transaction (including any transactions with employees,
Shareholders or Affiliates of Seller or any such employee or Shareholder) other
than in the Ordinary Course of Business or other than the Contemplated
Transactions;

(vi)          (A) increased the salary, wages,
bonuses or other compensation rates of any officer, employee, manager, partner
or consultant of Seller (other than

 27
 

standard annual
pay increases or pursuant to awards of promotion in the Ordinary Course of
Business); or (B) made or granted any increase in the benefits provided under
any Employee Plan, or amend any existing Employee Plan, or adopted any new
Employee Plan or made any commitment or incur any liability to any labor
organization;

(vii)         waived any rights of value with respect
to the Business or any Acquired Assets;

(viii)        made any write-off or write-down of, or
made any determination to write-off or write-down, any of the Acquired Assets;

(ix)           made any change in the general
pricing practices or policies or any change in the credit or allowance
practices or policies of the Business;

(x)            entered into any amendment,
modification or termination of (whether partial or complete), or granted any
waiver under, or given any consent with respect to any Assumed Contract or any
agreement that is required (or had it been in effect on the Closing Date would
have been required) to be disclosed in the schedules to this Agreement;

(xi)           granted to any Person any rights in
any Acquired Intellectual Property, other than licenses of firmware or Acquired
Intellectual Property in the Ordinary Course of Business in connection with the
sale or maintenance of products of the Business; or

(xii)          agreed or otherwise committed to do
any of the foregoing.

4.14     Permits.  Schedule
4.14 sets forth a true and complete list and description of all
Permits held by Seller and used by it in the conduct of the Business.  Except as set forth on Schedule 4.14, Seller is in compliance
with the terms of all such Permits, and there is no pending or threatened
termination, expiration or revocation of any such Permit.  Except for the Permits set forth on Schedule 4.14, there are no Permits,
whether written or oral, necessary or required for the conduct of the
Business.  Except as set forth on Schedule 4.14, the execution, delivery
and performance of this Agreement and the Transaction Agreements and the
consummation of the Contemplated Transactions do not and will not violate any
Permit, or result in any termination, modification, revocation or nonrenewal
thereof, and all such Permits can be transferred to Buyer without any material
changes to their current terms and conditions.

4.15     Financial Statements.

(a)           Schedule
4.15(a) sets forth true and complete copies of (i) the unaudited
balance sheet of the Business as of December 31, 2006, and the unaudited
statement of income for the fiscal year then ended, and the audited balance
sheet (before Helinet consolidated and elimination entries) of the Business as
of December 31, 2005, and the audited statement of income (before Helinet
consolidated and elimination entries) for the fiscal year then ended, together
with the other financial information included therewith (collectively, the “Annual Financial Statements”),
and (ii) the unaudited balance sheet

 28
 

of Seller as of
March 31, 2007, and the related unaudited statement of income for the
three-month period then ended (the “Interim Financial Statements” and, together
with the Annual Financial Statements, the “Financial Statements”).

(b)           The Annual Financial Statements
present fairly, in all material respects, the financial position and results of
operations of Seller at the dates and for the time periods indicated and have
been prepared and reviewed by the management of Seller in conformity with GAAP,
consistently applied throughout the periods indicated.  The Interim Financial Statements present
fairly, in all material respects, the financial position and results of
operations of Seller at the date and for the period indicated and have been
prepared and reviewed by the management of Seller in conformity with GAAP,
consistent with the Annual Financial Statements, except for the absence of
footnote disclosure and any customary year-end adjustments.  The Financial Statements were derived from
the books and records of Seller.

4.16     Undisclosed
Liabilities; Indebtedness.  Seller
does not have any Liabilities (regardless of when asserted) arising out of
transactions or events entered into prior to the date hereof, or any action or
inaction, or any state of facts existing, with respect to or based upon
transactions or events occurring prior to the date hereof, except (a)
Liabilities reflected in the Financial Statements or (b) Liabilities that have
arisen after the date of the Financial Statements in the Ordinary Course of
Business. 
Schedule 4.16  sets forth a true and complete list of
the individual components (indicating the amount and the Person to whom such
Indebtedness is owed) of all the Indebtedness outstanding with respect to the
Business or the Acquired Assets as of the date hereof.

4.17     Inventories.  The inventories of Seller relating to the
Business are of a quality and quantity useable and saleable in the normal and
Ordinary Course of Business, subject to appropriate and adequate allowances
reflected on the Financial Statements for obsolete, excess, slow-moving and
other irregular items.  Such allowances
have been calculated in accordance with GAAP and in a manner consistent with
the past practice of Seller.  None of
Seller’s inventory is held on consignment, or otherwise, by third parties.

4.18     Product Liability and Warranty.

(a)           Each product sold or otherwise
delivered by Seller has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Seller does not have
any Liability (and, to Seller’s knowledge, there are no latent or patent
defects in any previously sold products that would give rise to an Action
against Seller) for replacement or repair of any such products or other damages
in connection therewith, subject only to the reserve for product and warranty
claims as set forth on the Final Working Capital Statement No product
manufactured, sold, leased or delivered by Seller is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale, lease or service.  Schedule 4.18(a) sets forth true,
correct and complete copies of the standard terms and conditions of sale, lease
or service of Seller (containing applicable guaranty, warranty and indemnity
provisions).

 29
 

(b)           Seller does not have any Liability,
and, to Seller’s knowledge, there are no latent or patent defects in any
previously sold products that would give rise to any Liability, arising out of
any injury to individuals or property as a result of the ownership, possession
or use of a product manufactured, sold, leased or delivered by Seller prior to
the Closing.

4.19     Customers and Suppliers.

(a)           Schedule
4.19(a) sets forth a list of the top five customers of the
Business, together with the revenue attributable to each such customer, for the
year ended December 31, 2006 (“Material Customers”). 
Except as set forth on Schedule
4.19(a):  (i) Seller is
not involved in any claim, dispute or controversy with any Material Customer;
and (ii) to the knowledge of Seller Group, Seller is not involved in any claim,
dispute or controversy with any of its other customers that, individually or in
the aggregate, could reasonably be expected to have an adverse effect on the
Business.

(b)           Schedule
4.19(b) sets forth the 10 largest suppliers (based on dollar
amounts purchased by Seller) of the Business for each of the years ended
December 31, 2006, December 31, 2005, and December 31, 2004 (“Material Suppliers”).  Except as set forth on Schedule 4.19(b):  (i) all Material Suppliers continue to be
suppliers of the Business and none of such Material Suppliers has reduced
materially its business with Seller, and Seller Group does not have any
knowledge that such reduction will occur; (ii) no Material Supplier has
terminated its relationship with Seller or the Business or has threatened to do
so; (iii) Seller is not involved in any claim, dispute or controversy with any
Material Supplier; and (iv) to the knowledge of Seller Group, Seller is not
involved in any claim, dispute or controversy with any of its other suppliers
that, individually or in the aggregate, could reasonably be anticipated to have
an adverse effect on the Business. 
Except as set forth on Schedule
4.19(b), no supplier to Seller represents a sole source of
supply for goods and services used in the conduct of the Business.

4.20     Related
Party Transactions.  Except as set
forth on Schedule 4.20,
none of Seller, Shareholders or any of their respective Affiliates or Family
Affiliates, nor any current or former member, manager, officer or employee of
Seller, (a) has, or during the last three fiscal years has had, any direct or
indirect interest (i) in, or is or during the last three fiscal years was a
director, officer or employee of, any Person that is a client, customer,
supplier, lessor, lessee, debtor, creditor or competitor of Seller or (ii) in
any material property, asset or right that is owned or used by Seller in the
conduct of the Business or (b) is, or during the last three fiscal years has
been, a party to any Contract with Seller. 
There is no outstanding Indebtedness of any current or former director,
officer, employee or consultant of Seller or any Shareholder or any of their
respective Affiliates or Family Affiliates to Seller.

4.21     Brokers.  No Person has acted directly or indirectly as
a broker, finder or financial advisor for any member of Seller Group in
connection with the negotiations relating to the Contemplated Transactions, and
no Person is entitled to any fee or commission or like payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of any member of Seller Group.

 30

4.22     Government Contracts.

(a)           Other
than routine inquiries, audits and reconciliations such as could not reasonably
be expected to result in a material adverse effect, no employee set forth on Schedule 6.5 is, or during the last
three years has been, (i) under administrative, civil or criminal
investigation, indictment or information by any Governmental Authority (except
as to routine security investigations), (ii) suspended or debarred from doing
business with any Governmental Authority, or (iii) the subject of a finding of
non-responsibility or ineligibility for contracting with any Governmental
Authority.

(b)           There
is not any pending audit or investigation of Seller, the Business or any
employee set forth on Schedule 6.5
that could reasonably be expected to result in a material adverse effect with
respect to any alleged irregularity, misstatement or omission arising under or
relating to any Contract with a Governmental Authority (each, a “Government Contract”),
and during the last three years, neither Seller nor any of its Affiliates
(including Shareholders) has made a voluntary disclosure with respect to any
alleged irregularity, misstatement or omission arising under or relating to any
Government Contract.

(c)           (i)
Neither any Governmental Authority nor any prime contractor, subcontractor or
other Person has notified Seller that Seller has breached or violated any Law,
certification, representation, clause, provision or requirement pertaining to
any Government Contract; (ii) Seller has not terminated any Government Contract
to which Seller is a party, nor has it been notified by any Governmental
Authority, any prime contractor, subcontractor or any other Person that any
Government Contract to which Seller is a party has been terminated for any
reason, and no cure notice or show cause notice is currently in effect
pertaining to any Government Contract; and (iii) there are no outstanding
claims or disputes between Seller and any Governmental Authority under any Law
or Government Contract, or between Seller and any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract.

ARTICLE
5:  REPRESENTATIONS AND WARRANTIES OF
BUYER

Axsys and Buyer jointly and severally represent and
warrant to each member of Seller Group as follows:

5.1       Organization
and Power.  Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and has all requisite power and authority to own, lease and
operate its properties and to conduct its business as currently conducted.

5.2       Authority;
Enforceability.  The execution and
delivery of this Agreement and the Transaction Agreements have been duly and
validly authorized by all necessary action on the part of Buyer.  Buyer has all requisite power and authority
to enter into this Agreement and the Transaction Agreements and to consummate
the Contemplated Transactions.  This
Agreement and the Transaction Agreements have been duly executed and delivered
by Buyer

 31
 

and, upon the execution
and delivery by each of the other parties thereto, constitute the valid and
binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms.

5.3       Conflicts;
Consents.  The execution and delivery
of this Agreement and the Transaction Agreements and the consummation of the
Contemplated Transactions will not (a) conflict with or result in a breach of
the certificate of incorporation of Buyer or (b) violate any Law or Order
applicable to Buyer or Buyer’s properties or assets.  No consent or approval by, or any notification
of or filing with, any Person is required in connection with the execution,
delivery and performance by Buyer of this Agreement and the Transaction
Agreements or the consummation by Buyer of the Contemplated Transactions.

5.4       Financial
Capacity.  Axsys or Buyer have all
funds necessary to enable Axsys and Buyer to perform its obligations under this
Agreement and the Transaction Agreements in accordance with their respective
terms; specifically, Buyer will have sufficient financial means on the date
payment for each Earnout Period is due to satisfy its financial obligations in
connection with each Earnout Period.

5.5       Brokers.  No Person has acted directly or indirectly as
a broker, finder or financial advisor for Buyer or any of its Affiliates in
connection with the negotiations relating to the Contemplated Transactions, and
no Person is entitled to any fee or commission or like payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of Buyer or any of its Affiliates.

5.6       Actions; Orders.

(a)           There
are no Actions pending by or against Buyer that challenge, or that could
reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated
Transactions.  To Buyer’s knowledge, no
such Action has been threatened and no event has occurred or circumstance
exists that could reasonably be expected to give rise to, or serve as the basis
for, the commencement of any such Action.

(b)           There
is no Order to which Buyer is subject that enjoins, or that could reasonably be
expected to have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Contemplated Transactions.  To Buyer’s knowledge, no such Order has been
threatened and no event has occurred or circumstance exists that could
reasonably be expected to give rise to, or serve as the basis for, the issuance
of any such Order.

5.7       Condition
of Assets.  Buyer is purchasing the
Acquired Assets based solely on the results of its inspections and
investigations, and on the representations and warranties of Seller that are
expressly set forth in this Agreement. 
Buyer is not relying on any representation or warranty of Seller that is
not expressly set forth in this Agreement. 
Any claims or potential claims that Buyer may have for breach of
representation or warranty by Seller shall be based solely on the warranties of
Seller set forth in Article 4  hereof and Buyer waives any implied
warranties, including warranties of merchantability or fitness for a particular
purpose.  Buyer

 32
 

acknowledges and agrees
that except as expressly set forth in Article
4 of this Agreement, Seller (or any other Person on behalf of
Seller) has not made any representation or warranty, express or implied, as to
the accuracy or completeness of any information provided to Buyer regarding the
Acquired Assets or the Assumed Liabilities. 
With respect to any estimate, projection, budget or forecast delivered
by or on behalf of Seller to Buyer, Buyer acknowledges that: (i) there are
uncertainties inherent in attempting to make such estimates, projections,
budgets and forecasts; (ii) Buyer is aware that actual results may differ
materially; and (iii) Buyer shall have no claim against Seller with respect to
any such estimate, projection, budget or forecast; provided, however,
that such estimate, projection, budget or forecast was prepared and furnished
in good faith.  The statements and
acknowledgements made by Buyer pursuant to this Section 5.7 shall in no way limit any claim that may be
made by Buyer based on fraud or criminal misconduct of Seller, its Affiliates,
or their respective employees or representatives.

ARTICLE
6:  CERTAIN COVENANTS

6.1       Confidentiality.

(a)           All
information supplied to Buyer by Seller or its representatives in connection
with the negotiation and execution of this Agreement and the Transaction
Agreements and the transactions contemplated hereby and thereby shall be held
by Buyer in accordance with the Confidentiality Agreement.  Notwithstanding anything to the contrary
contained herein or in the Confidentiality Agreement, Buyer’s obligation to
maintain the confidentiality of such information provided by the members of
Seller Group or their representatives relating to the Business or the Acquired
Assets shall expire as of the Closing (and nothing shall prevent Buyer from
using such information in connection with its operation of the Business and the
Acquired Assets from and after the Closing); provided, however,
that Buyer’s obligation to maintain confidentiality regarding the Excluded
Assets shall continue after the Closing Date as per the Confidentiality
Agreement.

(b)           All information supplied by Buyer to
any member of Seller Group or its representatives in connection with the
negotiation and execution of this Agreement and the Transaction Agreements and
the transactions contemplated hereby and thereby shall be held by each member
of Seller Group and its representatives as if such Persons were recipients of
such information within the meaning of the Confidentiality Agreement and
subject to the terms of the Confidentiality Agreement with respect to such
information.

(c)           From
the Closing, no member of Seller Group shall disclose and their respective
Affiliates and their employees shall not disclose to any Person any Business
Confidential Information.  “Business Confidential Information”
means any proprietary, non-public information that has commercial value or
other utility and is related to the Business and/or the Acquired Assets, or the
unauthorized disclosure of which could be detrimental to the value of the
Business and/or any of the Acquired Assets, subject to the following
exceptions:  (i) information that is or
becomes generally available to the public through no action by Seller Group or
its representatives; and (ii) information that is required by applicable Law to
be disclosed or is disclosed in response to a valid Order,

 33
 

but only to the
extent required by, and for the purposes of, such Law or Order; provided,
however, that in the case of disclosure compelled by Law or Order,
Seller Group shall notify Buyer promptly of the request or requirement so that
Buyer may consider seeking an appropriate protective order and/or waiving
compliance with the provisions of this Section
6.1(c), and Seller Group shall cooperate with Buyer in seeking
any such protective order and otherwise resisting such disclosure.  If, in the absence of a protective order or
the receipt of a waiver hereunder, Seller Group is, on the written advice of
counsel, compelled to disclose any Business Confidential Information by
judicial or administrative process, Seller Group may so disclose the Business
Confidential Information; provided, however, that, at the written
request of Buyer, Seller Group shall use commercially reasonable efforts to
obtain, at the expense of Buyer, an order or other reasonable assurance that
confidential treatment will be accorded to such portion of the Business
Confidential Information required to be so disclosed.

6.2       Public
Announcements.  Buyer and Seller
shall consult with each other before issuing any press release or other public
announcements with respect to the Contemplated Transactions.  The parties will provide each other the
opportunity to review and comment upon any press release or other public
announcement or statement with respect to the Contemplated Transactions and no
party shall issue any such press release or other public announcement or
statement prior to such consultation and without the consent of the other
party, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.

6.3       Pre-Closing
Accounts Receivable.  In the event,
on or after the Closing Date, Buyer receives any payment of any account
receivable that is an Excluded Asset, such payment will be the property of, and
will be immediately forwarded and remitted to, Seller.  Buyer will promptly endorse and deliver to
Seller any cash, checks or other documents received by it on account of any
such accounts receivable.  Buyer will
advise Seller (promptly following Buyer becoming aware thereof) of any
counterclaims or set offs that may arise subsequent to the Closing Date with
respect to any account receivable that is an Excluded Asset.

6.4       Name Change Filings; Certain Other
Post-Closing Covenants.

(a)           Seller
will, within ten Business Days following the Closing Date, deliver to Buyer
evidence of filing with the Secretary of State of California of an amendment to
Seller’s articles of organization to change its name from “Cineflex, LLC” to a
name that is not confusingly similar to “Cineflex, LLC.”  Seller will, within 30 days after the Closing
Date, take such actions and file such documents as may be necessary to (i)
reflect such name changes in all States in which Seller is qualified to do
business as a foreign entity and will deliver to Buyer copies of such documents
evidencing such name change filings, (ii) change the trademarks and trade names
associated with any products or services available through Seller to
discontinue the use of the trademark and trade name “Cineflex, LLC,” and any
confusingly similar trademarks and trade names and (iii) otherwise discontinue
the use of such trademarks and trade names in connection with Seller’s business
operations.

 34
 

(b)           Seller
will, within ten Business Days following the Closing Date, deliver to Buyer
evidence of filing with the Secretary of State of the applicable
jurisdiction(s) of an amendment to any organizational documents of any other
entity owned or controlled by Seller or any of its Affiliates bearing as a
portion of its name the word “Cineflex” to a name that is not confusingly
similar to “Cineflex, LLC.”  Seller will,
within 30 days after the Closing Date, take such actions and file such
documents as may be necessary to (i) reflect such name changes in all States in
which such entity is qualified to do business as a foreign entity and will
deliver to Buyer copies of such documents evidencing such name change filings,
(ii) change the trademarks and trade names associated with any products or
services available through such entity to discontinue the use of the trademark
and trade name “Cineflex,” and any confusingly similar trademarks and trade names
and (iii) otherwise discontinue the use of such trademarks and trade names in
connection with such entity’s business operations.

(c)           Each
of the members of Seller Group shall promptly forward to Buyer any mail
(including electronic mail) that such member receives after the Closing Date
that relates to the Acquired Assets or the Business or is otherwise intended
for the owner of the Acquired Assets or the Business.

(d)           Seller
shall maintain sufficient funds in its relevant bank accounts until all of the
cut-but-uncashed checks of Seller relating to the Business or the Acquired
Assets and outstanding as of the Closing have cleared and been paid in full.

6.5       Employees.

(a)           Immediately
following the consummation of the transactions contemplated by this Agreement,
Buyer shall offer an employment opportunity to those employees of Seller Group
set forth on Schedule 6.5,
each of whom is primarily involved in the conduct of the Business as of the
Closing Date, at such rate of pay and with such employee benefits as are
comparable in the aggregate to each such employee’s current level of
compensation and benefits, provided, however, that nothing in
this Agreement shall obligate Buyer to employ any such employee for any period
of time or continue any term or condition of employment or any employment
benefits or policies for any period of time. 
Any employees who accept Buyer’s offer of employment and are hired will
be referred to as “Transferred
Employees”.

(b)           The
service time accrued by and any deductibles paid by any Transferred Employee
during such Transferred Employee’s employment with Seller or its
predecessor-in-interest will be recognized by Buyer (to the extent applicable)
for purposes of eligibility for benefits under any plan, policy, program or
arrangement maintained by Buyer for the benefit of Buyer’s employees.  During such Transferred Employee’s employment
by Buyer, each Transferred Employee shall have the right to participate in any
and all benefit plans, policies and arrangements available to Buyer’s employees
generally (including, Buyer’s 401(k) plan), in each case subject to the terms
and conditions of each plan, policy, program or arrangement and to the extent
of other similarly situated employees of Buyer.

 35
 

(c)           No
provision of this Section 6.5
shall: (i) create any third-party beneficiary or other rights in any employee
or former employee (including any beneficiary or dependent thereof) of Seller
or any other Person other than the parties hereto and their respective
successors and permitted assigns; (ii) constitute or create an employment
agreement; or (iii) constitute or be deemed to constitute an amendment to any
employee benefit plan sponsored or maintained by Seller, Buyer or any of their
respective Affiliates.

6.6       Licensed Intellectual Property.

(a)           Each
of Seller and Helinet, as applicable, hereby grants to Buyer an irrevocable,
nontransferable, nonexclusive, royalty-free, and fully paid-up license to the
Licensed Intellectual Property, including the right to use, make, sell,
advertise, offer to sell, import and supply products and services incorporating
the Licensed Intellectual Property, solely in connection with the operation of
the Business as currently conducted.

(b)           Buyer
shall have a limited right (consistent with the right granted under clause (a)
above) to grant sublicenses under the Licensed Intellectual Property to:  (i) Buyer’s Affiliates; provided, however,
that any such sublicense shall automatically terminate if such Affiliate ceases
to be an Affiliate of Buyer; (ii) Buyer’s contractors for the use,
manufacturing, sale, advertising, offer for sale, importation and supply by
Buyer or its Affiliates of products and services in connection with the
operation of the Business; and (iii) Buyer’s customers for use in connection
with the products of the Business in which such Licensed Intellectual Property
may be embedded or otherwise used.

(c)           Buyer
acknowledges and agrees that, except to the extent set forth herein,  all right, title and interest in and to the
Licensed Intellectual Property is solely vested in Seller or Helinet, as the
case may be, at all times.

6.7       Further
Assurances.  From and after the
Closing Date, at the request of Buyer, Seller and Shareholders shall take such
actions and provide such assistance, or cause to be taken such actions and
provided such assistance, or execute and deliver or cause to be executed and
delivered to Buyer such other agreements or instruments, in addition to those
required by this Agreement and the Transaction Agreements, as Buyer may
reasonably request, in order to implement the Contemplated Transactions,
including (a) obtaining the consents set forth on Schedule 3.2(g) that are not obtained prior to the Closing
Date, (b) delivering any closing documents required by Section 3.2 that Buyer waived at the
time of the Closing, (c) taking such actions as may be necessary to transfer
all transferable Permits relating to the Acquired Assets or the Business to
Buyer as contemplated by Section 2.1(b)
and (d) cooperating with Buyer at Buyer’s reasonable request to supply
documentation (including records and correspondence, both paper and electronic)
and other information relating to, and making their respective employees
available for interviews and teleconferences with respect to, export compliance
matters (including any voluntary disclosures and similar matters), the transfer
of any transferable export licenses relating to the Business to Buyer, and the
application by Buyer for any new or replacement export licenses relating to the
Business.  Seller shall preserve all such
documentation (including electronic records and correspondence) for at least
three (3) years following the Closing Date. 
From and after the Closing Date, at the request of Seller,

 36
 

Buyer shall take, or
cause to be taken, such actions, or execute and deliver or cause to be executed
and delivered to Seller, such other agreements or instruments, in addition to
those required by this Agreement and the Transaction Agreements, as Seller may
reasonably request, in order to implement the Contemplated Transactions.

6.8       Tax
Audits; Cooperation.  In connection
with the preparation of any Returns, audit examinations, and any administrative
or judicial proceedings relating to the Tax liabilities relating to the
Business, Buyer and Seller Group will cooperate fully with each other,
including by furnishing or making available during normal business hours
records, personnel (as reasonably required), books of account, powers of
attorney or other materials necessary or helpful for the preparation of such Returns,
the conduct of audit examinations or the defense of claims by Governmental
Authorities as to the imposition of Taxes.

6.9       Tax Clearances; Bulk Sales Laws;
Proration of Certain Taxes.

(a)           Within
the time period prescribed by applicable Law, Buyer or Seller, as appropriate,
shall report the sale of the Acquired Assets to the applicable state Taxing
Authorities to which the Business is subject, which report shall state the
names and addresses of Buyer and Seller, the Closing Date and any other information
required under applicable Law and may be accompanied by a copy of this
Agreement (or portions thereof) if required by applicable Law.

(b)           If
not paid by Seller, Buyer may pay out of the Escrow Amount or its own funds any
state Tax obligation, including interest and penalties, due from Seller to any
state Taxing Authority for sales Taxes, employee withholding Taxes, or any
other Taxes for which Buyer may be held liable. 
Seller will promptly reimburse Buyer for any such payments made by Buyer
out of its own funds.

(c)           All
Personal Property Taxes will be prorated as of the Closing Date with (i) Seller
being liable for such taxes relating to any time period or periods ending on or
prior to the Closing Date and (ii) Buyer being liable for such taxes relating
to any time period or periods beginning after the Closing Date.  Proration of Personal Property Taxes will be
made on the basis of the most recent officially certified tax valuation and
assessment for the Acquired Assets.  If
such valuation pertains to a tax period other than that which the Closing
occurs, such apportionment will be recalculated at such time as actual tax
bills for such period are available, and the parties will cooperate with each
other in all respects in connection with such recalculation and pay any sums
due in consequence thereof to the party entitled to recover the same within 60
days after the issuance of such actual tax bills.

(d)           Buyer
hereby waives compliance with the provisions of the applicable statutes
relating to bulk transfers or bulk sales.

6.10     Noncompetition; Nonsolicitation.

(a)           In
consideration of the Purchase Price and the consummation of the Contemplated
Transactions, Seller agrees that, for the period beginning on the Closing Date
and ending on the fifth anniversary of the Closing Date, Seller shall not, and
shall

 37
 

not permit its
Affiliates to, directly or indirectly, own, manage, engage in, operate,
control, promote, consult with, invest in, render services for, do business
with or participate in a business that competes with the Business (the “Competitive Activities”)
in North America, South America, Europe, Asia or Australia.  Notwithstanding the foregoing, Buyer hereby
agrees that the foregoing covenant shall not be deemed breached as a result of
ownership by Seller (together with Seller’s Affiliates) of less than an
aggregate of 5% of any class of capital stock of a person engaged, directly or
indirectly, in Competitive Activities.

(b)           Seller
agrees that it shall not, and shall not permit its Affiliates to, directly or
indirectly, at any time during the period beginning on the Closing Date and
ending on the second anniversary of the Closing Date, solicit, induce or
encourage, or attempt to solicit, induce or encourage, any employee of Buyer or
any Affiliate of Buyer to terminate his or her employment with Buyer or such
Affiliate, or hire or attempt to hire any employee of Buyer or any Affiliate of
Buyer, in each case, without obtaining written consent from Buyer prior to
engaging or attempting to engage in such solicitation, inducement,
encouragement or hiring, regardless of whether contact is initiated by Seller
or by such employee; provided, however, that Buyer agrees that
the foregoing covenant shall not be deemed breached as a result of (i) any
general, public advertisements of employment placed by Seller in the Ordinary
Course of Business not targeted at employees of the Business, Buyer or any
Affiliate of Buyer, or (ii) Seller’s solicitation or hiring of individuals that
have previously terminated employment with Buyer or an Affiliate of Buyer
without Seller’s inducement.

6.11     Retention
and Access to Records.  After the
Closing, Buyer shall retain for a period consistent with Buyer’s record
retention policies and practices those records of Seller delivered to Buyer.  Buyer also shall provide Seller and its
representatives reasonable access thereto, during normal business hours and on
at least five (5) Business Days’ prior written notice, to enable them to
prepare financial statements or tax returns or deal with tax audits.  After the Closing, Seller shall provide Buyer
and Buyer’s representatives reasonable access to records that are Excluded
Assets, during normal business hours and on at least five (5) Business Days’
prior written notice, for any reasonable business purpose specified by Buyer in
such notice.

ARTICLE
7:  REMEDIES

7.1       General Indemnification Obligations.

(a)           Indemnification
by Seller Group.  Subject to the
limitations and procedures contained in Section
7.3 and in Section 7.2(b),
from and after the Closing, each member of Seller Group shall jointly and
severally indemnify and hold harmless Buyer and its officers, directors,
employees, agents and Affiliates from and against any and all losses,
Liabilities, claims, damages, penalties, fines, judgments, awards, settlements,
Taxes, costs, fees, expenses (including reasonable attorneys’ fees) and
disbursements (collectively “Losses”) suffered, incurred or sustained by any of such
parties based upon, arising out of or otherwise in respect of (i) any misrepresentation
of or inaccuracy in any representation or warranty of any member of Seller
Group contained

 38
 

in this Agreement
(including any schedule hereto) or any of the Transaction Agreements, (ii) any
breach of any covenant or agreement of any member of Seller Group contained in
this Agreement (including any schedule hereto) or any of the Transaction
Agreements, (iii) any violation of or Liability arising under any bulk sales
Law in connection with the transfer of the Acquired Assets hereunder, (iv) the
failure of Seller to assume, pay, perform and discharge the Excluded
Liabilities, (v) the failure of the landlord under the Facility Lease Agreement
to complete construction and deliver possession of the leased premises to Buyer
on the terms and in the condition provided in the Facility Lease Agreement,
(vi) any non-compliance or alleged or possible non-compliance with U.S. Export
Control Laws by any member of Seller Group or any of its employees with respect
to the Business prior to the Closing, or (vii) to the extent interest or other
income earned on the Escrow Amount is disbursed to Seller under the Escrow
Agreement, any Taxes paid by Buyer in respect of interest or other income
earned on the Escrow Amount; provided, however, Seller shall not
indemnify Buyer for any accrued items set forth on the Final Working Capital
Statement.

(b)           Indemnification
by Buyer.  Subject to the limitations
and procedures contained in Section 7.3
and in Section 7.2(b), from
and after the Closing, Axsys and Buyer shall jointly and severally indemnify
and hold harmless Seller (including its officers, managers, employees, agents
and Affiliates) and Shareholders from and against any and all Losses suffered,
incurred or sustained by any of such Persons based upon, arising out of or otherwise
in respect of (i) any misrepresentation of or inaccuracy in any representation
or warranty of Buyer contained in this Agreement (including any schedule
hereto) or any of the Transaction Agreements, (ii) any breach of any covenant
or agreement of Buyer contained in this Agreement (including any schedule
hereto) or any of the Transaction Agreements, (iii) the failure of Buyer to
assume, pay, perform and discharge the Assumed Liabilities, or (iv) Buyer’s
conduct and operation of the Business after the Closing (excluding Losses for
which Buyer is otherwise entitled to indemnification hereunder).

7.2       Notice and Opportunity to Defend.

(a)           Notice
of Asserted Liability.  As soon as is
reasonably practicable after any member of Seller Group, on the one hand, or
Buyer, on the other hand, becomes aware of any claim that such party has under Section 7.1 that may result in a Loss
(a “Liability Claim”),
such party (the “Indemnified
Party”) shall give notice of such Liability Claim (a “Claims Notice”) to
the other party (the “Indemnifying
Party”).  A Claims Notice
must describe the Liability Claim in reasonable detail and must indicate the
amount (estimated, if necessary and to the extent feasible) of the Loss that
has been or may be suffered by the Indemnified Party.  No delay in or failure to give a Claims
Notice by the Indemnified Party to the Indemnifying Party pursuant to this Section 7.2(a) will adversely affect
any of the other rights or remedies that the Indemnified Party has under this
Agreement or alter or relieve the Indemnifying Party of its obligation to
indemnify the Indemnified Party to the extent that such delay or failure has
not materially prejudiced the Indemnifying Party.  Each Indemnifying Party to whom a Claims
Notice is given shall respond to any Indemnified Party that has given such
Claims Notice (a “Claim
Response”) within 30 days after the date that such Claims Notice
is given.  Any Claim

 39
 

Response shall
specify whether or not the Indemnifying Party giving the Claim Response
disputes the claim described in the Claims Notice.  If any Indemnifying Party fails to give a
Claim Response within such 30-day period, such Indemnifying Party shall be
deemed not to dispute the Liability Claim described in the related Claims
Notice.  If any Indemnifying Party elects
not to dispute a Liability Claim described in a Claims Notice, whether by
failing to give a timely Claim Response or otherwise, then the amount of such
Liability Claim shall be conclusively deemed to be an obligation of such
Indemnifying Party.  If an Indemnifying
Party shall be obligated to indemnify an Indemnified Party hereunder, the
Indemnifying Party shall pay to such Indemnified Party, in accordance with Section 7.3(e), the amount to which
such Indemnified Party shall be entitled.

(b)           Opportunity
to Defend.  The Indemnifying Party
has the right, exercisable by written notice to the Indemnified Party within 30
days after receipt of a Claims Notice from the Indemnified Party, to assume and
conduct the defense of the Liability Claim described in such Claims Notice in
accordance with the limits set forth in this Agreement with counsel selected by
the Indemnifying Party and reasonably acceptable to the Indemnified Party; provided,
however, that there is no conflict of interest that, under applicable
principles of legal ethics, as expressed in a written opinion of counsel to the
Indemnified Party, would prohibit a single counsel from representing both the
Indemnified Party and the Indemnifying Party in such action.  If the Indemnifying Party does not assume the
defense of a Liability Claim in accordance with this Section 7.2(b), then the Indemnified
Party may continue to defend such Liability Claim.  If the Indemnifying Party has assumed the
defense of a Liability Claim as provided in this Section 7.2(b), then the Indemnifying Party will not be
liable for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense of the Liability Claim; provided, however,
that if (i) a conflict of interest has arisen or (ii) the Indemnifying Party
fails to take reasonable steps necessary to defend diligently such Liability
Claim, the Indemnified Party may assume its own defense, and the Indemnifying
Party will be liable for all reasonable costs or expenses paid or incurred by
the Indemnified Party in connection with such defense.  The Indemnifying Party or the Indemnified
Party, as the case may be, has the right to participate in (but not control),
at its own expense, the defense of any Liability Claim that the other is
defending as provided in this Agreement. 
The Indemnifying Party, if it has assumed the defense of any Liability
Claim as provided in this Agreement, may not, without the prior written consent
of the Indemnified Party, consent to a settlement of, or the entry of any judgment
arising from, any such Liability Claim that (A) does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a complete release from all liability in respect of such
Liability Claim, (B) grants any injunctive or equitable relief or (C) may
reasonably be expected to have an adverse effect on the affected business of
the Indemnified Party.  The Indemnified
Party has the right to settle any Liability Claim, the defense of which has not
been assumed by the Indemnifying Party.

(c)           Notwithstanding
anything to the contrary contained in this Section
7.2, Buyer shall exercise control of the defense or handling of
any Liability Claim with respect to which Buyer is the Indemnified Party
arising under Section 7.1(a)(vi),
including any Liability Claim arising out of any filing or proceeding with any

 40
 

Governmental
Authority as a result of voluntary disclosures made by Buyer or its Affiliates
with respect to the Business under U.S. Export Control Laws, solely at the
expense of the Indemnifying Party.  The
Indemnifying Party has the right to participate in (but not control), at its
own expense, the defense or handling of any Liability Claim arising under Section 7.1(a)(vi) that Buyer is
defending or handling as provided in the preceding sentence, and the
Indemnifying Party shall not communicate with any Governmental Authority
regarding any such Liability Claim without Buyer’s prior written consent.  Buyer may not, without the prior written
consent of the Indemnifying Party, consent to a settlement of any such
Liability Claim arising under Section
7.1(a)(vi) that Buyer is defending or handling as provided in
this Section 7.2(c) that
grants any injunctive or equitable relief against the Indemnifying Party.

7.3       Survivability; Limitations.

(a)           The
representations and warranties of Buyer and Seller Group contained in this
Agreement and the Transaction Agreements will survive for a period ending on
the eighteen-month anniversary of the date of this Agreement (the “Expiration Date”); provided,
however, that:  (i) the Expiration
Date for any Liability Claim relating to a misrepresentation of or inaccuracy
in any of the representations and warranties set forth in Section 4.5 or  Section 4.6 will be 60 days after
the expiration of the applicable statute of limitations, as extended; (ii) the
Expiration Date for any Liability Claim relating to a misrepresentation of or
inaccuracy in any of the representations and warranties set forth in Section 4.7 shall be the 42-month anniversary
of the date of this Agreement; (iii) there will be no Expiration Date for any
Liability Claim relating to a misrepresentation of or inaccuracy in any of the
representations and warranties set forth in (A) Section 4.1, Section
4.2, Section 4.8(g)
or Section 4.21
(collectively the “Excluded
Representations”) or (B) Section
5.1, Section 5.2
or Section 5.5; and (iv)
any Liability Claim pending on any Expiration Date for which a Claims Notice
has been given in accordance with Section
7.2 on or before such Expiration Date may continue to be
asserted and indemnified against until finally resolved.  All of the covenants and agreements of Buyer
and of each member of Seller Group contained in this Agreement and the Transaction
Agreements will survive in accordance with their respective terms.

(b)           Notwithstanding
anything to the contrary contained in this Article
7, no member of Seller Group shall have any liability as a
result of any misrepresentation of or inaccuracy in any representation or
warranty contained in this Agreement (other than  Section 4.5, Section
4.6, Section 4.7
and the Excluded Representations), until the aggregate amount of all such
Losses suffered, incurred or sustained by the Person to be indemnified under Section 7.1(a) exceeds $400,000  (the “Deductible”), in which case the members of
Seller Group shall be jointly and severally liable for all such Losses in
excess of the Deductible.

(c)           Notwithstanding
anything to the contrary contained in this Article
7, no member of Seller Group shall have any liability as a
result of any misrepresentation of or inaccuracy in any representation or
warranty contained in this Agreement (other than Section 4.5, Section
4.6, Section 4.7
and the Excluded Representations) in excess of $12,000,000 (the “Cap”).

 41
 

(d)           Notwithstanding
any other provisions of this Section 7.3,
neither the Cap nor the Deductible shall apply (i) in the event any member of
Seller Group is found to have committed fraud or intentional misrepresentation
or (ii) to any indemnification claim made by Buyer based on any
misrepresentation of or inaccuracy in any representation or warranty contained
in Section 4.5, Section 4.6, Section 4.7 or any of the Excluded
Representations.

(e)           Any
indemnification of an Indemnified Party pursuant to this Article 7 shall be effected by wire
transfer or transfers of immediately available funds from the Indemnifying
Party to an account or accounts designated by the Indemnified Party within 15
days after the final determination thereof; provided, however,
that, if Buyer is the Indemnified Party, Buyer shall first recover any
indemnification payment or other amounts (or any portion thereof) then due and
unpaid from any member of Seller Group on a joint and several basis, from the
then-existing Escrow Amount, and second, by retaining and setting off such
amounts (or any portion thereof) against any amounts due or to become due from
Buyer to any member of Seller Group under this Agreement or any of the
Transaction Agreements, including any Earnout Payment or post-earnout payment
otherwise due to Seller under Section 2.6
or Section 2.7, as
applicable, and third, as Buyer may elect at its option (including on a joint
and several basis from any member of Seller Group).

(f)            For
all purposes of (i) determining whether there has been any misrepresentation of
or inaccuracy in the representations and warranties contained in this Agreement
and (ii) calculating Losses hereunder, any “material,” “materiality,” “material
adverse effect” or similar qualification in such representations and warranties
shall be disregarded.

7.4       Specific
Performance.  Each party’s obligation
under this Agreement is unique.  If any
party should breach its covenants under this Agreement, including the covenants
and agreements set forth in Section 6.10,
the parties each acknowledge that it would be extremely impracticable to
measure the resulting damages; accordingly, the nonbreaching party or parties,
in addition to any other available rights or remedies, may sue in equity for
specific performance, and each party expressly waives the defense that a remedy
in damages will be adequate.

7.5       Adjustment to Purchase Price.  All amounts paid by Buyer or Seller, as the
case may be, under this Article 7
shall be treated by the parties as adjustments to the Purchase Price for Tax
purposes, unless otherwise required by Law or Order.

7.6       Mitigation.  Any Indemnified Party shall take all
reasonable steps to mitigate its Losses upon and after becoming aware of any
event or condition that would reasonably be expected to give rise to any Losses
that are indemnifiable hereunder, including in connection with any settlements
entered into by Buyer with respect to a Liability Claim arising under Section 7.1(a)(vi).

 42
 

7.7       Insurance Benefits; Tax Benefits.

(a)           The
amount of Losses incurred by any Indemnified Party hereunder will be calculated
net of (i) any amount actually recovered by such Indemnified Party under
applicable insurance policies with respect to such Losses, and (ii) the amount
of any actual net reduction in Taxes then payable by such Indemnified Party in
the same taxable year as the indemnification payment to the extent arising from
the recognition of the applicable Loss.

(b)           Notwithstanding
anything to the contrary in Section 7.7(a)
above, to the extent the Indemnified Party has not received the insurance
proceeds or had the benefit of the Tax reduction (as the case may be) at the
time any indemnity payment is due to be paid to it, such indemnity payment
shall be made in gross (i.e., without respect to any net reductions).  Thereafter, the Indemnified Party shall be
required to reimburse the Indemnifying Party for amounts required to be netted
from the gross indemnity payments at such time as the Indemnified Party
actually receives such insurance proceeds and/or actually recognizes the Tax
reduction, as the case may be.

(c)           It
is acknowledged and agreed that, notwithstanding the deductions provided in
this Section 7.7, nothing
herein shall limit an Indemnified Party’s recovery for Losses under Article 7 related to the cost of any
insurance deductible or increased premiums or any cost incurred in obtaining a
Tax refund or other Tax benefit.

7.8       Exclusive
Remedy.  Except in the case of fraud
or where a party may be entitled to injunctive relief or other equitable remedies
hereunder, after the Closing, the indemnification provided in this Article 7 will constitute the exclusive
remedy of the Indemnified Parties hereunder in respect any and all Losses
arising out of or resulting from this Agreement or the consummation of the
transactions contemplated hereby.

7.9       Excluded Damages.  Notwithstanding anything to the contrary in
this Agreement, except
for payments made to third parties in respect of which a party is otherwise
entitled to indemnification hereunder, no party shall be liable hereunder for
special, consequential, exemplary or punitive Damages or for any Damages based
on multiples of lost profits or multiples of future cash flows.

ARTICLE
8:  MISCELLANEOUS

8.1       Expenses;
Transfer Taxes.  Each of the parties
shall bear their respective expenses incurred or to be incurred in connection
with the execution and delivery of this Agreement and the Transaction
Agreements and the consummation of the transactions contemplated hereby and
thereby; provided, however, that in the event of litigation
between the parties in connection with this Agreement, each of the parties
hereto agrees that the prevailing party shall be entitled to reimbursement by
the other party of reasonable fees and expenses (including attorneys’ fees)
incurred by the prevailing party in connection therewith.  All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees (including any
penalties and interest) imposed on Buyer or Seller in connection with the
consummation of the Contemplated Transactions (“Transfer Taxes”) will be borne and paid
up

 43
 

to $12,500 by Seller, and
Buyer shall reimburse Seller for any excess over such amount.  The parties hereto will cooperate with each
other in connection with the filing of any Returns relating to Transfer Taxes,
including joining in the execution of any such Returns or other
documentation.  Buyer and Seller shall,
upon request of the other party, use their commercially reasonable efforts to
obtain any certificate or other document from any Governmental Authority or
other Person as may be necessary to mitigate, reduce or eliminate any Transfer
Tax.

8.2       No
Assignment.  The rights and
obligations of the parties under this Agreement may not be assigned without the
prior written consent of the other parties to this Agreement.  Notwithstanding the previous sentence, Buyer
may, upon written notice to Seller, but without the consent of any member of
Seller Group, assign its rights under this Agreement to any lender of Buyer or
to any Affiliate of Buyer, provided that such party agrees to assume and
perform Buyer’s obligations hereunder and that Buyer shall not be released from
its obligations hereunder.

8.3       Headings.  The headings contained in this Agreement are
included for purposes of convenience only, and do not affect the meaning or
interpretation of this Agreement.

8.4       No
Third-Party Beneficiaries.  The terms
and provisions of this Agreement are intended solely for the benefit of the
parties hereto and their respective successors and permitted assigns, and it is
not the intention of the parties to confer third-party beneficiary rights, and
this Agreement does not confer any such rights, upon any other Person,
including any employee or former employee of any member of Seller Group.

8.5       Integration,
Modification and Waiver.  This
Agreement, together with the Confidentiality Agreement (which shall continue in
full force and effect to the extent provided in Section 6.2 and shall survive the Closing), the
Transaction Agreements and all exhibits, schedules, certificates and other
instruments delivered under this Agreement, constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior understandings of the parties hereto with respect to the
subject matter hereof.  No supplement,
modification or amendment of this Agreement will be binding unless executed in
writing by each of the parties to this Agreement.  No waiver of any of the provisions of this
Agreement will be deemed to be or will constitute a continuing waiver.  No waiver will be binding unless executed in
writing by the party making the waiver.

8.6       Construction.  The parties have participated jointly in the
negotiation and drafting of this Agreement and the Transaction Agreements.  In the event an ambiguity or question of
intent or interpretation arises, this Agreement and the Transaction Agreements
must be construed as if drafted jointly by the parties and no presumption or
burden of proof must arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement or the Transaction
Agreements.  When reference is made in
this Agreement to an Article, Section, Schedule or Exhibit, such reference shall
be to an Article or Section of, or a Schedule or Exhibit to, this Agreement,
unless otherwise indicated.  Any
reference to any federal, state, local or foreign statute or law will be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.  The word “including”
when used in this Agreement (or any variation thereof) shall mean “including,

 44
 

without limitation.”  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  Terms defined in the singular
in this Agreement shall also include the plural and vice versa.

8.7       Severability.  If any provision of this Agreement or the
application of any provision of this Agreement to any party or circumstance is,
to any extent, adjudged invalid or unenforceable, the application of the
remainder of such provision to such party or circumstance, the application of
such provision to other parties or circumstances, and the application of the
remainder of this Agreement will not be affected thereby.

8.8       Notices.  All notices and other communications required
or permitted under this Agreement must be in writing and will be deemed to have
been duly given (a) when delivered in person, (b) when dispatched by electronic
facsimile transfer (if confirmed in writing by mail simultaneously dispatched),
(c) one Business Day after having been dispatched by a nationally recognized
overnight courier service or (d) five Business Days after being sent by
registered or certified mail, return receipt requested, postage prepaid, to the
appropriate party at the address or facsimile number specified below:

If to any member
of Seller Group:

Cineflex, LLC

c/o Helinet Aviation Services, LLC

16644 Roscoe Blvd.

Van Nuys, California 91406

Attention: 
Chief Financial Officer

Facsimile
No.:  (818) 901-0534

with a copy to:

John Coyle 

c/o Axsys Technologies IR Systems, Inc. 

380 Crown Point Circle 

Grass Valley, California 95945 

Facsimile
No.:  (530) 477-5876

with a copy to:

Bingham McCutchen, LLP 

355 South Grand Avenue

Los Angeles, California 90071

Attention: 
Thomas A. Waldman

Facsimile
No.:  (213) 680-6499

If to Buyer or
Axsys:

Axsys Technologies
IR Systems, Inc.

 45
 

c/o Axsys Technologies, Inc.

175 Capital Boulevard, Suite 103

Rocky Hill, Connecticut 06067

Attention: 
Chief Executive Officer

Facsimile
No.:  (860) 594-5750

with a copy to:

Jones Day

901 Lakeside Avenue

Cleveland, Ohio 44114

Attention: Christopher J. Hewitt

Facsimile
No.:  (216) 579-0212

Any party may change its address or facsimile number
for the purposes of this Section 8.8
by giving notice as provided in this Agreement.

8.9       Consent to Jurisdiction; Waiver of
Jury Trial.

(a)           Seller Group hereby agrees that any
suit, action or proceeding brought by any of them against Axsys or Buyer
arising out of or relating to this Agreement shall be brought only in the
federal and state courts of Manhattan County, New York.  Axsys and Buyer hereby agree that any suit,
action or proceeding brought by either of them against Seller Group or any
member of Seller Group arising out of or relating to this Agreement shall be
brought only in the federal and state courts of Los Angeles County, California.

(b)           Each
of the parties to this Agreement (i) consents to submit to the exclusive
jurisdiction of the federal and state courts located in the Borough of
Manhattan, New York County, New York and Los Angeles County, California in any
suit, action or proceeding arising out of or relating to this Agreement or any
of the Transaction Agreements, (ii) agrees that all claims in respect of such
suit, action or proceeding may be heard and determined in any such court,(iii)
agrees to be bound by any final judgment rendered in any such court, (iv)
agrees not to commence any suit, action or proceeding arising out of or
relating to this Agreement in any other court and (v) waives any objection it
may have now or hereafter to the laying of the venue of any such suit, action
or proceeding, including any objection based on the grounds of forum non conveniens, in any such
court.  THE PARTIES HEREBY VOLUNTARILY,
KNOWINGLY AND INTENTIONALLY WAIVE ANY RIGHT SUCH PARTIES MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

8.10     Governing
Law.  This Agreement will be governed
by and construed and enforced in accordance with the laws of the State of New
York without regard to principles of conflicts of law.

 46
 

8.11     Counterparts;
Facsimile Signatures.  This Agreement
may be executed in two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.  A facsimile or other copy of
a signature will be deemed an original signature.

[Signatures
on the Following Page]

 47

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	
  

  	
  AXSYS TECHNOLOGIES IR SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott B.
  Conner

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott B. Conner

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AXSYS TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David A.
  Almeida

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David A. Almeida

  
	
   

  	
   

  	
  Title:

  	
  CFO and VP Finance & Admin.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CINEFLEX, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan D.
  Purwin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Alan D. Purwin

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HELINET AVIATION SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan D.
  Purwin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Alan D. Purwin

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ John Coyle

  	
   

  
	
   

  	
  JOHN COYLE, in his individual capacity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Alan D.
  Purwin

  	
   

  
	
   

  	
  ALAN D. PURWIN, in his individual capacityExhibit
10.1

OMNIBUS AMENDMENT OF LOAN DOCUMENTS

THIS
OMNIBUS AMENDMENT OF LOAN DOCUMENTS (this
“Amendment”), dated as of July      ,
2007 (this “Agreement”),
between PH FEE OWNER LLC, a Delaware limited liability company (“Fee Owner”) and
OPBIZ, L.L.C., a Nevada limited liability company (“OPBIZ”) and together
with Fee Owner individually and/or collectively, as the context may require,
“Borrower”), each having its principal place of business at 3667 Las
Vegas Boulevard South, Las Vegas, Nevada 89109, PLANET HOLLYWOOD INTERNATIONAL,
INC., a Delaware corporation PLANET HOLLYWOOD (REGION IV), INC., a Minnesota
corporation PLANET HOLLYWOOD MEMORABILIA, INC., a Florida corporation (each, a “PH
Entity”), TROPHY HUNTER INVESTMENTS, LTD., a Florida limited partnership, BAY
HARBOUR 90-1, LTD., a Florida limited partnership, BAY HARBOUR MASTER, LTD., a
Cayman Islands exempted company, DOUGLAS TEITELBAUM, an individual and ROBERT
EARL, an individual (each, a “Guarantor”) and  COLUMN FINANCIAL, INC., a Delaware
corporation, having an address at 11 Madison Avenue, New York, New York 10010 (“Lender”).

WITNESSETH:

WHEREAS, pursuant to
those certain loan documents listed on Schedule-1 hereto (collectively,
the “Loan Documents”), between Borrower and Lender, Lender made a loan
to Borrower in a principal amount of up to $820,000,000.

WHEREAS, Borrower and Lender have agreed to amend
certain terms and provisions of the Loan Documents as hereinafter set forth.

NOW, THEREFORE, in
consideration of the sum of Ten Dollars ($10) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower agree that the Loan Documents are amended and modified as
hereinafter set forth:

1.     Modifications to Loan
Agreement.

A.            The following definitions
shall be added to Section 1.1 of the Loan Agreement (as defined on Schedule-1):

(i) “Future
Funding Tranche A” shall mean an amount equal to $60,330,000.

(ii) “Future
Funding Tranche B” shall mean an amount equal to $40,000,000.

(iii) “REMIC
Trust” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note.

B.            The
definition of “Future Funding Allocation” in the Loan Agreement shall be
deleted and replaced by the following:

“Future Funding Allocation” shall mean
an amount equal to the sum of Future Funding Tranche A and Future Funding
Tranche B, being the maximum aggregate amount of Future Funding Advances to be
made hereunder with respect to any Project or for any other purpose permitted
hereunder, subject to reduction pursuant to Section 2.1.5.

C.            The
definition of “Excess Cash Flow Sweep Period” in the Loan Agreement shall be
deleted and replaced with the following:

“ “Excess Cash Flow Sweep Period”
shall mean (i) the period commencing on the date hereof and ending on the date
that the Property shall have achieved a Debt Service Coverage Ratio (assuming
for this purpose that the full Loan Amount has been advanced hereunder, after
giving effect to (x) any reduction thereof pursuant to Section 2.1.5(c)
and (y) any permitted prepayments of principal made by Borrower) of at least
1.05:1.00 for a calendar quarter and (ii) any period prior to expiration of the
First Loan Year during which any portion of Future Funding Tranche B that
Borrower is entitled to request has not yet been advanced to Borrower and (iii)
any period during which any amount of Future Funding Tranche B that has been
advanced to Borrower has not been repaid to Lender.”

D.            The
definition of “Renovation Project Substantial Completion Deadline” shall be
deleted and replaced by the following:

“ “Renovation Project Substantial
Completion Deadline” shall mean, subject to any Excusable Delay occurring
from and after July    , 2007, with respect to the Renovation
Project, but specifically excluding the Modification Work, other than the
renovation of an additional 448 rooms, December 31, 2007; with respect to
Modification Work (other than the renovation of 448 rooms), there shall be no
Renovation Project Substantial Completion Deadline.”

E.             The
definition of “Spread” in the Loan Agreement shall be deleted and replaced by
the following:

“Spread” shall mean (i) with respect
to the Base Loan and Future Funding Tranche A, three and one quarter percent
(3.25%) and (ii) with respect to 

 2
 

Future Funding Tranche B, seven and one half
of one percent (7.50%).

F.             The
following shall be added at the end of Section 2.1.3 of the Loan
Agreement:

“Borrower hereby agrees that the first
$60,330,000 of Future Funding advanced to Borrower hereunder shall constitute
Future Funding Tranche A and any Future Funding advanced to Borrower hereunder
in excess of $60,330,000 shall constitute a part of Future Funding Tranche B.”

G.            Section
2.1.5(c) of the Loan Agreement shall be deleted in its entirety and
replaced with the following :

“Notwithstanding anything contained herein or
in any other Loan Document to the contrary, upon the expiration of the First
Loan Year, if the entirety of Future Funding Tranche B has not been received by
Borrower, the obligation of Lender to lend any remaining unadvanced portion of
Future Funding Tranche B shall automatically terminate, and the maximum
aggregate Loan Amount hereunder shall be automatically reduced by such
unadvanced amount; provided, however, that, in the event that Borrower
shall so elect by irrevocable written notice delivered to Lender not less than
ten (10) Business Days prior to the expiration of the First Loan Year, the
following shall apply:

(i)            the then-unadvanced
portion of the Future Funding Tranche B shall not be automatically terminated;

(ii)           upon the expiration of
the First Loan Year, Lender shall fund an amount equal to the difference
between (x) the aggregate Future Advances of Future Funding Tranche B made by
Lender prior to expiration of the First Loan Year and (y) $40,000,000 into the
General Reserve Account; and

(iii)          upon such deposit by
Lender, the amount so deposited into the General Reserve Account, shall be
deemed to have been disbursed to Borrower, shall bear interest at the
Applicable Interest Rate in accordance with this Agreement and shall be held
and/or disbursed in accordance with Section 7.9.”

 3
 

H.            Section
2.1.5(d) of the Loan Agreement shall be deleted in its entirety and
replaced with the following :

“Borrower shall pay to Lender a fee (the “Ticking
Fee”) equal to (i) with respect to Future Funding Tranche A, 25 basis points
per annum and (ii) with respect to Future Funding Tranche B, 150 basis points
per annum, on the average daily amount by which Future Funding Tranche A or
Future Funding Tranche B (as applicable) of the Future Funding Allocation (as
it may be reduced pursuant to this Section 2.1.5) exceeds the aggregate amount
of all Future Funding Advances with respect to Future Funding Tranche A or
Future Funding Tranche B, as applicable, during the period for which payment is
made.  Such Ticking Fee shall be payable
on the basis of the annual rate set forth above monthly in arrears on or before
each Payment Date with respect to each Interest Period hereunder commencing on
(x) November 30, 2006 with respect to Future Funding Tranche A and (y) July     ,
2007 with respect to Future Funding Tranche B, and shall be computed on the
basis of the actual number of days elapsed in a year of three hundred sixty
(360) days.”

I.              The
final sentence of Section 2.4.1 of the Loan Agreement shall be deleted
and replaced by the following:

“Notwithstanding the foregoing, following the
Lockout Release Date, Borrower may at any time, prepay a portion of the
outstanding principal of the Loan in an aggregate amount not to exceed Fifty
Million Dollars ($50,000,000) without the requirement to pay any Spread
Maintenance; provided, that any repayments of Tranche B made out of the
FF&E Reserve Account or the Timeshare Project Proceeds Account shall not be
included in such $50,000,000; provided further that, if such prepayment occurs
on a date other than a Payment Date, Borrower shall pay Lender all interest
which would have accrued on the amount of the Loan so prepaid through and
including the last day of the Interest Period related to the Payment Date next
occurring following the date of such prepayment.”

J.              Clause
“(iii)” of Section 5.2.11(a) of the Loan Agreement shall be deleted in
its entirety and replaced with the following:

“(iii) with the prior consent of Lender (such
consent not to be unreasonably withheld, conditioned or delayed) or, after a
Securitization, after receipt of Rating Agency Confirmation”

 4
 

K.            In Section
5.2.11(b) of the Loan Agreement, the following shall be added after “(or
waived by lender in its sole discretion”:

“; provided Lender has received an opinion of
counsel that such waiver would not adversely affect the REMIC status of any
REMIC Trust or result in the imposition of tax on any REMIC Trust.”

L.             The
following shall be added after each occurrence of the phrase “Lender’s prior
approval” in Section 5.2.11(c) in the Loan Agreement:

“(or, after a Securitization, after receipt
of Rating Agency Confirmation)”

M.           The
following shall be added at the end of Section 7.3.1 of the Loan
Agreement:

“Each deposit made by Borrower into the
FF&E Reserve Account shall be treated as follows: 75% of each such deposit
shall be segregated (together with 75% of any other such deposits) within the
FF&E Reserve Account, to be utilized solely with respect to guest rooms or
to prepay Tranche B in accordance with and as permitted by in accordance with Section
7.3.2.  The remaining 25% of each
such deposit shall be segregated (together with 25% of any other such deposits)
to be used in accordance with Section 7.3.2 for FF&E other than
FF&E applicable to guest rooms. 
Amounts so segregated for the purpose of guest rooms shall be referred
to herein as the “Room FF&E Funds” and amounts so segregated with
respect to FF&E outside of guest rooms shall be referred to as “Non-Room
FF&E Funds”).

The following shall be added following the second sentence of Section
7.3.2 of the Loan Agreement:

“Borrower hereby agrees that by reason of any
Project, (i) no more than 425 rooms may be unavailable for guests at any one
time, (ii) no more than 275 rooms may be unavailable for guests at any one time
for a period exceeding eight (8) consecutive months and (iii) no more than 400
rooms may be unavailable for guests at any one time for a period exceeding four
(4) consecutive months.”

N.            In
Section 7.3.2, of the Loan Agreement, the final sentence prior to
subparagraph (a) shall be deleted and replaced with the following: “Notwithstanding
the foregoing, Borrower shall apply an amount (the “Additional Room
Renovation Amount”) equal to 75% of each monthly deposit into the FF&E
Reserve to renovate 1,056 rooms to be renovated as part of the Renovation
Project and may apply the Additional Room Renovation Amount to renovate other
rooms as part of the Renovation Project, provided that:”.

 5
 

O.            Section
7.3.2 of the Loan Agreement shall be amended as follows:

(i)            Subparagraph “(a)” of Section
7.3.2 shall be deleted and replaced with the following: “(a) Intentionally
Omitted”.

(ii)           Subparagraph “(b)” of Section
7.3.2 shall be deleted and replaced with the following: “(b) Intentionally
Omitted”.

(iii)          In subparagraph “(c)” of
Section 7.3.2, the term “Additional Rooms” shall be replaced with the
term “rooms” wherever it appears.

(ii)           The following shall be
inserted as a new paragraph following subparagraph (c) of Section 7.3.2:
“(d) Following Final Completion of 1,056 rooms to be renovated as part of the
Renovation Project in accordance with subparagraphs (a)-(c) above, provided no
Event of Default has occurred and is continuing Borrower may elect to apply
Room FF&E Funds to prepay outstanding portions of Future Funding Tranche B
without the requirement to pay Spread Maintenance.”

P.             Section
7.6.1 of the Loan Agreement shall be modified as follows:

(i)  the word “or” at the end of Section
7.6.1(ii) shall be deleted;

(ii)  the period at the end of Section
7.6.1(iii) shall be replaced with a semicolon; and

(iii)                 the
following shall be inserted after Section 7.6.1(iii):

“(iv) any portion of Future Funding Tranche B
that Borrower is entitled to request has not yet been advanced to Borrower; or
(v) any period during which any amount of Future Funding Tranche B that has
been advanced to Borrower has not been repaid to Lender.”

Q.            The
following shall be added at the end of Section 7.6.2 of the Loan
Agreement:

“During a Timeshare Proceeds Sweep Period,
provided that no Event of Default has occurred and is then continuing, Borrower
shall have the right, in compliance with the terms, conditions and procedures
of Article III relating to Project Advances, to request that Lender (subject to
the 

 6
 

terms, conditions and procedures of Article
III) either (i) until Future Funding Tranche B has been repaid in whole,
advance amounts on deposit in the Timeshare Project Proceeds Account to
Borrower for the payment of Project Costs in accordance with the terms hereof
governing the application of Project Advances or (ii) apply amounts on deposit
in the Timeshare Project Proceeds Account to prepay outstanding portions of
Future Funding Tranche B without the requirement to pay Spread Maintenance.”

2.     Representations:

A.            Organization.  Each Borrower Party (as defined in the Loan
Agreement) has been duly organized and is validly existing and in good standing
with requisite power and authority to own its properties and to transact the
businesses in which it is now engaged. 
Each Borrower Party is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations.  Each Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now
engaged.  The sole business of each
Borrower is the direct or indirect ownership, management and operation of the
Property.  Attached hereto as Schedule II
is a true, correct and complete chart showing the direct ownership interests in
each Borrower Party and identifying the respective direct or indirect interests
held by each Sponsor.

B.    Proceedings. 
Each Borrower Party has taken all necessary action to authorize the
execution, delivery and performance of this Amendment and the other Loan
Documents to which it is a party.  This
Amendment and such other Loan Documents have been duly executed and delivered
by or on behalf of each Borrower Party that is a party thereto and constitute
legal, valid and binding obligations of each Borrower Party enforceable against
each Borrower Party in accordance with their respective terms, subject only to
applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).

C.    No Conflicts.  The execution, delivery and performance of
this Amendment and the other Loan Documents by each Borrower Party will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance (other than pursuant to the Loan Documents) upon
any of the property or assets of each Borrower Party pursuant to the terms of
any indenture, mortgage, deed of trust, loan agreement, partnership agreement,
management agreement or other agreement or instrument to which each Borrower
Party is a party or by which any of each Borrower Party’s property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over each Borrower Party or any of each Borrower Party’s
properties or assets, and any consent, approval, authorization, order,
registration or qualification of or with any such 

 7
 

Governmental Authority required for the execution, delivery and
performance by each Borrower Party of this Amendment or any other Loan
Documents has been obtained and is in full force and effect.

D.    Other Representations. All of the
representations set forth in the Loan Agreement are hereby incorporated by
reference and are deemed remade on and as of the date hereof and all references
therein to “the Loan,” “this Agreement” and “the Loan Documents” shall be
deemed to refer to the Loan, the Loan Agreement and the Loan Documents as same
have been  amended and modified by this
Amendment.

3.             Funding
of Tranche A: Borrower has requested that Lender fund the entire available
balance of Future Funding Tranche A on the date hereof.  Pursuant to such request, Lender has, on the
date hereof, funded such balance in the amount of $31,433,623 into the General
Reserve.

4.             Modifications
to Renovation Project.  Lender hereby
consents to modifications of  the scope
of the work constituting the Renovation Project (as defined in the Loan Agreement),
which modification of scope (the “Modification”) is described on Exhibit
B hereto; it being agreed by Borrower that notwithstanding Lender’s
foregoing consent to the Modification, as a condition precedent to Lender’s
obligation to make any Project Advances to be used for any work contemplated by
the Modification (the “Modification Work”), Borrower shall satisfy, to
Lender’s reasonable satisfaction (or same shall be waived by Lender in its sole
and absolute discretion), the conditions set forth in Sections 3.1.7 and
3.1.8 of the Loan Agreement in connection with such work.  Lender shall not disapprove any Advance with
respect to the Modification Work, on the basis of the requirements of Sections
3.1.8(f) or 3.1.8(h), provided that (i) the Renovation Project Budget provides
for aggregate contingencies of not less than $5,000,000, (ii) the Modification
Work for which such Advance is requested and the cost thereof are consistent
with Exhibit B hereto.  Lender
hereby consents to the re-allocation of $18,600,000 in unused contingencies and
cost savings attributable to work contemplated by the original scope of the
Renovation Project to the Modification Work. 
Lender agrees that (i) notwithstanding the terms of Section
3.1.12(b)(vii) of the Loan Agreement, Borrower shall be entitled to exceed
the $20,000,000 aggregate cost limit set forth in Section 3.1.12(b)(vii)
by an additional $20,000,000 to the extent necessitated by the Modification
Work and (ii) notwithstanding the terms of Section 3.1.12(d)(ii) of the
Loan Agreement, Borrower shall be entitled to exceed the $15,000,000 aggregate
limit in Section 3.1.12(d)(ii) by an additional $20,000,000 to the
extent necessitated by the Modification Work.

5.             Bifurcation
of Spread.  Borrower agrees that other than prepayments of Future
Funding Tranche B with funds on deposit in the FF&E Reserve Account or
Timeshare Project Proceeds Account to the extent permitted under the Loan
Agreement (as amended hereby), four and sixty five one hundredths percent
(4.65%) of any pay-down of the principal amount of the Loan shall be applied to
the principal amount of Future Funding Tranche B and the remaining portion of
such pay-down shall be applied to the remaining principal of the Loan (and any
relief from payment of Spread Maintenance as contemplated in Section 2.4.1 of
the Loan Agreement shall be divided in such same 

 8
 

proportion
between Future Funding Tranche B and the remaining portion of the Loan). 
Notwithstanding the foregoing, following an Event of Default, any reduction of
principal shall be made in the order determined by Lender in its sole
discretion.

6.             Modification
of Ancillary Loan Documents:

A.            From
and after the date hereof, any references to “$820,000,000” in the Ancillary
Loan Documents (as defined on Schedule-1) shall be replaced by “$860,000,000.”

B.            All
references in the Ancillary Loan Documents to “the Loan,” and “the Loan
Documents” shall be deemed to refer to the Loan and the Loan Documents as same
have been amended and modified by this Amendment.

C.            Lender
expressly acknowledges and agrees that any amendment to the OpBiz Pledge (as
defined on Schedule-1) shall not be effective until same is approved by
the Gaming Authorities.  Borrower hereby
agrees to diligently and continuously pursue consent of the Gaming Authorities
to the modification of the OpBiz Pledge by this Amendment.

D.            The
term “Pledged Company Interests” in the TSP Pledge (as defined on Schedule-1)
shall be deleted and replaced with the following:

“Pledged Company Interests” means the limited
liability company interests of Pledgor in TSP Owner listed on Schedule 1
hereto, together with all membership or partnership interest certificates,
options or rights of any nature whatsoever which may be issued or granted by
TSP Owner to Pledgor while this Agreement is in effect.”

E.             Borrower
agrees that the “Interest Rate Cap Agreement,” as such term is defined in the
Cap Assignment (as defined on Schedule-1) has been amended to increase
the notional amount thereof to $860,000,000 and that the Cap Assignment shall apply
to the Interest Rate Cap Agreement as so amended.

7.             Amended
Warrant Documents: Lender hereby approves that certain First Amended and
Restated Investors Right Agreement and form of Restated Warrant to Purchase
Interests of MezzCo LLC in the forms attached as Exhibit A hereto.

8.             Ratification
of Guaranties:  By its signature
below, each Guarantor (as defined in the Loan Agreement) ratifies this
Amendment and agrees that (i) each Guaranty (as defined the Loan Agreement) to
which it is a party is hereby ratified and confirmed and that each such
Guaranty shall continue in full force and effect and (ii) any references to “the
Loan” or “the Loan Documents” in the Guaranty to which it is a party shall be
deemed to refer to the Loan and the Loan Documents as same have been amended by
this Amendment.  Each Guarantor party to
the Completion Guaranty hereby agrees that as used in the Completion Guaranty,
the term “Renovation Project” shall 

 9
 

mean the Renovation Project as same may be expanded or
otherwise modified with Lender’s consent.

9.             Ratification
by PH Entities:  By its signature below, each PH Entity (as
defined in the Loan Agreement) ratifies this Amendment and agrees that (i) each
Loan Document to which it is a party is hereby ratified and confirmed and that
each such Loan Document shall continue in full force and effect and (ii) any
references to “the Loan” or “the Loan Documents” in the Loan Document to which
it is a party shall be deemed to refer to the Loan and the Loan Documents as
same have been amended by this Amendment.

10.           Acknowledgment
of Participation:  Borrower hereby acknowledges that Lender
intends to transfer the Note and the other Loan Documents to a trustee (“Trustee”)
of a trust (the “Trust”) under a pooling and servicing agreement in
connection with the Securitization of a portion of the Note.  In connection with such transfer, a
Participation Agreement (the “Participation Agreement”) has been
executed, which will divide the rights and obligations of the Lender under the
Note and the other Loan Documents into two or more participations, one of which
(the Securitized Participation”) will be transferred to the
Trustee.  Certain of the other
participations (each, a “Secondary Participation”) have been sold in
accordance with the terms of the Loan Documents and the Participation
Agreement.  Sections 2.1.3 and 2.1.5 of
the Loan Agreement obligate Lender to make future advances of funds to Borrower
with respect to the Property upon fulfillment of certain conditions (such
obligation, the “Future Funding Obligation”).  Pursuant to the terms of the Participation
Agreement, the Future Funding Obligation will not be included in the
Securitized Participation, but will be included in one of the Secondary
Participations.  By its execution and
delivery of this Amendment and its acceptance of advances under the Loan on the
date hereof in accordance with the terms of the Loan Documents, Borrower hereby
acknowledges, confirms and agrees that: (i) the Note will be transferred to the
Trust; (ii) the Future Funding Obligation is and will be solely the obligation
of a holder (the “Future Funding Holder”) of the applicable Secondary
Participations; (iii) from and after the date of transfer of the Future Funding
Obligation to the Future Funding Holder, the Future Funding Obligation will be
solely the obligation of the Future Funding Holder on the same terms and
conditions specified in the Note and the related Loan Documents; and  (iv) Borrower will not have any right of
offset of other claim against any Trust (or its assigns or beneficiaries) as
holder of the Note or any interest therein in connection with the Future
Funding Obligation.

11.           Successors
and Assigns.  This Amendment shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors and assigns.

12.           Ratification.  The Loan Agreement and other Loan Documents
as expressly amended hereby are ratified and confirmed and shall continue in
full force and effect.

13.           Release;
No Offsets.  Borrower and each
Guarantor hereby release and forever discharge Lender, its agents, servants,
employees, directors, officers, attorneys, 

 10
 

branches, affiliates, subsidiaries, participants,
successors and assigns and all persons, firms, corporations and organizations
in its behalf of and from all damage, loss, claims, demands, liabilities,
obligations, actions and causes of action whatsoever which Borrower or any
Guarantor may now have or claim to have against Lender, as of the date hereof,
whether presently known or unknown, and of every nature and extent whatsoever
on account of or in any way touching, concerning, arising out of or founded
upon the Loan Documents, as herein or concurrently herewith modified.  Borrower and each Guarantor hereby acknowledges
and agrees that as of the date hereof there are no offsets, counterclaims or
defenses of any nature whatsoever with respect to the Loan or the Loan
Documents or to the performance by Borrower or such Guarantor of its
obligations under the Loan Documents.

14.           Governing
Law.  This Amendment shall be deemed
to be a contract entered into pursuant to the laws of the State of New York and
shall in all respects be governed, construed, applied and enforced in
accordance with the laws of the State of New York.

15.           Counterparts.  This Amendment may be executed in multiple
counterparts, each of which shall constitute an original, but all of which
shall constitute one original.

[Signatures
Follow on Next Page]

 11

IN WITNESS WHEREOF,
Borrower and Lender have duly executed this Amendment as of the day and year
first above written.

	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PH FEE OWNER LLC

  	
   

  
	
   

  	
  a Delaware
  limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARK HELM

  	
   

  
	
   

  	
  Name:  Mark Helm

  	
   

  
	
   

  	
  Title:  Senior Vice President/General Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPBIZ, L.L.C.

  	
   

  
	
   

  	
  a Nevada limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DONNA
  LEHMANN

  	
   

  
	
   

  	
  Name:  Donna Lehmann

  	
   

  
	
   

  	
  Title:  Executive Vice President/Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COLUMN
  FINANCIAL, INC.,

  	
   

  
	
   

  	
  a Delaware
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROMAN MARIN

  	
   

  
	
   

  	
  Name: Roman Marin

  	
   

  
	
   

  	
  Title:  Vice President

  	
   

  
						

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

	
   

  	
  PH ENTITIES (solely for the
  purpose of agreeing to

  Section 9 hereof):

  
	
   

  	
   

  
	
   

  	
  PLANET HOLLYWOOD
  (REGION IV), INC., a

  Minnesota corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT EARL

  	
   

  
	
   

  	
  Name:  Robert Earl

  
	
   

  	
  Title:  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PLANET HOLLYWOOD
  MEMORABILIA, INC.,

  
	
   

  	
  a Florida
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ ROBERT EARL

  	
   

  
	
   

  	
  Name:  Robert Earl

  
	
   

  	
  Title:  Chairman

  
						

 

[SIGNATURES
CONTINUE ON NEXT PAGE]

	
   

  	
  GUARANTORS (solely for the purpose of agreeing

  
	
   

  	
  to Section 8 and Section 13 hereof):

  
	
   

  	
   

  
	
   

  	
  TROPHY HUNTER INVESTMENTS, LTD., a

  
	
   

  	
  Florida limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS TEITELBAUM

  	
   

  
	
   

  	
  Name: Douglas Teitelbaum

  
	
   

  	
  Title: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAY HARBOUR 90-1, LTD.,

  
	
   

  	
  a Florida limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DOUGLAS TEITELBAUM

  	
   

  
	
   

  	
  Name: Douglas Teitelbaum

  
	
   

  	
  Title: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAY HARBOUR MASTER, LTD.,

  
	
   

  	
  a Cayman Islands exempted company,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ DOUGLAS TEITELBAUM

  	
   

  
	
   

  	
  Name: Douglas Teitelbaum

  
	
   

  	
  Title: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAY HARBOUR MASTER, LTD.,

  
	
   

  	
  a Cayman Islands exempted company,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ STEVEN A. VAN DYKE, CFA

  	
   

  
	
   

  	
  Name: Steven A. Van Dyke, CFA

  
	
   

  	
  Title: Managing Principal of Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS TEITELBAUM, an individual

  
	
   

  	
   

  
	
   

  	
  /s/ DOUGLAS TEITELBAUM

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROBERT EARL, an individual

  
	
   

  	
   

  
	
   

  	
  /s/ ROBERT EARL

  	
   

  
					

 

 1

SCHEDULE I

Loan Documents

Items 6 through 36
hereof shall collectively be referred to in this Amendment as the “Ancillary
Loan Documents.”

1.                                       Loan
Agreement by and between Borrower and Lender (the “Loan Agreement”)

2.                                       Promissory
Note by Borrower in favor of Lender

3.                                       Deed
of Trust, Financing Statement, Fixture Filing and Security Agreement by
Borrower to First American Title Insurance Company, for the benefit of Lender

4.                                       Deed
of Trust, Financing Statement, Fixture Filing and Security Agreement by TSP
Owner LLC to First American Title Insurance Company, for the benefit of Lender

5.                                       Assignment
of Leases, Rents and Security Deposits by Borrower in favor of Lender

6.                                       Assignment
of Contracts, Operating Permits and Construction Permits by Borrower in favor
of Lender

7.                                       Guaranty
Agreement by Bay Harbour 90-1, Ltd., Trophy Hunter Investments, Ltd. and Bay
Harbour Master Ltd. in favor of Lender

8.                                       Guaranty
Agreement by Douglas Teitelbaum in favor of Lender

9.                                       Guaranty
Agreement by Robert Earl in favor of Lender

10.                                 Environmental
Indemnity Agreement by Borrower in favor of Lender

11.                                 Completion
Guaranty made by Bay Harbour 90-1, Ltd., Trophy Hunter Investments, Ltd., Bay
Harbour Master Ltd. and Robert Earl in favor of Lender

12.                                 Restricted
Account Agreement (Access Restricted Immediately) by and among Borrower, Lender
and Wells Fargo Bank, National Association

13.                                 Bank
Acknowledgment by KeyBank, N.A.

14.                                 Restricted
Account Agreement by and among Borrower, Lender and Wells Fargo Bank, National
Association

15.                                 Manager
Subordination and Cooperation Agreement by and among Sheraton Operating
Corporation and Lender

16.                                 Licensor
Subordination and Cooperation Agreement by the PH Entities in favbor of Lender

17.                                 Security
Agreement by the PH Entities in favor of Lender

18.                                 Security
Agreement (Copyrights) by OpBiz in favor of Lender

19.                                 Security
Agreement (Trademarks) by OpBiz in favor of Lender

20.                                 Security
Agreement (Trademarks) by Planet Hollywood (Region IV), Inc. in favor of Lender

21.                                 Security
Agreement (Copyrights) by Planet Hollywood International, Inc. in favor of
Lender

22.                                 Collateral Assignment of
Interest Rate Cap Agreement made by Borrower in favor of Lender (the “Cap
Assignment”)

23.                                 Collateral
Assignment of Timeshare Project Proceeds made by Borrower and TSP Owner in favor
of Lender

24.                                 Pledge
and Security Agreement made by MezzCo, L.L.C. in favor of Lender (the “OpBiz
Pledge”)

25.                                 Pledge
and Security Agreement made by Fee Owner in favor of Lender (the “TSP Pledge”)

26.                                 Operations
and Maintenance Agreement made by Borrower in favor of Lender

27.                                 UCC-1
Financing Statement (DE) - Fee Owner

28.                                 UCC-1
Financing Statement (NV) – OpBiz

29.                                 UCC-1
Financing Statement (NV Clark County) - Fee Owner

30.                                 UCC-1
Financing Statement (NV Clark County) - OpBiz

31.                                 UCC-1
Financing Statement (NV) - OpBiz (IP Collateral)

32.                                 UCC-1
Financing Statement (DE) - TSP Owner

33.                                 UCC-1
Financing Statement (NV Clark County) - TSP Owner

34.                                 UCC-1
Financing Statement (MN) – PHIV

35.                                 UCC-1
Financing Statement (FL) - Planet Hollywood Memorabilia, Inc.

36.                                 UCC-1 Financing Statement
(DE) - PHI

SCHEDULE II

Organizational Structure of Borrower

(See Attached)

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