STOCK PURCHASEAGREEMENT

(a)  

any environmental, health, or safety matters or conditions (including on-site or off- site contamination, occupational safety and health, and regulation of chemical substances or products);

(b)  

fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health Law;

(c)  

financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions (“Cleanup”) required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages; or

(d)  

any other compliance, corrective, investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law.

(a)  

advising appropriate authorities, employees, and the public of intended or actual releases of pollutants or hazardous substances or materials, violations of discharge limits, or other prohibitions and of the commencements of activities, such as resource extraction or construction, that could have significant impact on the Environment;

(b)  

preventing or reducing to acceptable levels the release of pollutants or hazardous substances or materials into the Environment;

(c)  

reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated;

(d)  

assuring that products are designed, formulated, packaged, and used so that they do not present unreasonable risks to human health or the Environment when used or disposed of;

(e)  

protecting resources, species, or ecological amenities;

(f)  

reducing to acceptable levels the risks inherent in the transportation of hazardous substances, pollutants, oil, or other potentially harmful substances;

(g)  

cleaning up pollutants that have been released, preventing the threat of release, or paying the costs of such clean up or prevention; or

(h)  

making responsible parties pay private parties, or groups of them, for damages done to their health or the Environment, or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.

(a)  

nation, state, county, city, town, village, district, or other jurisdiction of any nature;

(b)  

federal, state, local, municipal, foreign, or other government;

(c)  

governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal);

(d)  

multi-national organization or body; or

(e)  

body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

2  

 

2.5

Closing Obligations.

At the Closing:

(i)  

   A certificate or certificates representing the Shares, duly endorsed (or accompanied by duly executed stock powers) in blank for transfer to Buyer;

(ii)  

a certificate executed by Seller representing and warranting to Buyer that each of Seller’s representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date (giving full effect to any supplements to the Disclosure Statement that were delivered by Seller to Buyer prior to the Closing Date in accordance with Section 5.5); and

 

(b)

Buyer will deliver or cause to be delivered to Seller and to the Escrow Agent:

(i)  

the Closing Payment by wire transfer or cashiers check to Seller;

(ii)  

the Escrow Deposit by wire transfer or cashiers check to Escrow Agent; and

 

(iii)

a certificate executed by Buyer to the effect that, except as otherwise stated in such certificate, each of Buyer’s representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date.

3  

REPRESENTATIONS AND WARRANTIES OF SELLER AND CDT

 

3.1

Organization and Good Standing.

(a)  

CDT is a corporation organized, validly existing, and in good standing under the laws of the State of Minnesota, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts.  CDT is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

(b)  

Seller has delivered or made available to Buyer copies of the Organizational Documents of CDT, as currently in effect.

 

3.2

Authority; No Conflict.

(a)  

This Agreement constitutes the legal, valid, and binding obligation of Seller and CDT, enforceable against Seller and CDT in accordance with its terms.  Seller and CDT have the right, power, authority, and capacity to execute and deliver this Agreement and to perform their obligations hereunder.

(b)  

Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time):

(i)  

contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of CDT, or (B) any resolution adopted by the board of directors or the stockholders of either CDT or the Seller;

(ii)  

contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which CDT or Seller, or any of the assets owned or used by CDT, may be subject;

(iii)  

contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental  Authorization that is held by CDT or that otherwise relates to the business of, or any of the assets owned or used by, CDT;

(iv)  

cause Buyer or CDT to become subject to, or to become liable for the payment of, any Tax;

(v)  

cause any of the assets owned by CDT to be reassessed or revalued by any taxing authority or other Governmental Body;

(vi)  

contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or

(vii)  

result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by CDT.

 

(a)

the authorized capital stock of CDT consists of 2,500,000 shares of Common Stock, $.01 par value per share, of which 955,162.5 shares are issued and outstanding (the “Shares”). Seller is and will be on the Closing Date the record and beneficial owner and holder of the Shares, free and clear of all Encumbrances.  No legend or other reference to any purported Encumbrance appears upon any certificate representing the Shares, and all of the Shares have been duly authorized and validly issued and are fully paid and nonassessable.  There are no Contracts relating to the issuance, sale, or transfer of any equity securities or other securities of CDT.  None of the Shares was issued in violation of the Securities Act or any other Legal Requirement.  CDT neither owns, nor has any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business.

 

(b)

CDT has no outstanding, or has had outstanding any securities registered (or required to be registered) under the Securities Act of 1933 or the Securities Exchange Act of 1934 or has or has had any reporting obligation thereunder. CDT is not subject to any filing or reporting requirements under the Securities Act of 1933 or the Securities Exchange Act of 1934.

 

(a)

Seller has delivered to Buyer: (a) the unaudited balance sheet of CDT as at March 31, 2007 (the “Balance Sheet”) and as at March 31, 2006, and the related statements of operations and cash flow for each of the fiscal years then ended, (b) the unaudited balance sheet of CDT as at December 31, 2007 (the “Interim Balance Sheet”), and the related statements of operations and cash flow for the nine months then ended.  Such financial statements fairly present the financial condition and the results of operations and cash flow of CDT as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse) and the absence of notes.  The financial statements referred to in this Section 3.4 reflect the consistent application of such accounting principles throughout the periods involved.  Within 105 days following the Closing Date, Seller will deliver to Buyer an unaudited balance sheet and related statements of operations and cash flow for CDT as of the Closing Date, in which all income and costs, from whatever source, relating to CDT will be fully and properly included in accordance with GAAP.

 

(b)

CDT has no liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) of the type required to be reflected or disclosed on a balance sheet (or the notes thereto) in accordance with GAAP that were not fully reflected or reserved against in the Balance Sheet and the Interim Balance Sheet, except for liabilities and obligations incurred in the Ordinary Course of Business since the respective dates thereof as set forth in the Disclosure Schedule hereto; the reserves reflected in the Balance Sheet and the Interim Balance Sheet are adequate, appropriate and reasonable under GAAP, and consistent with past practice with regard to CDT.

 

(a)

Part 3.6 of the Disclosure Schedule contains a complete and accurate list of all real property, leaseholds, or other interests therein owned by CDT as at the Interim Balance Sheet date.  CDT owns (with good and marketable title in the case of real property, subject only to the matters permitted by the following sentence) all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own, including all of the properties and assets reflected in the Balance Sheet and the Interim Balance Sheet (except for assets held under capitalized leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure Schedule and personal property sold since the date of the Balance Sheet and the Interim Balance Sheet, as the case may be, in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by CDT since the date of the Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice), other than Inventory and short-term investments, are listed in Part 3.6 of the Disclosure Schedule.  All properties and assets reflected in the Balance Sheet and the Interim Balance Sheet are free and clear of all Encumbrances and are not, in the case of real property, subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except, with respect to all such properties and assets, (a) mortgages or security interests shown on the Balance Sheet or the Interim Balance Sheet as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (b) mortgages or security interests incurred in connection with the purchase of property or assets after the date of the Interim Balance Sheet (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (c) liens for current taxes not yet due, and (d) with respect to real property, (i) minor imperfections of title, if any, none of which is substantial in amount, detracts from the value or impairs the use of the property subject thereto, or impairs the operations of CDT, and (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.

 

(b)

Neither Seller nor CDT has received notice that the whole nor any portion of the property or leaseholds owned or held by CDT is subject to any governmental decree or order to be sold or is being condemned, expropriated or otherwise taken by any Governmental Body or other Person with or without payment of compensation therfor, nor to the knowledge of Seller and CDT, has any such condemnation, expropriation or taking been proposed.

 

(a)

All Inventory, whether or not reflected in the Balance Sheet or the Interim Balance Sheet, consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, which have been written off or written down to net realizable value in the Balance Sheet or the Interim Balance Sheet or the accounting records of CDT as of the Closing Date, as the case may be, in each case consistent with GAAP.  All inventories not written off have been priced at the lower of cost or net realizable value.  The quantities of each item of inventory are reasonable in the present circumstances of CDT.

 

(b)

The aggregate of all agreements or commitments for the purchase of inventory, materials and supplies by CDT as of the date of this Agreement does not exceed $200,000, all of which orders, agreements and commitments were made in the Ordinary Course of Business. There are no claims against CDT to return in excess of an aggregate of $10,000 of merchandise by reason of alleged over shipments, defective merchandise or otherwise, or of merchandise in the hands of customers under an understanding that such merchandise would be returnable.

 

3.10

(a)  

CDT has filed or caused to be filed (on a timely basis since April 30, 2001) all Tax Returns that are or were required to be filed by or with respect to it pursuant to applicable Legal Requirements.  Seller has delivered or made available to Buyer copies of all such Tax Returns.  The Seller and/or CDT have paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by Seller or CDT, except such Taxes, if any, as are listed in Part 3.10 of the Disclosure Schedule and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Balance Sheet and the Interim Balance Sheet.

(b)  

Part 3.10 of the Disclosure Schedule contains a complete and accurate list of all audits, if any, of all such Tax Returns, including a reasonably detailed description of the nature and outcome of each audit.  All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or, as described in Part 3.10 of the Disclosure Schedule, are being contested in good faith by appropriate proceedings.  Neither Seller nor CDT has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of CDT or for which CDT may be liable.

(c)  

The charges, accruals, and reserves with respect to Taxes on the books of CDT are adequate (determined in accordance with GAAP) and are at least equal to CDT’s liability for Taxes.  There exists no proposed tax assessment against CDT except as disclosed in the Balance Sheet or in Part 3.10 of the Disclosure Schedule.  All Taxes that CDT is or was required by Legal Requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body or other Person.

(d)  

All Tax Returns filed by or on behalf of CDT are true, correct, and complete.  There is no tax sharing agreement that will require any payment by CDT after the date of this Agreement.  CDT is not, or within the five-year period preceding the Closing Date has been, an “S” corporation.

(e)  

CDT has paid and discharged all liabilities with respect to Taxes and has provided cash reserves for the payment of any contingent liabilities with respect to Taxes for the period up to and including the Closing Date.  CDT confirms that on the Closing Date it has no outstanding liability for Taxes and no unpaid contingent liability for Taxes.

 

(a)

CDT is in compliance in all material respects with all applicable laws, agreements and contracts relating to employment, employment practices, immigration, wages, hours, and terms and conditions of employment, including, but not limited to, employee compensation matters, and has correctly classified employees as exempt employees and non-exempt employees under the Fair Labor Standards Act and applicable state laws. A list of all employees, officers and consultants of CDT and their current title and/or job description, current compensation rates, bonuses paid during the last fiscal year, and accrued vacation and sick leave for all employees is set forth in Part 3.12 of the Disclosure Schedule.  Except as set forth in Part 3.12 of the Disclosure Schedule, CDT does not have any employment contracts or consulting agreements currently in effect that are not terminable at will (other than agreements with the sole purpose of providing for the confidentiality of proprietary information or assignment of inventions).

 

(b)

CDT (a) is not now, nor has it ever been, subject to a union organizing effort, (b) is not subject to any collective bargaining agreement with respect to any of its employees, (c) is not subject to any other contract, written or oral, with any trade or labor union, employees’ association or similar organization, and (d) has no current labor disputes.  Neither Seller nor CDT has knowledge (a) of any facts indicating that the consummation of the transactions contemplated by this Agreement will have a Material Adverse Effect on the employment relations of CDT, or (b) that any of CDT’s employees intends to leave CDT’s employ.  All of CDT’s employees are legally permitted to be employed by CDT in the United States in their current job capacities under applicable laws.

 

(c)

Part 3.12 of the Disclosure Schedule lists (i) all “employee benefit plans” within the meaning of Section 3(3) of ERISA, and (ii) all other employee benefit, bonus or other incentive compensation, stock option, stock purchase, stock appreciation, severance pay, lay-off or reduction in force, change in control, sick pay, vacation pay, salary continuation, retainer, leave of absence, educational assistance, service award, employee discount, fringe benefit plans, arrangements, policies or practices, to which CDT contributes to or has any obligation to or liability for (collectively, the “Employee Plans”).  Each Employee Plan provides that it may be amended or terminated at any time and, except for benefits protected under Section 411(d) of the IRC or Section 204(g) of ERISA or benefits to which a plan participant or beneficiary has accrued a vested right, all benefits payable to current or terminated employees or any beneficiary may be amended or terminated by CDT at any time without liability.  None of the Employee Plans is subject to Section 302 or Title IV of ERISA or Section 412 of the Code (a “Defined Benefit Plan”) or is a “multiemployer plan” within the meaning of Section 3(37) of ERISA (a “Multiemployer Plan”) and CDT has never (i) sponsored, maintained or contributed to, or been obligated to contribute to, a Defined Benefit Plan or (ii) contributed to, or been obligated to contribute to, a Multiemployer Plan.  The Employee Plans are based only on employee contributions and CDT has no obligation to make any contribution to and of the Employee Plans.  CDT does not maintain or contribute to any welfare benefit plan that provides health benefits to an employee after the employee’s termination of employment or retirement except as required under Section 4980B of the IRC and Sections 601 through 608 of ERISA (“COBRA”) or other applicable legal requirements. All expenses and liabilities relating to all of the Employee Plans described in Part 3.12 of the Disclosure Schedule have been, and will on the Closing be, fully and properly accrued on CDT’s books and records and are disclosed on the Balance Sheet or Interim Balance Sheet and such Employee Plans have no unfunded liabilities not reflected on the Balance Sheet or Interim Balance Sheet.

 

(d)

Persons performing or, who in the past have performed, contract labor for CDT, are not subject to written agreements with CDT, all such services being the subject of invoices submitted to CDT for payment by agencies which provide such contract labor.  All such contract laborers and/or the agencies who have provided such contract labor have been fully paid all amounts owing to them by CDT through the date hereof, and there are no disputes or controversies between any such contract laborer (or agency) and CDT whatsoever, including without limitation, disputes regarding amounts owed or ownership of CDT intellectual property.   

(f)  

There is no agreement, plan, arrangement or other Contract covering any employee that, considered individually or considered collectively with any other such agreements, plans, arrangements or other Contracts, will, or could reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as a “parachute payment” within the meaning of Section 280G(b)(1) of the IRC.  There is no agreement, plan, arrangement or other Contract by which CDT is bound to compensate any employee for excise taxes paid pursuant to Section 4999 of the Code.  

No “nonqualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the IRC) is sponsored or maintained by CDT.

 

3.13

(i)  

   CDT is, and at all times has been, in compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets;

(ii)  

   no event has occurred or circumstance exists that (with or without notice  or lapse of time) (A) may constitute or result in a violation by CDT of, or a failure on the part of CDT to comply with, any Legal Requirement, or (B) may give rise to any obligation on the part of CDT to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and

(iii)  

  CDT has not received, at any time since April 30, 2001, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement, or (B) any actual, alleged, possible, or potential obligation on the part of CDT to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

 

(b)

Part 3.13 of the Disclosure Schedule contains a complete and accurate list of each Governmental Authorization that is held by CDT or that otherwise relates to the Business, or to any of the assets owned or used by, CDT.  Each Governmental Authorization listed or required to be listed in Part 3.13 of the Disclosure Schedule is valid and in full force and effect.  Except as set forth in Part 3.13 of the Disclosure Schedule:

(i)  

   CDT is, and at all times has been, in full compliance with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Part 3.13 of the Disclosure Schedule;

(ii)  

   no event has occurred or circumstance exists that may (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization listed or required to be listed in Part 3.13 of the Disclosure Schedule, or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification to, any Governmental Authorization listed or required to be listed in Part 3.13 of the Disclosure Schedule;

(iii)  

   CDT has not received, at any time since April 30, 2001, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of or failure to comply with any term or requirement of any Governmental Authorization, or (B) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to any Governmental Authorization; and

(iv)  

   all applications required to have been filed for the renewal of the Governmental Authorizations listed or required to be listed in Part 3.13 of the Disclosure Schedule have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies.

 

3.14

(a)  

Except as set forth in Part 3.14 of the Disclosure Schedule, there is no pending or Threatened Proceeding:

(i)  

   that has been commenced by or against CDT or that otherwise relates to or may affect the business of, or any of the assets owned or used by, CDT; or

(ii)  

   that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.

(i)  

   there is no Order to which CDT, or any of the assets owned or used by CDT, is subject;

(ii)  

   neither CDT nor Seller is subject to any Order that relates to the business of, or any of the assets owned or used by, CDT; and

(iii)  

   to the Knowledge of Seller and CDT, no officer, director, agent, or employee of CDT is subject to any Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the business of CDT.

 

(i)

CDT is, and at all times since April 30, 2001 has been, in full compliance with all of the terms and requirements of each Order to which it, or any of the assets owned or used by it, is or has been subject;

 

(ii)

no event has occurred or circumstance exists that may constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which Seller, CDT, or any of the assets owned or used by CDT, is subject; and

 

(iii)

CDT has not received, at any time since April 30, 2001, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding any actual, alleged, possible, or potential violation of, or failure to comply with, any term or requirement of any Order to which CDT, or any of the assets owned or used by CDT, is or has been subject.

 

3.15

(a)  

change in CDT’s authorized or issued capital stock; grant of any stock option or right to purchase shares of capital stock of  CDT; issuance of any security convertible into such capital stock; grant of any registration rights; purchase, redemption, retirement, or other acquisition by CDT of any shares of any such capital stock; or declaration or payment of any dividend or other distribution or payment in respect of shares of capital stock;

(b)  

amendment to the Organizational Documents of CDT;

 

(c)

payment of any bonuses, salaries, or other compensation to any stockholder, director, officer, or (except in the Ordinary Course of Business) employee or entry into any employment, severance, or similar Contract with any director, officer, or employee;

(d)  

adoption of, or increase in the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement, or other employee benefit plan for or with any employees of CDT;

(e)  

damage to or destruction or loss of any asset or property of CDT, whether or not covered by insurance, materially and adversely affecting the properties, assets, business, financial condition, or prospects of the CDT, taken as a whole;

(f)  

entry into, termination of, or receipt of notice of termination of (i) any material license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to CDT of at least $5,000;

(g)  

sale (other than sales of inventory in the Ordinary Course of Business), lease, or other disposition of any material asset or property of CDT or mortgage, pledge, or imposition of any lien or other encumbrance on any material asset or property of  CDT, including the sale, lease, or other disposition of any of the Intellectual Property Assets;

(h)  

cancellation or waiver of any claims or rights with a value to CDT in excess of $5,000;

(j)  

agreement, whether oral or written, by CDT to do any of the foregoing.

 

3.16

(a)  

Part 3.16(a) of the Disclosure Schedule contains a complete and accurate list, and Seller and CDT have delivered to Buyer true and complete copies, of:

(i)  

   each Applicable Contract that involves performance of services or delivery of goods or materials by CDT of an amount or value in excess of $25,000;

(ii)  

   each Applicable Contract that involves performance of services or delivery of goods or materials to CDT of an amount or value in excess of $25,000;

(iii)  

   each Applicable Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of CDT in excess of $25,000;

(iv)  

   each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Applicable Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $5,000 and with terms of less than one year);

(v)  

   each licensing agreement or other Applicable Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any of the Intellectual Property Assets;

(vi)  

   each collective bargaining agreement and other Applicable Contract to or with any labor union or other employee representative of a group of employees;

(vii)  

   each joint venture, partnership, and other Applicable Contract (however named) involving a sharing of profits, losses, costs, or liabilities by CDT with any other Person;

(viii)  

   each Applicable Contract containing covenants that in any way purport to restrict the business activity of CDT or limit the freedom of CDT to engage in any line of business or to compete with any Person;

(ix)  

   each Applicable Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods;

(x)  

   each power of attorney that is currently effective and outstanding;

(xi)  

   each Applicable Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by CDT to be responsible for consequential damages;

(xii)  

   each Applicable Contract for capital expenditures in excess of $50,000;

(xiii)  

   each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by CDT other than in the Ordinary Course of Business; and

(xiv)  

   each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

 

3.17

(i)  

   true and complete copies of all policies of insurance to which CDT is a party or under which CDT, or any director of CDT, is or has been covered at any time within the three (3) years preceding the date of this Agreement; and

(ii)  

   true and complete copies of all pending applications for policies of insurance.

(i)  

   any self-insurance arrangement by or affecting CDT, including any reserves established thereunder;

(ii)  

   any contract or arrangement, other than a policy of insurance, for the transfer or sharing of any risk by CDT; and

(iii)  

   all obligations of CDT to third parties with respect to insurance (including such obligations under leases and service agreements) and identifies the policy under which such coverage is provided.

(c)  

Neither Seller nor CDT has received (A) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (B) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder.

(d)  

CDT and/or Seller have paid all premiums due, and have otherwise performed its obligations, under each policy to which CDT is a party or that provides coverage to CDT or any director or officer of CDT.

(a)  

CDT has given timely notice to the insurer of all claims that may be  insured thereby.

 

3.18

 

Except as set forth in part 3.18 of the Disclosure Schedule:

(a)  

To the Knowledge of Seller and CDT’s management team, CDT is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law.  Neither Seller nor CDT has any basis to expect, nor has any of them or any other Person for whose conduct they are or may be held to be responsible received, any actual or Threatened order, notice, or other communication from (i) any Governmental Body or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any Facilities, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or Threatened obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets (whether real, personal, or mixed) in which Seller or CDT has had an interest, or with respect to any property or Facility at or to which Hazardous Materials were generated, manufactured, refined, transferred, imported, used, or processed by Seller, CDT, or any other Person for whose conduct they are or may be held responsible, or from which Hazardous Materials have been transported, treated, stored, handled, transferred, disposed, recycled, or received.

 

(b)

There are no pending or, to the Knowledge of Seller and CDT, Threatened claims, Encumbrances, or other restrictions of any nature, resulting from any Environmental, Health, and Safety Liabilities or arising under or pursuant to any Environmental Law, with respect to or affecting any of the Facilities or any other properties and assets (whether real, personal, or mixed) in which Seller or CDT has or had an interest.

 

(c)

Neither Seller nor CDT has Knowledge of any basis to expect, nor has any of them or any other Person for whose conduct they are or may be held responsible, received, any citation, directive, inquiry, notice, Order, summons, warning, or other communication that relates to Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any other properties or assets (whether real, personal, or mixed) in which Seller or CDT had an interest, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used, or processed by Seller, CDT, or any other Person for whose conduct they are or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled, or received.

 

(d)       Neither Seller nor CDT, or any other Person for whose conduct they are or may be held responsible, has any Environmental, Health, and Safety Liabilities with respect to the Facilities or, to the Knowledge of Seller and CDT, with respect to any other properties and assets (whether real, personal, or mixed) in which Seller or CDT, has or had an interest.

(e)  

There are no Hazardous Materials present on or in the Environment at the Facilities, including any Hazardous Materials contained in barrels, above or underground storage tanks, landfills, land deposits, dumps, equipment (whether moveable or fixed) or other containers, either temporary or permanent, and deposited or located in land, water, sumps, or any other part of the Facilities, or incorporated into any structure therein or thereon.  Neither Seller, CDT, or any other Person for whose conduct they are or may be held responsible, or to the Knowledge of Seller and CDT, any other Person, has permitted or conducted, or is aware of, any Hazardous Activity conducted with respect to the Facilities or any other properties or assets (whether real, personal, or mixed) in which Seller or CDT has or had an interest except in full compliance with all applicable Environmental Laws.

(f)  

There has been no Release or, to the Knowledge of Sellers and CDT, Threat of Release, of any Hazardous Materials at or from the Facilities or at any other locations where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Facilities, or from or by any other properties and assets (whether real, personal, or mixed) in which CDT has an interest.

(g)  

Neither Seller nor CDT is aware of any report, study, analysis, test, or monitoring possessed or initiated by Seller or CDT pertaining to Hazardous Materials or Hazardous Activities in, on, or under the Facilities, or concerning compliance by CDT or any other Person for whose conduct CDT is responsible, with Environmental Laws.

 

3.19

(a)  

Part 3.19 of the Disclosure Schedule contains a complete and accurate list of the following information for each CDT employee, including each employee on leave of absence or layoff status: name; job title; current compensation paid or payable and any change in compensation since December 31, 2007; vacation accrued; and service credited for purposes of vesting and eligibility to participate under CDT’s pension, retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus, stock option, cash bonus, employee stock ownership (including investment credit or payroll stock ownership), severance pay, insurance, medical, welfare, or vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any other employee benefit plan or any Director Plan.

(b)  

No employee or director of CDT is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee or director and any other Person (“Proprietary Rights Agreement”) that in any way adversely affects or will affect (i) the performance of his duties as an employee or director of CDT, or (ii) the ability of CDT to conduct its business.  To Seller’s Knowledge, no officer or other key employee of CDT intends to terminate his employment with CDT.

 

(c)

Part 3.19 of the of Disclosure Schedule identifies the stock options granted by Seller to the employees of CDT (the “CDT Optionees”).  From and after the Closing Date, neither CDT nor Buyer will have any financial or other obligation to compensate the CDT Optionees in respect of the loss of any actual or potential value of such stock options based upon the expiration of such stock options as a consequence of the acquisition of CDT by Buyer or otherwise.

 

3.20

 

3.21

(i)  

   all patents, patent applications, and inventions and discoveries that may be patentable (collectively, “Patents”)

(ii)  

   fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, “Marks”);

(iii)  

   all copyrights in both published works and unpublished works (collectively, “Copyrights”);

(iv)  

   all URLs, including without limitation www.cdt-inc.com/engineering.html, www.cdt-inc.com/manufacturing.html, and www.cdt-inc.com.

(v)  

   all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, “Trade Secrets”); owned, used, or licensed by CDT as licensee or licensor.

(b)  

Part 3.21(b) of the Disclosure Schedule contains a complete and accurate list and summary description, including any royalties paid or received by the CDT, of all Contracts relating to the Intellectual Property Assets to which CDT is a party or by which CDT is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs under which CDT is the licensee.  There are no outstanding and, to Seller’s Knowledge, no Threatened disputes or disagreements with respect to any such agreement.

(i)  

   The Intellectual Property Assets are those necessary for the operation of the Business as it is currently conducted.  Except as set forth in Part 3.21(c) of the Disclosure Schedule, CDT is the owner of all right, title, and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use without payment to a third party all of the Intellectual Property Assets.

(ii)  

   Except as set forth in Part 3.21(c) of the Disclosure Schedule, all  employees of CDT have executed written Contracts with CDT that assign to CDT all rights to any inventions, improvements, discoveries, or information relating to the Business.  No employee of CDT has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than the CDT.

(i)  

Part 3.21(f) of the Disclosure Schedule contains a complete and accurate list and summary description of all Copyrights.  CDT is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all liens, security interests, charges, Encumbrances, equities, and other adverse claims.

(ii)  

All the Copyrights have been registered and are currently in compliance with formal legal requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the date of this Agreement.

(iii)  

To Seller’s’ Knowledge, no Copyright is infringed or has been challenged or threatened in any way.  None of the subject matter of any of the Copyrights  infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party.

(iv)  

All works encompassed by the Copyrights have been marked with the proper copyright notice.

(i)  

With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual.

(ii)  

To Seller’s Knowledge, CDT has taken reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets.

(iii)  

CDT has good title and (not necessarily exclusive) right to use the Trade Secrets.  The Trade Secrets are not part of the public knowledge or literature, and, to Seller’s Knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other than  CDT) or to the detriment of CDT.  No Trade Secret is subject to any adverse claim or, to the Knowledge of the Sellers, has been challenged or threatened in any way.

 

(h)

CDT has taken reasonable steps and customary measures and precautions necessary to protect the Intellectual Property Assets.  All current and to the Seller’s and CDT’s Knowledge, former employees and consultants of CDT have executed an agreement regarding confidentiality and proprietary information and copies of such agreements for current employees have been delivered to Buyer.  To the Knowledge of Seller and CDT, no employee or consultant of CDT is in violation thereof, any Intellectual Property Assets of any of the CDT’s employees made prior to their employment by CDT, which are necessary or useful in the Business, have been assigned to CDT.  To the Seller’s and CDT’s Knowledge, CDT is not infringing and has not at any time infringed or received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement of any registered US Patent or Trade Mark.  To the Knowledge of CDT no person is infringing or no proprietary asset owned or used by any other Person infringes or conflicts with, any Intellectual Property Asset owned or used by CDT.

 

(a)

CDT's Liabilities as of the date of this Agreement shall not exceed $450,000. For purposes of this Section 3.25, "Liabilities" means the aggregate of (i) trade accounts payable, (ii) purchases clearing, (iii) all accruals, and (iv) customer deposits.  Notwithstanding the foregoing, Liabilities shall not be deemed to include intercompany obligations of CDT or any other accruals for (i) income, franchise and sales and use taxes, (ii) audit fees and (iii) legal fees (collectively, “Intercompany Obligations”).  Further, the Buyer has no obligation or responsibility for the “Investment in CDT” account balance identified in the stockholder’s equity section of CDT’s balance sheet.  Neither CDT nor Buyer shall have any obligation to pay or reimburse Seller, and Seller shall have no right to collect, any of the Intercompany Obligations or the Investment in CDT, as the same may increase or decrease between December 31, 2007 and the Closing Date and from and after the Closing no such Intercompany Obligations and Investment in CDT shall be deemed liabilities of CDT or Buyer.

 

(b)

Part 3.25 of the Disclosure Schedule sets forth (i) a breakdown and aging of CDT’s existing accounts payable as of February 29, 2008, (ii) a breakdown of all customer deposits and other deposits held by CDT as of the date of this Agreement, and (iii) a breakdown of CDT’s long term indebtedness.

 

3.28

(a)  

No representation or warranty of Seller or CDT in this Agreement and no statement in the Disclosure Schedule omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.

(b)  

No notice given pursuant to Section 5.5 will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading.

 

(c)

There is no fact known to Seller that has specific application to CDT (other than general economic or industry conditions) and that materially adversely affects or, as far as Seller can reasonably foresee, materially threatens, the assets, business, prospects, financial condition, or results of operations of CDT that has not been set forth in this Agreement or the Disclosure Schedule.

4  

REPRESENTATIONS AND WARRANTIES OF BUYER

 

4.1

 

4.2

(a)  

This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.  Upon the execution and delivery by Buyer of this Agreement and the agreements contemplated hereby,  this Agreement (and such other agreements) will constitute the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms.  Buyer has the absolute and unrestricted right, power, and authority to execute and deliver this Agreement and to perform its obligations under this Agreement.

(b)  

Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance by Buyer of any of the transactions contemplated hereby will give any Person the right to prevent, delay, or otherwise interfere with the performance of the transactions contemplated hereby pursuant to:

(i)  

   any provision of Buyer’s Organizational Documents;

(ii)  

   any resolution adopted by the board of directors or the stockholders of Buyer;

(iii)  

   any Legal Requirement or Order to which Buyer may be subject; or

(iv)  

   any Contract to which Buyer is a party or by which Buyer may be bound.

5  

NOT APPLICABLE

6  

COVENANTS OF BUYER

 

6.1

 

(a)

As promptly as practicable after the date of this Agreement, Buyer will, and will cause each of its Affiliates to, make all filings required by Legal Requirements to be made by them to consummate this Agreement and the transactions contemplated hereby.  Between the date of this Agreement and the Closing Date, Buyer will, and will cause each Affiliate to, cooperate with Seller and CDT with respect to all filings that Seller or CDT is required by Legal Requirements to make in connection with the execution, delivery and performance of this Agreement, and (ii) cooperate with Seller in obtaining all consents identified in Part 3.2 of the Disclosure Schedule; provided that this Agreement will not require Buyer to dispose of or make any change in any portion of its business or to incur any other burden to obtain a Governmental Authorization.

 

(b)

Except as set forth in the proviso to Section 6.1(a), between the date of this Agreement and the Closing Date, Buyer will use its Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.

7  

CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

(a)  

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

(b)  

Each document required to be delivered pursuant to Section 2.5 must have been delivered, and each of the other covenants and obligations in Section 5 must have been performed and complied with in all material respects.

 

7.3

 

7.4

(a)  

an opinion of counsel to the Seller, dated the Closing Date, as to such matters as customarily are the subjects of opinions of Seller’s counsel in  transactions of the type contemplated by this Agreement, such opinion to be subject to the reasonable expectations of Buyer and its counsel; and

(b)  

such other documents as Buyer may reasonably request for the purpose of (i)  evidencing the accuracy of any of Sellers’ representations and warranties, (ii) evidencing the performance by Seller or CDT of, or the compliance by Seller or CDT with, any covenant or obligation required to be performed or complied with by Seller or CDT, (iii) evidencing the satisfaction of any condition referred to in this Section 7, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

8  

CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

 

8.2

(a)  

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

(b)  

Buyer must have delivered each of the documents required to be delivered by Buyer pursuant to Section 2.5 and must have made the cash payments  required to be made pursuant to Section 2.5(b).

9  

TERMINATION

 

9.1

(a)  

by either Buyer or Seller if a material Breach of any provision of this Agreement has been committed by the other party and such Breach has not been waived;

(b)  

(i) by Buyer if any of the conditions in Section 7 has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not waived such condition on or before the Closing Date; or (ii) by Seller, if any of the conditions in Section 8 has not been satisfied of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Seller or CDT to comply with their respective  obligations under this Agreement) and Seller has not waived such condition on or before the Closing Date;

(d)  

by either Buyer or Seller if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before March 31, 2008, or such later date as the parties may agree upon.

10  

INDEMNIFICATION; REMEDIES

 

10.1

 

10.2

(a)  

any Breach of any representation or warranty made by Seller or CDT in this Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule, or any other certificate or document delivered by Seller or CDT pursuant to this Agreement;

(b)  

any Breach of any representation or warranty made by Seller or CDT in this Agreement as if such representation or warranty were made on and as of the Closing Date without giving effect to any supplement to the Disclosure Schedule, other than any such Breach that is disclosed in a supplement to the Disclosure Schedule and is expressly identified in the certificate delivered pursuant to Section 2.5(a)(ii) as having caused the condition specified in Section 7.1 not to be satisfied;

(c)  

any Breach by Seller of any of its covenants or obligations in this Agreement;

(d)  

any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with Seller (or any Person acting on its behalf) in connection with this Agreement or the transactions contemplated hereby.

 

10.4

 

10.5

 

10.6

 

10.7

(a)  

Promptly after receipt by an indemnified party under Section 10.2 or 10.3 of notice of the commencement of any Proceeding against it, such indemnified party will, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnifying party’s failure to give such notice.

(b)  

If any Proceeding referred to in Section 10.7(a) is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party will, unless the claim involves Taxes, be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this Section 10 for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation.  If the indemnifying party assumes the defense of a Proceeding, (i) it will be conclusively established for purposes of this Agreement that the claims made in that Proceeding are within the scope of and subject to indemnification; (ii) no compromise or settlement of such claims  may be effected by the indemnifying party without the indemnified party’s consent unless (A) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (iii) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent.  If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within ten (10) days after the indemnified party’s notice is received by the indemnifying party, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will be bound by any determination made in such Proceeding or any compromise or settlement effected by the indemnified party.

(c)  

Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise, or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld).

11  

GENERAL PROVISIONS

 

11.1

 

11.2

 

11.3

 

11.4

By:  /s/ Nitin P. Matani                                                    

      Name: Nitin P. Matani

      Title: President/CEO

By: /s/ Eric G. Walters

       Name: Eric G. Walters

       Title: VP & CFO

By:  /s/ Michael F. Adams                                                    

       Name: Michael F. Adams

       Title: President & Treasurer

 

 

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