Asset Purchase Agreement between Lynch Systems, Inc. and Olivotto Glass Technologies S.p.A. dated May 17, 2007

 Exhibit 10.1 - -------------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT - -------------------------------------------------------------------------------- BY AND BETWEEN LYNCH SYSTEMS, INC. (AS THE "SELLER) AND OLIVOTTO GLASS TECHNOLOGIES S.P.A. (AS THE "BUYER") MAY 17, 2007  ARTICLE I. ASSETS TO BE PURCHASED.........................................................1 Section 1.1. Description of Assets.......................................................1 Section 1.2. Non-Assignment of Certain Property..........................................2 ARTICLE II. ASSUMPTION OF LIABILITIES AND OBLIGATIONS......................................3 ARTICLE III. PURCHASE PRICE.................................................................3 Section 3.1. Purchase Price..............................................................3 Section 3.2. Deposit.....................................................................4 Section 3.3. Closing Payment.............................................................4 Section 3.4. Calculation of Estimated Closing Date Net Asset Value.......................4 Section 3.5. Allocation of Purchase Price................................................6 Section 3.6. Consignment of Certain Items................................................6 ARTICLE IV. CLOSING........................................................................6 ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................................6 Section 5.1. Representations and Warranties of Buyer.....................................6 Section 5.2. Representations and Warranties of Seller....................................8 Section 5.3. Effect of Disclosures on Schedules.........................................17 Section 5.4. Disclaimer of Other Warranties.............................................17 Section 5.5. Closing Date Effect........................................................17 ARTICLE VI. COVENANTS.....................................................................17 Section 6.1. Covenant Against Disclosure................................................17 Section 6.2. Covenant Against Competition...............................................17 Section 6.3. Injunctive Relief..........................................................17 Section 6.4. Access to Records..........................................................17 Section 6.5. Transition of Customers....................................................18 Section 6.6. Operate Business in the Ordinary Course....................................18 Section 6.7. Certain Negative Covenants.................................................18 Section 6.8. Update Disclosure..........................................................18 Section 6.9. Severability...............................................................18 Section 6.10. Further Assurances........................................................19 Section 6.11. Announcements.............................................................19 Section 6.12. Employees of Seller.......................................................19 ARTICLE VII. CLOSING DELIVERIES............................................................19 Section 7.1. Deliveries by Seller.......................................................19 Section 7.2. Deliveries by Buyer........................................................20 ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING...............................................21 Section 8.1. Conditions to Obligation of Each Party to Effect the Transaction...........21 Section 8.2. Additional Conditions to Obligations of Buyer..............................21 Section 8.3. Additional Conditions to Obligations of Seller.............................22 ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER..............................................22 Section 9.1. Termination................................................................22 Section 9.2. Effect of Termination......................................................23 Section 9.3. Waiver.....................................................................23 ARTICLE X. INDEMNIFICATION...............................................................23 Section 10.1. Survival of Representations, Warranties and Agreements....................23 Section 10.2. Indemnification...........................................................24 Section 10.3. Limitations on Indemnification............................................25 i  Section 10.4. Procedure for Indemnification with Respect to Third-Party Claims..........26 Section 10.5. Procedure for Indemnification with Respect to Non-Third-Party Claims......27 Section 10.6. Cooperation in the Defense of Claims......................................27 ARTICLE XI. MISCELLANEOUS PROVISIONS......................................................27 Section 11.1. Notices...................................................................27 Section 11.2. Entire Agreement..........................................................28 Section 11.3. Binding Effect; Assignment................................................28 Section 11.4. Captions..................................................................28 Section 11.5. Expenses of Transaction...................................................28 Section 11.6. Waiver; Consent...........................................................28 Section 11.7. No Third Party Beneficiaries..............................................29 Section 11.8. Counterparts..............................................................29 Section 11.9. Remedies of Buyer.........................................................29 Section 11.10. Bulk Sales Laws..........................................................29 Section 11.11. Governing Law; Consent to Jurisdiction...................................29 Section 11.12. Exhibits and Schedules...................................................30 Section 11.13. Knowledge................................................................30 TABLE OF DEFINED TERMS Term Section - ---- ------- Accounts Payable........................................................................2.1(a) Accrued Liabilities.....................................................................2.1(b) Actual Closing Date Net Asset Value.....................................................3.4(b) Adjusted Carrying Value.................................................................3.4(a) Adjustment Report.......................................................................3.4(b) Allocation Certificate.....................................................................3.5 Arbiter.................................................................................3.4(d) Assignments and Assumptions.............................................................7.1(b) Assumed Liabilities..........................................................................2 Business...............................................................Introductory Paragraphs Business Day............................................................................3.4(a) Buyer..................................................................Introductory Paragraphs Certificate of Assumed Liabilities......................................................7.1(f) Closing......................................................................................4 Closing Date.................................................................................4 Closing Payment............................................................................3.3 Code...............................................................................5.2(n)(iii) Consigned Items............................................................................3.6 Contest Notice............................................................................10.5 Contracts...............................................................................1.1(f) Contracts Liabilities...................................................................2.1(c) Damages................................................................................10.2(a) Deposit....................................................................................3.2 Employee Benefit Plans...............................................................5.2(n)(i) ii  Employee Severance Payments.............................................................5.2(t) Encumbrances...............................................................................1.1 Environmental Laws..................................................................5.2(l)(ii) Environmental Permits..............................................................5.2(l)(iii) ERISA................................................................................5.2(n)(i) Escrow Agent...............................................................................3.2 Escrow Agreement...........................................................................3.2 Estimated Closing Date Net Asset Value..................................................3.4(a) Excluded Liabilities.........................................................................2 Execution Date.........................................................Introductory Paragraphs Financial Statements....................................................................5.2(e) GAAP....................................................................................3.4(a) Governmental Authority..................................................................5.1(c) Hazardous Material..................................................................5.2(l)(ii) Indemnifiable Claim....................................................................10.2(a) Indemnification Notice....................................................................10.4 Indemnified Party......................................................................10.3(d) Indemnifying Party.....................................................................10.3(d) Inventory...............................................................................1.1(g) Knowledge................................................................................11.13 Lease...................................................................................7.1(i) Losing Party............................................................................3.4(e) Material Adverse Effect.................................................................5.2(a) Miscellaneous Assets....................................................................1.1(i) Non-Third Party Claim Indemnification Notice..............................................10.5 Objection Notice........................................................................3.4(c) Permits.................................................................................1.1(c) Personal Property.......................................................................1.1(a) Preliminary Statement...................................................................3.4(a) Prevailing Party........................................................................3.4(e) Property...................................................................................1.1 Personal Property.......................................................................1.1(b) Personal Property Leases................................................................1.1(e) Premises................................................................................7.1(h) Proprietary Rights......................................................................1.1(d) Purchase Price.............................................................................3.1 Real Property..............................................................................1.1 Receivables.............................................................................1.1(b) Seller.................................................................Introductory Paragraphs Severance Contribution.....................................................................3.1 Warranty Liabilities....................................................................2.1(d) SCHEDULES Schedule 1.1(a) - Personal Property Schedule 1.1(b) - Receivables iii  Schedule 1.1(c) - Permits Schedule 1.1(d) - Proprietary Rights Schedule 1.1(e) - Personal Property Leases Schedule 1.1(f) - Contracts Schedule 1.1(g) - Inventory Schedule 1.1(h) - Miscellaneous Assets Schedule 1.1(l) - Excluded Assets Schedule 1.1(m) - Real Property Schedule 2.1(a) - Accounts Payable Schedule 2.1(b) - Accrued Liabilities Schedule 3.4(a) - Adjusted Carrying Value Schedule 5.2(b) - Authorization Schedule 5.2(c) - Conflicts Schedule 5.2(f) - Changes Schedule 5.2(g) - Liabilities Schedule 5.2(h) - Taxes Schedule 5.2(i) - Liens Schedule 5.2(j) - Insurance Schedule 5.2(k) - Litigation Schedule 5.2(l) - Compliance with Laws Schedule 5.2(n) - Employee Benefit Plans Schedule 5.2(o) - Labor Matters Schedule 5.2(p) - Encumbrances Schedule 5.2(q) - Contracts and Commitments Schedule 5.2(r) - Receivables Schedule 5.2(s) - Non-GAAP Inventory Schedule 5.2(t) - Employees EXHIBITS Exhibit A...Escrow Agreement Exhibit B...Bill of Sale Exhibit C...Assignments and Assumptions Exhibit D...Assignment of Proprietary Rights Exhibit E...Certificate of Assumed Liabilities Exhibit F...Lease iv  ASSET PURCHASE AGREEMENT THIS AGREEMENT dated May 17, 2007 (the "Execution Date"), is by and between OLIVOTTO GLASS TECHNOLOGIES S.P.A., an Italian corporation ("Buyer"), and LYNCH SYSTEMS, INC., a South Dakota corporation ("Seller"). W I T N E S S E T H: WHEREAS, Seller, INTER ALIA, designs, develops, manufactures and markets a broad range of manufacturing equipment for the electronic display and consumer glass industries (the "Business"); and WHEREAS, Buyer desires to purchase, and Seller desires to sell, certain of Seller's operating assets relating to the Business, upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, Buyer and Seller hereby agree as follows: ARTICLE I. ASSETS TO BE PURCHASED SECTION 1.1. DESCRIPTION OF ASSETS. Upon the terms and subject to the conditions set forth in this Agreement, Seller hereby agrees to convey, sell, transfer, assign and deliver to Buyer, and Buyer hereby agrees to purchase from Seller, on the Closing Date (as defined below), free and clear of all liens, security interests, claims, pledges, charges, encumbrances, equities, rights of use, levies, taxes, imposts and restrictions (the "Encumbrances"), all right, title and interest of Seller in and to the assets, properties and rights (contractual or otherwise) of Seller that are used in connection with the Business set forth below: (a) All machinery, equipment, tooling, parts, furniture, supplies, and other tangible personal property used in conducting the Business listed on Schedule 1.1(a) (the "Personal Property"); (b) All accounts receivable relating to or arising out of the operation of the Business listed on Schedule 1.1(b) (the "Receivables"); (c) All franchises, licenses, permits, consents, authorizations, approvals and certificates of any Governmental Authority (as hereinafter defined) used in conducting the Business listed on Schedule l.l(c) (the "Permits"); (d) Subject to clause (xi) of the final paragraph of this Section 1.1, all patents, inventions, trade secrets, processes, proprietary rights, proprietary knowledge, know-how, design archives, computer software, URLs, web sites including content and coding, trademarks, names, service marks, trade names, copyrights, symbols, logos, franchises and permits owned by Seller and used in conducting the Business and all applications therefor, registrations thereof and licenses, sublicenses or agreements in respect thereof, that Seller owns or has the right to use or to which Seller is a party and all filings, registrations or issuances of 1  any of the foregoing with or by any federal, state, local or foreign Governmental Authority and all related goodwill as set forth on Schedule 1.1(d) (collectively, the "Proprietary Rights"); (e) All leases of equipment or other tangible personal property used in conducting the Business listed on Schedule 1.1(e) (the "Personal Property Leases"); (f) All contracts, agreements, contract rights, license agreements, third party guaranties, indemnifications, arrangements, and understandings, whether oral or written, to which Seller is a party which relate to the License Agreements listed on Schedule 1.1(f) (the "Contracts"); (g) All inventories of materials, work-in-process, finished goods and supplies listed on Schedule 1.1(g) (the "Inventory"); (h) All security deposits, prepaid expenses and other miscellaneous assets of the Business listed on Schedule 1.1(h) (the "Miscellaneous Assets"); (i) All books of account, customer lists, client lists, files, papers, records and telephone numbers used in conducting the Business; (j) All rights of Seller in, to and under express or implied warranties from suppliers of the Business with respect to the Property (as hereinafter defined); and (k) All goodwill relating to the Business. All of the assets, properties and rights (contractual and otherwise) being conveyed, sold, transferred, assigned and delivered to Buyer pursuant to subsections (a) through (k) of this Section 1.1 are hereinafter collectively referred to as the "Property." Notwithstanding the foregoing, there shall be excluded from the Property the following assets and properties of Seller related to or used in connection with the Business: (i) all cash and cash equivalents; (ii) all tax refunds of any kind paid or payable to Seller; (iii) all assets listed on Schedule 1.1(l), (iv) the PT Kedaung accounts receivable, the gearless tablewear shear and the show machine; (v) the real property of Seller identified on Schedule 1.1(m) (the "Real Property"); (vi) all corporate minute books, stock records, tax returns, checkbooks, books of original entry and bank statements and supporting materials of Seller for all periods, all of which shall be subject to Buyer's right to inspect and copy; (vii) all insurance policies; (viii) all claims, causes of and choses in action of any sort that Seller may have, including, without limitation, under any of Seller's insurance policies, against any of the officers, directors and/or shareholders of Seller and/or the parents, spouses and lineal descendants of any such persons; (ix) rights of set-off, counterclaim and/or recoupment respecting any liabilities or obligations of Seller not included within the Assumed Liabilities (as hereinafter defined); and (x) the Closing Payment (as hereinafter defined); and (xi) all rights in and to the name "Lynch" for all uses other than in connection with the products manufactured in the Business on the Closing Date. SECTION 1.2. NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that the assignment hereunder of any of the Permits, Personal Property Leases or Contracts would require the consent of any other party (or in the event that any 2  of the same shall be nonassignable), neither this Agreement nor any action taken pursuant to its provisions shall constitute an assignment or an agreement to assign if such assignment or attempted assignment would constitute a breach thereof or result in the loss or diminution thereof; provided, however, that in each such case, Seller shall use its best efforts to obtain the consents of any such other party to an assignment to Buyer. If such consent is not obtained, subject to the provisions of Section 7.1(b), Seller shall cooperate with Buyer in any reasonable arrangement designed to provide for Buyer the full benefits of any such Permit, Personal Property Lease or Contract including, without limitation, enforcement, for the account and benefit of Buyer, of any and all rights of Seller against any other person with respect to any such Permit, Personal Property Lease or Contract. ARTICLE II. ASSUMPTION OF LIABILITIES AND OBLIGATIONS Buyer hereby agrees, on the terms and conditions contained herein to assume the following liabilities and obligations of Seller: (a) All liabilities with respect to the accounts payable of the Business listed on Schedule 2.1(a) (the "Accounts Payable"); (b) All liabilities with respect to the accrued liabilities of the Business listed on Schedule 2.1(b) (the "Accrued Liabilities"); (c) All liabilities with respect to post-Closing obligations arising under the Contracts (the "Contracts Liabilities"); (d) All liabilities with respect to post-Closing obligations arising under the Seller's warranty policies with respect to items sold by Seller prior to the Closing Date to customers other than PT Kedaung and Owens-Illinois do Brasil (Cisper); and (e) All liabilities with respect to post-Closing obligations arising under the Personal Property Leases. All of the liabilities being assumed by Buyer pursuant to subsections (a) through (e) of this Section 2.1 are hereinafter referred to as the "Assumed Liabilities." Notwithstanding the foregoing, Buyer is not assuming any liability for any Excluded Liability (as hereinafter defined) and it is understood and agreed that, as between Seller and Buyer, Seller shall remain solely responsible for the payment, discharge and satisfaction of all Excluded Liabilities. As used herein, "Excluded Liabilities" means all liabilities of Seller and the Business of any kind, liquidated or contingent, asserted or unasserted, known or unknown, other than the Assumed Liabilities, including but not limited to, all liabilities to PT Kedaung or Owens-Illinois do Brasil (Cisper) arising out of transactions between Seller and such party which occurred prior to the Closing Date. ARTICLE III. PURCHASE PRICE SECTION 3.1. PURCHASE PRICE. Upon the terms and subject to the conditions set forth in this Agreement, in consideration for the Property and in full payment therefor (the "Purchase Price"): 3  (i) Buyer is assuming the Assumed Liabilities; (ii) Buyer is making the Closing Payment reflected in the Preliminary Statement (as hereinafter defined), which is subject to adjustment as provided in Sections 3.4 and 3.5; and (iii) Buyer is making a payment to Seller with respect to a portion of the Employee Severance Payment (as hereinafter defined) in the amount of $117,637.15 (the "Severance Contribution"). Buyer is paying the cash portion of the Purchase Price as provided below. SECTION 3.2. DEPOSIT. Concurrently herewith Buyer is delivering by wire transfer of immediately available funds the sum of $500,000 (the "Deposit") to Olshan Grundman Frome Rosenzweig & Wolosky LLP (the "Escrow Agent") to be held in escrow and disbursed in accordance with the provisions of the escrow agreement in the form of Exhibit A hereto (the "Escrow Agreement") executed and delivered by Buyer, Seller and the Escrow Agent concurrently herewith. SECTION 3.3. CLOSING PAYMENT. On the Closing Date, Buyer shall pay the Closing Payment to Seller by wire transfer of immediately available funds to an account designated by Seller not later than two (2) Business Days prior to the Closing Date. As used herein, the "Closing Payment" means the difference between (a) the Estimated Closing Date Net Asset Value (as hereinafter defined) and (b) the Deposit. SECTION 3.4. CALCULATION OF ESTIMATED CLOSING DATE NET ASSET VALUE. (a) Not later than three (3) Business Days prior to the Closing Date, Seller and Buyer shall execute a certificate (the "Preliminary Statement") setting forth the Estimated Closing Date Net Asset Value. As used herein, the "Estimated Closing Date Net Asset Value" means the good faith estimate of the positive difference as of the Closing Date between (i) the aggregate carrying value of the Property as reflected on the books and records of Seller determined in accordance with United States generally accepted accounting principles consistently applied ("GAAP"), adjusted consistent with the methodology set forth on Schedule 3.4(a) hereto (the "Adjusted Carrying Value") and (ii) the aggregate amount of the Assumed Liabilities as reflected on the books and records of Seller determined in accordance with GAAP. As used herein, "Business Day" means any day that is not a Saturday, Sunday or legal holiday on which federally-chartered banks are required or authorized to be closed. (b) As soon as reasonably practical after the Closing, but in no event more than forty five (45) calendar days thereafter, Seller shall prepare and deliver to Buyer a schedule (the "Adjustment Report") showing the computation of the Actual Closing Date Net Asset Value (as hereinafter defined). As used herein, "Actual Closing Date Net Asset Value" means the positive difference as of the Closing Date between (i) the Adjusted Carrying Value of the Property and (ii) the aggregate amount of the Assumed Liabilities as reflected on the books and records of Seller determined in accordance with GAAP. 4  (c) Within thirty (30) calendar days after receipt of the Adjustment Report, Buyer may, by written notice to Seller, object thereto. If Buyer shall not object thereto in writing within such thirty (30) calendar day period, the calculations on the Adjustment Report shall become final and shall not be subject to further review, challenge or adjustment absent fraud or manifest error. Buyer may in good faith object to the Adjustment Report within such thirty (30) calendar day period by delivering a written notice of its objection (the "Objection Notice") to Seller: (i) setting forth the items being disputed and the reasons therefor, and (ii) specifying Buyer's calculation of the figures on the Adjustment Report. In connection with the preparation of the Objection Notice (and any subsequent submissions to the Arbiter (as defined below)), each party shall grant the other party and its accountants and other representatives' reasonable access to all of the books and records of such party. Any delay in granting access to all such books and records shall correspondingly extend such thirty (30) calendar day period for delivery of the Objection Notice. (d) For thirty (30) calendar days after delivery of the Objection Notice, Buyer and Seller shall attempt to resolve all disputes between them regarding the Adjustment Report. If Buyer and Seller cannot resolve all such disputes within such thirty (30) day period, the matters in dispute shall be determined by an accounting firm selected by them to resolve the remaining objections (the "Arbiter"). If Buyer and Seller are unable to jointly select an accounting firm, they will select a nationally-recognized accounting firm by lot after excluding their respective regular outside accounting firms. Any advance retainer and any periodic payments to the Arbiter shall be advanced equally by Buyer and Seller. Promptly, but not later than forty-five (45) days after the acceptance of its appointment, the Arbiter shall determine (based solely on presentations by Buyer and Seller to the Arbiter and not by independent review) only those items in dispute and shall render a report as to its resolution of such items and the resulting calculation of the Adjustment Report. For purposes of the Arbiter's determination, the amounts to be included shall be the amounts from the Adjustment Report as to items that are not in dispute, and the amounts determined by the Arbiter, as to items that are submitted for resolution by the Arbiter. In resolving any disputed item, the Arbiter must select the amount of the disputed item proffered by Buyer or the amount of the disputed item proffered by Seller (and cannot substitute the Arbiter's own judgment) based upon the position the Arbiter determines to be closest to the correct amount. Buyer and Seller shall cooperate with the Arbiter in making its determination and such determination shall be conclusive and binding upon Buyer and Seller. (e) The fees and expenses of the Arbiter shall be paid by the party (the "Losing Party") whose calculation of Actual Closing Date Net Asset Value is further from the Actual Closing Date Net Asset Value as determined by the Arbiter. If the other party (the "Prevailing Party") has advanced or provided a portion of the Arbiter's fees and costs as provided above in Section 3.2(d), the Losing Party shall reimburse the Prevailing Party for such fees and costs within ten (10) Business Days after the Arbiter's final decision. (f) Within five (5) Business Days after the determination of the Actual Closing Date Net Asset Value: 5  (i) If the Actual Closing Date Net Asset Value is greater than the Estimated Closing Date Net Asset Value, then Buyer shall pay to Seller the amount by which the Actual Closing Date Net Asset Value exceeds the Estimated Closing Date Net Asset Value. (ii) If the Estimated Closing Date Net Asset Value is greater than the Actual Closing Date Net Asset Value, then Seller shall pay to Buyer the amount by which the Estimated Closing Date Net Asset Value exceeds the Actual Closing Date Net Asset Value. SECTION 3.5. ALLOCATION OF PURCHASE PRICE. The aggregate purchase price of the Property shall be allocated for purposes of this Agreement and for federal, state and local tax purposes as set forth on an allocation certificate ("Allocation Certificate") to be agreed upon by Seller and Buyer at such time as they execute the Preliminary Statement. The allocation shall reflect the respective book value of the assets sold to liabilities assumed by the Buyer, and shall be adjusted if necessary, in accordance with Section 3.2 hereof. Buyer and Seller shall file all federal, state, local and foreign tax returns, including Internal Revenue Form 8594, in accordance with the allocation set forth in such Allocation Certificate. SECTION 3.6. CONSIGNMENT OF CERTAIN ITEMS. For a period of eighteen (18) months following the Closing Date the gearless tablewear shear and the show machine (the "Consigned Items") shall be held on consignment by Buyer. If Buyer receives any offers to purchase any of the Consigned Items from a third party during such eighteen-month period Buyer shall promptly notify Seller and if Seller accepts such offered terms the proceeds of such sale shall be shared equally between Seller and Buyer. If the Consigned Items have not been so sold by the end of such eighteen-month period Buyer shall deliver possession of the Consigned Items to Seller. ARTICLE IV. CLOSING The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New York, on the later of: (i) the day on which all of the conditions precedent set forth in Article VIII have been satisfied or waived, or (ii) June 1, 2007. Such time and date are herein referred to as the "Closing Date." Subject to the provisions of Article IX hereof, failure to consummate such transactions on the date and the time determined pursuant to this Article IV shall not result in the termination of this Agreement and shall not relieve any party of any obligation under this Agreement. ARTICLE V. REPRESENTATIONS AND WARRANTIES SECTION 5.1. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller that: (a) CORPORATE EXISTENCE. Buyer is a corporation duly organized, validly existing and in good standing under the laws of Italy. 6  (b) AUTHORIZATION; VALIDITY. Buyer has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. All necessary action has been taken by Buyer with respect to the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby. Assuming the due execution and delivery of this Agreement by Seller, this Agreement is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors' rights generally, and the fact that equitable remedies or relief (including, but not limited to, the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought. (c) LITIGATION. There is no claim, litigation, action, suit, proceeding, investigation or inquiry, administrative or judicial, pending or, to the knowledge of Buyer, threatened against Buyer, at law or in equity, before any foreign, federal, state or local agency, authority, board, bureau, court, instrumentality or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers (each, a "Governmental Authority"), that might have an adverse effect on Buyer's ability to perform any of its obligations under this Agreement or to consummate the transactions contemplated hereby. (d) NO BREACH OF STATUTE OR CONTRACT. Neither the execution and delivery of this Agreement by Buyer, nor the consummation by Buyer of the transactions contemplated hereby, nor compliance by Buyer with any of the provisions hereof, will violate or cause a default under any statute (domestic or foreign), judgment, order, writ, decree, rule or regulation of any Governmental Authority applicable to Buyer or any of its material properties; breach or conflict with any of the terms, provisions or conditions of the organization documents of Buyer; or violate, conflict with or breach any agreement, contract, mortgage, instrument, indenture or license to which Buyer is party or by which Buyer is or may be bound, or constitute a default (in and of itself or with the giving of notice, passage of time or both) thereunder, or result in the creation or imposition of any Encumbrance upon, or give to any other party or parties, any claim, interest or right, including rights of termination or cancellation in, or with respect to any of Buyer's properties. (e) BROKERS. Buyer has not entered into any agreement, arrangement or understanding with any party as to which Seller may have any liability for a finder's fee, brokerage commission, advisory fee or other similar payment. (f) SUFFICIENT FUNDS. Buyer has sufficient funds available to it, without requiring the prior consent, approval or other discretionary action of any third party, to make the payments required under Article III, to pay all fees and expenses to be paid by Buyer in connection with the transactions contemplated by this Agreement and to satisfy any other payment obligations that may arise in connection with the transactions contemplated by this Agreement. 7  (g) CLOSING DATE EFFECT. All of the representations and warranties of Buyer are true and correct as of the Execution Date and shall be true and correct on and as of the Closing Date with the same force and effect as if such representations and warranties were made by Buyer on the Closing Date. SECTION 5.2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Buyer that: (a) CORPORATE EXISTENCE. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of South Dakota and has the corporate power to own, operate or lease the Property and to carry on the Business as now being conducted. Complete and correct copies of the Articles of Incorporation of Seller and all amendments thereto, certified by the Secretary of State of the State of South Dakota, and of the By-Laws of Seller, and all amendments thereto, previously have been delivered to Buyer. Seller is duly qualified to do business as a foreign corporation, and is in good standing in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification necessary, except where the failure to be so duly qualified and in good standing would not reasonably be expected to have a Material Adverse Effect. For the purposes of this Agreement, "Material Adverse Effect" means any effect or change that would be materially adverse to the Business or Property of Seller on one hand or Buyer on the other hand, or on the ability of either party to consummate timely the transactions contemplated hereby. (b) AUTHORIZATION; VALIDITY. Seller has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby without the approval of any third party, except as listed on Schedule 5.2(b). All necessary corporate action has been taken by Seller with respect to the execution, delivery and performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby. Assuming the due execution and delivery of this Agreement by Buyer, this Agreement is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors' rights generally, and the fact that equitable remedies or relief (including, but not limited to, the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought. (c) NO BREACH OF STATUTE OR CONTRACT. Except as set forth on Schedule 5.2(c), neither the execution and delivery of this Agreement nor the consummation by Seller of the transactions contemplated hereby, nor compliance by Seller with any of the provisions hereof will violate or cause a default under any statute (domestic or foreign), judgment, order, writ, decree, rule or regulation of any Governmental Authority applicable to Seller or any of its properties; breach or conflict with any of the terms, provisions or conditions of the Articles of Incorporation or By-Laws of Seller; or violate, conflict with or breach any agreement, contract, mortgage, instrument, indenture or license to which Seller is a party or by which Seller is or may be bound with respect to the Property 8  or the Business, or constitute a default (in and of itself or with the giving of notice, passage of time or both) thereunder, or result in the creation or imposition of any Encumbrance upon, or give to any other party or parties any claim, interest or right, including rights of termination or cancellation in, or with respect to, the Property. (d) SUBSIDIARIES. Seller has no subsidiaries or equity investments in any other corporation, association, partnership, joint venture or other entity that carries on the Business. (e) FINANCIAL STATEMENTS. The following financial statements of Seller (collectively, the "Financial Statements"), which have been furnished previously to Buyer by Seller, have been prepared from and are in accordance with the books and records of Seller in conformity with GAAP applied on a consistent basis throughout the periods involved, and fairly present the financial condition of Seller as at the dates stated and the results of operations of Seller for the periods then ended: balance sheet of Seller at December 31, 2005 and the income statement for the year then ended, including footnotes (audited); balance sheet of Seller at December 31, 2006 and income statement for the period then ended, including footnotes (audited); balance sheet of Seller at March 31, 2007 and income statement for the period then ended (unaudited). (f) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on Schedule 5.2(f), since December 31, 2006 there has not been with respect to the Business: (i) Any material adverse change in its operations (as now conducted or as presently proposed to be conducted), assets, properties or rights, prospects or condition (financial or otherwise); (ii) Other than in the ordinary and usual course of business, any material increase in amounts payable by Seller to or for the benefit of or committed to be paid by Seller to or for the benefit of any officer, consultant, agent or employee of Seller engaged in the Business, in any capacity, or in any benefits granted under any bonus, stock option, profit sharing, pension, retirement, deferred compensation, insurance, or other direct or indirect benefit plan with respect to any such person; (iii) Any material transaction entered into or carried out other than in the ordinary and usual course of its business including, without limitation, any transaction resulting in the incurrence of liabilities or obligations; (iv) Any material change made in the methods of doing business or in the accounting principles or practices or the method of application of such principles or practices; (v) Any Encumbrance imposed or agreed to be imposed on or with respect to the Property that will not be discharged prior to the Closing; (vi) Any modification, waiver, change, amendment, release, rescission or termination of, or accord and satisfaction with respect to any term, condition or provision of any Contract, other 9  than any satisfaction by performance in accordance with the terms thereof in the ordinary and usual course of its business; or (vii) Any damage, destruction or similar loss, whether or not covered by insurance, adversely affecting the Business. (g) LIABILITIES. Except as set forth on Schedule 5.2(g), Seller has no liability or obligation of any nature (whether liquidated, unliquidated, accrued, absolute, contingent or otherwise and whether due or to become due) in respect of the Business except: (i) those set forth or reflected in the Financial Statements that have not been paid or discharged since the date thereof; (ii) those arising under agreements or other commitments listed on any Schedule hereto including, but not limited to, the Permits, Personal Property Leases and Contracts; (iii) current liabilities arising in the ordinary and usual course of the Business subsequent to December 31, 2006 that are accurately reflected on its books and records in a manner consistent with past practice; and (iv) ordinary course warranty and product liability obligations and liabilities for product returns and allowances. (h) TAXES. Except as set forth on Schedule 5.2(h): (i) Seller has duly filed all federal, state, local and foreign tax returns and tax reports required to be filed by it. All such returns and reports are true, correct and complete in all material respects, none of such returns and reports has been amended, and all taxes, assessments, fees and other governmental charges due with respect to the periods covered by such returns and reports have been fully paid; (ii) Schedule 5.2(h) sets forth the dates and results of any and all audits of federal, state, local and foreign tax returns of Seller performed by federal, state, local or foreign taxing authorities. No waivers of any applicable statutes of limitations are outstanding. All deficiencies proposed as a result of any audits have been paid or settled. There is no pending or to Seller's Knowledge threatened federal, state, local or foreign tax audit of Seller and no agreement with any federal, state, local or foreign tax authority that may affect the subsequent tax liabilities of Seller; (iii) Seller has no liabilities for taxes other than those that are not yet due and payable, and no federal, state, local or foreign tax authority is now asserting or threatening to assert any deficiency or assessment for additional taxes with respect to Seller. 10  (i) REGISTERED PROPRIETARY RIGHTS. Schedule 1.1(d) sets forth all issued patents; registered URLs; registrations and applications for trademarks, service marks, and trade names; registrations and applications for copyrights; and all licenses, sublicenses or agreements in respect thereof that Seller owns or has the right to use or to which Seller is a party except for the off the shelf software licenses. Except as set forth on Schedule 5.2(i), Seller is the owner of all right, title and interest or otherwise has valid license rights in and to all Proprietary Rights free and clear of all Encumbrances whatsoever. To the Knowledge of Seller, the Business as conducted immediately prior to the Closing, and the sale by Seller and ownership by Buyer of any of the Property is not and will not be in contravention of any patent, trademark, copyright or other proprietary right of any third party. Except as listed on Schedule 5.2(i), none of the Proprietary Rights has been hypothecated, sold, assigned or licensed by Seller to any other person, corporation, firm or other legal entity; or to the Knowledge of Seller, infringes upon or violates the rights of any person, firm, corporation, or other legal entity. Except as listed on Schedule 5.2(i), and except in the ordinary course pursuant to Article 2 of the Uniform Commercial Code, to the Knowledge of Seller, Seller has not given any indemnification against patent, trademark or copyright infringement as to any equipment, materials, products, services or supplies that Seller uses, license or sells; there is not pending or to the Knowledge of Seller, threatened any claim to sell, engage in or employ any such product, process, method or operation. (j) INSURANCE. Schedule 5.2(j) lists all policies of property, casualty, liability and other forms of insurance currently owned or held by Seller relating to the Business and all such policies are currently in full force and effect. Since January 1, 2005, Seller has not received any notice from any insurer thereunder with respect to the cancellation of any such insurance, other than notice of cancellation for non-payment, which non-payment has been cured. All premiums due and payable on such policies have been paid or are being financed by the applicable insurer. (k) LITIGATION. Except as set forth on Schedule 5.2(k), there are no claims, actions, suits or proceedings pending or, to the Knowledge of Seller, threatened against or affecting Seller or any officer or director of Seller in connection with the Business or the Property, before any federal, state, local or foreign court or Governmental Authority. Seller is not subject to or in default with respect to any judgment, order, writ, injunction or decree that is binding upon Seller with respect to the Business. (l) COMPLIANCE WITH LAWS. Except as listed on Schedule 5.2(l), (i) Seller is in compliance in all material respects with all laws, ordinances, regulations and orders applicable to the Business and the Property and has no notice or knowledge of any violations, whether actual, claimed or alleged, thereof. The foregoing representation shall not apply to Environmental Laws (as hereinafter defined). 11  (ii) Seller has complied and is compliance in all material respects with all federal, state and local laws, ordinances, rules and regulations and other provisions having the force or effect of law pertaining to pollution or protection of the environmental matters including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing processing, discharge, release, threatened release, control or cleanup of any solid waste disposal, toxic substances, hazardous substances, hazardous materials, hazardous waste, toxic chemicals, pollutants, contaminants (collectively, "Hazardous Material") and air, water, ground or subsurface pollution and to the storage, use, handling, transportation, discharge, and disposal (including spills and leaks) of gaseous, liquid, semi-solid or solid materials (collectively, "Environmental Laws"). There has been no on site disposal or discharge by Seller of Hazardous Material, chemicals, oil or solid wastes on the Real Property. (iii) Seller has not received a summons, citation, order, letter or other oral or written communication from any federal, state or local Governmental Authority regarding actual or alleged violation by Seller of Environmental Laws or a permit issued to Seller pursuant to Environmental Laws (the "Environmental Permits") relating to the Real Property, nor has Seller received any notice of an administrative investigation, or a civil or criminal action, suit, summon, citation, complaint, claim, notice of violation, demand, judgment, order or hearing based on any Environmental Permit, or any Environmental Law relating to the Real Property from any Governmental Authority under any of the Environmental Laws. (iv) To the Knowledge of Seller, neither Seller nor the Real Property, in whole or in part, is the subject of any order or directive of any federal, state or local Governmental Authority relating to asbestos-containing material. (v) To the Knowledge of Seller, there are no underground storage tanks (either regulated or unregulated), incinerators, or waste treatment, storage or disposal units, landfills, disposal areas or surface impoundments on, under or within the Real Property. (vi) Schedule 1.1(c) lists all franchises, licenses, permits, consents, authorizations, approvals and certificates of any Governmental Authority used in conducting the Business. Each of the Permits is currently valid and in full force and effect and the Permits constitute all franchises, licenses, permits, consents, authorizations, approvals, and certificates of any Governmental Authority necessary to the conduct of the Business. Seller is not in violation of any of the Permits. There is no pending or, to the Knowledge of Seller, threatened proceeding that could result in the revocation or cancellation of, or inability of Seller to renew, any Permit. 12  (m) BROKERS. Seller has not entered into any agreement, arrangement or understanding with any party as to which Buyer may have any liability for a finder's fee, brokerage commission, advisory fee or other similar payment. (n) EMPLOYEE BENEFIT PLANS. (i) Set forth on Schedule 5.2(n) is a true, accurate and complete list of all pension, retirement, profit-sharing, deferred compensation, bonus, stock option or other incentive plan, or other employee benefit program, arrangement, agreement or understanding, or medical, vision, dental or other health plan, or life insurance or disability plan, or any other employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (whether or not any such employee benefit plans are otherwise exempt from the provisions of ERISA, whether or not legally binding), adopted, established, maintained or contributed to by Seller or under which it would otherwise be a party or have liability and under which employees or former employees (whether or not retired employees) of Seller (or their beneficiaries) are eligible to participate or derive a benefit (collectively, the "Employee Benefit Plans"). There shall be included within the meaning of Seller, for this purpose and for the purpose of the representations in this Section 5.2(n), all "affiliates," whether or not incorporated, within the meaning of Section 407(d)(7) of ERISA. (ii) Full payment has been made of all amounts that Seller is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which it is a party, to have paid as contributions to or benefits under any Employee Benefit Plan as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the Execution Date. (iii) Seller has performed all obligations required to be performed by it under the Employee Benefit Plans. Seller has not engaged in any transaction with respect to the Employee Benefit Plans that would subject it or Buyer to a tax, penalty or liability for a prohibited transaction under Sections 406, 407 or 502(i) of ERISA or Section 4975 of the Internal Revenue Code of 1986 as amended (the "Code"), nor have Seller's directors, officers, employees or agents, to the extent they or any of them are fiduciaries under Title I of ERISA. Excepting only changes necessary to preserve an Employee Benefit Plan's tax-qualified or exempt status under the Code or to otherwise comply with applicable provisions of ERISA and the Code (and in each case effective only as of the date necessary to do so), Seller will not, and has no plan or commitment, whether formal or informal, written or oral, and whether or not legally binding, to modify or change any Employee Benefit Plan in any material manner prior to the Closing. Seller and any "administrator(s)" (as described in Section 3(16)(A) of ERISA) of the Employee Benefit Plans have complied in all material respects with the applicable requirements of ERISA, the Code and all other statutes, orders, rules or regulations, specifically including, without limitation, material compliance with all reporting and disclosure requirements of Part 1 of Title 1 of ERISA and of the 13  Code in a timely and accurate manner, and no penalties have been or will be imposed, nor is Seller or any administrator liable for any penalties imposed, under ERISA, the Code or otherwise with respect to the Employee Benefit Plans or any related trusts. Seller is not delinquent in the payment of any federal, state or local taxes with respect to the Employee Benefit Plans. There is no pending litigation, arbitration, or disputed claim, settlement adjudication or proceeding with respect to the Employee Benefit Plans, and neither Seller nor any administrator is aware of any threatened litigation, arbitration or disputed claim, adjudication proceeding, or any governmental or other proceeding, or investigation with respect to the Employee Benefit Plans or with respect to any fiduciary or administrator thereof (in their capacities as such), or any party-in-interest thereto (with respect to their relationship as such). There is no multiemployer plan to which Seller has been a party or has been required to make any contributions at any time. (iv) Seller has delivered or caused to be delivered to Buyer true and complete copies of the following, if and to the extent applicable to the Business (A) all Employee Benefit Plans and any related trust agreements, custodial agreements, investment management agreements, insurance contracts or policies, and administrative service contracts, all as in effect, together with all amendments thereto that will become effective at a later date; (B) the latest Summary Plan Description and any modifications thereto for each Employee Benefit Plan requiring same under ERISA; (C) the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code; (D) the Summary Annual Report for the current and prior fiscal years for each Employee Benefit Plan requiring same under ERISA; (E) each Form 5500 and/or Form 990 series filing (including required schedules and financial statements) for the current and prior fiscal years for each Employee Benefit Plan required to file such form; and (F) the most recent actuarial evaluation, analysis or other report issued with respect to any Employee Benefit Plan. From the date of the most recent actuarial evaluation to the Closing, for each defined benefit plan, there has been no increase in the unfunded actuarial liability under any such defined benefit plan, assuming the years of the same actuarial assumptions as used in the most recent applicable actuarial evaluation. Neither Seller nor any officer, employee representative or agent thereof, has made any written or oral representations or statements to any current or former employees, dependents, participants or beneficiaries or other persons which are inconsistent in any material manner with the provisions of these documents. (v) With respect to any of Seller's employee welfare plans (as defined in Section 3(1) of ERISA and including those Employee Benefits Plans that qualify as such) that are "group health plans" under Section 162(k) or Section 4980B of the Code and Section 607(1) of ERISA and related regulations (relating to the benefit continuation rights imposed by COBRA), there has been timely compliance in all material respects with all requirements imposed thereunder, as and when applicable to such plans, so that Seller has no (and will not incur any) loss, assessment, penalty, loss of 14  federal income tax deduction or other sanction, arising on account of or in respect of any failure to comply with any COBRA benefit continuation requirement, that is capable of being assessed or asserted directly or indirectly against Seller or against Buyer or any of its subsidiaries or other member of Buyer's corporate control group, with respect to any such plan. (o) LABOR MATTERS. Seller has not received any notice from any labor union or group that it represents or intends to represent Seller's employees. Seller has complied in all material respects with all applicable laws affecting employment and employment practices, terms and conditions of employment and wages and hours. Seller has not received any notice of and there is no complaint alleging unfair labor practices against Seller pending, or to the Knowledge of Seller, threatened before the National Labor Relations Board or any other charges or complaints pending, or to the Knowledge of Seller, threatened before the Equal Employment Opportunity Commission, any state or local Human Rights Commission or any other state or local agency against Seller in respect of labor or employment matters. Except as set forth on Schedule 5.2(o), no labor strike, material dispute, slowdown or stoppage has occurred with respect to Seller's employees and there is no labor strike, material dispute, slowdown or stoppage pending or to Seller's Knowledge threatened with respect to Seller's employees. Schedule 5.2(o) sets forth all pending grievances or arbitration proceedings against Seller relating to labor and employee matters. (p) TITLE TO PROPERTY. (a) Seller has good and marketable title to all Property owned by it and valid leasehold interests in all Property leased by it in the operation of the Business, free and clear of all Encumbrances, except as listed on Schedule 5.2(p) hereto, and excluding (i) liens for taxes, fees, levies, imposts, duties or governmental charges of any kind that are not yet delinquent or are being contested in good faith by appropriate proceedings that suspend the collection thereof; or (ii) liens for mechanics, materialmen, laborers, employees, suppliers or others that are not yet delinquent or are being contested in good faith by appropriate proceedings. All of such owned or leased Property is listed on Schedule 5.2(p) hereto. Seller is not in violation of any covenant, condition, restriction, easement, agreement, order or regulation of any Governmental Authority having jurisdiction over any such Property that affects such Property or the use thereof. Except as listed on Schedule 5.2(p), no financing statement under the Uniform Commercial Code or similar law naming Seller as debtor has been filed in any jurisdiction in respect of the Property, and Seller is not a party to or bound under any agreement or legal obligation authorizing any party to file any such financing statement. Schedule 1.1(a) contains a complete and accurate list of all machinery, equipment, tooling, parts, furniture, supplies and other tangible personal property owned or used by Seller in the conduct of the Business. (q) CONTRACTS AND COMMITMENTS. Schedules 1.1(e) and 1.1(f) list all Personal Property Leases and Contracts. Each of the Personal Property Leases and the Contracts is valid and binding, in full force and effect and enforceable in accordance with its respective provisions. Except as 15  set forth on Schedule 5.2(q), Seller has not assigned, mortgaged, pledged, encumbered, or otherwise hypothecated any of its right, title or interest under the Personal Property Leases or the Contracts. Except as set forth on Schedule 5.2(q), neither Seller nor, to the Knowledge of Seller, any other party thereto is in material violation of, in default in respect of, nor, to Knowledge of Seller, has there occurred an event or condition which, with the passage of time or giving of notice (or both), would constitute a material violation or a default of any Personal Property Lease or Contract. No notice has been received by Seller claiming any such default by Seller or indicating the desire or intention of any other party thereto to amend, modify, rescind or terminate any Personal Property Lease or Contract. (r) ACCOUNTS RECEIVABLE. All Receivables included in the Property are subsisting; arose in the ordinary and usual course of the Business; and are not and will not be subject to any Encumbrance. Since January 1, 2007, except as set forth on Schedule 5.2(r), no customers of Seller in respect of the Business have notified Seller, orally or in writing, that they intend to return any products, or assert any right to a discount, allowance or chargeback with respect to any products. (s) INVENTORY. Except as set forth on Schedule 5.2(s), inventory reflected on the Financial Statements as of the date thereof was determined in accordance with GAAP consistently applied, stated, on an aggregate basis, at the lower of cost (based on the last-in, first-out method) or market value and consists solely of merchandise usable or salable in the ordinary course of business at not less than gross cost. The inventory conforms to customary trade standards for marketable goods. (t) OFFICERS, EMPLOYEES AND COMPENSATION. Schedule 5.2(t) lists each salaried employee of Seller employed by or engaged in connection with the Business during the period January 1, 2005 through the Execution Date. Schedule 5.2(t) also lists and describes as of December 31, 2006, the base salary, fringe benefits and perquisites of each such employee of Seller whose total current base salary exceeds or exceeded in any of the last two years $25,000 annually and the severance amount payable by Seller to each employee of Seller employed in the Business upon the termination of such employee's employment by Seller immediately prior to the Closing pursuant to Section 6.12 (the "Employee Severance Payments"). Except as disclosed on Schedule 5.2(t), there are no other forms of compensation paid by Seller to any such employee. There has been no material increase since December 31, 2006 in the rate of compensation or other benefits paid to any such employee. No shareholder or director or any person related to such person by blood or marriage holds any position or office with or has any material financial interest, direct or indirect, in any supplier, customer or account of, or other outside business that has had or will have material transactions with Seller. Seller has no agreements or understandings with any officer, employee or representative of Seller employed or engaged in the Business that would influence any such person not to become associated with Buyer from and after the Execution Date or from serving Buyer in a capacity similar to the capacity currently held. (u) BOOKS OF ACCOUNT; RECORDS. The general ledgers, books of account and other records of Seller in respect of the Business are complete and correct in all material respects, have been maintained in accordance with 16  good business practices and the matters contained therein are appropriately and accurately reflected in the Financial Statements. SECTION 5.3. EFFECT OF DISCLOSURES ON SCHEDULES. Information disclosed by Seller on any Schedule to this Agreement shall be deemed to be disclosed on any other Schedule to this Agreement as to which such information would be reasonably applicable. SECTION 5.4. DISCLAIMER OF OTHER WARRANTIES. Except for the representations and warranties set forth in this Agreement and in the documents and instruments delivered in accordance with the terms of this Agreement, Seller, nor any person acting on its behalf, makes any representation or warranty relating to Seller, the Business or the Property. Seller hereby disclaims any implied warranty with respect to it, the Business and the Property, including, without limitation, any implied warranty of merchantability or fitness for a particular purpose. SECTION 5.5. CLOSING DATE EFFECT. All of the representations and warranties of Seller are true and correct as of the date hereof and shall be true and correct on and as of the Closing Date with the same force and effect as if such representations and warranties were made by Buyer to Seller on the Closing Date. ARTICLE VI. COVENANTS SECTION 6.1. COVENANT AGAINST DISCLOSURE. Other than to Seller's officers, directors, accountants, legal advisors or other such advisors, Seller shall not (a) disclose to any person, association, firm, corporation or other entity (other than Buyer or those designated in writing by Buyer) in any manner, directly or indirectly, any confidential information or data relevant to the Business, whether of a technical or commercial nature, or (b) use, or permit or assist, by acquiescence or otherwise, any person, association, firm, corporation or other entity (other than Buyer or those designated in writing by Buyer) to use, in any manner, directly or indirectly, any such information or data, excepting only use of such data or information as is at the time generally known to the public and that did not become generally known through any breach by Seller of any provision of this Section 6.1 and data and information that is disclosed pursuant to applicable law or to enforce the provisions of this Agreement. The foregoing provision shall not limit or prevent disclosure by Seller's parent corporation in order to comply with applicable provisions of the Federal securities laws. SECTION 6.2. COVENANT AGAINST COMPETITION. For a period of three years after the Closing Date Seller shall not, directly or indirectly, engage in any business activity that competes with the Business. SECTION 6.3. INJUNCTIVE RELIEF. Seller acknowledges and agrees that Buyer's remedy at law for any breach of any of Seller's obligations under Section 6.1 or 6.2 hereof would be inadequate, and agrees and consents that temporary and permanent injunctive relief may be granted in a proceeding that may be brought to enforce any provision of Section 6.1 or 6.2 without the necessity of proof of actual damage. SECTION 6.4. ACCESS TO RECORDS. For a period of five years after the Execution Date (i) Seller shall preserve those of Seller's books and records 17  relating to the Business as are not delivered to Buyer hereunder and shall make available to Buyer for inspection and copying such books and records as reasonably required by Buyer for all purposes reasonably related to this Agreement or any of the documents and instruments delivered in accordance with its terms; and (ii) Buyer shall preserve those of Seller's books and records as are delivered to Buyer hereunder and shall make available to Seller for inspection and copying such books and records as reasonably required by them for all purposes reasonably related to this Agreement or any of the documents and instruments delivered in accordance with its terms. SECTION 6.5. TRANSITION OF CUSTOMERS. Seller shall use its reasonable commercial efforts to insure the smooth transfer from Seller to Buyer of all of Seller's present customers who, prior to the Execution Date, purchased the products of the Business. Seller shall not be required to make any expenditures in furtherance of the foregoing undertaking. SECTION 6.6. OPERATE BUSINESS IN THE ORDINARY COURSE. Between the date hereof and the Closing Date, Seller shall operate its Business only in the ordinary course consistent with past practices. SECTION 6.7. CERTAIN NEGATIVE COVENANTS. Except as specifically contemplated by this Agreement, until the Closing Date, Seller shall not without Buyer's prior written consent: (a) make any capital expenditure; (b) liquidate, sell, dispose of, or encumber any Property, other than the sale of spare parts on normal terms and conditions in the ordinary and usual course of the Business; or (c) enter into any negotiations with any third party in contemplation of agreements to sell any Property to or to perform any service for such third party; SECTION 6.8. UPDATE DISCLOSURE. From and after the Execution Date until the Closing Date, Seller and Buyer shall update each other on a regular basis by written notice to the other party to reflect any matters that have occurred from and after the Execution Date, that if existed on the Execution Date, would have been required to be described under this Agreement. After the execution of this Agreement but prior to the Closing, Seller shall (i) provide Buyer with the individual customer names related to the Receivables disclosed on Schedule 1.1(b) hereof (as updated pursuant to Section 7.1(g)), (ii) conduct a physical count of the Inventory listed on Schedule 1.1(g) hereof (as updated pursuant to Section 7.1(g)) and provide the results of such count, including individual part numbers, to Buyer and (iii) provide Buyer with the individual customer names related to the customer deposits disclosed on Schedule 2.1(b) hereof (as updated pursuant to Section 7.1(g)). SECTION 6.9. SEVERABILITY. With respect to any provision of this Article VI finally determined by a court of competent jurisdiction to be unenforceable, such court shall have jurisdiction to reform such provision so that it is enforceable to the maximum extent permitted by law, and the parties shall abide by such court's determination. In the event that any provision of this Article VI cannot be reformed, such provision shall be deemed to be severed from this Agreement, but every other provision of Article VI of this Agreement shall remain in full force and effect. 18  SECTION 6.10. FURTHER ASSURANCES. On and after the Execution Date, Seller shall prepare, execute and deliver, at Seller's expense, such further instruments of conveyance, sale, assignment or transfer, and shall take or cause to be taken such other or further action as Buyer's counsel shall reasonably request at any time or from time to time in order to perfect, confirm or evidence in Buyer title to all or any part of the Property or to consummate, in any other manner, the terms and conditions of this Agreement. On and after the Execution Date, Buyer shall prepare, execute and deliver, at Buyer's expense, such further instruments, and shall take or cause to be taken such other or further action as Seller's counsel shall reasonably request at any time or from time to time in order to confirm or evidence Buyer's assumption of the Assumed Liabilities or to consummate, in any other manner, the terms and conditions of this Agreement. SECTION 6.11. ANNOUNCEMENTS. Except as required by law, neither party to this Agreement shall issue any press releases or make any public announcements with respect to this Agreement or the transactions contemplated hereby without the written consent of the other party hereto, which consent shall not be unreasonably withheld or delayed. Prior to issuing any press release or making any public announcements, the disclosing party shall give the other party a copy of the text of their proposed disclosure and a reasonable opportunity to comment on it. Subject to the obligations of Seller's parent company under applicable securities laws, Buyer and Seller shall jointly agree on the press release or other public announcement with respect to the transactions contemplated by this Agreement which will be disseminated promptly following the execution and delivery hereof. SECTION 6.12. EMPLOYEES OF SELLER. Seller shall retain and discharge when due all liabilities and obligations to its employees, including but not limited to, liabilities and obligations with respect to wages, salary, termination pay, severance pay, sick pay, vacation pay, unemployment benefits, pension or welfare benefits to which such employees are entitled by virtue of their employment by Seller or termination of their employment by Seller. Immediately prior to Closing, Seller shall terminate the employment of all of its employees. Immediately after the Closing, Seller shall apply the Severance Contribution received from Buyer pursuant to Section 3.1 above to discharge, in part, the Employee Severance Payments and Seller shall be solely responsible for the payment of the balance of the Employee Severance Payments to its former employees. ARTICLE VII. CLOSING DELIVERIES SECTION 7.1. DELIVERIES BY SELLER. Seller shall deliver to Buyer at Closing the following: (a) An executed counterpart of the General Conveyance, Assignment and Bill of Sale conveying, selling, transferring and assigning to Buyer title to all of the Property, free and clear of all Encumbrances, in the form of Exhibit B hereto. (b) Executed counterparts of Assignments and Assumptions of the Permits, the Personal Property Leases and the Contracts which include the written consents of all parties (in particular the consents of Emhart Glass S.A. and The Eldrid Company, Inc.) necessary in order to duly transfer all of Seller's rights thereunder to Buyer, in the form of Exhibit C hereto (the "Assignments and Assumptions"). 19  (c) An executed counterpart of the Assignment of the Proprietary Rights conveying, transferring and assigning to Buyer, all of Seller's right, title and interest in and to the Proprietary Rights, free and clear of all Encumbrances, in the form of Exhibit D hereto. (d) Resolutions of the Board of Directors and sole shareholder of Seller adopted at meetings or by consent authorizing the execution and delivery of this Agreement by Seller and the performance of its obligations hereunder, certified by the Secretary of Seller. (e) A certificate of the Secretary of State of South Dakota dated as of a recent date as to the good standing of Seller in such state. (f) An executed counterpart of the Certificate of Assumed Liabilities in the form of Exhibit E hereto (the "Certificate of Assumed Liabilities"). (g) Updated versions of Schedules 1.1(a), 1.1(b), 1.1(c), 1.1(d), 1.1(e), 1.1(f), 1.1(g), 1.1(h), 2.1(a), 2.2(b), 2.2(c) and 2.2(d) reflecting the information required to be set forth therein as of the Business Day immediately prior to the Closing Date. (h) A certificate of the Secretary of State of Indiana dated as of the a recent date as to the good standing of The LGL Group, Inc. in such state. (i) An executed counterpart of the Lease in favor of Buyer with respect to the Real Property in the form of Exhibit F hereto (the "Lease") which will have a term of up to six months from Closing; provide for no payment by Buyer to Seller other than a pro rata share of real estate taxes and insurance costs based upon portion occupied; and will permit Seller to market and show premises to potential purchasers during the term. (j) Such other separate bills of sale, assignments or documents of transfer that Buyer may reasonably deem necessary or appropriate in order to perfect, confirm or evidence title to all or any part of the Property. SECTION 7.2. DELIVERIES BY BUYER. Buyer shall deliver to Seller at Closing the following: (a) Payment of the Closing Payment. (b) Executed counterparts of the Assignments and Assumptions. (c) Resolutions of the Board of Directors of Buyer authorizing the execution and delivery of this Agreement by Buyer and the performance of its obligations hereunder, certified by the Secretary of Buyer. (d) An executed counterpart of the Certificate of Assumed Liabilities. (e) An executed counterpart of the Lease. 20  (f) Such other separate instruments of assumption that Seller may reasonably deem necessary or appropriate in order to confirm or evidence Buyer's assumption of the Assumed Liabilities. ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING SECTION 8.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE TRANSACTION. The respective obligations of Seller and Buyer, as applicable, to effect the transactions contemplated herein shall be subject to the satisfaction at or prior to the Closing Date of the following conditions: (a) NO ORDER. No federal or state governmental or regulatory authority or other agency or commission, or federal or state court of competent jurisdiction, shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) that has the effect of restricting in any material respect, preventing or prohibiting consummation of the transactions contemplated by this Agreement. (b) NO CHALLENGE. There shall not be a pending action, proceeding or investigation before any court or administrative agency or by a government agency (i) challenging or seeking damages in connection with the transactions contemplated by this Agreement or (ii) seeking to restrain, prohibit or limit the exercise of full rights of ownership or operation by Buyer of all or any portion of the Business or Property, that in either case would reasonably be expected to have a Material Adverse Effect. SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to effect the transactions contemplated by this Agreement are also subject to the following conditions: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Seller in this Agreement that are qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, without giving effect to any update or notice to Buyer, as of the Execution Date and (except to the extent such representations and warranties speak as of a certain date or period and except as permitted or contemplated by this Agreement) as of the Closing Date as though made on and as of the Closing Date. (b) AGREEMENTS AND COVENANTS. Seller shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to Closing Date. (c) NO MATERIAL ADVERSE EFFECT. Since the Execution Date, there shall not have been any change in the financial condition, results of operations Business or Property, taken as a whole, which either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. 21  (d) OFFICER'S CERTIFICATE. Buyer shall have received a certificate of the Chief Executive Officer of Seller with respect to the conditions set forth in Sections 8.2(a), (b) and (c). (e) AUDITED 2006 FINANCIAL STATEMENTS. Buyer shall have received a copy of the audited balance sheet of Seller at December 31, 2006 and Seller's income statement for the period then ended, together with the audit report of Seller's auditors with respect to such financial statements. SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF Seller. The obligations of Seller to effect the transactions contemplated by this Agreement are also subject to the following conditions: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Buyer in this Agreement that are qualified as to materiality shall be true and correct, and those not so qualified shall be true and correct in all material respects, without giving effect to any update or notice to Seller, as of the Execution Date and (except to the extent such representations and warranties speak as of a certain date or period and except as permitted or contemplated by this Agreement) as of the Closing Date as though made on and as of the Closing Date. (b) AGREEMENTS AND COVENANTS. Buyer shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to Closing Date. (c) OFFICER'S CERTIFICATE. Seller shall have received a certificate of the Chief Executive Officer of Buyer with respect to the conditions set forth in Sections 8.3(a) and (b). ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER SECTION 9.1. TERMINATION. This Agreement may be terminated as provided below: (a) by mutual written consent of Buyer and Seller; (b) Buyer may terminate this Agreement by giving written notice to Seller at any time prior to the Closing if Seller is in material breach of any representation, warranty, or covenant contained in this Agreement provided that: (i) Buyer has notified Seller of the breach, (ii) the breach has continued without cure for a period of thirty (30) days after Buyer notified Seller, or by its nature, the breach cannot be cured prior to the Closing Date and (iii) Buyer is not in breach of any representation, warranty, or covenant contained in this Agreement. (c) Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing if Buyer is in material breach of any representation, warranty, or covenant contained in this Agreement provided that: (i) Seller has notified Buyer of the breach, (ii) the 22  breach has continued without cure for a period of thirty (30) days after Seller notified Buyer, or by its nature, the breach cannot be cured prior to the Closing Date and (iii) Seller is not in breach of any representation, warranty, or covenant contained in this Agreement. (d) by either Buyer or Seller if any permanent injunction preventing the consummation of the purchase and sale has become final and nonappealable; (e) 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 in all material respects with its obligations under this Agreement) on or before June 8, 2007; (f) by Buyer if any of the conditions in Sections 8.1 and 8.2 applicable to it have 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 (g) by Seller, if any of the conditions in Article Sections 8.1 and 8.3 applicable to it have not be satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Seller to comply with its obligations under this Agreement) and Seller has not waived such condition on or before the Closing Date. SECTION 9.2. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void and, subject to the provisions of the Escrow Agreement with respect to the Deposit, all rights and obligations of any party shall cease except that nothing herein shall relieve any party from liability for any breach of this Agreement or any representation, warranty, covenant or agreement contained in this Agreement or shall restrict either party's rights in the case thereof. SECTION 9.3. WAIVER. At any time prior to the Closing Date, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension, waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. ARTICLE X. INDEMNIFICATION SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Subject to the limitations set forth in this Article X and notwithstanding any investigation conducted at any time with regard thereto by or on behalf of Buyer or Seller, all representations, warranties, covenants and agreements of Buyer and Seller in this Agreement shall survive the Closing. All statements contained in any Schedule or Exhibit hereto shall be deemed 23  representations and warranties of Buyer or Seller, as the case may be, set forth in this Agreement for the purposes of this Article. SECTION 10.2. INDEMNIFICATION. (a) Subject to the limitations set forth in this Article X, Seller shall indemnify and hold harmless Buyer from and against any and all losses, liabilities, damages, demands, claims, suits, actions, judgments or causes of action, assessments, costs and expenses including, without limitation, interest, penalties, reasonable attorneys' fees, any and all reasonable expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation (collectively, "Damages"), asserted against, resulting to, imposed upon, or incurred or suffered by Buyer, directly or indirectly, as a result of or arising from the following (individually an "Indemnifiable Claim" and collectively "Indemnifiable Claims" when used in the context of Buyer as the Indemnified Party (as hereinafter defined)): (i) Any inaccuracy in or breach of any of the representations, warranties or agreements made in this Agreement by Seller or the non-performance of any covenant or obligation to be performed by Seller; (ii) Any Excluded Liability or other liability imposed upon Buyer as transferee of the Business or the Property, including without limitation, any such liability as may be imposed upon Buyer under applicable bulk sales and other similar laws, or otherwise relating to the conduct of the Business prior to the Closing Date, except to the extent such liability has been assumed by Buyer pursuant to Article II hereof; (iii) Seller's failure to comply with the bulk transfer laws of any state or its misapplication of the proceeds of the Purchase Price of the Property in fraud of its creditors. (b) Subject to the limitations set forth in this Article X, Buyer shall indemnify and hold harmless Seller from and against any and all Damages asserted against, resulting to, imposed upon, or incurred or suffered by Seller, directly or indirectly, as a result of or arising from the following: (i) Any inaccuracy in or breach of any of the representations, warranties or agreements made by Buyer in this Agreement or the non-performance of any covenant or obligation to be performed by Buyer; (ii) Any liability imposed upon Seller as a result of Buyer's conduct of the Business after the Closing Date; or (iii) The nonperformance or nonpayment by Buyer of any of the Assumed Liabilities. 24  (c) For purposes of this Article X, all Damages shall be computed net of any insurance coverage with respect thereto that reduces the Damages that would otherwise be sustained; provided, however, that in all cases, the timing of the receipt or realization of insurance proceeds shall be taken into account in determining the amount of reduction of Damages. (d) Notwithstanding anything to the contrary contained in this Agreement, in no event shall any party hereto have any liability hereunder to any other party hereto for consequential, indirect or incidental damages of any kind or nature or lost profits. (e) If Buyer has Knowledge at or before the Closing of any breach or non-fulfillment of a representation, warranty, covenant or agreement herein by Seller, and Buyer nevertheless proceeds to consummate the transaction contemplated hereby, then without further act on the part of any party hereto, Buyer shall be deemed to have waived its rights to such indemnification with respect to such breach or non-fulfillment (but not without respect to any other breach or non-fulfillment). SECTION 10.3. LIMITATIONS ON INDEMNIFICATION. Rights to indemnification hereunder are subject to the following limitations: (a) As to Seller and Buyer, the obligation of indemnity provided herein with respect to the representations and warranties made by them herein shall survive the Closing Date and shall continue for a period equal to 18 months following the Closing Date at which time such representations and warranties shall expire and become null and void, except as to any matters with respect to which a bona fide written claim shall have been made before such date, in which event survival shall continue (but only with respect to, and to the extent of, such claim). (b) An Indemnified Party shall be entitled to indemnification hereunder with respect to a breach by the Indemnifying Party of any representation or warranty only to the extent that the amount of all Damages suffered by the Indemnified Party as a result of the breach by the Indemnifying Party of one or more representations and warranties exceeds in the aggregate $50,000, whereupon all amounts in excess of an aggregate of $50,000 shall be subject to indemnification. In no event shall Buyer be entitled to indemnification hereunder with respect to one or more breaches by the Seller of its representations or warranties in an aggregate amount that exceeds the Purchase Price. (c) As to Seller and Buyer, the obligation to indemnify provided herein with respect to any matter other than a representation and warranty made by them herein shall survive the Closing Date until the expiration of the applicable statute of limitations. (d) If, prior to the termination of any obligation to indemnify as provided for herein, written notice of a claimed breach is given by the party seeking indemnification including in detail the basis therefor (the "Indemnified Party") to the party from whom indemnification is sought (the "Indemnifying Party") or a suit or action based upon a claimed breach is commenced against the Indemnified Party, the Indemnified Party shall not be precluded from pursuing such claimed breach or suit or action, or from 25  recovering from the Indemnifying Party (whether through the courts or otherwise) on the claim, suit or action, by reason of the termination otherwise provided for above. (e) The right of any party hereto to commence or assert an action, suit, claim or proceeding for Damages in respect of the breach of a representation or warranty contained herein shall terminate at the same time that the obligation of indemnification provided herein with respect to such breach shall terminate. (f) Notwithstanding anything contained in this Agreement to the contrary, the parties hereto acknowledge and agree that, except as hereinafter provided, the indemnification set forth in this Article X, subject to the limitations contained in this Article X, shall be the sole and exclusive remedy of the Indemnified Party for any breach, default, inaccuracy or failure of any of the representations and warranties of the Indemnifying Party contained in this Agreement and in any document and instrument delivered in connection herewith, whether based upon contract, tort or upon any other theory of law. The preceding sentence shall not affect the availability to Buyer of equitable remedies in respect of this Agreement and the transactions contemplated hereby, including, without limitation, the remedies of injunction and specific performance, or remedies in respect of fraud by Seller that may hereafter be alleged by Buyer. (g) Notwithstanding anything else contained in this Agreement to the contrary, the sum of $250,000, constituting the portion of the Deposit remaining after the partial release contemplated by Section 3(a) of the Escrow Agreement shall be the sole source for reimbursement to Buyer with respect to any Receivables that are not collected in full by Buyer within 90 days after the Closing Date. SECTION 10.4. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD-PARTY CLAIMS. The Indemnified Party shall give the Indemnifying Party prompt written notice of any third party claim, demand, assessment, suit or proceeding to which the indemnity set forth in Section 10.2 applies, which notice to be effective must describe such claim in reasonable detail (the "Indemnification Notice"). Notwithstanding the foregoing, the Indemnified Party shall not have any obligation to give any notice of any assertion of liability by a third party unless such assertion is in writing and the rights of the Indemnified Party to be indemnified hereunder in respect of any third party claim shall not be adversely affected by its failure to give notice pursuant to the foregoing unless and, if so, only to the extent that, the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall have the right to control the defense or settlement of any such action subject to the provisions set forth below, but the Indemnified Party may, at its election, participate in the defense of any action or proceeding at its sole cost and expense. Should the Indemnifying Party fail timely to defend any such action (except for failure resulting from the Indemnified Party's failure to timely give the Indemnification Notice), then, in addition to any other remedy, the Indemnified Party may settle or defend such action or proceeding through counsel of its own choosing and may recover from the Indemnifying Party the amount of such settlement, demand, or any judgment or decree and all of its costs and expenses, including reasonable fees and disbursements of counsel. 26  SECTION 10.5. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO NON-THIRD-PARTY CLAIMS. In the event that the Indemnified Party asserts the existence of an Indemnifiable Claim (but excluding claims resulting from the assertion of liability by third parties), it shall give prompt written notice to the Indemnifying Party specifying in reasonable detail and to the extent known to it the nature and amount of the claim asserted (the "Non-Third Party Claim Indemnification Notice"). If the Indemnifying Party, within 30 days (or such greater time as may be necessary for the Indemnifying Party to investigate such Indemnifiable Claim not to exceed 60 days), after receiving the Non-Third Party Claim Indemnification Notice from the Indemnified Party, shall not give written notice to the Indemnified Party announcing its intent to contest such assertion of the Indemnified Party (the "Contest Notice"), such assertion shall be deemed accepted and the amount of claim shall be deemed a valid Indemnifiable Claim. During the time period set forth in the preceding sentence, the Indemnified Party shall cooperate fully with the Indemnifying Party in respect of such Indemnifiable Claim. In the event, however, that the Indemnifying Party contests the assertion of a claim by giving a Contest Notice to the Indemnified Party within said period, then if the parties hereto, acting in good faith, cannot reach agreement with respect to such claim within 10 days after such notice, such parties may seek any remedy available thereto at law or in equity. SECTION 10.6. COOPERATION IN THE DEFENSE OF CLAIMS. In the event that an Indemnifiable Claim is asserted, the Indemnifying Party and the Indemnified Party shall each cooperate in all reasonable respects with the other. Such cooperation shall include making available on reasonable notice during normal business hours at the cost of the Indemnifying Party such business records as relate to the Business and the transactions contemplated by this Agreement and suitable personnel with knowledge of the foregoing. ARTICLE XI. MISCELLANEOUS PROVISIONS SECTION 11.1. NOTICES. All notices and other communications required or permitted under this Agreement shall be deemed to have been duly given and made if in writing and if served either by personal delivery to the party for whom intended (which shall include delivery by Federal Express or similar responsible overnight service) when received or if sent by facsimile transmission, with a copy by personal delivery, Federal Express or similar responsible overnight service) on the same day, when transmitted and receipt is confirmed by telephone, bearing the address shown in this Agreement for, or such other address as may be designated in writing hereafter by, such party: If to Seller: c/o The LGL Group, Inc. 140 Greenwich Avenue, 4th Floor Greenwich, Connecticut 06830 Attention: Chief Executive Officer Facsimile No.: (203) 622-1360 with a copy to: Olshan Grundman Frome Rosenzweig & Wolosky LLP Park Avenue Tower 65 East 55th Street New York, New York 10022 Attention: David J. Adler, Esq. Facsimile No.: (212) 451-2222 27  If to Buyer: Olivotto Glass Technologies SpA Viale Gandhi 22 10051 Avigliana (TO) Italy Attention: Giulio Napoli, President Facsimile No.: 011 ###-###-#### with a copy to: Patterson Belknap Webb & Tyler LLP 1133 Avenue of the Americas New York, New York 10036-6710 Attention: Jeffrey E. LaGueux, Esq. Facsimile No.: (212) 336-2222 SECTION 11.2. ENTIRE AGREEMENT. This Agreement and Schedules hereto, and the documents referred to herein embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings, oral or written, relative to said subject matter. SECTION 11.3. BINDING EFFECT; ASSIGNMENT. This Agreement and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon Buyer and Seller and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be transferred or assigned (by operation of law or otherwise) by any of the parties hereto without the prior written consent of the other parties. Any transfer or assignment of any of the rights, interests or obligations hereunder in violation of the terms hereof shall be void and of no force or effect. Notwithstanding the foregoing, Buyer shall be permitted to assign all of its rights to acquire the Property and to delegate its obligations to assume the Assumed Liabilities arising under this Agreement to any entity which is wholly-owned by Buyer or Olivotto Industries, S.p.A. ("Buyer's Assignee") prior to the Closing. Any such assignment shall not release Buyer or Olivotto Industries, S.p.A from its liabilities and obligations hereunder. SECTION 11.4. CAPTIONS. The Article and Section headings of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement in construing or interpreting any provision hereof. SECTION 11.5. EXPENSES OF TRANSACTION. Buyer and Seller shall each pay its own costs and expenses incurred by it in connection with this Agreement and the transactions contemplated hereby. The liability for sales, real estate transfer and/or documentary taxes, if any, (but not income or similar type taxes) in connection with the sale and delivery of the Property shall be the responsibility of Seller. SECTION 11.6. WAIVER; CONSENT. This Agreement may not be changed, amended, terminated, augmented, rescinded or discharged (other than by performance), in whole or in part, except by a writing executed by each of the 28  parties hereto, and no waiver of any of the provisions or conditions of this Agreement or any of the rights of a party hereto shall be effective or binding unless such waiver shall be in writing and signed by the party claimed to have given or consented thereto. Except to the extent that a party hereto may have otherwise agreed to in writing, no waiver by that party of any condition of this Agreement or breach by any other party of any of its obligations, representations or warranties hereunder shall be deemed to be a waiver of any other condition or subsequent or prior breach of the same or any other obligation or representation or warranty by such other party, nor shall any forbearance by the first party to seek a remedy for any noncompliance or breach by such other party be deemed to be a waiver by the first party of its rights and remedies with respect to such noncompliance or breach. SECTION 11.7. NO THIRD PARTY BENEFICIARIES. Nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person, firm, corporation or legal entity, other than the parties hereto, any rights, remedies or other benefits under or by reason of this Agreement. SECTION 11.8. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. SECTION 11.9. REMEDIES OF BUYER. The Property is unique and not readily available. Accordingly, Seller acknowledges that, in addition to all other remedies to which Buyer is entitled, Buyer shall have the right to enforce the terms of this Agreement by a decree of specific performance, provided Buyer is not in material default hereunder. SECTION 11.10. BULK SALES LAWS. Buyer hereby waives compliance with any and all applicable bulk sales and other similar laws. SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION. (a) This Agreement, and all other agreements and related documents executed and delivered pursuant hereto including, without limitation, the Escrow Agreement, shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. (b) Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any New York state court, or the United States District Court, Southern District of New York, in each case sitting in the County of New York over any action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby and by the other agreements and related documents executed and delivered pursuant hereto, including, without limitation, the Escrow Agreement, and each of the parties hereto hereby irrevocably agrees that all claims in respect of such action or proceeding shall be heard and determined in such New York state or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent legally possible, the defense of an inconvenient forum to the maintenance of such action or proceeding. 29  SECTION 11.12. EXHIBITS AND SCHEDULES. Each reference in this Agreement to an Exhibit or Schedule shall mean an Exhibit or Schedule annexed to this Agreement and shall be incorporated into this Agreement by such reference. SECTION 11.13. KNOWLEDGE. All references herein to the "Knowledge" of Seller or words of similar import shall mean the actual knowledge of Brian Fabacher and Janet Grimsley. All references herein to the "Knowledge" of Buyer or words of similar import shall mean the actual knowledge of Giulio Napoli. [SIGNATURE PAGE FOLLOWS] 30  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. BUYER: OLIVOTTO GLASS TECHNOLOGIES S.P.A. By: /s/ Giulio Napoli ----------------------------------- Name: Giulio Napoli Title: President SELLER: LYNCH SYSTEMS, INC. By: /s/ Jeremiah M. Healy ----------------------------------- Name: Jeremiah M. Healy Title: Chief Executive Officer The liabilities and obligations of each of Buyer and Buyer's Assignee under and pursuant to the foregoing Agreement are hereby unconditionally guaranteed by the undersigned. This is a guaranty of payment and performance and not of collection. OLIVOTTO INDUSTRIES, SPA By: /s/ Giulio Napoli ----------------------------------- Name: Giulio Napoli Title: President The liabilities and obligations of Seller under and pursuant to the foregoing Agreement are hereby unconditionally guaranteed by the undersigned. This is a guaranty of payment and performance and not of collection. THE LGL GROUP, INC. By: /s/ Jeremiah M. Healy ----------------------------------- Name: Jeremiah M. Healy Title: Chief Executive Officer