ASSET AND STOCK PURCHASE AGREEMENT

Asset Purchase Agreement

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ELECTRO SWITCH CORP | EMRISE Corporation | EMRISE ELECTRONICS CORPORATION | ESC WORLDWIDE, INC | XCEL Japan Ltd

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Title: ASSET AND STOCK PURCHASE AGREEMENT
Governing Law: Delaware Date: 3/26/2009
Industry: Electronic Instr. and Controls Law Firm: Rutan Tucker Sector: Technology

Exhibit 10.1

ASSET AND STOCK PURCHASE AGREEMENT

by and among

ELECTRO SWITCH CORP.

and

ESC WORLDWIDE, INC.

and

EMRISE ELECTRONICS CORPORATION

and

EMRISE CORPORATION

Dated March 20, 2009

TABLE OF CONTENTS

				Page

ARTICLE I			DEFINITIONS	1

ARTICLE II			SALE AND PURCHASE TRANSACTIONS; CLOSING	14
2.1		Sale and Purchase of the Digitran Assets		14
2.2		Retained Assets		16
2.3		Assumption of Liabilities		17
2.4		Retained Liabilities		17
2.5		Assignability and Consents.		19
2.6		Sale and Purchase of XCEL Japan Shares		19
2.7		Purchase Price		19
2.8		Closing		21
2.9		Closing Obligations		21
2.10		Purchase Price Adjustment		24
2.11		Purchase Price Allocation		25
2.12		Buyers’ Representative		26

ARTICLE III			REPRESENTATIONS AND WARRANTIES OF SELLER	26
3.1	Organization and Good Standing			26
3.2	Authority; No Conflict			26
3.3	Capitalization; No Subsidiaries; Stockholder Claims Against XCEL Japan.			27
3.4	Financial Statements			28
3.5	Books and Records			29
3.6	Title to Assets; Encumbrances; Leases			29
3.7	Condition and Sufficiency of Facilities			31
3.8	Accounts Receivable			31
3.9	Inventory			31
3.10	No Undisclosed Liabilities			31
3.11	Taxes			32
3.12	No Material Adverse Change			32
3.13	Employee Benefits			32
3.14	Compliance with Legal Requirements; Governmental Authorizations			34
3.15	Legal Proceedings; Orders			36
3.16	Absence of Certain Changes and Events			37
3.17	Contracts; No Defaults			38
3.18	Insurance			39
3.19	Environmental Matters			41
3.20	Employees			42
3.21	Labor Relations; Compliance			43
3.22	Intellectual Property			44
3.23	Certain Payments			47
3.24	Customer / Supplier Relations			47

					Page

3.25			Product Warranty		47
3.26			Product Liability		48
3.27			Export Regulation		48
3.28			Disclosure		48
3.29			Brokers or Finders		48
3.30			No Insolvency		48
3.31			Intercompany Arrangements and Accounts		48

ARTICLE IV				REPRESENTATIONS AND WARRANTIES OF BUYERS	49
4.1		Organization and Good Standing			49
4.2		Authority; No Conflict			49
4.3		Investment Intent			49
4.4		Certain Proceedings			49
4.5		Brokers or Finders			50
4.6		Bulk Transfer Laws			50

ARTICLE V				INDEMNIFICATION; REMEDIES	50
5.1			Survival; Right to Indemnification Not Affected by Knowledge		50
5.2			Indemnification and Payment of Damages by Seller and Parent		50
5.3			Indemnification and Payment of Damages by Buyers		52
5.4			Time Limitations		52
5.5			Limitations on Amount		52
5.6			Procedure For Indemnification—Third-Party Claims		53
5.7			Procedure For Indemnification—Other Claims		54
5.8			Sole Remedy		54
5.9			Insurance and Third Party Recoveries		54
5.10			Tax Benefit		54

ARTICLE VI				TAX MATTERS	55
6.1		Tax Returns			55
6.2		Transfer Taxes			55

ARTICLE VII				POST-CLOSING COVENANTS	56
7.1	Confidentiality				56
7.2	Maintenance of, and Access to, Records.				56
7.3	Non-Competition.				57
7.4	Accounts Receivable				59
7.5	Employee Matters.				59
7.6	Electronic Mail				59
7.7	Post Closing Governance				60
7.8	Environmental Report				60
7.9	Offsite Purchase Assets				60
7.10	Other Intellectual Property Rights				60
7.11	Transfer of Digitran Ltd				60
7.12	Accounts Payable				60

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7.13			Reconciliation of Financed Equipment		61
7.14			Delivery of Documents Regarding XCEL Japan Shares		61

ARTICLE VIII				GENERAL PROVISIONS	61
8.1		Expenses			61
8.2		Public Announcements			61
8.3		Notices			61
8.4		Governing Law; Jurisdiction; Service of Process			62
8.5		Further Assurances			63
8.6		Waiver			63
8.7		Entire Agreement and Modification			63
8.8		Disclosure Schedule			63
8.9		Assignments, Successors, and No Third-Party Rights			63
8.10		Severability			64
8.11		Section Headings, Construction			64
8.12		Time of Essence			64
8.13		Specific Performance			64
8.14	Counterparts				64

EXHIBITS :

Exhibit 2.3		Form of Assignment and Assumption Agreement
Exhibit 2.9(a)(ii)		Form of Bill of Sale
Exhibit 2.9(a)(iv)		Form of Intellectual Property Assignment
Exhibit 2.9(a)(v)		Form of Domain Name Assignment
Exhibit 2.9(a)(vi)		Form of Transition Services Agreement
Exhibit 2.9(a)(xx)		Forms of Opinions of Seller’s Counsel
Exhibit 2.10		Sample Closing Net Value Calculation

SCHEDULES :

Schedule 1		Financed Equipment
Schedule 2.1(a)		Fixed Assets
Schedule 2.1(b)		Inventory
Schedule 2.1(c)		Other Tangible Personal Property
Schedule 2.1(d)		Advance Payments
Schedule 2.1(g)		Contracts
Schedule 2.1(h)		Intangible Rights
Schedule 2.1(j)		Unfilled Purchase Orders
Schedule 2.1(k)		Governmental Authorizations
Schedule 2.1(m)		Other Assets
Schedule 2.2(k)		Retained Assets
Schedule 2.5(a)		Required Consents
Schedule 2.9(a)(i)(B)		Offsite Assets
Schedule 4.2		Buyer Consents
Schedule 4.5		Buyer Brokers and Finders

iii

		Page

Schedule 7.5(b)	Continuing Employees
Schedule 7.12	Accounts Payable

ASSET AND STOCK PURCHASE AGREEMENT

THIS ASSET AND STOCK PURCHASE AGREEMENT (the “ Agreement ”) is made as of March 20, 2009, by and between Electro Switch Corp., a Delaware corporation (“ Buyer ”), ESC Worldwide, Inc., a Massachusetts corporation ( “Stock Buyer” ), EMRISE Electronics Corporation, a New Jersey corporation (“ Seller ”), and EMRISE Corporation, a Delaware corporation ( “Parent” ). Buyer, Stock Buyer, Seller and Parent are referred to collectively as the “ Parties ,” and each individually as a “ Party .”

R E C I T A L S

A. Digitran is a division of Seller, which is in the business (the “Digitran Business” ) of developing and manufacturing high reliability electromechanical switch products (the “Products” ) serving niche applications in military, commercial aerospace and specialized industrial markets.

B. XCEL Japan Ltd., a corporation organized under the laws of Japan ( “XCEL Japan” ), a wholly-owned subsidiary of Seller, is in the business (collectively with the Digitran Business, the “Business” ) of serving as the sales and distribution entity for the Digitran Business in the Asia Pacific market.

C. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, substantially all of the assets and properties relating to the Digitran Business and in connection therewith Buyer is willing to assume certain specified liabilities of Seller relating thereto, all upon the terms and subject to the conditions set forth herein.

D. Seller desires to sell, and Stock Buyer desires to purchase, all of the Capital Equity (as defined below) of XCEL Japan (the “XCEL Japan Shares” ), for the consideration and on the terms set forth in this Agreement.

E. Parent is the parent of Seller and will derive substantial direct and indirect benefits from the performance of this Agreement and the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual covenants contained in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I :

“Accounting Firm” shall have the meaning set forth in Section 2.7(b) .

“Accounts Receivable” shall have the meaning set forth in Section 3.8 .

“Affiliate” means with respect to any particular Person any other Person controlling, controlled by or under common control with such Person.

“Agreement” shall have the meaning set forth in the first paragraph of this Agreement.

“Applicable Contract” means any Contract relating to the Business (a) under which Seller or XCEL Japan has or may acquire any rights, (b) under which Seller or XCEL Japan has or may become subject to any obligation or liability, or (c) by which Seller, XCEL Japan or any of the Purchased Assets is or may become bound.

“AQMD” means the South Coast Air Quality Management District.

“Arbitrator” shall have the meaning set forth in Section 6.1(d) .

“Assignment and Assumption Agreement” shall have the meaning set forth in Section 2.3 .

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

“Benefit Plan” shall have the meaning set forth in Section 3.13(a) .

“Bill of Sale” shall have the meaning set forth in Section 2.9(a)(ii) .

“Business” shall have the meaning set forth in the recitals of this Agreement.

“Business Day” means any day that is not a Saturday, Sunday or other day on which banks in the State of California are authorized or required to close.

“Business Financial Statements” shall have the meaning set forth in Section 3.4(b) .

“Business Leases” shall have the meaning set forth in Section 3.6(c) .

“Business Leased Real Property” shall have the meaning set forth in Section 3.6(c) .

“Business Real Property Permits” shall have the meaning set forth in Section 3.6(e) .

“Buyer” shall have the meaning set forth in the first paragraph of this Agreement.

“Buyers” means Buyer and Stock Buyer.

“ Capital Equity” means any and all shares, interests, participations or other equivalents (however designated) of equity of a corporation, and any and all ownership interests in a Person (other than a corporation), including membership interests, partnership interests, joint venture interests and beneficial interests, and any and all warrants, options or other rights to purchase any of the foregoing.

“Claim Date” shall have the meaning set forth in Section 5.4 .

“Closing” shall have the meaning set forth in Section 2.8 .

“Closing Accounts Payable” shall have the meaning set forth in Section 7.12 .

“Closing Cash Consideration” shall have the meaning set forth in Section 2.7 .

“Closing Date” means the date and time as of which the Closing actually takes place.

“Closing Net Asset Value” shall equal the sum of the following items on the balance sheet of the Digitran Business as of the Closing Date calculated in accordance with GAAP: (a) accounts receivable of the Digitran Business plus (b) inventory of the Digitran Business plus (c) other current assets plus (d) other intangibles (net) plus (e) property, plant and equipment (net) plus (f) other assets.

“Closing Net Book Value” shall equal (a) total assets of XCEL Japan minus (b) total liabilities of XCEL Japan as of the Closing Date calculated in accordance with GAAP.

“Closing Net Value” shall have the meaning set forth in Section 2.10(a) .

“Closing Statement” shall have the meaning set forth in Section 2.10(a) .

“Company” shall have the meaning set forth in the first paragraph of this Agreement.

“Company Improvements” shall have the meaning set forth in Section 3.6(g) .

“Consent” means any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

“Contemplated Transactions” means all of the transactions contemplated by this Agreement, including:

(a) the sale of the Purchased Assets by Seller to Buyer;

(b) the sale of the XCEL Japan Shares by Seller to Stock Buyer;

(d) the performance by Buyers, Parent and Seller of their respective covenants and obligations under the Transaction Documents;

(e) Buyer’s acquisition and ownership of the Purchased Assets; and

(f) Stock Buyer’s acquisition and ownership of the XCEL Japan Shares.

“Continued Employees” shall have the meaning set forth in Section 7.5(b) .

“Contract” means any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

“Copyrights” shall have the meaning set forth in the definition of Intellectual Property Assets.

“Customer” shall have the meaning set forth in Section 2.1(i) .

“Damages” shall have the meaning set forth in Section 5.2 .

“Deductible” shall have the meaning set forth in Section 5.5 .

“Deferred Cash Consideration” shall have the meaning set forth in Section 2.7(b)(i) .

“Digitran Balance Sheet” shall have the meaning set forth in Section 3.4(a) .

“Digitran Business” shall have the meaning set forth in the recitals of this Agreement.

“Digitran Financial Statements” shall have the meaning set forth in Section 3.4(a) .

“Digitran Interim Financial Statements” shall have the meaning set forth in Section 3.4(a) .

“Digitran, Ltd.” means Digitran Ltd., a corporation organized under the laws of the United Kingdom.

“Disclosure Schedule” means the disclosure schedule delivered by Seller to Buyers concurrently with the execution and delivery of this Agreement.

“Domain Name Assignment” shall have the meaning set forth in Section 2.9(a)(v) .

“Encumbrance” means any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or material restriction of any kind, including any material restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“Environment” means soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.

“Environmental, Health, and Safety Liabilities” means any cost, damages, expense (including reasonable attorneys fees), liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law and consisting of or relating to:

(a) any environmental, health, or safety matters or conditions (including, but not limited to, on-site or off-site contamination, occupational safety and health, and regulation of chemical substances or products);

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

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

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

The terms “removal,” “remedial,” and “response action,” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. , as amended (“ CERCLA ”).

“Environmental Law” means any Legal Requirement that requires or relates to:

(a) advising appropriate authorities, employees, Governmental Bodies, and the public of intended or actual Release or Threat of Release of pollutants or Hazardous Materials, violations of discharge limits, or other prohibitions and of the commencements of activities, such as resource extraction or construction, that could have significant impact on the Environment;

(b) preventing or reducing to acceptable levels the Release of Hazardous Materials into the Environment;

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

(e) protecting the Environment, natural resources, species, or ecological amenities;

(f) reducing to acceptable levels the risks inherent in the transportation of Hazardous Materials;

(g) cleaning up pollutants that have been Released, preventing the Threat of Release, or paying the costs of such Cleanup or prevention; or

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

“ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“ERISA Affiliate” means, with respect to Seller and XCEL Japan, any other person that, together with Seller or XCEL Japan, would be treated as a single employer under IRC § 414.

“Facilities” means any real property, leaseholds, or other interests currently or formerly owned or operated by Seller or XCEL Japan relating to the Business and any buildings, structures, or equipment (including motor vehicles) currently or formerly owned or operated by Seller or XCEL Japan relating to the Business.

“Financed Equipment Amount” means the total amount owed by Seller for the equipment loans and leases set forth on Schedule 1 attached hereto.

“GAAP” means generally accepted United States accounting principles.

“Governmental Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“Governmental Body” means any:

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

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

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

(d) multinational organization or body; or

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

“Hazardous Activity” means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment, disposal, or use (including any withdrawal or other use of groundwater) of Hazardous Materials in, on, under, about, or from the Facilities or any part thereof into the Environment, and any other act, business, operation, or thing that increases the danger, or risk of

danger, or poses an unreasonable risk of harm to persons, or property or the Environment on or off the Facilities, or that may affect the value of the Facilities or Seller.

“Hazardous Materials” means any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, harmful, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials.

“Indemnified Persons” shall have the meaning set forth in Section 5.2 .

“Intellectual Property Assets” includes:

(a) the names “Digitran” and “XCEL Japan,” all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, “Marks” );

(b) all patents, patent applications, patent rights and inventions and discoveries that may be patentable (collectively, “Patents” ) used by Seller or XCEL Japan in any manner in the Business or otherwise necessary to the design, manufacture, sale or distribution of the Products;

(c) all copyrights in both published works and unpublished works and all copyright registrations and applications and all derivatives, translations, adaptations and combinations used by Seller in the Business (collectively, “Copyrights” );

(d) all rights in mask works (collectively, “Rights in Mask Works” ); and

(e) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blueprints used by Seller in the Business and all material knowledge and experience necessary for the operation of the Business and the practical application of all technology and state of the art industrial techniques necessary for the manufacture of the Products (collectively, “Trade Secrets”) owned, used, or licensed by Seller as licensee or licensor.

(f) all goodwill, franchise, licenses, permits, consents, and approvals and claims of infringement against third parties owned or used by Seller in any manner in the Business or otherwise necessary for the design, manufacture, sale or distribution of the Products;

(g) all engineering and other specifications, flow charts, system documentation or procedures, statements of principals of operation, schematics and other technical documentation used by Seller in the Business or otherwise necessary for the design, manufacture, marketing, sale or distribution of the Products ( “Technical Documentation” );

(h) all written agreements with Seller’s past and present employees of the Business which assign the inventions, discoveries, improvements and ideas to Seller and the inventions, improvements and ideas related documents and work of authorship referred to in such agreements;

(i) all nondisclosure contracts and/or confidentiality agreements entered into between Seller and Persons in connection with disclosure by Seller relating to the Products, the Intellectual Property Assets or the Business.

“Intellectual Property Assignment” shall have the meaning set forth in Section 2.9(a)(iv) .

“Interim Business Balance Sheets” shall have the meaning set forth in Section 3.4(b) .

“Interim Business Financial Statements” shall have the meaning set forth in Section 3.4(b) .

“IRC” means the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.

“IRS” means the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury.

“ITAR” shall have the meaning set forth in Section 3.27 .

“Knowledge” means an individual will be deemed to have “Knowledge” of a particular fact or other matter if:

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

(b) a prudent individual reasonably would be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the existence of such fact or other matter.

A Person (other than an individual) will be deemed to have “Knowledge” of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.

“Lease Assignment” shall have the meaning set forth in Section 2.9(a)(vi) .

“Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether

liquidated or unliquidated, whether incurred or consequential and whether due or to become due), including any liability for Taxes.

“Marks” shall have the meaning set forth in the definition of Intellectual Property Assets.

“Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least 10% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 10% of the outstanding equity securities or equity interests in a Person.

“Multi-Employer Plan” has the meaning given in ERISA § 3(37)(A).

“Net Sales” means gross sales of the Business for fiscal year 2009 less returns and allowances calculated in accordance with GAAP and the principles, policies and practices that were used in preparing the Business Financial Statements.

“Net Sales Target” means $9,113,493; provided , however , that such amount shall be reduced by $297,000 if the Distribution Agreement between the Digitran Business and XPS is terminated prior to the end of fiscal year 2009 for any reason other than (i) the termination of such relationship by Buyer due to breach by XPS of any of its obligations under the Distribution Agreement or (ii) the termination of such Distribution Agreement by XPS.

“Nonassignable Items” shall have the meaning set forth in Section 2.5(b) .

“Notice of Disagreement” shall have the meaning set forth in Section 2.10(a) .

“Occupational Safety and Health Law” means any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.

“Offsite Assets” shall have the meaning set forth in Section 2.9(a)(i)(B) .

“Order ” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

“Ordinary Course of Business” means an action taken by a Person will be deemed to have been taken in the “Ordinary Course of Business” only if:

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

(b) such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

“Organizational Documents” means (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the operating agreement and the certificate of formation of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing.

“Owner” shall have the meaning set forth in the definition of Subsidiary.

“Parent” means EMRISE Corporation, a Delaware corporation and the parent of Seller.

“Parties” shall have the meaning set forth in the first paragraph of this Agreement.

“Patents” shall have the meaning set forth in the definition of Intellectual Property Assets.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.

“Potential AQMD Permit Liability” means any Liabilities of Seller related to failure to obtain a permit for the painting station used in the Digitran Business from the AQMD.

“Potential BKK Environmental Liability” means any Liabilities of Seller related to disposal of waste at the BKK Corporation Class I landfill.

“Potential Clean Room Liability” means any Liabilities of Seller related to (i) failure to obtain a permit and/or landlord consent for build out of the clean room in the Facility at 9654 Hermosa Avenue, Rancho Cucamonga, California, and/or (ii) at the termination of the lease for such Facility, the removal of such clean room such that it is returned to its condition at the commencement of the lease.

“Potential Rent Dispute Liability” means any Liabilities of Seller for payment of additional rent for the XCEL Japan Facilities relating to periods prior to the Closing based upon the outcome of the ongoing rent dispute with the landlord relating to the XCEL Japan Facilities.

“Potential Sierra Circuits Liability” means any Liabilities of Seller related to penalties imposed for failure to purchase minimum quantities of printed circuit boards pursuant to

Section 6 of that certain Supply Agreement by and between Seller and Sierra Circuits, Inc. dated July 24, 2008.

“Potential XCEL Japan Asbestos Liability” means any Liabilities of Seller related to asbestos contamination at the XCEL Japan Facilities.

“Pre-Closing Straddle Period Taxes” shall have the meaning set forth in the definition of Pre-Closing Taxes.

“Pre-Closing Taxes” means:

(i) with respect to Taxes (other than those addressed in Section 6.2 (Transfer Taxes)) imposed upon XCEL Japan, or for which XCEL Japan is liable, with respect to taxable periods ending prior to or on the Closing Date, all Taxes due for such taxable period (regardless of whether such Taxes are due and payable at Closing); and

(ii) with respect to Taxes (other than those addressed in Section 6.2 (Transfer Taxes)) imposed upon XCEL Japan, or for which XCEL Japan is liable, with respect to taxable periods beginning before and ending after the Closing Date (each, a “ Straddle Period ”), the portion of any such Taxes that is allocable to the portion of the Straddle Period ending on the Closing Date (such Taxes, the “Pre-Closing Straddle Period Taxes” ), determined in accordance with the following:

(A) In the case of Taxes that are either (x) based upon or related to income, receipts or shareholders’ equity or (y) imposed in connection with any sale, transfer or assignment or any deemed sale, transfer or assignment of property (real or personal, tangible or intangible) (regardless of whether such transaction occur before or after the Closing Date), Pre-Closing Period Straddle Taxes shall be deemed equal to the amount that would be payable if the Tax year ended on the Closing Date. For purposes of this clause (A), any exemption, deduction, credit or other item that is calculated on an annual basis shall be allocated to the portion of the Straddle Period ending on the Closing Date on a pro rata basis determined by multiplying the entire amount of such item allocated to the Straddle Period by a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

(B) In the case of Taxes (other than those described in Clause (A) above) imposed on a periodic basis with respect to Seller or otherwise measured by the level of any item, Pre-Closing Straddle Period Taxes shall be deemed to equal (x) the aggregate amount of such Taxes for the entire Straddle Period (or, in the case of Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding Tax period) multiplied by (y) a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

11

“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“Products” shall have the meaning set forth in the recitals of this Agreement, and shall include the underlying technologies, designed, sold or distributed by Seller in connection with the Digitran Business and XCEL Japan, including, without limitation, any such technology in development.

“Proprietary Rights Agreement” shall have the meaning set forth in Section 3.20(b) .

“Prorated Rent Amount” means $4,213.07.

“Purchase Price” shall have the meaning set forth in Section 2.7 .

“Purchased Assets” shall have the meaning set forth in Section 2.1 .

“Rancho Cucamonga Lease” shall have the meaning set forth in Section 2.1(g) .

“Release” means any spilling, leaking, emitting, discharging, depositing, escaping, leaching, disposing, dumping, or other releasing into the Environment, whether intentional or unintentional.

“Remaining Accounts Payable” shall have the meaning set forth in Section 7.12 .

“Representative” means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

“Restricted Period” shall have the meaning set forth in Section 7.3(a) .

“Restricted Territory” shall have the meaning set forth in Section 7.3(b) .

“Retained Assets” shall have the meaning set forth in Section 2.2 .

“Retained Liabilities” shall have the meaning set forth in Section 2.4 .

“Rights in Mask Works” shall have the meaning set forth in the definition of Intellectual Property Assets.

“Securities Act” means the Securities Act of 1933, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Seller” shall have the meaning set forth in the first paragraph of this Agreement.

“Straddle Period” shall have the meaning set forth in the definition of Pre-Closing Taxes.

“Stock Buyer” shall have the meaning set forth in the first paragraph of this Agreement.

“Subsidiary” means with respect to any Person (the “Owner” ), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries.

“Target Net Value” shall mean $2,990,537.

“Tax” means any tax (including any income tax, excise tax, capital gains tax, value-added tax, sales tax, property tax, franchise tax, gross receipts tax, license tax, payroll tax, employment tax, severance tax, stamp tax, occupation tax, premium tax, windfall profits tax, environmental tax, capital stock tax, profits, withholding tax, social security tax (or similar), unemployment, disability, real property, personal property, transfer, registration, alternative, or add on minimum or estimated tax, assessment, charge, levy, and all other taxes and similar assessments, customs duties, charges and fees of any kind whatsoever and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any Governmental Body or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee.

“Tax Return” means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

“Technical Documentation” shall have the meaning set forth in the definition of Intellectual Property Assets.

“Threat of Release” means a substantial likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment that may result from such Release.

“Threatened” means a claim, Proceeding, dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.

“Trade Secrets” shall have the meaning set forth in the definition of Intellectual Property Assets.

“Transaction Costs” shall have the meaning set forth in Section 3.25 .

“Transaction Documents” means this Agreement, the Assignment Assumption Agreement, the Bill of Sale, the Intellectual Property Assignment, the Domain Name Assignment, the Transition Services Agreement, the Lease Assignment, and all other agreements, documents and instruments executed and delivered or to be executed and delivered in connection with the execution and delivery of this Agreement and the consummation of the Contemplated Transactions.

“Transfer Taxes” shall have the meaning set forth in Section 6.2 .

“WARN Act” shall have the meaning set forth in Section 3.21(b) .

“XCEL Japan” shall have the meaning set forth in the recitals of this Agreement.

“XCEL Japan Balance Sheet” shall have the meaning set forth in Section 3.4(b) .

“XCEL Japan Financial Statements” shall have the meaning set forth in Section 3.4(b) .

“XCEL Japan Interim Financial Statements” shall have the meaning set forth in Section 3.4(b) .

“XCEL Japan Shares” shall have the meaning set forth in the recitals of this Agreement.

“XPS” shall have the meaning set forth in Section 7.3(a)(i) .

ARTICLE II

SALE AND PURCHASE TRANSACTIONS; CLOSING

2.1 Sale and Purchase of the Digitran Assets . At the Closing, Seller and Parent shall sell and transfer to Buyer, and Buyer shall purchase from Seller and Parent, free and clear of all Encumbrances, all of Seller’s and Parent’s assets, properties and business as a going concern relating to the Digitran Business of every kind, nature and description, wherever located and whether real, personal or mixed, tangible or intangible, in electronic form or otherwise, and whether or not having any value for accounting purposes or carried or reflected on or specifically referred to in its books or financial statements, except those assets specifically excluded pursuant to Section 2.2 . The properties, business, goodwill and assets of Seller and Parent relating to the Digitran Business to be sold and transferred to Buyer hereunder (collectively, the “Purchased Assets” ) shall include the following:

(a) all of Seller’s machinery, equipment, components, parts, tooling, dies, jigs, spare parts, supplies and materials relating to the Digitran Business wherever located, including the items specifically set forth on Schedule 2.1(a) ;

(b) all of Seller’s inventories of raw materials, work-in-process, parts, subassemblies and finished goods relating to the Digitran Business, and all packaging and all other materials and supplies to be used or consumed by Seller relating to the Digitran Business in the production of finished goods, wherever located and whether or not obsolete or carried on Seller’s books of account, including the items set forth on Schedule 2.1(b) ;

(c) all of Seller’s other tangible personal property relating to the Digitran Business, including office furniture, office equipment and supplies, leasehold improvements, vehicles, computers and all related equipment, and telephones and all related equipment, including the items set forth on Schedule 2.1(c) ;

(d) all of Seller’s advance payments, rental deposits, prepaid items, surety accounts and other similar assets, claims, deferred charges, credits and claims for refund relating to the Digitran Business, including the items set forth on Schedule 2.1(d) , but excluding such items as are associated primarily with Retained Liabilities;

(e) all notes and billed and unbilled accounts receivable and other rights to payments from customers of the Digitran Business, including trade accounts receivable from goods shipped, products sold or services rendered, vendor credits, and the full benefit to all security for such accounts or rights to payment, a listing of which is set forth on Schedule 2.1(e) ;

(f) all of Seller’s books, records, manuals, documents, and books of account relating to the Digitran Business, whether inscribed on tangible medium or stored in electronic or other medium, including sales and credit reports, client, customer and supplier lists, literature, brochures, advertising material, maintenance records, service and warranty records, referral sources, research and development records, production records, equipment logs, operating guides and manuals, financial and accounting records, creative materials, advertising materials, promotional materials, studies, reports, correspondence and other similar documents, all rights to receive and retain mail and other communications relating to the Digitran Business, and, subject to Legal Requirements, copies of all personnel records;

(g) all of Seller’s rights under the lease for its Facility at 9654 Hermosa Avenue, Rancho Cucamonga, California (the “Rancho Cucamonga Lease” ), and all other Contracts identified on Schedule 2.1(g) ;

(h) all of Seller’s and Parent’s intangible rights and property relating to the Digitran Business, including goodwill and rights in and to the name “Digitran,” any Product names, and in any other trade name, trademark, fictitious name or service mark, or any variant of any of them, and any applications therefor or registrations thereof, and any other forms of Intellectual Property Assets, and all research related to the Digitran Business conducted by Seller or Parent, all development facilities and inventions and work-in-process a part thereof, all rights to Seller’s and Parent’s software, telephone numbers, facsimile numbers, Internet sites, Internet addresses (excluding email addresses)

15 and domain names thereof and other listings related to the Digitran Business, including the items identified on Schedule 2.1(h) ;

(i) all information, data, lists and documents related to all Persons to whom or to which Seller has sold or otherwise furnished Products, directly or indirectly, at any time ( “Customer” or “Customers” ) including related information as to the unit and dollar volume of such sales, the type of Products so sold or furnished, the method of distribution and other relevant marketing and product information for each Customer;

(j) all unfilled purchase and sale orders relating to the Digitran Business set forth on Schedule 2.1(j) ;

(k) to the extent permitted by Legal Requirements, all Governmental Authorizations relating to the Digitran Business, and all pending applications for issuance or renewal thereof, including the items identified on Schedule 2.1(k) ;

(l) all of Seller’s rights to the Digitran Business, to the extent not described above, all assets that are employed by Seller solely in connection with the Digitran Business, and all of the assets to be reflected on the Closing Statement;

(m) the other assets, properties, rights, titles and interests specifically listed on Schedule 2.1(m) ; and

(n) all of Seller’s claims, causes of action and judgments, all express and implied warranties, guarantees, refunds, causes of action, rights of recovery, rights of set-off and rights of recoupment of every kind and nature and all existing and inchoate claims, rights and remedies related to any of the foregoing relating to the Digitran Business.

2.2 Retained Assets . Seller shall retain and the Purchased Assets shall not include the following assets relating to the Digitran Business (collectively, the “Retained Assets” ):

(a) the consideration to be delivered to Seller pursuant to, and all other rights under, this Agreement and the other Transaction Documents;

(b) Seller’s other rights hereunder;

(c) Seller’s minute book, stock records and seal;

(d) any right to receive mail and other communications addressed to Seller relating to the Retained Assets and Retained Liabilities;

(e) all of Seller’s cash, cash in banks, cash equivalents, bank and mutual fund accounts and lockboxes (other than post-Closing payments sent to such lockboxes in payment of the Accounts Receivable);

(f) all Tax Returns of Seller;

16 (g) all email addresses of Seller and its Affiliates;

(h) all personnel records that Seller is required by law to retain in its possession;

(i) all claims for refund of Taxes and other governmental charges of whatever nature;

(j) all rights in connection with and assets of any Benefit Plan;

(k) subject to Section 7.11 , Digitran, Ltd. (only to the extent necessary to maintain its corporate charter), and

(l) the assets specifically listed on Schedule 2.2(l) .

2.3 Assumption of Liabilities . Buyer shall assume, pay, and perform in accordance with their terms or otherwise satisfy, after the Closing Date, only the following liabilities (collectively, the “Assumed Liabilities” ):

(a) at the Closing, Buyer shall, pursuant to an Assignment and Assumption Agreement substantially in the form of Exhibit 2.3 attached hereto (the “Assignment and Assumption Agreement” ), assume and agree to perform, defend, pay or discharge, when due, all of the obligations after the date of this Agreement assumed by Buyer pursuant to the Contracts sold to Buyer under Section 2.1 , including any future change in terms of such Contracts of which Buyer is informed prior to the Closing; provided , however , that in no event shall Buyer assume any portion of the Potential Sierra Circuits Liability; and

(b) after the Closing, Buyer shall perform all warranty service related to Products sold by Seller prior to Closing; provided , however , that Seller shall reimburse Buyer for any direct labor, materials, freight and out-of-pocket costs and expenses incurred by Buyer in excess of $37,500 for providing such warranty service.

2.4 Retained Liabilities . Notwithstanding anything contained in this Agreement to the contrary and regardless of whether such Liability is disclosed herein or on any schedule or exhibit hereto, except for the Assumed Liabilities, Buyer will not assume or be liable for any liabilities of Seller or any other Person, regardless of whether relating to the Digitran Business or the Purchased Assets, and in each case, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated and whether due or to become due (collectively, the “ Retained Liabilities ”). Seller shall retain and shall be responsible for paying and satisfying the Retained Liabilities including, but not limited to, the following:

(a) all Liabilities arising out of the Contracts to be transferred to Buyer as set forth in Section 2.1(g) which are not assigned to the Buyer because necessary consents to such assignment have not been obtained; provided , however , that Buyer shall be responsible for paying and satisfying all such Liabilities to the extent that Buyer has received the benefit of such Contracts notwithstanding such lack of assignment;

17 (b) any Liability of Seller arising out of a breach of its obligations under this Agreement;

(c) subject to Section 2.3(b) , any Liabilities in connection with or relating to actions, suits, judgments, litigation, assessments, proceedings, investigations or claims relating to periods and arising out of events occurring prior to the Closing Date;

(d) all Liabilities which are (i) related to the operation of the Digitran Business by Seller prior to the Closing or (ii) accrued in accordance with GAAP prior to the Closing with respect to (x) the Contracts or (y) an occurrence related to the Digitran Business which occurred prior to the Closing;

(e) all Liabilities of Seller arising out of or in connection with employment related claims for benefits of any kind by the employees of the Digitran Business arising out of any occurrence prior to the Closing including, but not limited to, (i) any earned account, vacation, holiday pay or any other fringe benefits provided by Seller to such employees, (ii) any health, disability, bonuses, compensation or life insurance coverage or medical benefits provided by Seller to such employees, (iii) any severance pay or other termination benefits due from Seller to such employees and (iv) obligations of Seller set forth in Section 7.5 ;

(f) any Liabilities caused by any Product shipped by Seller or XCEL Japan in the operation of the Digitran Business prior to the Closing, including, but not limited to, Liabilities for death, bodily injury or property damage, and any Liability for recalls of any Products produced, sold or distributed prior to the Closing;

(g) all Liabilities of any unfunded vested benefit liability to any Multi-Employer Pension Plan to which Seller made contributions;

(h) any Liability related to any Benefit Plan of Seller;

(i) any Liability arising out of the failure to comply with any applicable bulk transfer law;

(j) any Environmental Health and Safety Liabilities related to the operation of the Digitran Business by Seller prior to the Closing;

(k) the Potential AQMD Permit Liability;

(l) the Potential Sierra Circuits Liability;

(m) the Potential Clean Room Liability;

(n) the Potential BKK Environmental Liability; and

(o) all other Liabilities of Seller relating to the Digitran Business not included in the Assumed Liabilities.

18

2.5 Assignability and Consents .

(a) Required Consents . Schedule 2.5(a) sets forth a list of all Purchased Assets, including Contracts and Governmental Authorizations, which are non-assignable or non-transferable or cannot be subleased to Buyer without the consent of some other Person. Seller has taken or caused to be taken by others, all commercially reasonable actions to (i) obtain or satisfy all Consents from any Persons necessary to authorize, approve or permit the full and complete sale, conveyance, assignment, sublease or transfer of the Purchased Assets, (ii) ensure that any Contracts assigned to Buyer, as contemplated by this Agreement, are assigned on the same terms as are disclosed on the Schedules to this Agreement, and (iii) consummate and make effective the Contemplated Transactions. In addition, Seller agrees to take, or cause to be taken, all commercially reasonable actions to continue such efforts as may be required after the Closing Date to facilitate the full and expeditious assignment, transfer of legal title, or sublease, as the case may be, of the Purchased Assets.

(b) Nonassignable Items . Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to sell, convey, assign, sublease or transfer any Purchased Assets, including Contracts and Governmental Authorizations, if an attempted sale, conveyance, assignment, sublease or transfer thereof, without the consent of another Person, would constitute a breach of, or in any way affect the rights of either Seller or Buyer with respect to, such Purchased Assets (collectively, the “Nonassignable Items” ). Seller shall use its commercially reasonable efforts (and Buyer shall cooperate in all reasonable respects with Seller) to obtain and satisfy all Consents and to resolve all impracticalities of sale, conveyance, assignment, sublease or transfer necessary to convey to Buyer all Nonassignable Items. If any such Consents are not obtained and satisfied or if an attempted sale, conveyance, assignment, sublease or transfer would be ineffective, Seller and its Affiliates shall enter into such arrangements (including related written agreements) as Buyer may reasonably request to provide Buyer with the benefit of the Nonassignable Items.

2.6 Sale and Purchase of XCEL Japan Shares . Subject to the terms and conditions of this Agreement, at the Closing, Seller will sell and transfer the XCEL Japan Shares to Stock Buyer, and Stock Buyer will purchase the XCEL Japan Shares from Seller.

2.7 Purchase Price . Subject to Section 2.10 , the purchase price (the “Purchase Price” ) for the XCEL Japan Shares and Purchased Assets will be payable at or after the Closing, as the case may be, and in the manner as further described below:

(a) Cash at Closing . At the Closing, Buyer will pay to Seller by wire transfer in immediately available funds an amount equal to the sum of (i) $11,500,000 (the portion of such sum as is attributable to the price of the XCEL Japan Shares having been provided to Buyer from Stock Buyer) plus (ii) the Financed Equipment Amount (collectively, the “Closing Cash Consideration” ) plus (iii) the Prorated Rent Amount minus (iv) the aggregate amount of the Closing Accounts Payable.

19 (b) Deferred Purchase Price .

(i) If Net Sales for fiscal year 2009 (which is the calendar year) exceed $6,835,120, Buyer shall pay to Seller, in accordance with the procedures set forth in Section 2.7(b)(ii) , an amount in cash (the “Deferred Cash Consideration” ) equal to the product of $500,000 multiplied by a fraction, the numerator of which is Net Sales for fiscal year 2009 and the denominator of which is the Net Sales Target; provided , however , that the amount of the Deferred Cash Consideration shall not exceed $500,000.

(ii) Within forty-five (45) days after December 31, 2009, Buyer shall deliver to Seller a written statement (the “Payment Statement” ), including supporting documentation, setting forth the amount of Net Sales for fiscal year 2009. The Payment Statement shall become final and binding upon Buyers and Seller on the 15 th day following delivery thereof, unless Seller gives notice of disagreement with the Payment Statement (a “Dispute Notice” ) to Buyer prior to such date. Any Dispute Notice shall specify in reasonable detail the nature of any disagreement so asserted. If a Dispute Notice is received by Buyer in a timely manner, then the Payment Statement shall become final and binding upon Buyers and Seller on the earlier of (i) the date Buyer and Seller resolve in writing any differences they have with respect to the matters specified in the Dispute Notice and (ii) the date any disputed matters are finally resolved in writing by the Accounting Firm. During the 30-day period (the “Resolution Period” ) following the delivery of a Dispute Notice, Buyer and Seller shall use their commercially reasonable efforts and seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Dispute Notice. At the end of the Resolution Period, Buyer and Seller shall submit to an independent accounting firm (the “Accounting Firm” ) for arbitration, in accordance with the standards set forth in this Section 2.7(b) , only matters that remain in dispute and were properly included in the Notice of Disagreement in accordance with this Section 2.7(b) and any claim of calculation-related errors. The Accounting Firm shall be RSM McGladrey (which the parties represent has not provided services to any of them or their respective subsidiaries during the past three years) or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed upon by Buyer and Seller in writing. Buyer and Seller shall use their commercially reasonable efforts to cause the Accounting Firm to render a written decision resolving the matters submitted to the Accounting Firm within thirty (30) days of their delivery of such submission. The Accounting Firm shall determine Net Sales for fiscal year 2009 pursuant to this Section 2.7(b) in accordance with GAAP and the principles, policies and practices that were used in preparing the Business Financial Statements; provided , however , that no adjustment shall be made by the Accounting Firm in favor of Seller with respect to any item that was not included in Seller’s Dispute Notice. The Accounting Firm’s decision shall be based solely on written submissions by Buyer and Seller and their respective representatives and by reference to the terms of this

20 Agreement. Seller and Buyer shall furnish or cause to be furnished to the Accounting Firm such work papers and other documents and information related to the disputed matters as the Accounting Firm may request and are reasonably available to Seller, Buyer or their respective agents. The Accounting Firm shall address only those items in dispute and calculation-related errors. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. Within three (3) Business Days of the Payment Statement becoming final and binding, Buyer shall pay to Seller the Deferred Cash Consideration. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.7(b) shall be borne equally by Buyer and Seller.

2.8 Closing . The purchase and sale (the “Closing” ) provided for in this Agreement will take place upon execution and delivery of this Agreement by both parties.

2.9 Closing Obligations . At the Closing:

(a) Seller will deliver, or cause to be delivered, as applicable, to Buyer (or the Stock Buyer, as the case may be):

(i) Physical possession and/or control of the Purchased Assets in accordance with the following:

(A) all Purchased Assets which are tangible personal property and located at Seller’s Facility shall be turned over to the Buyer; and

(B) for all Purchased Assets located at or with a supplier or outside manufacturer (collectively, the “Offsite Assets” ), a listing of which is attached hereto as Schedule 2.9(a)(i)(B) , Seller will take all steps required to place Buyer in control of such Offsite Assets at Closing, including delivering at or prior to the Closing a listing of all such Offsite Assets;

(ii) a bill of sale transferring the Purchased Assets to Buyer, free and clear of any and all Encumbrances whatsoever in the form of Exhibit 2.9(a)(ii) (the “Bill of Sale” ), executed by Seller;

(iii) the Assignment and Assumption Agreement, executed by Seller;

(iv) an Intellectual Property Assignment in the form of Exhibit 2.9(a)(iv) (the “Intellectual Property Assignment” ), executed by Seller and Parent, as applicable;

(v) a Domain Name Assignment in the form of Exhibit 2.9(a)(v) (the “Domain Name Assignment” ), executed by Seller and Parent, as applicable;

21 (vi) a Transition Services Agreement in the form of Exhibit 2.9(a)(vi) (the “Transition Services Agreement” ), executed by Seller;

(vii) copies of all Consents to the transfer, assignment or sublease to Buyer of each Purchased Asset, including Contracts and Governmental Authorizations that require such Consent;

(viii) an assignment and assumption agreement relating the Rancho Cucamonga Lease (the “Lease Assignment” ), executed by Seller with written consent of the landlord;

(ix) a request for entry in shareholders’ register, executed by Seller and addressed to XCEL Japan, that XCEL Japan effect an entry in its shareholders’ register with respect to the acquisition due to transfer to Stock Buyer, in form approved by Buyers’ counsel prior to Closing;

(x) the resignations, dated as of the Closing Date, of (A) Carmine T. Oliva as a director of XCEL Japan and (B) Gallant Thein as the statutory auditor of XCEL Japan, and such director and statutory auditor shall represent that they have no claims against XCEL Japan;

(xi) a duly executed acceptance of directors and statutory auditor of XCEL Japan and duly executed resolutions of the board of directors of XCEL Japan appointing new representative directors in form submitted by Buyers’ counsel;

(xii) evidence (in the form and substance reasonably satisfactory to Buyer) of termination of all agreements regarding voting, transfer, restrictions or Encumbrances on the XCEL Japan Shares, rights of repurchase or other arrangements related to the XCEL Japan Shares that are in effect prior to Closing;

(xiii) duly executed satisfactions, termination statements and/or releases, to the extent required, to release any existing liens, claims or encumbrances;

(xiv) evidence (in the form and substance reasonably satisfactory to Buyer) that Seller’s investment bankers, attorneys and/or other advisors and any other similar agents or Representatives have been paid in full prior to the Closing and/or that Seller has no liability to any such parties for Transaction Costs;

(xv) evidence (in the form and substance reasonably satisfactory to Buyer) that the equipment loans and leases set forth on Schedule 1 have been paid in full;

(xvi) evidence (in the form and substance reasonably satisfactory to Buyer) that all intercompany accounts between the Digitran Business or XCEL Japan, on the one hand, and Parent or any Subsidiary of Parent, on the other hand,

22 have been settled, except for intercompany accounts between the Digitran Business and XCEL Japan;

(xvii) certificates of Seller’s legal existence and corporate and tax good standing from the State of New Jersey and the State of California and from such other jurisdictions where Seller’s activities require qualification as a foreign corporation in connection with the operation of the Digitran Business;

(xviii) a secretary or clerk’s certificate of Seller dated as of the date of the Closing certifying as to the incumbency and signature of any officer of Seller executing any document being delivered to Buyer in connection with the transactions contemplated by this Agreement and attached to such certificate shall be certified copies of the resolutions of the Board of Directors of Seller and Parent, authorizing the execution and delivery of this Agreement and the transactions contemplated hereby.

(xix) such tax waivers from such jurisdictions as are customary for a transaction of this type;

(xx) opinions from Seller’s counsel (both United States and Japan counsel) in the forms set forth on Exhibit 2.9(a)(xx) attached hereto;

(xxi) such other deeds, bills of sale, endorsements, assignments, affidavits and other good and sufficient instruments of sale, assignment, conveyance and transfer including, without limitation, instruments necessary for the transfer of any vehicles included in the Purchased Assets in form and substance reasonably satisfactory to Buyer and its counsel, as are required to effectively vest in Buyer good and marketable title in and to all of the Purchased Assets, free and clear of any and all Encumbrances;

(xxii) the true and complete original corporate records and business and financial records, employment records and agreements of XCEL Japan and all regulatory approvals, consents and authorizations issued to XCEL Japan and all documents related to XCEL Japan’s corporate structure and business;

(xxiii) a side letter agreement by and between Parent’s senior lender and Buyer relating to access to Accounts Receivable in the lockboxes;

(xxiv) copies of all documents (in form approved by Buyers’ counsel) filed by XCEL Japan with the Legal Affairs Bureau relating to the conversion of XCEL Japan to a “Non-Share Certificate Issuing Company” and a receipt from the Legal Affairs Bureau acknowledging that it has received these documents for filing; and

(xxv) an affidavit of lost certificate with respect to the XCEL Japan Shares which provides indemnification to Buyer; and

(xxvi) a certified true copy of commercial register and certificates of tax payment (“ nozei-shomeisho ”) regarding XCEL Japan.

(b) Buyer will deliver to Seller:

(i) the Closing Cash Consideration (including the portion provided by Stock Buyer) by wire transfer at the account specified in writing to Buyer;

(ii) the Assignment and Assumption Agreement, executed by Buyer;

(iii) the Intellectual Property Assignment, executed by Buyer;

(iv) the Domain Name Assignment, executed by Buyer;

(v) the Transition Services Agreement, executed by Buyer; and

(vi) the Lease Assignment, executed by Buyer.

2.10 Purchase Price Adjustment . The Purchase Price shall be adjusted after the Closing as follows:

(a) Closing Statement . Within forty-five (45) days after the Closing Date, Seller shall deliver to Buyers a statement (the “Closing Statement” ) setting forth (i) the Closing Net Asset Value, (ii) the Closing Net Book Value, and (iii) the sum of the Closing Net Asset Value and the Closing Net Book Value (the “Closing Net Value” ). For illustration purposes only, a computation of the Closing Net Book Value utilizing the figures from the Interim Business Balance Sheets is attached hereto as Exhibit 2.10 . The Closing Statement shall become final and binding upon Buyers and Seller on the 15 th day following delivery thereof, unless Buyer gives notice of disagreement with the Closing Statement (a “ Notice of Disagreement ”) to Seller prior to such date. Any Notice of Disagreement shall (i) specify in reasonable detail the nature of any disagreement so asserted and (ii) only include disagreements based on mathematical errors or based on the Closing Net Asset Value or Closing Net Book Value not being calculated pursuant to this Section 2.10 , which requires that the calculations be in accordance with GAAP. If a Notice of Disagreement is received by Seller in a timely manner, then the Closing Statement (as revised in accordance with this sentence) shall become final and binding upon Buyers and Seller on the earlier of (A) the date Buyers and Seller resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (B) the date any disputed matters are finally resolved in writing by the Accounting Firm. During the 30-day period following the delivery of a Notice of Disagreement, Buyers and Seller shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. At the end of such 30-day period, Buyers and Seller shall submit to the Accounting Firm for arbitration, in accordance with the standards set forth in this Section 2.10 , only matters that remain in dispute and were properly included in the Dispute Notice in accordance with this Section 2.10 . Buyers and Seller shall use their commercially reasonable efforts to cause the Accounting Firm to render a written

decision resolving the matters submitted to the Accounting Firm within thirty (30) days of the receipt of such submission. The Accounting Firm shall determine the Closing Net Asset Value and the Closing Net Book Value pursuant to this Section 2.10 ; provided , however , that no adjustment shall be made by the Accounting Firm in favor of Buyers with respect to any item that was not included in Buyer’s Notice of Disagreement. The Accounting Firm’s decision shall be based solely on written submissions by Buyers and Seller and their respective Representatives and by reference to the terms of this Agreement. Seller and Buyers shall furnish or cause to be furnished to the Accounting Firm such work papers and other documents and information related to the disputed matters as the Accounting Firm may request and are reasonably available to Seller, Buyers or their respective agents. The Accounting Firm shall address only those items in dispute and calculation-related errors. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.10 shall be borne by Buyers and Seller equally.

(b) Inventory Reserve; Pension Obligation . Prior to delivery of the Closing Statement, Buyer and Seller shall determine if the inventory reserve of XCEL Japan is adequate assuming a maximum of 18 months on hand at an individual unit level (based on the order activity during the past 18 months immediately prior to the Closing) assuming all current open orders are filled. If such inventory reserve is not sufficient, Buyer and Seller shall mutually agree upon the amount by which the inventory reserve shall be increased and increase the Target Net Value accordingly. Prior to delivery of the Closing Statement, the Target Net Value shall be increased to reflect an adjustment to the pension obligation of XCEL Japan to ¥43,015,811, which reflects the agreed upon liability as of the Closing.

(c) Payment of Adjustment . Within three (3) days following the date that the Closing Statement becomes final and binding upon Buyers and Seller, if the Closing Net Value as set forth in the Closing Statement is less than an amount equal to the Target Net Value, then Seller shall pay to Buyers (in such proportion as directed by the Buyers) an amount equal to the Target Net Value minus the Closing Net Value and the Purchase Price shall be reduced accordingly. If the Closing Net Value as set forth on the Closing Statement is greater than the Target Net Value, then Buyers shall pay to Seller an amount equal to the Closing Net Value minus the Target Net Value and the Purchase Price shall be increased accordingly.

2.11 Purchase Price Allocation . The Purchase Price represents the amount agreed upon by the Parties to be the aggregate value of the Purchased Assets and the XCEL Japan Shares. Promptly after Closing but in no event more than ninety (90) days after the Closing, the Parties shall agree upon the allocation of the Purchase Price among the Purchased Assets and the XCEL Japan Shares. If Buyers and Seller are not able to agree upon the allocation of the Purchase Price among the Purchased Assets and XCEL Japan shares, such allocation shall be made by a valuation firm mutually acceptable to Buyer and Seller. Each of the Parties shall report the purchase and sale of the Purchased Assets, including, without limitation, in all federal, foreign, state, local and other Tax Returns and reports prepared and filed by or for either Seller or

Buyer, including but not limited to their respective Internal Revenue Service Forms 8594, in accordance with the basis of allocation described in this Section 2.11 .

2.12 Buyers’ Representative . Buyer shall act as the representative for both Buyers in the administration of the provisions of Sections 2.10 and 2.11 .

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyers as follows:

3.1 Organization and Good Standing . Section 3.1 of the Disclosure Schedule contains a complete and accurate list for each of Seller and XCEL Japan: its name, its jurisdiction of incorporation, and other jurisdictions in which it is authorized to do business. Seller is a corporation duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts and to operate the Digitran Business. XCEL Japan is a corporation duly incorporated under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts. Each of Seller (solely as it relates to the Digitran Business) and XCEL Japan is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification in which failure to so qualify would have a material adverse effect on the Business. Each of Seller and XCEL Japan has made available to Buyer copies of its Organizational Documents, as currently in effect.

3.2 Authority; No Conflict .

(a) This Agreement and each of the other Transaction Documents to which Seller or XCEL Japan is a party constitutes the legal, valid, and binding obligation of Seller or XCEL Japan, as applicable, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other simil

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