ASSET PURCHASE AGREEMENT BETWEEN iSONIX LLC

Exhibit 10(ppp)

EXECUTION

ASSET PURCHASE AGREEMENT

BETWEEN

iSONIX LLC

AND

MISONIX, INC.

APRIL 7, 2009

TABLE OF CONTENTS

This ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of April 7, 2009, between iSONIX LLC, a Delaware limited liability company (the “ Buyer ”), MISONIX, INC., a New York corporation (the “ Seller ”), and, solely for purposes of Section 8.5 , Sonics & Materials, Inc., a Delaware corporation and the sole member of the Buyer (“ Parent ”).

WITNESSETH :

WHEREAS, the Seller manufactures, promotes and sells ultrasonic liquid processors (sonicators), ultrasonic soldering instruments, ultrasonic cleaners, and all related accessories, generally known as the Seller’s ultrasonics laboratory products line (the “ Business ”).

WHEREAS, the Buyer desires to purchase from the Seller certain assets owned or leased or used by the Seller in connection with the Business, and to assume certain Liabilities of the Seller specified herein, and the Seller desires to sell such assets in exchange for cash and the assumption of such specified Liabilities.

NOW, THEREFORE, in consideration of these premises, the mutual promises herein made, and the representations, warranties, and covenants herein contained, the Parties hereto agree as follows:

ARTICLE I.
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

1.1 Acquired Assets .

On and subject to the terms and conditions of this Agreement, at the Closing, the Buyer shall purchase from the Seller, and the Seller shall sell, transfer, assign, convey and deliver to the Buyer, all right, title and interest of the Seller in and to all of the tangible and intangible assets, business, goodwill and rights of the Seller used in, arising out of, or related to, the Business, other than the Excluded Assets (all such assets, business, goodwill and rights being purchased hereunder are collectively referred to as the “ Acquired Assets ”), as the same shall exist immediately prior to the Closing, free and clear of all Liens (other than Permitted Liens), including, without limitation, the following (to the extent used in, arising out of, or related to, the Business):

(a) raw materials, components, and supplies, work-in-process, processed or finished goods and other items of inventory, and all packaging, wrapping, shipping containers and other parts, wherever located, specifically including any inventory held by third parties for demonstration purposes or on consignment;

(b) all machinery, equipment, tooling, dies and molds (whether located at the facilities of the Seller or at other locations), furniture, fixtures, leasehold improvements, vehicles and other tangible personal property listed on Schedule 1.1(b) ;

(c) all Intellectual Property set forth on Schedule 1.1(c) , the goodwill associated therewith, licenses and sublicenses granted or obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the Laws of all jurisdictions, and all rights granted to the Buyer under the Intellectual Property License Agreement (the “ Ultrasonics Intellectual Property ”), subject to the limitations set forth in Section 2.4 ;

(d) to the extent that the same are assignable, agreements, contracts, unfulfilled sales orders with customers listed on Schedule 1.1(d) , unfulfilled purchase orders entered into with suppliers listed on Schedule 1.1(d) , licenses, commitments, plans, instruments, arrangements, understandings and proposals, documents and leases (whether of real or personal property) (including, without limitation, any such agreements, contracts, licenses, commitments, documents and leases listed on Schedule 5.13 ), including all amendments and supplements thereto (collectively, the “ Contracts ”), subject to the limitations set forth in Section 2.4 ;

(e) all payments, deposits (including, without limitation, customer deposits or prepayments on unfulfilled sales orders) and prepaid expenses set forth on Schedule 1.1(e) ;

(f) all claims, choses-in-action, warranties, refunds, rights of recovery, rights of set-off and rights of recoupment set forth on Schedule 1.1(f) ;

(g) [intentionally omitted];

(h) to the extent that the same are assignable, all Permits, including those Permits which are listed on Schedule 5.8 ;

(i) all rights to receive mail, email, faxes and other communications addressed to the Seller and relating to the Business (including communications from customers, suppliers, distributors, agents and others and payments with respect to the Acquired Assets), all of which shall be forwarded to the Buyer;

(j) all records, files, documents and correspondence, lists, drawings, specifications, bill of materials, studies, reports, advertising and promotional materials, and other printed or written materials, relating to the Business, including all electronic and printed copies of each of the foregoing;

(k) rights to the name “Misonix” granted by the Intellectual Property License Agreement;

(l) the domain names listed on Schedule 1.1(l) ; and

(m) all other Assets included on Schedule 1.1(m) .

1.2 Excluded Assets .

Any assets of the Seller that are not Acquired Assets (the “ Excluded Assets ”) are retained by the Seller.

1.3 Assumed Liabilities .

On and subject to the terms and conditions of this Agreement, the Seller shall transfer to the Buyer, and the Buyer shall assume and discharge or perform when due in accordance with the terms thereof, only the following Liabilities of the Seller, and no other Liabilities of the Seller (collectively, the “ Assumed Liabilities ”):

(a) all obligations of the Seller under the Contracts, sales orders, purchase orders and other agreements included in the Acquired Assets either (i) to furnish goods, services, and other non-Cash benefits to another party after the Closing or (ii) to pay for goods, services, and other non-Cash benefits that another party will furnish after the Closing (but not including any obligation or Liability arising out of or in connection with any breach of any such Contract, sales order, purchase order or other agreement occurring as of or prior to the Closing or, without the Buyer’s written consent, any Contract that was required to be listed on Schedule 5.13 but was not so listed); and

(b) all obligations of the Seller under the warranties described on Schedule 5.22(c) .

1.4 Excluded Liabilities .

Notwithstanding anything to the contrary contained in this Agreement, except for the Assumed Liabilities, the Buyer shall not assume or be liable for any of the Liabilities of the Seller or the Business (the “ Excluded Liabilities ”), which Excluded Liabilities shall include, without limitation, the following:

(a) any of the Liabilities of the Seller under this Agreement;

(b) any of the Liabilities of the Seller for expenses, Taxes or fees incident to or arising out of the negotiation, preparation, approval or authorization of this Agreement, the other Documents or the consummation (or preparation for the consummation) of the transactions contemplated hereby or thereby (including all attorneys’ and accountants’ fees, and brokerage fees incurred by or imposed upon the Seller or its Affiliates;

(c) any of the Liabilities of the Seller arising out of (i) the conduct of the Business prior to the Closing or (ii) any other business of the Seller, including without limitation, any accounts payable, short-term indebtedness, Funded Indebtedness or other similar obligations;

(d) any Liability of the Seller under any agreement, contract, commitment, document, license or lease, and any Liability of the Seller under any Contract or Permit to the extent arising out of a breach or alleged breach thereof that occurred as of or prior to the Closing;

(e) any Liability of the Seller with respect to any income Taxes or any other Taxes, in each case for any period, including any Liability for unpaid Taxes of any Person as a transferee, successor by contract or otherwise, and including any claim against the Buyer arising as a result of such Liability of the Seller, whether due to the failure by Seller to provide a tax good standing or clearance certificate in connection with the transactions contemplated by this Agreement or otherwise;

(f) any Liability, to the extent such Liability results from or arises out of events, facts or circumstances occurring or existing on or prior to the Closing, notwithstanding that the date on which any action or claim is commenced or made is after the Closing and irrespective of whether such Liability attaches to the Buyer or the Seller in the first instance, (i) that arises by reason of any violation or alleged violation of any Law or any requirement of any Governmental Authority, (ii) that arises under any Environmental and Safety Requirements with respect to the ownership or operation by the Seller of the Business or (iii) that arises by reason of any breach or alleged breach by the Seller of any agreement, contract, lease, license, commitment, instrument, judgment, order or decree;

(g) any Liabilities for which the Buyer may become liable as a result of or in connection with the failure to fully and properly comply with any bulk sales or transfers Laws arising out of the Seller’s failure to pay any Excluded Liabilities;

(h) any Liabilities arising out of the injury to or death of any Person or animal or damage to or destruction of any property, whether based on negligence, breach of warranty, strict liability, enterprise liability or any other legal or equitable theory arising from or related to products (or parts of components thereof) manufactured, sold, distributed or otherwise disposed of or for services performed by the Seller, to the extent any of such Liabilities result from or arise out of events, facts or circumstances occurring or existing on or prior to the Closing, notwithstanding that the date on which any action or claim is commenced or made is after the Closing;

(i) any Liabilities relating to any legal action or Proceeding to the extent arising out of or in connection with (i) the Seller’s conduct of the Business prior to the Closing or (ii) any other conduct of the Seller or the Seller’s officers, directors, employees, shareholders, consultants, agents or advisors in their capacities as such, whether or not disclosed on the Schedules hereto;

(j) any Liabilities of the Seller for pay in lieu of notice and severance pay;

(k) any Liabilities for bonuses or like payments to any director, officer, employee, shareholder or Affiliate of the Seller for the period ending on or prior to the Closing, other than normal salary payments or salary accruals in the Ordinary Course of Business which are properly included as accrued expenses;

(l) any Liabilities relating to any Employee Benefit Plan of the Seller;

(m) any Liability for claims for worker’s compensation, injury, disability or death based on an event occurring prior to the Closing Date;

(n) any Liabilities which relate to assets of the Seller that are not Acquired Assets;

(o) any Liabilities of the Seller to any Affiliate of the Seller; and

(p) any Liability of the Seller that the Seller became responsible for as a successor either de jure or de facto of another Person.

The Seller hereby expressly acknowledges that it is retaining the Excluded Liabilities, and the Seller shall pay, discharge and perform all such Excluded Liabilities promptly when due.

ARTICLE II.
CONSIDERATION; CLOSING

2.1 Consideration .

The consideration to be paid by the Buyer for the Acquired Assets (the “ Consideration ”), shall consist of:

(a) an aggregate of $3,500,000 (the “ Cash Closing Payment ”), which shall be payable at Closing by wire transfer of immediately available U.S. funds to the Seller, in accordance with the written payment instructions furnished by the Seller to the Buyer prior to the Closing Date (the “ Direct Cash Payment ”); plus

(b) the assumption of the Assumed Liabilities.

2.2 The Closing .

The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Siller Wilk LLP, 675 Third Avenue, New York, New York 10017. The date on which the Closing occurs shall be referred to as the “Closing Date.”

2.3 Deliveries at the Closing .

(a) At the Closing, the Seller shall deliver to the Buyer or cause to be delivered to the Buyer, as applicable:

(i) a counterpart of an assignment, assumption and bill of sale agreement (the “ Bill of Sale ”), in the form of Exhibit A duly executed by the Seller;

(ii) a counterpart of the intellectual property license agreement (the “ Intellectual Property License Agreement ”), in the form of Exhibit D hereto, duly executed by the Seller;

(iii) a counterpart of the patent assignment (the “ Patent Assignment ”), in the form of Exhibit E hereto, duly executed by the Seller;

(iv) such other duly executed instruments of sale, transfer, conveyance and assignment and assumption, as the Buyer or its counsel may reasonably request, in form reasonably satisfactory to the Seller, to effectuate the transfer of the Acquired Assets to the Buyer (the “ Other Assignment Documents ”);

(v) a counterpart of the Non-Competition Agreement between the Buyer and Ronald Manna, in the form of Exhibit F (the “ Non-Competition Agreement ”), duly executed by the parties thereto other than the Buyer;

(vi) copies of all consents listed on Schedule 5.3 ;

(vii) certified copies of the Fundamental Documents of the Seller and the authorizing resolutions and incumbency certificates of the Seller for this Agreement and the Documents;

(viii) certificates from the Secretary or similar authority of the State or other jurisdiction of formation to the effect that the Seller is in existence in such jurisdiction and filed all reports due and paid all fees, taxes and penalties owed to the Secretary or similar authority of the State or other jurisdiction of formation of the Seller, dated as of a date not more than twenty (20) days prior to the Closing Date;

(ix) a counterpart of a transition and manufacturing services agreement, in the form attached as Exhibit G (the “ Transition and Manufacturing Services Agreement ”), duly executed by the Seller;

(x) evidence satisfactory to the Buyer of the Seller’s payment in full of all payables listed on Schedule 5.21 ; and

(xi) evidence satisfactory to the Buyer of the Seller’s purchase of the product liability insurance required by Section 9.10 .

(b) At the Closing, the Buyer shall deliver or cause to be delivered to the Seller:

(i) confirmations of the wire transfers of immediately available funds required by the terms and conditions of Section 2.1(a) ;

(ii) a counterpart of the Bill of Sale, duly executed by the Buyer;

(iii) an executed Undertaking and Assumption of Liabilities (the “ Undertaking and Assumption of Liabilities ”), in the form of Exhibit B , duly executed by the Buyer;

(iv) a counterpart of the Intellectual Property License Agreement, duly executed by the Buyer;

(v) a counterpart of the Patent Assignment, duly executed by the Buyer;

(vi) a counterpart of the Non-Competition Agreement, duly executed by the Buyer;

(vii) certified copies of the Fundamental Documents of the Buyer, and the authorizing resolutions and incumbency certificates of the Buyer for this Agreement and the Documents;

(viii) certificates from the Secretary or similar authority of the State or other jurisdiction of formation to the effect that the Buyer is in existence in such jurisdiction and filed all reports due and paid all fees, taxes and penalties owed to the Secretary or similar authority of the State or other jurisdiction of formation of the Buyer, dated as of a date not more than twenty (20) days prior to the Closing Date;

(ix) a certificate from the Secretary of State or similar authority of each State or other jurisdiction in which the Buyer is qualified to do business to the effect that the Buyer is in good standing in such state or jurisdiction, dated as of a date not more than twenty (20) days prior to the Closing Date; and

(x) a counterpart of the Transition and Manufacturing Services Agreement, duly executed by the Buyer.

2.4 Certain Contracts and Intellectual Property .

Notwithstanding any other provision of this Agreement to the contrary, to the extent that the assignment by the Seller of any Contract or Intellectual Property to be assigned hereunder shall require the consent or approval of another party thereto, this Agreement shall not constitute an assignment or attempted assignment thereof or an assumption by the Buyer of the Seller’s obligations thereunder if such assignment or attempted assignment would, without the consent of such other party, constitute a breach thereof. The Seller shall use its reasonable commercial efforts to obtain the written consent or approval to the assignment to the Buyer of each such Contract or Intellectual Property with respect to which such consent is required for such assignment. If such consent or assignment is obtained after the Closing, such Contract shall automatically be deemed to be included as a Contract under Section 1.1(d) . Until such consent or approval is obtained, each Party agrees to cooperate with the other Parties in any reasonable arrangement necessary or desirable to provide to the Buyer the benefits of the Contract or Intellectual Property. All profits, losses, income and expenses attributable to the performance, maintenance and enforcement of such Contracts after the Closing Date shall be borne by, and be solely for the account of, Buyer.

2.5 Allocation of Consideration .

The Consideration shall be allocated among the Acquired Assets acquired from the Seller and the non-competition provisions contained in Section 9.6 as determined by the Buyer and the Seller and consistent with the principles set forth in Code Section 1060. Such allocation shall be set forth in a statement (the “ Statement of Allocation ”) attached hereto as Exhibit C . None of the Parties shall take any action inconsistent with the Statement of Allocation prepared in accordance with this Section 2.5 .

ARTICLE III.
[INTENTIONALLY OMITTED]

ARTICLE IV.
[INTENTIONALLY OMITTED]

ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE SELLER

As a material inducement to the Buyer to enter into and perform its obligations under this Agreement, the Seller represents and warrants to the Buyer as set forth below.

5.1 Organization and Capitalization of the Seller .

The Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of New York. The Seller is qualified to do business in every jurisdiction in which the failure to so qualify could have a Material Adverse Effect on the Seller or the Business. Schedule 5.1(a) lists all of the jurisdictions in which the Seller is qualified to do business as a foreign corporation. Schedule 5.1(a) sets forth all names under which the Seller or, to the Knowledge of the Seller, any predecessor or former owner of the Business, has conducted the Business.

5.2 Authorization of Transaction .

The Seller has all requisite power and authority, and all licenses, Permits and authorizations necessary, to own and operate the Business and to carry on the Business as now conducted. The Seller has all requisite power and authority to execute and deliver each Document to which it is a party and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of each such Document and all related transactions and to perform its obligations under each such Document. The execution, delivery and performance of each Document to which the Seller is a party has been duly and validly authorized by all necessary action on the part of the Seller, and each Document to which the Seller is a party has been duly executed and delivered by the Seller and constitutes the valid and legally binding obligation of the Seller, enforceable against the Seller in accordance with its terms and conditions, subject to applicable bankruptcy and insolvency Laws and statutes.

5.3 Non-contravention .

Neither the execution, delivery and performance of the Documents nor the consummation of the transactions contemplated by the Documents by the Seller, will (a) violate any Law to which the Seller, the Business or the Acquired Assets is subject, (b) violate any provision of the Fundamental Documents of the Seller, (c) except as disclosed on Schedule 5.3 , conflict with, result in a breach of, constitute a default (or an event which with notice, lapse of time or both would constitute a default) under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any of the Contracts or Intellectual Property or any contract, agreement, instrument, lease, license, Permit, order, decree, authorization or other document to which the Seller is a party or by which any of its assets is bound, (d) result in the imposition of any Lien upon any of the Acquired Assets (other than Liens in favor of lenders to the Buyer under credit arrangements entered into by the Buyer), or (e) cause the Buyer to become subject to, or to become liable for the payment of, any Tax. The Seller is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or any consent or approval of any other Person in order for the Parties to consummate the transactions contemplated by the Documents or in order for the Buyer to conduct the Business as conducted (or contemplated to be conducted) in the ordinary course following the Closing.

5.4 Profit and Loss Statements .

(a)  Schedule 5.4 contains Profit and Loss Statements of the Business for Seller’s fiscal years ended June 30, 2006, 2007 and 2008 and for the six months ended December 31, 2008 (the “ Business Profit and Loss Statements ”).

(b) The Business Profit and Loss Statements are true, correct and complete in all Material respects.

5.5 Subsequent Events .

Since June 30, 2008, except for matters specifically relating to the transactions contemplated by this Agreement, the Seller has operated the Business in the Ordinary Course of Business and the Business has not suffered any Material Adverse Change. Without limiting the generality of the foregoing, since June 30, 2008, except as set forth on Schedule 5.5 :

(a) no party (including the Seller) has accelerated, terminated, modified or canceled any agreement, contract, document, lease, or license (or series of related agreements, contracts, leases, and licenses) related to or affecting the Business involving more than $10,000 per annum to which the Seller is a party or by which the Seller is bound or which is otherwise Material to the Seller or the Business and, to the Knowledge of the Seller, no party intends to take any such action;

(b) the Seller has not experienced any damage, destruction, or loss (whether or not covered by insurance) to any of the Acquired Assets;

(c) the Seller has not entered into any contract, lease, or license (or series of related contracts, leases, and licenses) related to or affecting the Business;

(d) [intentionally omitted];

(e) [intentionally omitted];

(f) there has not been any other Material occurrence, event, incident, action, failure to act or transaction outside the Ordinary Course of Business involving the Business;

(g) the Seller has not sold, leased, transferred, or assigned any of the assets of the Business, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

(h) the Seller has not made any capital expenditure (or series of related capital expenditures) in connection with the Business either involving more than $10,000 in the aggregate or outside the Ordinary Course of Business;

(i) except in connection with bona fide disputes, the Seller has not delayed or postponed the payment of any accounts payable or commissions or any other Liability of the Business or agreed or negotiated with any Person to extend the payment date of any accounts payable or commissions or any other Liability of the Business;

(j) the Seller has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) in connection with or affecting the Business;

(k) the Seller has not granted any license or sublicense of any rights under or with respect to the Ultrasonics Intellectual Property;

(l) the Seller has not entered into any employment contract or collective bargaining agreement, written or oral, in connection with or affecting the Business or modified the terms of any existing such contract or agreement;

(m) [intentionally omitted];

(n) the Seller has maintained the inventory of the Business at levels commensurate with sales experience and otherwise within the Ordinary Course of Business;

(o) the Seller has not written down the value of any Acquired Asset on its books or records, except for depreciation and amortization taken in the Ordinary Course of Business; and

(p) the Seller has not committed to do any of the foregoing.

5.6 Absence of Liabilities .

Except as set forth on Schedule 5.6 , (a) the Seller has no Funded Indebtedness, and (b) the Seller has no Liabilities in connection with the Business, and (c) the Seller has no Liabilities which are or may be secured by a Lien on any of the Acquired Assets.

5.7 Creditors; Bankruptcy, Etc.

The Seller is not involved in any Proceeding by or against the Seller as a debtor in any court under the United States Bankruptcy Code or any other insolvency or debtors’ relief act, whether foreign, international, provincial, state, local or federal, or for the appointment of a trustee, receiver, liquidator, assignee, sequestrator or other similar official of the Seller or for a substantial part of the property of the Seller.

5.8 Legal Compliance .

In its conduct of the Business, the Seller has complied, and is in compliance in all Material respects, with all applicable Laws, Environmental and Safety Requirements, Orders and Permits, and no Proceeding is pending or, to the Knowledge of the Seller, threatened, alleging any failure to so comply. Schedule 5.8 sets forth a list of all Permits under which the Seller is operating or bound except where the failure to have any such Permit would not have a Material Adverse Effect. Such Permits (a) constitute all Permits used or required in the conduct of the Business as presently conducted, (b) are in full force and effect, (c) are assignable by Seller, (d) have not been violated in any respect and (e) are not subject to any pending or, to the Knowledge of the Seller, threatened Proceeding seeking their revocation or limitation. Upon the Seller’s delivering any required notices and obtaining any necessary consents as specifically set forth in Schedule 5.8 , the Permits will continue in full force and effect on substantially identical terms for the benefit of the Buyer following the consummation of the transactions contemplated hereby and by the other Documents, without any further action by any of the Parties.

5.9 Title to Assets .

(a) Except as set forth on Schedule 5.9(a) , (i) the Seller has good and marketable title, free and clear of all Liens (other than Permitted Liens), to all of the Acquired Assets, and (ii) with the exception of the Excluded Assets and inventory or other assets previously disposed of in the Ordinary Course of Business, the Acquired Assets include all assets, properties and interests in properties previously or presently used by or necessary for the conduct of the Business by the Seller and, immediately after the Closing, the Buyer, in the Ordinary Course of Business. Except as set forth on Schedule 5.9(a) , no other Person owns any asset that is or has been used by, related to and/or necessary for the conduct of the Business.

(b) Except as set forth on Schedule 5.9(b) , the machinery, equipment and other tangible assets included in the Acquired Assets are in good working order and condition (reasonable wear and tear excepted) in the Ordinary Course of Business (subject to routine maintenance and repair for similar assets of like age), fit for the use for which the Seller has been using them, and usable in the Ordinary Course of the Business. The Seller owns or leases under valid leases all machinery, equipment and other tangible assets necessary for the conduct of the Business as conducted as of the date hereof.

(c)  Schedule 5.9(c) contains a true and complete listing of all Material tangible assets included in the Acquired Assets, other than inventory. Schedule 5.9(c) specifies the locations of the Material tangible assets included in the Acquired Assets, other than inventory. At all times during which the Seller owned such tangible assets, none of such tangible assets was located (or, in the case of the vehicles, garaged) at any location other than the locations set forth on Schedule 5.9(c) , except for (i) periods in which such tangible assets were in transit in the Ordinary Course of Business or stored in a warehouse, and (ii) periods in which such tangible assets were being repaired off premises in the Ordinary Course of Business.

5.10 Inventory .

(a)  Schedule 5.10 summarizes the inventory value of the Business as of June 30, 2006, June 30, 2007, June 30, 2008, December 31, 2008, and the most recent month end. Except for the Wells’ Lien, the Seller owns all of the inventory of the Business free and clear of all Liens, subject only to Permitted Liens. The inventory of the Business consists of raw materials, work-in-process, finished goods and packaging as set forth on Schedule 5.10 .

(b) The finished goods of the Business are fit for the purpose for which they were manufactured and do not contain slow-moving, obsolete, damaged or defective inventory in excess of historical percentage levels. For purposes of this Agreement, “slow-moving” means any item of finished goods the sale of which by the Seller has taken or is likely to take in excess of that experienced by the Seller in the Ordinary Course of Business. Since June 30, 2008, the finished goods of the Business have been purchased or manufactured in the Ordinary Course of Business consistent with sales of the Business and reasonably anticipated requirements of the Seller and its customers.

(c) The raw materials and work-in-process of the Business consist of a quality and quantity usable in the Ordinary Course of Business. Since June 30, 2008, the raw materials and work-in-process of the Business have been purchased or manufactured in the Ordinary Course of Business consistent with sales of the Business and reasonably anticipated requirements of the Seller and its customers.

5.11 Tax Matters .

(a) Except as set forth on Schedule 5.11(a) , the Seller and each other entity included in any consolidated, combined or unitary Tax Return or in any group filing in which the Seller is or has been a member (a “ Seller Tax Group ”), (A) have timely paid all income and other material Taxes required to be paid by them through the date hereof (whether or not such Taxes are shown on any Tax Return) and (B) have filed or caused to be filed in a timely manner (within any applicable extension periods) all income and other material Tax Returns required to be filed by them with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed, and all such Tax Returns are true, correct and complete in all respects. In the past five (5) years, no claim has been made by an authority in a jurisdiction where the Seller does not file Tax Returns that the Seller is or may be subject to taxation by that jurisdiction.

(b) Except as set forth on Schedule 5.11(b) :

(i) no Liens have been filed and the Seller has not been notified by the Internal Revenue Service or any other taxing authority that any issues have been raised (and are currently pending) by the Internal Revenue Service or such other taxing authority in connection with the Seller or any Tax Return of the Seller;

(ii) except as set forth on Schedule 5.11(b)(ii) , there are no pending Tax audits of the Seller nor any of its Tax Returns; and

(iii) except as set forth on Schedule 5.11(b)(iii) , no unresolved deficiencies or additions to Taxes have been proposed, asserted or assessed against the Seller.

5.12 Intellectual Property .

(a)  Schedule 5.12(a) identifies (i) all (A) registered patents and patent applications, (B) trademark and service mark registrations and applications therefor, (C) Material unregistered trademarks and service marks, (D) copyright registrations and applications therefor, and (E) registered trade names and assumed names, developed by, or on behalf of, or owned by, the Seller, used in connection with the Business, and (ii) each license, agreement or other permission which the Seller has granted to any third party with respect to any Ultrasonics Intellectual Property (“ Licensed Intellectual Property ”).

(b) Except as set forth on Schedule 5.12(b) ,

(i) to the Knowledge of the Seller, the Seller has not interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of third parties or committed any acts of unfair competition in its conduct of the Business, and the Seller has not received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation, conflict or act of unfair competition;

(ii) the Seller owns, has the right to use, sell, license and dispose of, and has the right to bring actions for the infringement of, and, where necessary, has made timely and proper application for, all Intellectual Property (other than the Licensed Intellectual Property) necessary or required for the conduct of the Business as currently conducted and as proposed to be conducted and, to the Knowledge of the Seller, such rights to use, sell, license, dispose of and bring actions are exclusive with respect to such Intellectual Property other than fees and payments with respect to Licensed Intellectual Property identified on Schedule 5.12(a) ;

(iii) there are no royalties, honoraria, fees or other payments payable by the Seller to any Person by reason of the ownership, use, license, sale or disposition of the Intellectual Property used in the Business;

(iv) no activity, service or procedure currently conducted or proposed to be conducted by the Seller in the Business violates or will violate any agreement related to the Business governing the use of Intellectual Property;

(v) to the Knowledge of the Seller, no patent, formulation, invention, device, application or principle nor any Law exists that would have or could reasonably be expected to have a Material Adverse Effect on the Business;

(vi) the Seller has not sent to any third party in the past five (5) years or otherwise communicated to another Person any charge, complaint, claim, demand or notice asserting infringement or misappropriation of, or other conflict with, any Intellectual Property right of the Seller by such other Person or any acts of unfair competition by such other Person, nor, to the Knowledge of the Seller, is any such infringement, misappropriation, conflict or act of unfair competition occurring or threatened; and

(vii) the Seller has taken reasonable and practicable steps (including, without limitation, entering into confidentiality and nondisclosure agreements with all officers, directors, managers, members and employees of, and consultants to, the Seller with access to or knowledge of the Intellectual Property) designed to safeguard and maintain the secrecy and confidentiality of, and its proprietary rights in, all Intellectual Property.

5.13 Contracts and Commitments .

Schedule 5.13 lists all of the following contracts or other arrangements (written or oral) related to the Business to which the Seller is a party or by which it or its assets are bound:

(a) contracts relating to the manufacture, purchase, distribution, marketing or sales of the Seller’s or any other Person’s products or services (other than purchase and sales orders entered into in the Ordinary Course of Business consistent with past practices and the performance of which by the parties thereto is reasonably expected to be substantially completed within sixty (60) days of the execution thereof), including all volume rebate agreements, “bill and hold” or other similar arrangements, and all contracts which designate the Seller as an exclusive manufacturer or supplier of any product or service;

(b) contracts, agreements or arrangements for the employment of any officer, individual employee, or other Person on a full-time, part-time, consulting or other basis (excluding oral, at-will employment arrangements the generic terms of which are described on an aggregate basis ( i.e. , ranges of wages of salary, typical benefits, etc.) on Schedule 5.13 );

(c) instruments, agreements or indentures relating to Funded Indebtedness or to the mortgaging, pledging or otherwise placing a Lien on any asset or group of assets of the Seller;

(d) guarantees of any obligation for borrowed money or otherwise;

(e) agreements with respect to the lending or investing of funds;

(f) leases or agreements under which the Seller is the lessee, sublessee, occupant, holder or operator of any real or personal property owned by any other party;

(g) leases or agreements under which the Seller is the lessor or sublessor of or permits any third party to occupy, hold or operate any real or personal property owned or controlled by the Seller;

(h) assignments, licenses, indemnifications or agreements with respect to any form of intangible property, including, without limitation, any Intellectual Property or confidential information;

(i) contracts or groups of related contracts with the same party for the purchase or sale of products or services, including all purchase orders and sales orders;

(j) research and development agreements;

(k) any contracts containing covenants not to compete or similar provisions (A) binding on the Seller, (B) restricting other Persons for the benefit of the Seller or (C) which otherwise restrict competition granted by the Seller in favor of a third party;

(l) contracts which contain a “most favored customer” or similar provision;

(m) contracts under which the amount payable by the Seller is dependent on the revenues or income or similar measure of the Business (or any part thereof), or under which the Seller is obligated to pay royalties, commissions or similar payments to any Person;

(n) marketing, agency, advertising, sales representative, broker, subscription, list management, printing, distribution, fulfillment or similar contracts; or

(o) other agreements or instruments which are otherwise Material to the Business, and which are not listed in the foregoing clauses of this Section 5.13 ;

(collectively, the “ Material Contracts ”).

Each Material Contract is valid and enforceable against the Seller and the other parties thereto, subject to applicable bankruptcy and insolvency Laws and statutes. Except as specifically disclosed on Schedule 5.13 , the Seller has performed in all respects all obligations required to be performed by it and is not in default under or in breach of nor in receipt of any claim of default or breach under any Material Contract; and no event has occurred which with the passage of time or the giving of notice or both would result in a default or breach under any such Material Contract. No other party to any Material Contract is in default under or in breach of such Material Contract and no event has occurred which with the passage of time or giving of notice or both would result in a default or breach under any such Material Contract. Except as disclosed on Schedule 5.13 , each Material Contract is assignable by the Seller. The unfulfilled sales orders with customers listed on Schedule 1.1(d) and the unfulfilled purchase orders entered into with suppliers listed on Schedule 1.1(d) are assignable by the Seller. The Seller has supplied the Buyer with (i) a true, correct and complete copy of each Material Contract, together with all amendments, waivers or other changes thereto, and (ii) a reasonably complete description of all material terms of all oral agreements covered by this Section 5.13 to which the Seller is a party.

5.14 Insurance .

The Seller maintains insurance coverage of a type and amount customary for entities of similar size engaged in similar lines of business. All of Seller’s current insurance policies are in full force and effect and the Seller is not in default with respect to its obligations under any of such insurance policies. The Seller has not received any notification of cancellation or modification of any of such insurance policies or that any claim outstanding is expected to cause a Material increase in the Seller’s insurance rates. To the Knowledge of the Seller, there are no facts or circumstances which exist that might relieve any insurer under such insurance policies of its obligations to satisfy in full claims thereunder.

5.15 Litigation .

Except as set forth on Schedule 5.15 , there are no Proceedings pending or, to the Seller’s Knowledge, threatened against the Seller and, to the Knowledge of the Seller, except as set forth on Schedule 5.15 , there is no Basis for any of the foregoing. None of the Proceedings listed on Schedule 5.15 could have a Material Adverse Effect on the Seller or the Business. Schedule 5.15 also sets forth all Proceedings involving the Seller during the last five (5) years which (i) alleged criminal conduct by the Seller, (ii) resulted in the Seller or its Affiliates paying or receiving an amount in excess of $25,000 in connection with the adjudication or compromise of such matter or (iii) had, or could reasonably be expected to have, a Material Adverse Effect on the Seller or the Business. All materials provided to the Buyer relating to any matters described on Schedule 5.15 are true, correct and complete. Schedule 5.15 identifies the pending Proceedings that are covered by insurance policies and/or the defense of which has been assumed by the insurance carrier and sets forth the applicable insurance carrier and insurance policy. Such insurance carriers have not delivered any reservations of rights or indicated any objections or reservations whatsoever with respect to such insurance carriers’ obligation to provide a defense against the claims asserted in such Proceedings and to pay the amounts of damages or settlement amounts arising from the claims of such Proceedings.

5.16 [Intentionally Omitted] .

5.17 [Intentionally Omitted] .

5.18 Environment and Safety .

The Seller has complied with, and the Business and the Acquired Assets are in compliance with, all Environmental and Safety Requirements. Schedule 5.18 contains a list of all Permits required under all Environmental and Safety Requirements for the operation of the Business, and the ownership, operation or occupation of the Acquired Assets. The Seller has accurately prepared and timely filed with the appropriate Governmental Authorities all reports, notifications, and filings required pursuant to Environmental and Safety Requirements for the operation of the Business and the ownership, operation or occupation of the Acquired Assets. The Seller has not received any notice or other information regarding any actual or alleged violation of, any actual or potential Liability under, or any corrective or remedial obligation under, any Environmental and Safety Requirements with respect to the Business or the Acquired Assets.

5.19 Customers and Suppliers .

(a)  Schedule 5.19(a) lists the ten (10) largest customers (and total sales, in dollars, to each such customer) and the ten (10) largest suppliers (and total purchases, in dollars, from each such supplier) of the Business during the Seller’s fiscal years ended June 30, 2007 and June 30, 2008, and for the six (6) months ended December 31, 2008. Except as set forth on Schedule 5.19(a) , no such customer or supplier of the Business has terminated, reduced or materially modified its business (including as a result of engaging in business with foreign suppliers) with the Seller since June 30, 2006. No changes have occurred to the customer base other than in the Ordinary Course of Business. Except as set forth on Schedule 5.19(a) , the Seller has not received any notice or otherwise has any reason to believe (other than because of the current economic conditions), that any of the customers or suppliers listed on Schedule 5.19(a) intends, or is reasonably likely, to terminate, reduce or materially modify its business (including as a result of engaging in business with foreign suppliers) with the Seller.

(b) Without limiting the foregoing, except as set forth on Schedule 5.19(b)(i) , in the six (6) months preceding the Closing Date, the Seller has not engaged in rebate, discount, advance sale programs, volume discounts, or other programs or arrangements (such as arrangements to sell to customers products or services in excess of such customers’ reasonably foreseeable requirements) with customers of the Business which would reasonably be expected to result in such customers reducing, temporarily or permanently, their purchases of products or services from the Buyer after the Closing. Schedule 5.19(b)(ii) identifies all “bill and hold” or consignment arrangements entered into with customers.

(c) Other than as set forth on Schedule 5.19(c) , since June 30, 2008, the Seller has not offered, become bound by and/or become a party to any trade deals, trade promotions or programs, trade refunds or cooperative programs or any consumer promotions and programs (including, without limitation, premiums and reb