TERMINATION AND RELEASE AGREEMENT

Exhibit 10.1

TERMINATION AND RELEASE AGREEMENT

THIS TERMINATION AND RELEASE AGREEMENT (this “ Agreement ”) is made and entered into as of this 30th day of June, 2007, by and between Seiko Instruments Inc., a corporation organized and existing under the laws of Japan, with offices at 8, Nakase 1-chome, Mihama-ku, Chiba-shi, Chiba 261-8507, Japan (“ SII ”), and Franklin Electronic Publishers, Inc., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A, with offices at One Franklin Plaza, Burlington, New Jersey 08016-4907, U.S.A. (“ FEP ”).

(SII and FEP are referred to herein individually as a “ Party ” and collectively as the “ Parties ”.)

RECITALS

A. WHEREAS , SII and FEP are parties to various agreements relating to the supply, distribution and licensing of electronic reference products listed in Schedule 1 hereto which are referred to therein respectively as the US Agreement, the Omnibus Agreement, the CTTA, and the TLA (collectively the “ Subject Agreements ”).

B. WHEREAS , on and subject to the terms and conditions of this Agreement, SII and FEP desire to terminate the Subject Agreements.

C. WHEREAS , concurrent with the execution and delivery of this Agreement, SII and FEP are executing and delivering three certain additional agreements to provide for an orderly transition upon termination of the Subject Agreements and to memorialize certain follow-on commercial arrangements (which agreements are collectively defined herein as the “New Agreements” or, in the case of any one such agreement alone, a “New Agreement”).

NOW , THEREFORE , in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations and warranties of each Party set forth herein, the Parties, intending to be legally bound hereby, agree as follows:

1.1 Definitions . As used herein, the following terms shall have the respective meanings assigned to them below:

“ Agreement ” is defined in the preamble hereto.

“ Continuing Agreements ” shall mean, collectively, (i) that certain Settlement Agreement and General Release dated as of October 2, 2002, among SII, FEP and Seiko Instruments U.S.A., Inc. (the “Settlement Agreement”), (ii) that certain Cross License Agreement dated as of October 2, 2002, between SII and FEP, as amended by that certain Amendment Agreement dated as of January 7, 2003, between SII and FEP (the “Cross License”), (iii) that certain Technology Transfer Evaluation and Licensing Agreement dated

as of June 1, 2003, between SII and FEP (the “Chip License”), and (iv) that certain Trademark and Copyright Sublicense Agreement dated as of October 6, 2005, between SII and FEP, as amended by that certain Amendment to Trademark and Copyright Sublicense Agreement dated as of February 16, 2006, between SII and FEP (the “Sudoku License”).

“ FEP ” is defined in the preamble hereto.

“ New Agreements ” shall mean, collectively, the following agreements of even date herewith between SII and FEP, each of which is being executed and delivered concurrent with this Agreement in the form and substance set forth, respectively, in Exhibits A, B, and C which are attached hereto and made a part hereof: (i) that certain Short-Term Supply and Services Agreement (the “STSSA”) as set forth in Exhibit A; (ii) that certain Supply and Distribution Agreement (the “Australia Agreement”) as set forth in Exhibit B; and (iii) that certain License Agreement (the “New License”) as set forth in Exhibit C.

“ Party ” and “ Parties ” are defined in the preamble hereto.

“ SII ” is defined in the preamble hereto.

“ Subject Agreements ” is defined in the recitals hereto.

“ Surviving Provisions ” is defined in Section 2.4(a).

“ Termination Date ” shall mean the date on which SII completes its payment obligation to FEP in a timely manner as set forth in Section 2.3 herein.

1.2 Interpretation . The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context requires otherwise, Section headings used herein are for convenience of reference only, do not form a part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

2.1 Termination . Each of the Subject Agreements is terminated by mutual agreement of the Parties with effect as and from the Termination Date. For avoidance of doubt, the Parties acknowledge and agree (i) that the Product Development Agreement between the Parties dated as of October 1, 2004 has expired by its terms and (ii) that that certain Retail Distribution Agreement dated June 25, 2004 by and between FEP and Seiko UK Ltd. is not one of or part of one of the Subject Agreements.

2.2 Execution and Delivery of New Agreements : The Parties agree to execute and deliver the New Agreements in the form and substance set forth in Exhibits A, B, and C hereof on the date of execution hereof, which execution and delivery shall be a condition precedent to this Agreement. The Parties acknowledge and agree that, without the timely execution and delivery of each of the New Agreements in such form and substance, this Agreement shall be of no effect and shall be null and void.

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2.3 Termination Payment by SII . In consideration of FEP’s agreement to terminate the Subject Agreements, SII shall, on or before July 31, 2007, pay to FEP the sum of Three Million United States Dollars (US$3,000,000) by wire transfer of immediately available funds in accordance with the following wire transfer instructions:

PNC Bank, NA

East Brunswick, NJ

Account #8009779117

Beneficiary: Franklin Electronic Publishers, Inc.

ABA #031207607

The parties acknowledge and agree that in the case in which SII fails to complete its payment obligation in a timely manner as set forth in this Section 2.3, this Agreement shall be null and void.

2.4 Acknowledgements . Each Party hereby irrevocably agrees, confirms and acknowledges that:

(a) notwithstanding the terminations that may be effected hereby, each of the provisions of any one of the Subject Agreements which by the express terms of the applicable Subject Agreement are to survive any termination or expiration of such Subject Agreement shall survive and continue in effect in accordance with such terms, subject to any agreed modifications or superseding provisions that may be set forth with specificity in one or more of the New Agreements or in this Agreement; provided, however, that the Parties acknowledge and agree that any and all indemnification provisions set forth in the CTTA shall survive the termination thereof (collectively the “ Surviving Provisions ”) ; and

(b) this Agreement shall have no effect whatsoever on either Party’s rights or obligations under any of the Continuing Agreements, each of which shall continue in full force and effect in accordance with its terms, subject to such amendments, modifications, or strikings, if any, as may be specifically agreed between the Parties pursuant to this Agreement, the New Agreements, or otherwise in writing.

3.1 Mutual Releases .

(a) Effective as of the Termination Date, SII, for itself and each of its subsidiaries, affiliates, officers, directors, agents, attorneys, sub-distributors, successors and assigns, hereby fully, irrevocably and unconditionally releases, acquits and forever discharges FEP and its subsidiaries, affiliates, officers, directors, agents, attorneys, sub-distributors (and their respective officers, directors, attorneys, and agents), and their successors and assigns of and from any and all claims, liabilities, obligations, demands, causes of action, damages, costs, losses, debts and expenses, including any claims for court costs or attorneys’ fees, of whatever kind or nature, whether known or unknown, asserted or raised, suspected or claimed,

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whether fixed, contingent, liquidated, unliquidated, disputed or undisputed, presently existing or arising in the future, and whether arising in contract, tort, under statute, at law or in equity, that arise out of, or are in any way related to each and all of the Subject Agreements; and

(b) Effective as of the Termination Date, FEP, for itself and each of its subsidiaries, affiliates, officers, directors, agents, attorneys, sub-distributors, successors and assigns, hereby fully, irrevocably and unconditionally releases, acquits and forever discharges SII and its subsidiaries, affiliates, officers, directors, agents, attorneys, sub-distributors (and their respective officers, directors, attorneys, and agents), and their successors and assigns of and from any and all claims, liabilities, obligations, demands, causes of action, damages, costs, losses, debts and expenses, including any claims for court costs or attorneys’ fees, of whatever kind or nature, whether known or unknown, asserted or raised, suspected or claimed, whether fixed, contingent, liquidated, unliquidated, disputed or undisputed, presently existing or arising in the future, and whether arising in contract, tort, under statute, at law or in equity, that arise out of, or are in any way related to each and all of the Subject Agreements.

(c) Each of SII and FEP, being familiar with and fully aware of California Civil Code § 1542, which provides that:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR”,

hereby freely and voluntarily waives any and all rights or benefits that it has or may come to have pursuant to said code section, as well as pursuant to any statutes or common law principles of similar effect.

3.2 Releases Unconditional . For the avoidance of doubt, the Parties hereby agree, confirm and acknowledge that the termination of the Subject Agreements effected as of the Termination Date hereby and the mutual releases granted hereunder as of the Termination Date are irrevocable and unconditional. Without limiting the generality of the foregoing, the Parties further agree, confirm and acknowledge that no breach or default under, or termination of, any of the New Agreements or Continuing Agreements, or failure to perform any of the Surviving Provisions, shall in any event affect the continued validity or enforceability of this Agreement or otherwise constitute grounds for challenging, invalidating, rescinding, avoiding or otherwise denying full effect to the provisions hereof or for unwinding the termination of the Subject Agreements effected hereby as of the Termination Date.

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4.1 Representations and Warranties of SII . SII represents and warrants to FEP that, as of the date of this Agreement:

(a) SII is a corporation duly incorporated and validly existing under the laws of Japan, with full power and authority to own its assets and conduct its business as presently conducted and as proposed to be conducted.

(b) SII has full corporate power and authority to enter into this Agreement and to exercise its rights and perform its obligations hereunder. All corporate actions and procedures necessary to authorize its execution, delivery and performance of this Agreement have been taken.

(c) All acts, conditions and things (including the obtaining of any third party or governmental consents) which are necessary or prudent to be done, fulfilled, obtained or performed by SII in connection with its execution, delivery or performance of this Agreement have been done, fulfilled and/or performed, are in full force and effect and are not subject to any pending or threatened proceedings.

(d) This Agreement has been duly executed and delivered by SII’s authorized representative and, assuming the due authorization, execution and delivery hereof by FEP, constitutes and will at all times constitute the legal, valid and binding obligation of SII enforceable against SII in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity.

(e) SII’s execution, delivery and performance of this Agreement will not result in contravention of (i) its constitutive documents, (ii) any contractual provision to which it is subject or by which its assets are bound, (iii) any laws, rules or regulations applicable to it or its property, or (iv) any judgment, injunction, order or decree binding on it or any of its assets.

4.2 Representations and Warranties of FEP . FEP represents and warrants to SII that, as of the date of this Agreement:

(a) FEP is a corporation duly incorporated and validly existing under the laws of the Commonwealth of Pennsylvania, U.S.A., with full power and authority to own its assets and conduct its business as presently conducted and as proposed to be conducted.

(b) FEP has full corporate power and authority to enter into this Agreement and to exercise its rights and perform its obligations hereunder. All corporate actions and procedures necessary to authorize its execution, delivery and performance of this Agreement have been taken.

(c) All acts, conditions and things (including the obtaining of any third party or governmental consents) which are necessary or prudent to be done, fulfilled, obtained or performed by FEP in connection with its execution, delivery or performance of this Agreement have been done, fulfilled and/or performed, are in full force and effect and are not subject to any pending or threatened proceedings.

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(d) This Agreement has been duly executed and delivered by FEP’s authorized representative and, assuming the due authorization, execution and delivery hereof by SII, constitutes and will at all times constitute the legal, valid and binding obligation of FEP enforceable against FEP in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity.

(e) FEP’s execution, delivery and performance of this Agreement will not result in contravention of (i) its constitutive documents, (ii) any contractual provision to which it is subject or by which its assets are bound, (iii) any laws, rules or regulations applicable to it or its property, or (iv) any judgment, injunction, order or decree binding on it or any of its assets.

5.1 Confidentiality . Each Party shall hold in confidence the terms of this Agreement provided, however, that nothing in this Section 5.1 shall prevent a Party from disclosing information:

(a) which becomes generally available to the public other than as a result of a wrongful disclosure by such Party;

(b) which becomes available to such Party from other sources not known by such Party to be bound by a confidentiality obligation; or

(c) to the extent required by law. SII understands and acknowledges that this Agreement and certain of the terms of this Agreement have been disclosed by FEP in connection with the execution of the MOU as defined herein and that additional disclosure will be made by FEP in connection with the execution and delivery of this Agreement.

5.2 Governing Law . This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York, U.S.A., without giving effect to the conflict of laws principles thereof.

5.3 Dispute Resolution . All disputes arising out of or in connection with this Agreement shall be finally and conclusively settled by arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“Rules”), subject to the following:

(a) Absent an agreement between the Parties to the contrary, each Party to the arbitration shall appoint one (1) arbitrator and the two (2) arbitrators so selected shall nominate the third arbitrator. If the two (2) arbitrators nominated by the Parties cannot agree on a third arbitrator, the third arbitrator shall be appointed in accordance with the Rules.

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(b) The arbitration proceedings shall take place in San Francisco, California, U.S.A.

(c) The arbitration shall be conducted in the English language, provided that either Party may submit testimony or documentary evidence in Japanese (with English translations to be provided at the request and cost of the other Party).

(d) The award rendered by the arbitral tribunal shall be binding upon the Parties and may include award of costs, including reasonably attorneys’ fees and disbursements. Judgment on the award may be entered in any court having jurisdiction thereof.

(e) At the request of either Party, the arbitral tribunal may issue any order for interim relief, including injunctive relief, it deems necessary. The arbitral tribunal shall have the power, inter alia , to order that neither Party take any action inconsistent with this Agreement during the pendency of the arbitral proceedings. Each Party shall also have the right to seek injunctive or other equitable relief from any court of competent jurisdiction, which right shall not be deemed incompatible with, or a waiver of, the agreement to arbitrate set forth in this Section 5.3.

5.4 Expenses . Each Party shall bear its own costs and expenses incurred in connection with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, the fees of any attorneys, accountants and other advisors engaged by such Party.

5.5 Notices . Unless otherwise agreed in writing by the Parties, all notices, requests, demands and other communications required by, or made in connection with, this Agreement shall be in writing in English and shall be delivered personally, made by certified or registered airmail, return receipt requested, by recognized overnight courier or by facsimile transmission, and shall be sent to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice, provided that notices of a change of address shall become effective only upon actual receipt thereof):

If to SII:

Seiko Instruments Inc.

8, Nakase 1-chome

Mihama-ku, Chiba-shi, Chiba 261-8507

Japan

Telephone:                                         

Facsimile:                                            

Attention:                                         

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If to FEP:

Franklin Electronic Publishers, Inc.

One Franklin Plaza

Burlington, New Jersey 08016-4907

U.S.A.

Telephone: 609 386 2500x6000

Facsimile: 609 3870082

Attention: Barry Lipsky, President and CEO

cc: Arnold Levitt, CFO

Such notices shall be deemed to have been received, (i) if delivered in person or by courier, upon actual receipt by the intended recipient, (ii) if sent by facsimile, transmission confirmed, on the date of transmission unless transmitted after normal business hours at the place of receipt, in which case on the following business day at the place of receipt, or (iii) if mailed, upon the date of first attempted delivery.

5.6 Assignment . Neither this Agreement nor any of the rights, benefits or obligations under this Agreement may be assigned by any Party without the prior written consent of the other Party.

5.7 Amendments and Waivers . No term or provision of this Agreement may be amended, waived, discharged or terminated except through an instrument in writing signed by the Party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in the specific instance and only in accordance with its express terms and conditions. No failure on the part of any Party to exercise, and no delay in exercising, any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

5.8 Entire Agreement . This Agreement and the New Agreements constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede in its entirety all prior agreements and understandings, express or implied, oral or written among them with respect thereto, including that certain Memorandum of Understanding between SII and FEP dated as of June 13, 2007 (“MOU”), which is hereby terminated in full.

5.9 Binding Effect . The terms and provisions hereof shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

5.10 Severability . If any provision hereof or obligation hereunder is held or found to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof or obligations hereunder shall not in any way be affected or impaired thereby.

5.11 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument.

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5.12 Rights and Remedies Cumulative . The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any other rights or remedies provided by law or otherwise.

[signature pages follow]

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IN WITNESS WHEREOF , the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

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SCHEDULE 1

Subject Agreements

1. Distribution Agreement dated as of January 7, 2003, as amended by Exhibit A to the Omnibus Development and Distribution Agreement dated as of June 25, 2004 (“US Agreement”)

2. Omnibus Development and Distribution Agreement dated as of June 25, 2004, as amended by that certain Amendment dated as of August 23, 2006 (“Omnibus Agreement”)

3. Cross Technology Transfer Agreement dated as of June 25, 2004, as amended by (i) Amendment dated as of January 12, 2005; (ii) Addendum to the First Amendment dated as of September 9, 2005;(iii) Second Amendment dated as of November 30, 2005; (iv) Addendum to the Second Amendment dated as of August 23, 2006, (v) Second Addendum to the Second Amendment dated as of August 23, 2006; (vi) Third Amendment dated as of September 22, 2005; and (vii) Addendum to the Third Amendment dated as of June 7, 2006 (the “CTTA”)

4. Trademark License Agreement dated as of June 25, 2004 (the “TLA”)

SHORT-TERM SUPPLY AND SERVICES AGREEMENT

THIS SHORT-TERM SUPPLY AND SERVICES AGREEMENT (this “ Agreement ”) is made and entered into as of this 30 ^th day of June, 2007 by and between Seiko Instruments Inc., a corporation organized and existing under the laws of Japan, with offices at 8, Nakase 1-chome, Mihama-ku, Chiba-shi, Chiba 261-8507, Japan (“ SII ”), and Franklin Electronic Publishers, Inc., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, U.S.A, with offices at One Franklin Plaza, Burlington, New Jersey 08016-4907, U.S.A. (“ FEP ”).

(SII and FEP are referred to herein individually as a “ Party ” and collectively as the “ Parties ”.)

RECITALS

A. WHEREAS , concurrent with the execution and delivery of this Agreement, SII and FEP entered into that certain Termination and Release Agreement of even date herewith (the “ Termination Agreement ”) providing for the termination of the Subject Agreements (as defined therein) on the Termination Date as defined therein.

B. WHEREAS , on the terms and conditions set forth herein, the Parties wish to provide on and after the Termination Date for an orderly wind-up of the business arrangements in the Americas, Japan, and Germany that were terminated pursuant to the Termination Agreement.

C. WHEREAS , SII and FEP desire to set forth their respective rights and obligations in respect of such post-termination product supply and after-sales service.

NOW , THEREFORE , in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the representations and warranties of each Party set forth herein, the Parties, intending to be legally bound hereby, agree as follows:

1.1 Definitions . As used herein, capitalized terms shall have the meanings ascribed to them in the Termination Agreement. In addition, the following terms shall have the respective meanings assigned to them below:

“ Agreement ” is defined in the preamble hereto.

“ Ancillary Materials ” shall mean, with respect to any SII Product or FEP Product, packaging materials, manuals and other ancillary materials for such product.

“ FEP ” is defined in the preamble hereto.

“**** indicates where a confidential portion has been omitted and filed separately with the Commission.”

“ FEP Products ” shall mean ****

“ Final German Delivery Date ” ****

“ Final German Order Date ” ****

“ Final US Delivery Date ” ****

“ Final US Order Date ” ****

“ German Tooling ” shall mean tooling for SII Products for German market **** which are owned by SII and used by **** and its subcontractor(s) at their manufacturing facilities for manufacturing such products.

“ Party ” and “ Parties ” are defined in the preamble hereto.

“ SII Products ” shall mean, (i) with respect to the Americas market, those products of SII listed in Schedule A hereto, and (ii) with respect to the German market, those products of SII listed in Schedule B hereto.

“ SII ” is defined in the preamble hereto.

“ Termination Agreement ” is defined in the recitals hereto.

1.2 Interpretation . The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context requires otherwise, Section headings used herein are for convenience of reference only, do not form a part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

1.3 Effective Date. This Agreement shall be effective on and after the Termination Date as defined in the Termination Agreement. In the case in which the Termination Agreement becomes null and void, this Agreement shall be of no effect and shall be null and void.

2.1 SII Products for the Americas Market . Notwithstanding the termination of the US Agreement or any provision to the contrary contained therein (specifically including Article 17 thereof), after the Termination Date SII agrees to continue to supply SII Products for the Americas market in accordance with the following (capitalized terms used in this Section 2.1 that are not listed in Section 1.1 above shall have the respective meanings assigned to them in the US Agreement):

(a) ****

“**** indicates where a confidential portion has been omitted and filed separately with the Commission.”

(b) ****

(c) ****

(d) Purchase prices for the SII Products shall be as set forth in Schedule A hereto.

(e) For each SII Product purchased from SII and distributed in the Americas by FEP pursuant to this Section 2.1, FEP shall provide a product warranty of a scope consistent with the terms of Section 12.1 of the US Agreement.

2.2 SII Products for the German Market . Notwithstanding the termination of the Omnibus Agreement or any provision to the contrary contained therein (specifically including Article 13 of Exhibit F thereto), after the Termination Date SII agrees to continue to supply SII Products for the German market in accordance with the following (capitalized terms used in this Section 2.2 that are not listed in Section 1.1 above shall have the respective meanings assigned to them in Exhibit F to the Omnibus Agreement):

(a) ****

(b) ****

(c) ****

(d) Purchase prices for the SII Products shall be as set forth in Schedule B hereto.

(e) For each SII Product purchased from SII and distributed in the Germany by FEP pursuant to this Section 2.2, FEP shall provide a product warranty of a scope consistent with the terms of Section 10.1 of Exhibit F to the Omnibus Agreement.

2.3 Use of Tooling for German SII Products . SII shall not object to the use of the German Tooling and to the continued manufacture by **** for FEP of the SII Products or derivatives thereof for a period **** for purposes of manufacturing handheld electronic reference products in FEP’s name for sale in the Germany, provided that a request therefore has been submitted in writing by FEP on or prior to ****. Notwithstanding anything contained herein to the contrary, FEP shall, in no event, use the trademarks and logos owned or controlled by SII and the trademark “SEIKO” in relation to SII Products or derivatives thereof (including manuals thereof) to be manufactured by using the German Tooling. At the request and cost of FEP, SII shall render such reasonable non-financial assistance as may be appropriate to secure any third party consents required for such use of the German Tooling and manufacture. In respect of use of the German Tooling as contemplated in this Section 2.3, FEP hereby agrees and acknowledges that:

(a) SII makes no representation or warranty of any kind regarding the German Tooling or the use thereof, including any warranties of merchantability, fitness for a particular purpose or non-infringement of the proprietary rights of any third party;

(b) SII shall have no liability whatsoever for or on account of use of the German Tooling or any products manufactured by or for FEP utilizing the German Tooling;

(c) SII shall have no obligation to provide any technical assistance or support in the use of the German Tooling; and

(d) Notwithstanding FEP’s rights under this Section 2.3, SII shall at all times have priority of use of the German Tooling.

3.1 Warranty Obligations . Notwithstanding termination of the Subject Agreements, the Parties shall continue to honor and perform their respective product warranty obligations under the US Agreement and the Omnibus Agreement.

3.2 After-Sales Service . Notwithstanding any contrary provision in the US Agreement or the Omnibus Agreement, following Termination, each Party shall, or shall cause its subdistributors and/or agents to, continue to provide out-of-warranty services on:

(a) in the case of SII, FEP Products sold or distributed by or for SII pursuant to its distribution rights under the Omnibus Agreement or this Agreement; and

(b) in the case of FEP, all of the products of SII, including, without limitation, SII Products, sold or distributed by or for FEP pursuant to its distribution rights under the US Agreement, the Omnibus Agreement or this Agreement.

Such out-of-warranty services shall in principle be provided by each Party consistent with its current practices, provided that SII and FEP shall each have the right to make such adjustments to its service fees and other service terms as it may deem reasonably necessary or appropriate from time to time in light of prevailing market conditions and other commercial realities.

3.3 Ancillary Materials . The Parties shall supply each other with Ancillary Materials as set forth below, notwithstanding termination of the Subject Agreements:

(a) SII shall provide to FEP, on or before the Final US Delivery Date, the Ancillary Materials for SII Products for Americas market in the quantity agreed to by the Parties.

“**** indicates where a confidential portion has been omitted and filed separately with the Commission.”

(b) SII shall provide to FEP, on or before the Final German Delivery Date, the Ancillary Materials for SII Products for German market in the quantity agreed to by the Parties.

(c) FEP shall provide to SII, on or before the date agreed to by the Parties, the Ancillary Materials for FEP Products for the Japanese market in the quantity agreed to by the Parties.

4.1 Sell-Off Rights . After the Termination Date, the Parties shall have the right to continue to sell inventories of SII Products (in the case of FEP) and FEP Products (in the case of SII) for a limited time following termination in accordance with their respective sell-off rights under the Subject Agreements, provided that, notwithstanding any provision in such agreements to the contrary:

(a) FEP shall have the right to continue to sell SII Products in the Americas for a period of ****;

(b) FEP shall have the right to continue to sell SII Products in Germany for a period of ****; and

(c) SII shall have the right to continue to sell the FEP Products in Japan until the end of ****.

Upon the expiration of a Party’s sell-off rights in a given territory, such Party shall, in accordance with the once applicable provisions of the US Agreement or the Omnibus Agreement, and except to the extent specifically permitted pursuant to that certain Supply and Distribution Agreement of even date herewith between SII and FEP, cease in such territory to promote, market or advertise, or hold itself out as an authorized distributor of, in the case of FEP, SII Products and, in the case of SII, FEP Products.

4.2 Sales . Consistent with past practices under the US Agreement and the Omnibus Agreement, after the Termination Date each Party shall be free to determine the prices at which it will resell, in the case of SII, FEP Products, and, in the case of FEP, SII Products, to its customers during the sell-off periods referred to in Section 4.1 above. ****

4.3 Licenses . Notwithstanding termination of any agreement between the Parties, the Parties hereby agree and acknowledge that:

(a) For so long as, and only for so long as, SII is permitted to continue to sell FEP Products pursuant to Section 4.1 above, SII shall continue to have and enjoy the right to use the trademarks and logos of FEP on the terms set forth in the Trademark License Agreement (except, for the avoidance of doubt, any terms requiring payment of royalties or other amounts by SII).

(b) For so long as, and only for so long as, FEP is permitted to sell SII Products pursuant to Section 4.1 above, FEP shall continue to have and enjoy the right to use the trademarks and logos of SII and the trademark “SEIKO” on the once applicable terms set forth in the US Agreement and the Omnibus Agreement.

5.1 Outstanding Payment Obligations . The Parties agree and acknowledge that, as of the Termination Date, except for the unpaid purchase price consideration for SII Products supplied by SII to FEP prior to the Termination Date, there are no amounts, whether in the nature of royalties, purchase price consideration for products or materials supplied, fees for services rendered or otherwise, due, payable or otherwise standing to the credit of either Party under the Subject Agreements, including any amounts payable as, in respect of or in connection with any “Make Whole Sum”, “Minimum Purchase Target”, “Annual Target”, “Minimum”, “Shortfall” or other minimum purchase commitments, howsoever characterized, under the US Agreement or the Omnibus Agreement. FEP shall pay the said unpaid purchase price consideration to SII in accordance with the terms as once set forth in the US Agreement and the Omnibus Agreement.

5.2 Confidentiality . Notwithstanding any provision in a Subject Agreement that calls for the earlier return or destruction of a Party’s confidential information, each Party shall be entitled to retain the confidential information of the other Party obtained in connection with the Subject Agreements until all of its sell-off rights as set forth in Section 4.1 above have expired, whereupon the confidential information shall be returned or destroyed as set forth in the relevant Subject Agreement.

5.3 Surviving Provisions . Except to the extent specifically modified and superseded by the provisions hereof, the provisions of each Subject Agreement which by the express terms of such agreement are to survive any termination or expiration of that agreement shall survive and continue in effect in accordance with its terms.

6.1 Representations and Warranties of SII . SII represents and warrants to FEP that, as of the date hereof:

(a) SII is a corporation duly incorporated and validly existing under the laws of Japan, with full power and authority to own its assets and conduct its business as presently conducted and as proposed to be conducted.

(b) SII has full corporate power and authority to enter into this Agreement and to exercise its rights and perform its obligations hereunder. All corporate actions and procedures necessary to authorize its execution, delivery and performance of this Agreement have been taken.

(c) All acts, conditions and things (including the obtaining of any third party or governmental consents) which are necessary or prudent to be done, fulfilled, obtained or performed by SII in connection with its execution, delivery or performance of this Agreement have been done, fulfilled and/or performed, are in full force and effect and are not subject to any pending or threatened proceedings.

(d) This Agreement has been duly executed and delivered by SII’s authorized representative and, assuming the due authorization, execution and delivery hereof by FEP, constitutes and will at all times constitute the legal, valid and binding obligation of SII enforceable against SII in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity.

(e) SII’s execution, delivery and performance of this Agreement will not result in contravention of (i) its constitutive documents, (ii) any contractual provision to which it is subject or by which its assets are bound, (iii) any laws, rules or regulations applicable to it or its property, or (iv) any judgment, injunction, order or decree binding on it or any of its assets.

6.2 Representations and Warranties of FEP . FEP represents and warrants to SII that, as of the date hereof:

(a) FEP is a corporation duly incorporated and validly existing under the laws of the Commonwealth of Pennsylvania, U.S.A., with full power and authority to own its assets and conduct its business as presently conducted and as proposed to be conducted.

(b) FEP has full corporate power and authority to enter into this Agreement and to exercise its rights and perform its obligations hereunder. All corporate actions and procedures necessary to authorize its execution, delivery and performance of this Agreement have been taken.

(c) All acts, conditions and things (including the obtaining of any third party or governmental consents) which are necessary or prudent to be done, fulfilled, obtained or performed by FEP in connection with its execution, delivery or performance of this Agreement have been done, fulfilled and/or performed, are in full force and effect and are not subject to any pending or threatened proceedings.

(d) This Agreement has been duly executed and delivered by FEP’s authorized representative and, assuming the due authorization, execution and delivery hereof by SII, constitutes and will at all times constitute the legal, valid and binding obligation of FEP enforceable against FEP in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity.

(e) FEP’s execution, delivery and performance of this Agreement will not result in contravention of (i) its constitutive documents, (ii) any contractual provision to which it is subject or by which its assets are bound, (iii) any laws, rules or regulations applicable to it or its property, or (iv) any judgment, injunction, order or decree binding on it or any of its assets.

7.1 Confidentiality . Each Party shall hold in confidence all confidential information of the other Party obtained by it in connection with this Agreement, including the existence and terms of this Agreement, provided, however, that nothing in this Section 7.1 shall prevent a Party from disclosing information:

(a) which becomes generally available to the public other than as a result of a wrongful disclosure by such Party;

(b) which becomes available to such Party from other sources not known by such Party to be bound by a confidentiality obligation; or

(c) to the extent required by law.

7.2 Governing Law . This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York, U.S.A., without giving effect to the conflict of laws principles thereof.

7.3 Dispute Resolution . All disputes arising out of or in connection with this Agreement shall be finally and conclusively settled by arbitration conducted in accordance with the Commerc