Note 12: Subsequent Events

Sale of CoaLogix

On July 28, 2011, the Company entered into a Stock Purchase and Contribution Agreement (the “Stock Purchase Agreement”) with EnerTech Capital Partners III L.P. (“EnerTech”), certain management employees of CoaLogix (collectively with the Company, the “Sellers”), CoaLogix and CoaLogix Holdings, Inc. (the “Buyer”) pursuant to which the Sellers have agreed to sell all the outstanding capital stock of CoaLogix to the Buyer for $101 million in cash. The sale price of $101 million is before certain adjustments, including the assumption of certain debt of CoaLogix.

The Company owns approximately 65% of CoaLogix on a fully diluted basis and is expected to receive net proceeds of approximately $61.8 million before taxes from the sale.

The Stock Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions and is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close in the third quarter of 2011.

The Company will continue to consolidate CoaLogix’ results from operations until the close of the transaction. Following the close of the transaction, all of CoaLogix’ historic results will be included in discontinued operations.

See the Company’s CoaLogix segment (Note 11) for the operating results of CoaLogix for the three and six months ending June 30, 2011. The carrying amounts of CoaLogix’ assets and liabilities on the Company’s balance sheet as at June 30, 2011 are as follows:

Current assets:
Cash and cash equivalents	$	1,363
Restricted deposits		108
Accounts receivable		1,521
Unbilled revenue and work-in-process		2,522
Inventory		5,224
Other current assets		1,071
Total current assets		11,809
Property and equipment, net		9,931
Intangible assets, net		4,351
Goodwill		3,714
Other assets		72
Total assets	$	29,877

Current liabilities:
Short-term bank credit and current maturities of long-term bank debt	$	723
Accounts payable		4,043
Accrued payroll, payroll taxes and social benefits		379
Other current liabilities		2,364
Total current liabilities		7,509
Long-term liabilities:
Long-term debt		75
Other long-term liabilities		468
Total long-term liabilities		543
Total liabilities	$	8,052

Renewal of Loan Agreement by CoaLogix

On July 25, 2011, CoaLogix and its subsidiaries entered into an Amended and Restated Loan and Security Agreement with its bank with an effective date of July 1, 2011. Under the agreement, the credit facility was extended for the $4 million formula based line of credit. The credit facility was also modified to add a $3 million term loan, and to remove a $1 million non-formula based line-of-credit. Prior to advances on the term loan, CoaLogix is required to receive new equity or subordinated debt from its investors in an amount equal to or in excess of one-third of the amount of such term loan. The Company and EnerTech, have committed to loan such capital to CoaLogix (in July 2011, the Company and EnerTech lent $364 and $146, respectively to CoaLogix). The formula based line-of-credit matures June 30, 2012 and has an interest rate of the greater of 1.50% above prime rate or 5.50%. The term loan is available through July 15, 2012, matures July 15, 2014, and has an interest rate of the greater of 2.50% above prime rate or 6.50%. The maximum amount of outstanding credit under the facility remains at $5 million.