Exhibit 10.1
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
CHRISTOPHER J. GRAFF,
SJC INDUSTRIES CORP.
AND
THOR INDUSTRIES, INC.
Effective as of
March 1, 2010

--------------------------------------------------------------------------------

 

STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS

         
ARTICLE I DEFINITIONS
    1  
 
       
1.1 Defined Terms
    1  
 
       
ARTICLE II PURCHASE AND SALE; CLOSING; PURCHASE PRICE
    10  
 
       
2.1 Purchase and Sale
    10  
2.2 The Closing
    10  
2.3 Purchase Price Consideration; Adjustment
    10  
2.4 Escrow
    12  
2.5 Determination of Adjusted Gross-Up Basis for Tax Purposes
    13  
 
       
ARTICLE III INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
    13  
 
       
3.1 Power
    13  
3.2 Purchased Shares
    14  
3.3 Litigation
    15  
3.4 Enforceability
    15  
3.5 No Violation
    15  
3.6 No Acquisitions
    15  
3.7 Brokerage
    15  
3.8 Third Party Consents
    15  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND THE COMPANY
    16  
 
       
4.1 Organizational Matters
    16  
4.2 Capitalization
    16  
4.3 Subsidiary
    17  
4.4 No Violation
    17  
4.5 No Conflicts; Third Party Consents
    18  

-i-

--------------------------------------------------------------------------------

 

         
4.6 Financial Statements; Absence of Undisclosed Liabilities; Indebtedness
    18  
4.7 Tax Matters
    18  
4.8 Absence of Certain Changes
    20  
4.9 Assets
    22  
4.10 Bank Accounts
    23  
4.11 Litigation
    24  
4.12 Compliance With Laws
    24  
4.13 Material Contracts
    24  
4.14 Employee Matters
    26  
4.15 Employee Benefit Plans
    26  
4.16 Environmental Matters
    29  
4.17 Proprietary Rights
    30  
4.18 Brokerage
    30  
4.19 Inventories
    30  
4.20 Insurance
    31  
4.21 NHTSA; Other Safety Standards
    31  
4.22 Product Liability; Product Recalls
    31  
4.23 Warranty
    32  
4.24 Dealer Network
    32  
4.25 Machinery and Equipment
    32  
4.26 Accounts Receivable
    33  
4.27 Certain Interests
    33  
4.28 Business Conduct
    33  
4.29 Compliance with the Foreign Corrupt Practices Act (FCPA), other
Anti-bribery Laws and other U.S. Trade Laws
    34  
4.30 Internal Controls
    35  

-ii-

--------------------------------------------------------------------------------

 

         
4.31 Business Names
    35  
 
       
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
    35  
 
       
5.1 Organization
    35  
5.2 No Violation
    35  
5.3 Authority; Validity
    35  
5.4 Brokerage
    36  
5.5 Third Party Consents
    36  
 
       
ARTICLE VI COVENANTS
    36  
 
       
6.1 Confidentiality
    36  
6.2 Indemnification of Directors, Officers and Others
    36  
6.3 Section 338(h)(10) Election
    37  
6.4 Straddle and Tax Election
    39  
6.5 Retention of Records
    39  
6.6 Bonus and Continuing Employees
    39  
6.7 Litigation Support
    40  
6.8 Action as to Certain Assets
    40  
6.9 Transfer Taxes
    40  
6.10 Further Action
    40  
 
       
ARTICLE VII CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS
    40  
 
       
7.1 Representations and Warranties True on the Closing Date
    40  
7.2 Compliance With Agreement
    40  
7.3 Consents and Approvals
    40  
7.4 Documents to be Delivered by Shareholder
    41  
7.5 Release Agreements
    41  
7.6 Non-Compete Agreement
    41  

-iii-

--------------------------------------------------------------------------------

 

         
7.7 SJC Real Estate Purchase Agreement
    41  
7.8 SJC Real Estate Lease
    41  
7.9 Payoff Letters
    41  
7.10 Legal Restraints; Proceedings
    42  
 
       
ARTICLE VIII CONDITIONS PRECEDENT TO SHAREHOLDER’S OBLIGATIONS
    42  
 
       
8.1 Representations and Warranties True on the Closing Date
    42  
8.2 Compliance With Agreement
    42  
8.3 Absence of Litigation
    42  
8.4 Consents and Approvals
    42  
8.5 Intentionally Omitted
    42  
8.6 Documents to be Delivered by Buyer
    42  
8.7 Personal Guaranty Releases
    43  
8.8 SJC Real Estate Purchase Agreement
    43  
8.9 SJC Real Estate Option Agreement
    43  
8.10 SJC Real Estate Lease
    43  
 
       
ARTICLE IX SURVIVAL; INDEMNIFICATION
    43  
 
       
9.1 Survival
    43  
9.2 Indemnification by Shareholder
    44  
9.3 Tax Indemnification
    47  
9.4 Indemnification by Buyer
    48  
9.5 Tax Treatment of Indemnification
    50  
9.6 Other Indemnification Provisions
    50  
 
       
ARTICLE X TERMINATION OF AGREEMENT
    50  
 
       
10.1 INTENTIONALLY OMITTED
    50  

-iv-

--------------------------------------------------------------------------------

 

         
ARTICLE XI DISPUTE RESOLUTION
    50  
 
       
11.1 Dispute
    50  
11.2 Process
    50  
11.3 Negotiations
    50  
11.4 Submission to Adjudication
    51  
11.5 General
    51  
 
       
ARTICLE XII MISCELLANEOUS
    52  
 
       
12.1 Further Assurance
    52  
12.2 Law Governing Agreement
    52  
12.3 Assignment; Amendment and Modification
    52  
12.4 Notice
    52  
12.5 Expenses
    54  
12.6 Entire Agreement; Binding Effect
    54  
12.7 No Third Party Beneficiary
    54  
12.8 Counterparts and Fax and Electronic Signatures
    54  
12.9 Headings
    54  
12.10 No Strict Construction
    54  
12.11 Severability
    55  
12.12 No Agreement Until Executed
    55  
12.13 Interpretation
    55  
12.14 Specific Performance
    55  

-v-

--------------------------------------------------------------------------------

 

     
EXHIBITS
         
Exhibit 1-A
  Company Total Assets
Exhibit 1-B
  Company Total Liabilities
Exhibit 2
  Estimated Closing Date Balance Sheet

DISCLOSURE SCHEDULES
Section 2.3 Disbursement of Funds
Section 3.2: Purchased Shares
Section 3.3: Litigation
Section 3.8: Shareholder Third Party Consents
Section 4.1: Organizational Matters
Section 4.2: Capitalization
Section 4.3: Subsidiary
Section 4.4: No Violation
Section 4.5: Consents
Section 4.6: Financial Statements
Section 4.7: Tax Matters
Section 4.8: Absence of Changes
Section 4.9: Assets
Section 4.10: Bank Accounts
Section 4.11: Litigation
Section 4.12: Compliance with Laws
Section 4.13: Material Contracts
Section 4.14: Employee Matters
Section 4.15: Employee Benefit Plans
Section 4.16: Environmental Matters
Section 4.17: Proprietary Rights
Section 4.20: Insurance
Section 4.22: Product Liability or Recalls
Section 4.24: Dealers
Section 4.25: Machinery and Equipment
Section 4.27: Certain Interests
Section 4.31: Business Names
Section 6.3: Section 338(h)(10) Election
Section 6.8: Distribution of Assets
Section 7.3: Material Consents
Schedule 7.9: Indebtedness

-vi-

--------------------------------------------------------------------------------

 

STOCK PURCHASE AGREEMENT
          THIS STOCK PURCHASE AGREEMENT is effective as of March 1, 2010, by and
among Christopher J. Graff (“Shareholder”), SJC Industries Corp., an Indiana
corporation (the “Company”), and Thor Industries, Inc. a Delaware corporation
(“Buyer”).
RECITALS
          A. Shareholder owns all of the issued outstanding shares of Common
Stock of the Company.
          B. Buyer desires to acquire all of the issued and outstanding shares
of Common Stock of the Company from Shareholder and Shareholder desires to sell
all of the issued and outstanding shares of Common Stock of the Company to
Buyer, all in accordance with the terms and conditions of this Agreement.
          NOW THEREFORE, in consideration of the Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
     1.1 Defined Terms. As used in this Agreement, the terms below shall have
the following meanings.
          “338(h)(10) Election Forms” shall have the meaning specified in
Section 6.3(d) of this Agreement.
          “Affiliate” of any Person shall mean another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
          “AGUB” shall have the meaning specified in Section 2.5(a) of this
Agreement.
          “Agreement” shall mean this Stock Purchase Agreement, as the same
shall be amended and/or restated from time to time in accordance with its terms.
          “Ancillary Agreements” shall mean the SJC Real Estate Purchase
Agreement, the SJC Real Estate Lease, the Release Agreements and the Non-Compete
Agreement.
          “Basket” shall have the meaning specified in Section 9.2(b)(i) of this
Agreement.
          “Business” shall mean the design, manufacture, assembly and sale of
ambulance and other specialty vehicles and aftermarket business providing
repair, refurbishment and vehicle remounting services business conducted by the
Company and its Subsidiary.

 

--------------------------------------------------------------------------------

 

          “Business Day” shall mean any day other than Saturday, Sunday or any
day on which the NYSE is authorized to be closed.
          “Buyer” shall have the meaning specified in the Preamble to this
Agreement.
          “Buyer Indemnified Party” shall have the meaning specified in
Section 9.2(a) of this Agreement.
          “Change of Control Payments” shall mean certain one-time bonus
payments to certain employees of the Company and the associated employer payroll
tax obligations equal to $2,382,708.00 and $52,892.66 respectively, both in the
aggregate.
          “Chassis Inventory” means the Company’s inventory of rolling chassis.
          “Chassis Payables” means the Company’s obligations to the respective
manufacturer of the Chassis Inventory pursuant to agreements with the Chassis
Inventory manufacturer.
          “Closing” shall mean the execution and delivery of this Agreement,
together with the Ancillary Documents, which shall be effective as of the
Closing Date.
          “Closing Date” shall have the meaning specified in Section 2.2 of this
Agreement.
          “Closing Date Balance Sheet” shall have the meaning specified in
Section 2.3(c) of this Agreement.
          “Closing Date Shareholder’s Equity” shall mean Total Assets minus
Total Liabilities as reflected on the Reviewed Closing Date Balance Sheet less
the sum of: (a) the net equity of SJC Real Estate LLC recorded on the Reviewed
Closing Date Balance Sheet and (b) the Non-Accrued Change of Control Payments
(if not accrued on the Estimated Closing Date Balance Sheet).
          “Closing Date Tax Return” shall have the meaning specified in
Section 6.4(b) of this Agreement.
          “Code” shall mean the Internal Revenue Code of 1986, as amended.
          “Common Stock” shall mean the authorized shares of the Company’s
common stock, no par value per share.
          “Company” shall mean SJC Industries Corp., an Indiana corporation.
          “Company Intellectual Property Assets” shall mean all Intellectual
Property Assets used by the Company and its Subsidiary in the Business.
          “Company Persons” shall have the meaning specified in Section 4.29(a)
of this Agreement.

2

--------------------------------------------------------------------------------

 

          “Confidentiality Agreement” shall mean the agreement between William
Blair & Co., as agent for the Company and Shareholder, and Buyer dated
January 26, 2010.
          “Contracts” means, in respect of any Person, all loan agreements,
indentures, letters of credit (including related letter of credit applications
and reimbursement obligations), mortgages, security agreements, pledge
agreements, deeds of trust, bonds, notes, guarantees, surety obligations,
warranties, licenses, franchises, permits, powers of attorney, purchase orders,
leases, employment agreements, confidentiality agreements, intellectual property
assignment agreements, and other agreements, contracts, instruments,
obligations, commitments, arrangements and understandings, whether written or
oral, to which such Person is a party or by which such Person or any of its
properties or assets is bound or affected, in each case as amended,
supplemented, restated, waived or otherwise modified and including all exhibits,
schedules or other attachments thereto.
          “Copyrights” shall mean copyrights in both published and unpublished
works, including without limitation all compilations, databases and computer
programs, manuals and other documentation and all copyright registrations and
applications.
          “D&T” shall have the meaning specified in Section 2.3(e) of this
Agreement.
          “Dealer” shall have the meaning specified in Section 4.24(a) of this
Agreement.
          “Disclosure Schedule” shall mean the Disclosure Schedule, dated the
date of this Agreement, delivered by Shareholder to Buyer contemporaneously with
the execution and delivery of this Agreement.
          “Dispute” shall have the meaning specified in Section 11.1 of this
Agreement.
          “Election” shall have the meaning specified in Section 6.3(a) of this
Agreement.
          “Election Forms” shall have the meaning specified in Section 6.3(d)(i)
of this Agreement.
          “Employee Benefit Plan” or “Employee Benefit Plans” shall have the
meaning specified in Section 4.15(a) of this Agreement.
          “Encumbrance” shall mean any mortgage, pledge, Lien, conditional sale
agreement, security title or other encumbrance.
          “Environmental Laws” shall mean all Laws relating to public health and
safety and pollution or protection of the environment, including Laws relating
to the presence, use, manufacturing, refining, production, emissions,
discharges, generation, handling, transportation, treatment, recycling,
transfer, storage, disposal, distribution, importing, labeling, testing,
processing, Release or threatened Release, control, or other action or failure
to act involving cleanup of any Hazardous Substances into the environment,
including the Clean Water Act, the Clean Air Act, the Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Comprehensive
Environmental Response Compensation Liability Act, all as amended and in force
and effect as of the Closing.

3

--------------------------------------------------------------------------------

 

          “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended.
          “Escrow Agent” shall mean JP Morgan Chase.
          “Escrow Agreement” shall mean the Escrow Agreement to be entered into
by and among Buyer, Shareholder and Escrow Agent as of the Closing.
          “Escrow Amount” means an amount in cash equal to $2,000,000.00.
          “Escrow Funds” shall mean the Escrow Amount plus any interest and
earnings thereon.
          “Estimated Closing Date Balance Sheet” shall have the meaning
specified in Section 2.3(a)(ii) of this Agreement.
          “Estimated Purchase Price” shall have the meaning specified in
Section 2.3(a)(ii) of this Agreement.
          “Excluded Buyer Representations” shall have the meaning specified in
Section 9.1(b) of this Agreement.
          “Excluded Shareholder/Company Representations” shall have the meaning
specified in Section 9.1(a) of this Agreement.
          “FCPA” shall have the meaning specified in Section 4.29(a) of this
Agreement.
          “Financial Statements” shall mean the audited consolidated balance
sheets of the Company and its Subsidiary as of December 31, 2006, 2007, 2008 and
2009 and the related statements of income and cash flow for the years then
ended, prepared in accordance with GAAP. For purposes of clarification, the
Parties acknowledge that SJC Real Estate is reflected in the foregoing Financial
Statements.
          “First S Corp. Year” shall have the meaning specified in
Section 4.7(f) of this Agreement.
          “First S Corp. Year for Marque” shall have the meaning specified in
Section 4.7(g) of this Agreement.
          “GAAP” shall mean generally accepted accounting principles
consistently applied in the United States.
          “Governmental Authority” shall mean any government or political
subdivision, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any federal,
state, local or foreign court or arbitrator.

4

--------------------------------------------------------------------------------

 

          “Hazardous Substances” shall mean any substance, pollutant,
contaminant, material, or waste, or combination thereof, whether solid, liquid,
or gaseous in nature, defined or subject to regulation, investigation, control,
or remediation under Environmental Laws.
          “Indebtedness” shall mean, as to any Person, without duplication,
(a) all obligations of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and banker’s acceptances, whether or not matured, and
any inter-company debt obligations), (b) all obligations of such Person to pay
the deferred purchase price of property or services, (c) all interest rate and
currency swaps, caps, collars and similar agreements or hedging devices under
which payments are obligated to be made by such Person, whether periodically or
upon the happening of a contingency, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such Person under
leases which have been or should be, in accordance with GAAP, recorded as
capital leases, and (f) any guarantees made by such Person of any Indebtedness
of any other Person described in clauses (a) through (e) but excluding any
Chassis Payables.
          “Indemnification Cap” shall have the meaning specified in
Section 9.2(b)(iii) of this Agreement.
          “Indemnified Party” shall mean any Party seeking indemnification under
Article IX of this Agreement.
          “Indemnifying Party” shall mean the Party from whom the
indemnification is sought under Article IX of this Agreement.
          “Indemnitees” shall have the meaning specified in Section 6.2(a) of
this Agreement.
          “Independent Accountant” shall mean such firm of independent
accountants of at least regional standing upon which the Parties agree, and
which has not provided substantial services to Buyer, the Company, Shareholder
or any of their Affiliates for the previous five (5) years from the date of the
proposed engagement.
          “Intellectual Property Assets” shall mean all Patents, Marks,
Copyrights and Trade Secrets.
          “IRS” shall mean the Internal Revenue Service of the United States.
          “Key Employee” shall have the meaning specified in Section 4.14(d) of
this Agreement.
          “Ken-Mac Defense Costs” shall have the meaning specified in
Section 9.2(b)(iii) of this Agreement.

5

--------------------------------------------------------------------------------

 

          “Ken-Mac Litigation” shall have the meaning specified in
Section 9.2(a) of this Agreement.
          “Ken-Mac Reimbursement Obligation” shall have the meaning specified in
Section 9.2(b)(iii) of this Agreement.
          “Knowledge” shall mean a Person will be deemed to have “Knowledge” of
a particular fact or other matter if (a) with respect to the Company such
(i) Person is actually aware of such fact or other matter after due inquiry and
investigation by it of the Company’s employees and officers who would normally
be expected to have knowledge of the truthfulness or completeness of the
representations or warranties requested (it being understood that none of such
Persons have made any other independent investigation or consulted with third
parties except as a review of the Company’s books and records and as may be
indicated in the Exhibits attached hereto, which serve as the Disclosure
Schedules) or (ii) such Person should be aware of such fact or matter based upon
such Person’s position and/or role within the Company and (b) with respect to
Shareholder, the actual knowledge of Shareholder after due inquiry and
investigation. Any reference to the Knowledge of the Company shall apply to
Christopher J. Graff, Chuck Drake, Bob Parks or James Evans. Any reference to
the Knowledge of Shareholder shall apply to Christopher J. Graff. For the
avoidance of doubt, the Parties acknowledge that in connection with any fact or
matter attested to by a Person herein that is qualified by “Knowledge,” such
Person, to the extent that he or she does not have actual awareness of the
particular fact or matter, shall be deemed to have an affirmative obligation to
conduct due inquiry and investigation in connection with such fact or matter, as
contemplated in clause (a)(ii) of this definition.
          “Law” shall mean any federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code, or
order.
          “Leased Real Property” shall have the meaning specified in
Section 4.9(c) of this Agreement.
          “Lease” or “Leases” shall have the meaning specified in Section 4.9(c)
of this Agreement.
          “Lien” shall mean any mortgage, pledge, hypothecation, lien (statutory
or otherwise including judgment and mechanics’ liens), preference, security
interest, security agreement, easement, restriction or other similar
encumbrance.
          “Losses” shall mean damages, liabilities, deficiencies, claims,
actions, demands, judgments, interest, losses, costs or expenses of whatever
kind, including reasonable attorneys’ fees, provided, however, that “Losses”
shall not include loss of profits, punitive damages or other special, exemplary
or consequential damages and shall not be calculated by using a multiple of
earnings, book value or other similar measure that may have been used in
arriving at or that may be reflective of the Purchase Price.
          “Make-Whole Amount” shall have the meaning specified in Section 6.3(a)
of this Agreement.

6

--------------------------------------------------------------------------------

 

          “Marks” shall mean all trade names, logos, slogans, Internet domain
names, registered and unregistered trademarks and service marks and related
registrations and applications for registration.
          “Material Adverse Effect” shall mean for purposes of this Agreement,
with respect to Shareholder, the Company and the Company’s Subsidiary, any
breach of a representation or warranty hereunder or a covenant to be performed
by Shareholder, the effect of which may be to (a) impede or impair the operation
of the Business in the ordinary course consistent with past practices or (b)
cause the Company and/or its Subsidiary to pay or become liable to pay more than
$10,000.00 to remedy any single such event, violation, breach, default or
termination (as the case may be) or more than $100,000.00 in the aggregate for
all such events, violations, breaches, or defaults or terminations (as the case
may be).
          “Material Contracts” shall have the meaning specified in
Section 4.13(a) of this Agreement.
          “McGladrey” shall have the meaning specified in Section 2.3(c) of this
Agreement.
          “Net Chassis Amount” shall mean the difference between the Chassis
Inventory and the Chassis Payables.
          “Non-Accrued Change of Control Payments” shall mean certain one time
payments made by Buyer, immediately following the Closing Date, to certain
employees of the Company, whose names and the amount of each respective Change
of Control Payment owed to each employee are set forth on the Estimated Closing
Date Balance Sheet (but only to the extent that any such Change of Control
Payment is not accrued on the Estimated Closing Date Balance Sheet).
          “Non-Compete Agreement” shall have the meaning specified in
Section 7.6 of this Agreement.
          “NHTSA” shall have the meaning specified in Section 4.21 of this
Agreement.
          “NYSE” shall mean the New York Stock Exchange.
          “OFAC” shall have the meaning specified in Section 4.29(b) of this
Agreement.
          “Objection Notice” shall have the meaning specified in
Section 2.3(a)(i) of this Agreement.
          “Open Purchase Orders” shall have the meaning specified in
Section 4.13(c) of this Agreement.
          “Party” or “Parties” shall mean, individually, each of Buyer and
Shareholder, and collectively, Buyer and Shareholder.
          “Patents” shall mean all patents and patent applications.

7

--------------------------------------------------------------------------------

 

          “Permitted Encumbrances” shall mean (a) Encumbrances for utilities,
current Taxes or assessments or other governmental charges not yet due and
payable, (b) mechanics’, carriers’, workers’, repairers’, materialmen’s,
warehousemen’s, lessor’s, landlord’s and other similar liens arising or incurred
in the ordinary course of business, (c) statutory Encumbrances arising in the
ordinary course of business, and (d) the ownership interests of the lessor or
licensor of leased assets or licensed Intellectual Property Assets, the terms of
the lease agreement or license and Encumbrances on the ownership interests of
the lessor or licensor in such leased assets or licensed Intellectual Property
Assets.
          “Permits” shall mean licenses, permits, approvals, certificates,
notices, waivers, franchises, registrations, filings, accreditations,
authorizations and consents required by any Governmental Authority or Law.
          “Person” shall mean a natural person, corporation, limited liability
company, trust, partnership, government entity, agency or branch or department
thereof, or any other legal entity.
          “Pre-Closing Period” shall have the meaning specified in
Section 6.4(a) of this Agreement.
          “Purchase Price” shall have the meaning specified in Section 2.3(a)(i)
of this Agreement.
          “Purchased Shares” shall mean all of the issued and outstanding shares
of Common Stock.
          “Real Property” shall mean all real property owned or leased by the
Company or SJC Real Estate.
          “Recent Audited Balance Sheet” shall mean the December 31, 2009
audited consolidated balance sheet of the Company and its Subsidiary included in
the Financial Statements.
          “Release” shall mean any release, spill, leaking, dumping, injection,
pumping, pouring, emitting, emptying, discharging, injecting, escaping, deposit,
discharge, dispersal, leaching, migration or disposal of a Hazardous Substance
into the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata).
          “Release Agreements” have the meaning specified in Section 7.5 of this
Agreement.
          “Reviewed Closing Date Balance Sheet” shall have the meaning specified
in Section 2.3(c) of this Agreement.
          “S Corp. State” shall have the meaning specified in Section 4.7(f) of
this Agreement.

8

--------------------------------------------------------------------------------

 

          “Shareholder” shall have the meaning specified in the Preamble to this
Agreement.
          “Shareholder Indemnified Party” shall have the meaning specified in
Section 9.4(a) of this Agreement.
          “SJC Real Estate” shall mean SJC Real Estate, LLC, an Indiana limited
liability company.
          “SJC Real Estate Lease” shall mean the Lease Agreement entered into by
and between SJC Real Estate and Buyer, dated as of the date hereof.
          “SJC Real Estate Purchase Agreement” shall mean the Real Estate
Purchase and Sale Agreement entered into by and between SJC Real Estate and
Buyer, dated as of the date hereof.
          “Subsidiary” shall mean SJC International Corp., an Indiana
corporation.
          “Tax” or “Taxes” shall mean any federal, state, local or foreign
income, gross receipts, capital gains, franchise, alternative or add-on minimum,
estimated, sales, use, goods and services, ad valorem, transfer, registration,
value added, excise, natural resources, severance, stamp, occupation, premium,
windfall profit, environmental, customs, duties, real property, special
assessment, personal property, capital stock, social security, unemployment,
employment, disability, payroll, license, employee or other withholding,
contributions or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing.
          “Tax Returns” shall mean returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
with respect to Taxes.
          “Third Party Claim” shall mean a legal proceeding, action, claim or
demand instituted by any third person or Governmental Authority.
          “Third Party Rights” shall have the meaning specified in
Section 4.17(b)(iii) of this Agreement.
          “Total Assets” shall mean the Company and its Subsidiary’s (together
on a consolidated basis) current assets and fixed assets, as identified on the
Estimated Closing Date Balance Sheet and further reflected on Exhibit 1-A
attached hereto, recorded in accordance with GAAP.
          “Total Liabilities” shall mean the Company’s and its Subsidiary’s
(together on a consolidated basis) current liabilities and non-current
liabilities, as identified on the Estimated Closing Date Balance Sheet and
further reflected on Exhibit 1-B attached hereto, which as reflected therein
shall be recorded in accordance with GAAP.

9

--------------------------------------------------------------------------------

 

          “Trade Secrets” shall mean rights under applicable U.S. state trade
secret laws as are applicable to know-how and confidential information.
          “WARN” shall have the meaning specified in Section 4.14(a) of this
Agreement.
          “Welfare Plan” shall have the meaning specified in Section 4.15(d) of
this Agreement.
ARTICLE II
PURCHASE AND SALE; CLOSING; PURCHASE PRICE
     2.1 Purchase and Sale. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement, Shareholder agrees to sell,
assign, convey and deliver to Buyer, and Buyer agrees to purchase and accept
from Shareholder, the Purchased Shares owned by Shareholder.
     2.2 The Closing. The Closing shall take place with the simultaneous
execution of this Agreement and the Closing Date shall be March 1, 2010 as
agreed to by the Parties hereto (the “Closing Date”).
     2.3 Purchase Price Consideration; Adjustment.
          (a) (i) Determination of Purchase Price. The total amount of
consideration to be paid by Buyer to Shareholder, in the aggregate for all of
the Purchased Shares, shall be an amount equal to the sum of (A) the Closing
Date Shareholder’s Equity, plus (B) Ten Million Five Hundred Thousand Dollars
($10,500,000.00) (the “Purchase Price”).
               (ii) Estimated Purchase Price. For purposes of determining the
amount of the Purchase Price to be paid on the Closing (the “Estimated Purchase
Price”), the Estimated Purchase Price shall be determined in the same manner as
the Purchase Price is to be determined, except that the Estimated Purchase Price
shall be based upon the Closing Date Shareholder’s Equity as reflected on the
unaudited but not reviewed consolidated balance sheet of the Company as of the
Closing Date (the “Estimated Closing Date Balance Sheet”), which shall be
delivered to Buyer prior to Closing and as reflected on Exhibit 2 attached
hereto.
          (b) Payment of the Estimated Purchase Price. At Closing, the Estimated
Purchase Price shall be paid as follows:
               (i) to Shareholder less the Escrow Amount; and
               (ii) to Escrow Agent, the Escrow Amount.
All payments shall be paid or directed on the disbursement of funds, as
reflected on Section 2.3 of the Disclosure Schedules, by wire transfer of
immediately available funds to an account or accounts designated by Shareholder.

10

--------------------------------------------------------------------------------

 

          (c) Adjustment of the Purchase Price. In order to conclusively
determine the Purchase Price as of the Closing Date, the Company and Buyer, with
the cooperation of Shareholder, will cause a consolidated balance sheet of the
Company and Subsidiary as of the Closing Date (the “Closing Date Balance Sheet”)
to be prepared as promptly as practicable following the Closing Date and Buyer
will engage McGladrey & Pullen LLP (“McGladrey”) to perform a review, in
accordance with AICPA Statements on Standards for Accounting and Review
Services, of the Closing Date Balance Sheet (as reviewed, the “Reviewed Closing
Date Balance Sheet”). The Reviewed Closing Date Balance Sheet shall be prepared
based upon the Company’s books and records in accordance with GAAP except (i) no
adjustment shall be made to the carrying value of inventory solely as a result
of the methodology used by the Company to account for cash discounts or chassis
rebates, (ii) only inventory (other than parts and services inventory) which is
not reasonably anticipated to be used in the ordinary course of business in the
two years following the Closing Date shall be deemed slow moving and shall be
written down to realizable value and (iii) inventory will be valued at the lower
of cost or market on a first-in-first-out basis.
          (d) The Parties shall use their reasonable best efforts to cause
McGladrey to complete and deliver the Reviewed Closing Date Balance Sheet to
Buyer and Shareholder within sixty (60) days after McGladrey’s receipt of the
Closing Date Balance Sheet. The Parties shall cooperate with McGladrey in
connection with such audit and shall provide McGladrey with all books, records
and other papers necessary for such purpose.
          (e) Upon delivery of the Reviewed Closing Date Balance Sheet, Buyer
and Deloitte & Touche LLP (“D&T”) will be allowed access to and review
McGladrey’s work papers prepared in connection with its review of the Closing
Date Balance Sheet.
               (i) The Reviewed Closing Date Balance Sheet shall be final and
binding on the Parties, unless within thirty (30) days after receipt thereof
either Shareholder or Buyer (as the case may be) shall give the other Party a
notice of objection (an “Objection Notice”). The Objection Notice shall specify
each item Shareholder or Buyer (as applicable) objects to in the Reviewed
Closing Date Balance Sheet, together with a calculation of each disputed amount,
and shall include all supporting calculations and data used in that
determination. Any item in the Reviewed Closing Date Balance Sheet that is not
objected to in the Objection Notice shall be deemed agreed and shall be final
and binding on the Parties.
               (ii) In the event an Objection Notice is given, Buyer and
Shareholder, together with D&T and McGladrey or such other party identified by
Buyer and Shareholder, as the case may be, shall meet in an effort to resolve
any objection and arrive at a final determination. If Buyer and Shareholder are
unable to arrive at a final determination within ten (10) days after an
Objection Notice is given, the matter shall be submitted for final determination
to Independent Accountant. Independent Accountant shall make a final
determination in writing as to all matters in dispute within thirty (30) days
after its appointment, and such determination shall be final and binding on the
Parties.
               (iii) Within five (5) days after the engagement of Independent
Accountant, Shareholder and Buyer shall each furnish, at their own expense, to
Independent Accountant and the other Party, a written statement of their
position with respect to each matter

11

--------------------------------------------------------------------------------

 

in dispute. Within five (5) days after expiration of the original five (5) day
period, Shareholder and Buyer may deliver to Independent Accountant and to the
other Party their response to the other’s position on matters in dispute. With
each submission, Shareholder and Buyer may also furnish to Independent
Accountant such other information and documents as they deem relevant or such
information and documents as may be requested by Independent Accountant with
appropriate copies or notification being given to the other Party. Independent
Accountant may, in its discretion, conduct a conference concerning the
disagreement with Shareholder and Buyer, at which conference each Party shall
have the right to present additional documents, materials and other information
and to have present its advisors, counsel and accountants. In connection with
such process, there shall be no hearings, oral examinations, testimony,
depositions, discovery or other similar proceedings conducted by any Party or by
Independent Accountant.
               (iv) Buyer shall pay any fees owing to D&T in connection with
this Section 2.3(e) and Shareholder shall pay any fees owing to McGladrey in
connection with this Section 2.3(e). Any fees owing to Independent Accountant in
connection with this Section 2.3(e) shall be paid in direct proportion to the
amounts of the disputed items that are lost by Shareholder or Buyer, as the case
may be.
          (f) Method of Adjustment. In the event that the Purchase Price as
finally determined pursuant to Section 2.3(c) is greater than the Estimated
Purchase Price as determined pursuant to Section 2.3(a)(ii), Buyer shall pay
such difference in cash to Shareholder. In the event that the Purchase Price as
finally determined pursuant to Section 2.3(c) is less than the Estimated
Purchase Price as determined pursuant to Section 2.01(a)(ii), such difference
shall be withdrawn from the Escrow Funds and delivered to Buyer in accordance
with Section 2.4. In the event that the Purchase Price as finally determined
pursuant to Section 2.3(c) is less than the Estimated Purchase Price as
determined pursuant to Section 2.01(a)(ii), and such difference exceeds the
balance of Escrow Funds in the escrow account at such time, Shareholder shall
pay into the escrow account, for the benefit of Buyer, the amount of the
deficiency by wire transfer of immediately available funds.
     2.4 Escrow. Notwithstanding anything to the contrary contained in this
Article II, on the Closing Date, the Escrow Amount will be deposited into an
interest bearing escrow account, to be held by Escrow Agent pursuant to an
Escrow Agreement to be entered into on the Closing Date. The Escrow Funds will
secure (x) any adjustments to the Purchase Price as provided for in Section
2.3(f) and (y) Shareholder’s indemnification obligations under Article IX of
this Agreement. The Escrow Funds will be withdrawn or released as follows:
          (a) upon the final determination of the Purchase Price in accordance
with Section 2.3(f), if Buyer is entitled to receive any cash in connection with
an adjustment of the Purchase Price, such amount shall be withdrawn from the
Escrow Funds in accordance with
Section 2.3(f) and paid to Buyer within five (5) Business Days after such final
determination;
          (b) following the withdrawal, if any, of the Escrow Funds as provided
in clause (a) above, if less than $2,000,000.00 shall remain after such
withdrawal, Shareholder, within five (5) Business Days after such withdrawal,
shall deposit such additional cash as needed to cause the Escrow Funds to be
replenished to an amount equal to $2,000,000.00; provided, however, that
Shareholder shall not be required to deposit additional cash pursuant to

12

--------------------------------------------------------------------------------

 

this Section 2.4(b) if the total amount of Escrow Funds disbursed to Buyer
pursuant to Article IX plus the amount remaining Escrow Funds (immediately prior
to any requirement to replenish funds pursuant to this Section 2.4(b)) would
exceed the Indemnification Cap, immediately following any requirement to
replenish funds; and
          (c) the remaining Escrow Funds, if any, will be released to
Shareholder on the date that is twelve months following the Closing Date;
provided, however, that if prior to such date, Buyer gives notice of a claim or
claims for indemnification pursuant to Article IX, then: (i) if any such claim
is resolved prior to such date, by judicial determination or otherwise, any sums
due Buyer shall be withdrawn from the Escrow Funds and paid to Buyer within five
(5) Business Days after such resolution or (ii) if any such claim is not
resolved prior to such date, the amount of such claim, plus the reasonably
estimated amount of legal fees and disbursements to be incurred in connection
therewith, shall be retained as Escrow Funds until such claim is resolved.
     2.5 Determination of Adjusted Gross-Up Basis for Tax Purposes.
          (a) Adjusted Gross Up Basis (“AGUB”) of Buyer shall include (i) the
Purchase Price (as defined in Section 2.3) plus (ii) the Make-Whole Amount plus
(iii) the Change of Control Payments plus (iv) any Non-Accrued Change of Control
Payments or similar amounts plus (v) all liabilities of the Company assumed by
Buyer.
          (b) The Parties acknowledge that the Change of Control Payments and
any Non-Accrued Change of Control Payments represent liabilities of the Company,
which are not being assumed by Buyer for any tax purpose.
          (c) The Parties agree that the Company shall have the right to claim a
tax deduction for the Change of Control Payments and Non-Accrued Change of
Control Payments on its Tax Return for the period beginning on January 1, 2010
and ending on the Closing Date.
          (d) The AGUB shall be allocable to the acquired assets pursuant to
Section 338 of the Code.
ARTICLE III
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
     All representations and warranties of Shareholder are made subject to the
exceptions which are noted in the Disclosure Schedule. Subject to the foregoing,
Shareholder represents and warrants to Buyer that:
     3.1 Power
          (a) Shareholder (i) possesses all requisite capacity under applicable
Law in order to execute, deliver and perform fully the terms of this Agreement
and the other documents and instruments to be executed and delivered by or on
behalf of Shareholder pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby and to perform his obligations
hereunder and thereunder.
          (b) Neither the execution and delivery by Shareholder of this
Agreement and the other agreements, documents and instruments contemplated
hereby, nor the consummation

13

--------------------------------------------------------------------------------

 

by Shareholder of the transactions contemplated hereby and thereby in accordance
with the terms hereof and thereof, and compliance by Shareholder with any of the
provisions hereof or thereof, do not and will not (i) violate, or conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right of termination, cancellation or acceleration of or loss
of any material benefit under any of the terms, conditions or provisions of any
Contract to which Shareholder is a party, or by which Shareholder or any of its
properties is bound, except, in each case, as would not have a Material Adverse
Effect on the ability of Shareholder to perform its obligations under this
Agreement, or result in the creation of any Encumbrance in or upon any of the
Purchased Shares.
     3.2 Purchased Shares Shareholder owns of record that number of the
Purchased Shares set forth on Section 3.2 of the Disclosure Schedule as being
owned by Shareholder. Shareholder has full power, right and authority to
transfer the Purchased Shares owned by Shareholder to Buyer. Shareholder owns
and is conveying to Buyer the Purchased Shares owned by Shareholder free and
clear of all Encumbrances and no other Person has any legal or beneficial
interests in any such Purchased Shares, and there are no restrictions on
Shareholder’s right to transfer such Purchased Shares. Except for this
Agreement, there are no other options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which Shareholder is a
party or by which Shareholder is bound obligating it to issue, exchange,
transfer, deliver or sell, or cause to be issued, exchanged, transferred,
delivered or sold, additional shares of capital stock or other equity interests
of the Company and its Subsidiary. There are no irrevocable proxies, voting
trusts and no agreements or understandings to which Shareholder is a party with
respect to the voting of any of the Purchased Shares or which restrict the
transfer of any such shares or securities.

14

--------------------------------------------------------------------------------

 

     3.3 Litigation. Shareholder is not involved or a party (either as plaintiff
or defendant) in any litigation, suit, legal action, arbitration, or other legal
or administrative proceeding or investigation before any Governmental Authority
pending nor, (a) is any litigation, suit, legal action, arbitration, or other
legal or administrative proceeding or investigation before any Governmental
Authority pending or (b) to Shareholder’s Knowledge, has any litigation, suit,
legal action, arbitration, or other legal or administrative proceeding or
investigation before any Governmental Authority been threatened in writing
against Shareholder which (i) affects the Company, its Subsidiary or their
respective businesses, properties or assets, (ii) questions the validity of this
Agreement or any other documents or instruments to be executed and delivered by
Shareholder pursuant hereto, or the right of the Company or Shareholder to enter
into this Agreement or any such other documents or instruments, or to consummate
the transactions contemplated hereby or thereby, or (iii) if adversely
determined, would be likely to have a Material Adverse Effect on the ability of
the Company or Shareholder to perform their respective obligations under this
Agreement or any such other documents or instruments. To Shareholder’s
Knowledge, there is no fact or facts existing which would be reasonably expected
to result in, nor is there any basis for, any such action, suit, arbitration, or
other proceeding or investigation. Shareholder is not a party to or subject to
any order, writ, injunction, decree, judgment or other restriction of any
Governmental Authority which would be reasonably likely to prevent or materially
delay Shareholder’s ability to enter into this Agreement or any other documents
or instruments to be executed and delivered pursuant hereto or consummate the
transactions contemplated hereby or thereby.
     3.4 Enforceability. This Agreement constitutes, and when executed and
delivered, the other documents and instruments required to be executed and
delivered by Shareholder pursuant hereto will constitute, the valid and binding
agreements of Shareholder enforceable against Shareholder in accordance with
their respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other Laws affecting creditors’ rights generally, and by
general equitable principles.
     3.5 No Violation. The execution, delivery and performance of this Agreement
by Shareholder and all of the documents required hereby by Shareholder do not
violate or conflict with any contract or agreement binding on Shareholder, or to
Shareholder’s Knowledge, any Law.
     3.6 No Acquisitions. Except for this Agreement, Shareholder is not party to
or bound by any Contract with respect to a purchase, sale, share exchange or
tender offer for Purchased Shares.
     3.7 Brokerage. Except for fees payable to William Blair & Co., which will
be paid by Shareholder at Closing, Shareholder has not employed any other broker
or finder or incurred any liability for any brokerage fees, commissions or
finders’ fees in connection with the transactions contemplated by this
Agreement.
     3.8 Third Party Consents. No material approval, authorization, notice,
consent or other action by or filing with any Person is required for
Shareholder’s execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.

15

--------------------------------------------------------------------------------

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND THE
COMPANY
     All representations and warranties of the Company are made subject to the
exceptions which are noted in the Disclosure Schedule. Subject to the foregoing,
the Company hereby represents and warrants to Buyer as follows:
     4.1 Organizational Matters.
          (a) The Company and its Subsidiary are each companies validly existing
and in good standing (or its equivalent) under the Laws of its jurisdiction of
incorporation as set forth on Section 4.1 of the Disclosure Schedule. The
Company and its Subsidiary are each qualified to conduct business as a foreign
corporation, and each is in good standing (or its equivalent), in each
jurisdiction where the character of the properties owned or leased by it, or the
nature of its respective business, makes such qualification necessary except
where the failure to do so would not have a Material Adverse Effect. Any states
in which the Company and/or its Subsidiary is licensed or qualified to do
business are listed in Section 4.1 of the Disclosure Schedule.
          (b) The Company and its Subsidiary each has all requisite corporate
power and authority to own, operate and lease its properties and to carry on the
business conducted by it as and where such is now being conducted.
          (c) True and complete copies of the Articles of Incorporation and
Bylaws of the Company and its Subsidiary have been made available to Buyer in
the data room hosted by William Blair & Co. The minute books of the Company
contain complete and accurate records of all material corporate action taken by
the Board of Directors and stockholders of the Company. The minute books of the
Subsidiary contains complete and accurate records of all material corporate
action taken by the Board of Directors and stockholders of the Subsidiary. True
and complete copies of the minute books of the Company have been made available
to Buyer in the data room hosted by William Blair & Co.
          (d) The officers and directors of the Company and the Subsidiary are
set forth in Section 4.1 of the Disclosure Schedule.
          (e) The Company represents and warrants that following the
consolidation of the activities of Marque, Inc. and McCoy Miller, LLC into the
Company as described on Section 4.2 of the Disclosure Schedules, there have not
been any liabilities, assets or obligations incurred or acquired (as applicable)
by these entities other than as reflected on the Financial Statements and/or the
Estimated Closing Date Balance Sheet.
     4.2 Capitalization.
          (a) The authorized capital stock of the Company and its Subsidiary is
set forth on Section 4.2 of the Disclosure Schedule. The Purchased Shares
represent all of the issued and outstanding shares of the capital stock of the
Company. Section 4.2 of the Disclosure Schedule sets forth the number of shares
of the Purchased Shares owned by Shareholder. All of

16

--------------------------------------------------------------------------------

 

the issued and outstanding capital stock of each Subsidiary is owned by the
Company. All of the outstanding shares of the capital stock of the Company and
its Subsidiary have been duly authorized and validly issued, and are fully paid
and nonassessable. No shares of capital stock of, or other ownership interest
in, the Company or the Subsidiary are reserved for issuance and, except for this
Agreement, there are no outstanding options, warrants, rights, subscriptions,
claims of any character, agreements or understandings relating to the capital
stock of the Company and/or its Subsidiary pursuant to which the Company and/or
its Subsidiary is or may become obligated to issue or exchange any shares of its
capital stock.
          (b) There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock, other
equity interests or any other securities of the Company.
          (c) The stock register of the Company accurately records: (i) the name
and address of each Person owning shares of Common Stock of the Company and
(ii) the certificate number of each certificate evidencing shares of capital
stock issued by Company, the number of shares evidenced by each such
certificate, the class of such shares, the date of issuance thereof and, in the
case of cancellation, the date of cancellation.
          (d) Upon consummation of the transactions contemplated by this
Agreement and registration of the Common Stock in the name of Buyer in the stock
records of the Company, Buyer, assuming it shall have purchased the Common Stock
for value in good faith and without notice of any adverse claim, will own all
the issued and outstanding capital stock of the Company free and clear of all
Encumbrances.
     4.3 Subsidiary.
          (a) The Company’s sole Subsidiary is listed in Section 4.3 of the
Disclosure Schedule and includes the name of the Subsidiary and type of entity.
The Company owns directly or indirectly all of the outstanding shares of capital
stock or other equity interests of the Subsidiary. Except as set forth on
Section 4.3 of the Disclosure Schedule, neither the Company nor the Subsidiary
owns, directly or indirectly, of record or beneficially, any capital stock,
equity, or other ownership interest in any other Person or any right (contingent
or otherwise) to acquire the same. Neither the Company nor the Subsidiary is a
member of (nor is any part of the Business conducted through) any partnership
nor is the Company nor its Subsidiary a participant in any joint venture or
similar arrangement.
          (b) All corporate actions taken by the Subsidiary have been duly
authorized and the Subsidiary has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of any
provision of its Articles of Incorporation or Bylaws.
     4.4 No Violation. Except as set forth in Section 4.4 of the Disclosure
Schedule, the execution and delivery of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby will not
cause a material breach, violation of or default under any provision of (a) the
Articles of Incorporation or Bylaws of the Company and/or its

17

--------------------------------------------------------------------------------

 

Subsidiary; (b) any Material Contract to which the Company and/or its Subsidiary
is a party or by which the Company and/or its Subsidiary is bound; or (c) any
Law.
     4.5 No Conflicts; Third Party Consents. The execution and delivery by the
Company of this Agreement and the documents and instruments to be executed and
delivered pursuant hereto by the Company and its Subsidiary, and the
consummation by the Company and its Subsidiary of the transactions contemplated
hereby in accordance with the terms hereof and thereof, do not and will not
(a) violate, conflict with or result in a default (with or without the giving of
notice, lapse of time or both) under, or give rise to a right of termination,
cancellation or acceleration of or loss of any material benefit under, or result
in the creation of any Encumbrance (except for Permitted Encumbrances) in or
upon any of the properties or assets of the Company and/or its Subsidiary under,
or give rise to any increased, additional, accelerated or guaranteed rights or
entitlements under, (i) except as set forth on Section 4.5 of the Disclosure
Schedule any Material Contract, permit, license, or authorization to which the
Company and/or its Subsidiary is a party or by which the Company’s or its
Subsidiary’s assets are bound, (ii) any provision of the Company’s Articles of
Incorporation or Bylaws; (b) violate or result in a violation of, or constitute
a default (whether after the giving of notice, lapse of time or both) under, any
applicable Law (c) except as set forth on Section 4.5 of the Disclosure
Schedule, require from the Company and/or its Subsidiary any notice to,
declaration or filing with, or consent or approval of any Governmental Authority
or other third party.
     4.6 Financial Statements; Absence of Undisclosed Liabilities; Indebtedness
          (a) Section 4.6 of the Disclosure Schedule contains complete and
accurate copies of the Financial Statements. All of such Financial Statements
(i) have been prepared in accordance with the books and records regularly
maintained by the Company and its Subsidiary; (ii) fairly present in all
material respects the assets, liabilities, financial condition and results of
operation of the Company and the Subsidiary; and (iii) were prepared in
accordance with GAAP, consistently applied throughout the periods involved and
fairly present the financial position of the Company and its Subsidiary as of
the dates indicated and the results of the Company’s and its Subsidiary’s
operations and cash flows for the periods then ended.
          (b) The books of account and other financial records of the Company
and its Subsidiary: (i) reflect all items of income and expense and all assets
and liabilities required to be reflected therein in accordance with GAAP
consistently applied, and (ii) are complete and correct, and do not contain or
reflect any inaccuracies or discrepancies.
          (c) Section 4.6 of the Disclosure Schedule sets forth a true, complete
and correct list of all Indebtedness owed by the Company or the Subsidiary to
any Person.
     4.7 Tax Matters. Except as set forth on Section 4.7 of the Disclosure
Schedule:
          (a) For all periods open under the applicable statute of limitations,
the Company and its Subsidiary has timely filed all federal, state, local and
foreign income, information and other Tax Returns which are required to be filed
by them and all such Tax Returns have been prepared in compliance with all
applicable Laws and are true, complete and accurate in all respects;

18

--------------------------------------------------------------------------------

 

          (b) All Taxes imposed for all periods open under the applicable
statute of limitations upon the Company and/or its Subsidiary or upon any of
their assets, income or franchises, whether or not reflected in their respective
Tax Returns have been timely paid or withheld (or are being contested in good
faith) or, if not yet due and payable, the Company and/or its Subsidiary has
made provisions for such Tax liability;
          (c) There are no outstanding Tax deficiencies, assessments, liens, or
adjustments with respect to the Company and/or its Subsidiary, and no consent
has been given with respect to the Company and/or its Subsidiary to extend the
time in which any Tax may be assessed or collected by any taxing authority; and
          (d) There are no ongoing Tax audits by any taxing authority against
the Company and/or its Subsidiary and no written claim or inquiry has been
received by the Company and/or its Subsidiary from a taxing authority in a
jurisdiction where the Company and/or its Subsidiary does not pay Taxes or file
Tax returns to the effect that it is or may be subject to Taxes assessed by such
jurisdiction.
          (e) Neither the Company nor its Subsidiary is a party to any tax
sharing agreement or to any other agreement or arrangement, as a result of which
liability of the Company and/or its Subsidiary to any taxing authority is
determined or taken into account with reference to the activities of any other
person and the Company and its Subsidiary is not currently under any obligation
to pay any amounts as a result of having been a party to such an agreement or
arrangement, regardless of whether such tax is imposed on the Company and/or its
Subsidiary.
          (f) The Company has made a valid election pursuant to section
1362(a)(1) of the Code, pursuant to which the persons who were shareholders of
the Company on the date of that election have made valid consents pursuant to
Section 1362(a)(2) of the Code, effective not later than the first taxable year
of the Company (and any predecessor company) commencing May 26, 2005 (the “First
S Corp. Year”), to be treated as an “S Corporation” within the meaning of
sections 1361 and 1362 of the Code and the Company and its shareholders have
made a similarly effective election and consents under the comparable provisions
of the laws of the State of Indiana (the “S Corp. State”) effective not later
than the First S Corp. Year. Following the date of such election of the Company
to be treated as an S Corporation during the First S Corp. Year, the Company has
at all times qualified as an S Corporation under Section 1361 of the Code. For
the First S Corp. Year and all subsequent taxable years of the Company, the
Company at all times qualified as an S Corporation and incurred no liability for
federal income tax (including under Sections 1374 and 1375 of the Code) and no
liability for any tax of the S Corp. State based on income. The Company has not,
in the past ten (10) years, (i) acquired assets from another corporation in a
transaction in which the Company’s adjusted tax basis for the acquired assets
was determined, in whole or in part, by reference to the adjusted tax basis of
the acquired assets (or any other property) in the hands of the transferor or
(ii) acquired the stock of any corporation which is a qualified subchapter S
subsidiary under the Code.
          (g) Marque, Inc., has made a valid election pursuant to section
1362(a)(1) of the Code, pursuant to which the persons who were shareholders of
Marque, Inc. on the date of

19

--------------------------------------------------------------------------------

 

that election have made valid consents pursuant to Section 1362(a)(2) of the
Code, effective not later than the first taxable year of Marque, Inc. (and any
predecessor company) commencing September 20, 1990 (the “First S Corp. Year for
Marque”), to be treated as an “S Corporation” within the meaning of sections
1361 and 1362 of the Code and Marque, Inc. and its shareholders have made a
similarly effective election and consents under the comparable provisions of the
laws of the S Corp. State effective not later than the First S Corp. Year for
Marque. For the First S Corp. Year for Marque, Inc. and all subsequent taxable
years of Marque, Inc., Marque, Inc. at all times qualified as an S Corporation
and incurred no liability for federal income tax (including under Sections 1374
and 1375 of the Code) and no liability for any tax of the S Corp. State based on
income. Marque, Inc. has not, in the past ten (10) years, (i) acquired assets
from another corporation in a transaction in which Marque, Inc.’s adjusted tax
basis for the acquired assets was determined, in whole or in part, by reference
to the adjusted tax basis of the acquired assets (or any other property) in the
hands of the transferor or (ii) acquired the stock of any corporation which is a
qualified subchapter S subsidiary under the Code.
          (h) The Company is not and has not at any time in the immediately
preceding past five years been a “United States real property holding
corporation” within the meaning of 897(c)(2) of the Code.
     4.8 Absence of Certain Changes Other than pursuant to this Agreement or as
described on Section 4.8 of the Disclosure Schedule, since December 31, 2009
until the date hereof, the (a) Company and its Subsidiary have each operated
only in the ordinary course of business consistent with past practices and there
has been no material change in the condition, assets, or business of the Company
and/or its Subsidiary, and, (b) without limiting the generality of the
foregoing, the Company and its Subsidiary have not:
               (i) suffered any theft, damage, destruction or casualty loss to
any material asset or any material portion of its assets (whether or not covered
by insurance), or any substantial destruction of its books and records, which
has had a Material Adverse Effect;
               (ii) incurred any obligation or liability (except liabilities or
obligations incurred in the ordinary course of business consistent with past
practices and reflected on the Estimated Closing Date Balance Sheet);
               (iii) discharged or satisfied any Encumbrance, or paid any
obligation or liability;
               (iv) mortgaged, pledged, or subjected to Encumbrances (except for
Permitted Encumbrances) any of the Company’s or its Subsidiary’s properties or
assets;
               (v) sold, leased, assigned, transferred, licensed or otherwise
disposed of any of the Company’s or its Subsidiary’s properties or assets other
than in the ordinary course of business consistent with past practices as
further set forth on Schedule 4.8 of the Disclosure Schedule;
               (vi) waived any right of material value;

20

--------------------------------------------------------------------------------

 

               (vii) made or granted any bonus or any wage, salary or
compensation increase other than in the ordinary course of business to any
employee or independent contractor, except as provided by any Contract, the
terms of which have been disclosed in Section 4.13 of the Disclosure Schedule,
or made any bonus, percentage of compensation or other like benefit accruing to
or for the credit of any such directors, officers, employees, consultants or
agents of the Company and/or its Subsidiary (except in accordance with any
Employee Benefit Plans of the Company);
               (viii) terminated or received any notice of termination of any
Material Contract, or any lease, trademark, patent, patent application,
copyright or trade name protection;
               (ix) suffered any taking or seizure of all or any part of the
Company’s or its Subsidiary’s properties or assets by condemnation or eminent
domain;
               (x) experienced any material change in its relations with its
vendors, suppliers, lenders, dealers, distributors, customers, employees,
consultants or agents;
               (xi) acquired any capital stock or other securities of any
Person, or otherwise made any loan or advance to or investment in any Person;
               (xii) made any capital expenditures or capital additions
exceeding $25,000.00 singly or in the aggregate;
               (xiii) instituted, settled or agreed to settle any litigation,
action or proceeding before any Governmental Authority affecting the Company’s
or its Subsidiary’s financial condition, the Company’s or the Subsidiary’s
property or the respective business operations of the Company and/or its
Subsidiary (as applicable) involving a claim in excess of $10,000.00;
               (xiv) made any purchase commitment in excess of normal, ordinary
and usual requirements, or made any material change in its selling, pricing, or
personnel practices other than in the ordinary course of business consistent
with past practices;
               (xv) made any change in accounting principles or methods, or in
the manner of keeping books, accounts and records of the Company which is, or
may be, inconsistent with the principles or methodology by which the Financial
Statements have been prepared;
               (xvi) entered into any Contract, except in the ordinary course of
business consistent with past practices;
               (xvii) changed the authorized capital stock of the Company,
redeemed any capital stock of the Company, issued, sold or otherwise disposed of
any capital stock of the Company or any option to acquire capital stock of the
Company, or any securities convertible into or exchangeable for capital stock of
the Company, increased its Indebtedness, or made any declaration or payment of
any dividend or any other distribution (whether in cash, stock or property) in
respect of its capital stock;

21

--------------------------------------------------------------------------------

 

               (xviii) revoked the Company or Marque, Inc.’s election to be
taxed as an S Corporation within the meaning of Sections 1361 and 1362 of the
Code (and corresponding elections under state law). Shareholder has not taken or
allowed any action (other than the sale of the Company’s stock pursuant to this
Agreement) that would result in the termination of the Company and Marque Inc.’s
status as a validly electing S Corporation within the meaning of Sections 1361
and 1362 of the Code (and corresponding elections under state law);
               (xix) made any election with respect to Tax, filed any amended
Tax Return, enter into any closing agreement, settled any Tax claim or
assessment relating to the Company, surrendered any right to claim a refund of
Taxes, consented to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to the Company and/or its Subsidiary, or
taken any other similar action relating to the filing of any Tax Return or the
payment of any Tax, if such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action would have the effect of
increasing the Tax liability of the Company for any period ending after the
Closing Date or decreasing any Tax attribute of the Company existing on the
Closing Date; or
          (b) entered into any Contract or made any commitment to do any of the
things described in the preceding subsections (a) through (s) of this
Section 4.8.
     4.9 Assets.
          (a) Each of the Company, its Subsidiary and SJC Real Estate each has
good and marketable title to all of its assets and properties free and clear of
all Liens except (i) those listed on Section 4.9 of the Disclosure Schedule;
(ii) Liens for taxes, charges or assessments not yet due or which are being
contested in good faith by appropriate proceedings; (iii) statutory and
contractual Liens granted to any landlord, lessor, licensor, materialman,
mechanic, carrier, or repairer and similar Liens granted in the ordinary course
of business; (iv) Liens reflected in the Financial Statements; (v) zoning,
entitlement, building and other land use and similar Laws and any agreements
entered into with respect to the same; (vi) easements, covenants, rights of way,
conditions, restrictions and other similar matters of record; and (vii) other
defects in title, if any, that do not materially affect the operations of the
Business.
          (b) Section 4.9 of the Disclosure Schedule contains a complete and
accurate list of all the Real Property. Except as listed on Section 4.9 of the
Disclosure Schedule, neither the Company, its Subsidiary nor SJC Real Estate has
received, in the last two (2) years, any written notice of any (i) order
requiring repair, alteration, or correction of any existing condition affecting
any Real Property or the systems or improvements thereat, or (ii) structural,
mechanical, or other defects of material significance affecting any Real
Property or the systems or improvements thereat. Neither the whole nor any
portion of the Real Property has been condemned, requisitioned or otherwise
taken by any public authority, no written notice of such condemnation,
requisition or taking has been served upon the Company, its Subsidiary or SJC
Real Estate in the past two (2) years and, to the Company or Shareholder’s
Knowledge (as applicable), no such condemnation, requisition or taking is
threatened or contemplated. All water, sewer, gas, electric and telephone
utilities are available to the Real Property in a manner that adequately serves
the Business as currently conducted.

22

--------------------------------------------------------------------------------

 

          (c) Section 4.9 of the Disclosure Schedule sets forth a list of all
real property leased by the Company (the “Leased Real Property”). All leases
relating to Leased Real Property are identified on Section 4.9 of the Disclosure
Schedule (each a “Lease” and collectively, the “Leases”) by the premises covered
thereby, the date of lease and all amendments and supplements thereto, the name
of the landlord thereunder, and the term of the lease, including the expiration
date thereof. To the Company or Shareholder’s Knowledge (as applicable), the
Leased Real Property and improvements thereon may lawfully be used in connection
with the Business. To the Company’s Knowledge, the Leased Real Property and
improvements are in material compliance with all applicable laws, rules,
regulations and ordinances of all Governmental Authorities including, but not
limited to, zoning, building, health, safety and environmental laws; and neither
the Company, its Subsidiary or SJC Real Estate, has received any notices of
violations with respect thereto. With respect to each Lease listed on
Section 4.9 of the Disclosure Schedule, except as provided for to the contrary
on Section 4.9 of the Disclosure Schedule:
               (i) the Company has a valid and enforceable leasehold interest in
each Leased Real Property free and clear of any Encumbrances other than
Permitted Encumbrances;
               (ii) each of said Leases has been duly authorized and executed by
the Company, is in full force and effect and has not been modified or amended
except as identified on Section 4.9 of the Disclosure Schedule;
               (iii) each of said Leases affords the Company peaceful and
undisturbed possession of the Leased Real Property covered thereby; and
               (iv) neither the Company, nor its Subsidiary, nor to the Company
or Shareholder’s Knowledge (as applicable), is any other party to any of the
Leases (including SJC Real Estate) in breach or default under any of said
Leases, and, to the Company or Shareholder’s Knowledge (as applicable), no event
of default or event, occurrence, condition or act (including the transactions
contemplated by this Agreement) on the part of the Company, or, to the Company
or Shareholder’s Knowledge (as applicable), on the part of the lessor
thereunder, has occurred which, with or without notice or lapse of time or the
happening of any further event or condition, would constitute such a breach or
default or permit termination, modification or acceleration under said Lease or
render the lessee liable to incur any expenditure under such Lease.
          (d) Except as set forth in Section 4.9 of the Disclosure Schedule, all
of the tangible personal property owned by the Company is located on the Real
Property, except goods in transit sold in the ordinary course of business.
     4.10 Bank Accounts. Section 4.10 of the Disclosure Schedule sets forth the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company and its Subsidiary each
maintains a safe deposit box, lock box or checking, savings, custodial or other
account of any nature, and the type and authorized signatories of each such
account.

23

--------------------------------------------------------------------------------

 

     4.11 Litigation. Except as set forth in Section 4.11 of the Disclosure
Schedule, neither the Company nor its Subsidiary is involved or a party to
(either as plaintiff or defendant) in any litigation, suit, legal action,
arbitration, or other legal or administrative proceeding or investigation before
any Governmental Authority pending nor, (a) is any litigation, suit, legal
action, arbitration, or other legal or administrative proceeding or
investigation before any Governmental Authority pending or (b) to the Company’s
Knowledge, has any litigation, suit, legal action, arbitration, or other legal
or administrative proceeding or investigation before any Governmental Authority
been threatened against the Company and/or its Subsidiary, which (i) affects the
Company and/or its Subsidiary or the respective business or any of its
properties or assets of such Person, (ii) questions the validity of this
Agreement or any other documents or instruments to be executed and delivered by
the Company or Shareholder pursuant hereto, or the right of the Company or
Shareholder to enter into this Agreement or any such other documents or
instruments, or to consummate the transactions contemplated hereby or thereby,
or (iii) if adversely determined, would be likely to have a Material Adverse
Effect on the ability of the Company or Shareholder to perform their respective
obligations under this Agreement or any such other documents or instruments. To
the Company’s Knowledge, except as set forth on Section 4.11 of the Disclosure
Schedule, there is no fact or facts existing which would be reasonably expected
to result in, nor is there any basis for, any such action, suit, arbitration, or
other proceeding or investigation. Section 4.11 of the Disclosure Schedule
hereto identifies, with respect to each action, suit, arbitration, or other
proceeding or investigation set forth thereon, the parties thereto, the nature
of the claim, the status thereof, the court or other tribunal in which such
claim is being heard, and whether such claim is fully covered by insurance. The
Company is not a party to or subject to any order, writ, injunction, decree,
judgment or other restriction of any Governmental Authority which has or would
be reasonably likely to have a Material Adverse Effect or would be reasonably
likely to prevent or materially delay Shareholder’s ability to enter into this
Agreement or any other documents or instruments to be executed and delivered
pursuant hereto or consummate the transactions contemplated hereby or thereby.
     4.12 Compliance With Laws.
          (a) Laws. Except as set forth in Section 4.12 of the Disclosure
Schedule, the Company and its Subsidiary are in compliance with all applicable
Laws except where non-compliance would not have a Material Adverse Effect.
Neither the Company nor its Subsidiary has received, in the past two (2) years,
any written notice of violation or alleged violation of, any Laws, which remains
unresolved.
          (b) Licenses and Permits. Section 4.12 of the Disclosure Schedule
contains a complete listing of all material Permits currently held by the
Company and its Subsidiary. Such Permits constitute the Permits required for the
conduct of the Business as presently conducted, except where the failure to hold
a Permit would not have a Material Adverse Effect. To the Company’s Knowledge,
all such Permits are in full force and effect and each of the Company and its
Subsidiary are in material compliance with the Permits held by it.
Notwithstanding the foregoing, no representation or warranty is made in this
Section 4.12 with respect to environmental matters, which are covered
exclusively in Section 4.16.
     4.13 Material Contracts
          (a) Except as set forth on Section 4.13 of the Disclosure Schedule,
neither the Company nor its Subsidiary is a party to, nor are any of the
Company’s or any of its Subsidiary’s assets bound by, any executory agreements
(including dealer and distributor

24

--------------------------------------------------------------------------------

 

agreements), purchase orders (other than purchase commitments for raw materials
and supplies in the ordinary course of business), bailment agreements, equipment
leases, commitments, contracts, employment agreements, repurchase or floor plan
financing agreements, warranties, guarantees, understandings or other agreement:
               (i) which involve or may involve a payment, or delivery of assets
or services, in excess of $50,000.00 per year;
               (ii) which are of a duration in excess of twelve (12) months from
the date of execution thereof;
               (iii) to which any direct or indirect stockholder, officer,
director or employee of the Company and/or its Subsidiary or any member of such
Person’s immediate family, or any business entity in which such Person is a
partner, investor, officer or director is a party in any capacity;
               (iv) with another Person materially limiting or restricting the
ability of the Company and/or its Subsidiary to enter into or engage in any
market or line of business;
               (v) which relate to the incurrence, assumption, surety or
guarantee of any Indebtedness;
               (vi) which relates to the sale of any of the assets of the
Company and/or its Subsidiary other than in the ordinary course of business
consistent with past practices or for the grant to any person of any
preferential rights to purchase any of its assets; or
               (vii) which creates or evidence an Encumbrance upon any of the
Company’s or its Subsidiary’s assets or properties.
               (viii) (such agreements, together with any Leases, collectively
the “Material Contracts”).
          (b) True, correct and complete copies of each of the Material
Contracts (including all amendments thereto) have been delivered, or made
available to Buyer. Each of the Contracts set forth on Section 4.13 of the
Disclosure Schedule is in full force and effect, is the legal, valid and binding
obligation of the Company and/or its Subsidiary, enforceable against them in
accordance with its terms, except as such enforceability may be limited by
general enforceability exceptions, is between the Company and the counterparty
named on Section 4.13 of the Disclosure Schedule, has not been amended or
modified except as set forth on Section 4.13 of the Disclosure Schedule, and
constitutes the entire agreement between the parties thereto with respect to the
subject matter thereof. Neither the Company nor its Subsidiary is and, to the
Company’s Knowledge, no other party to any of the Material Contracts is in
default thereunder, nor to the Company’s Knowledge is there any fact or
circumstance with respect to any of the Material Contracts which upon notice or
lapse of time could give rise to a default thereunder.
          (c) Section 4.13 of the Disclosure Schedule sets forth a true, correct
and complete list of all purchase orders (“Open Purchase Orders”) to which the
Company and/or

25

--------------------------------------------------------------------------------

 

its Subsidiary is a party or by which the Company and/or its Subsidiary is bound
which involve or may involve the payment of more than $1,000.00 to any single
vendor or supplier. True and complete copies of all such Open Purchase Orders
have been delivered, or made available to Buyer. The Company and/or its
Subsidiary have performed all material obligations required to be performed by
it as of Closing under each Open Purchase Order. The Company and/or its
Subsidiary is not and, to the Company’s Knowledge, no other party to any Open
Purchase Order is in default thereunder, nor, to the Company’s Knowledge, is
there any fact or circumstance with respect to any Open Purchase Order which
upon notice or lapse of time could give rise to a default thereunder.
     4.14 Employee Matters.
          (a) Except as otherwise would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, the Company and its
Subsidiary are each in compliance with all federal and state laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours. There has been no “mass layoff” or “plant closing” within the
meaning of the Worker Adjustment and Retraining Notification Act of 1988, as
amended (“WARN”), and any similar state or local “mass layoff” or “plant
closing” law with respect to the Company and/or its Subsidiary within the six
(6) months prior to the Closing.
          (b) There is no labor dispute, strike, work stoppage, slow-down or
lockout, or, to the Company’s Knowledge, any threat thereof, by or with respect
to any employee of the Company or any of its Subsidiary.
          (c) None of the Company’s employees is covered by a collective
bargaining Contract and to the Company’s Knowledge, there is no union or other
organization seeking or claiming to represent any such employees. None of the
Company and/or its Subsidiary is subject to any charge, demand, petition, or
proceeding seeking to compel, require or demand it to bargain with any labor
union or labor organization.
          (d) Section 4.14 of the Disclosure Schedule is a true and complete
list of the names, positions and current salary rates of all present directors,
officers and employees of the Company and its Subsidiary whose total current
annual compensation is $70,000.00 or more, together with a summary showing the
salaries, bonuses, additional compensation and other like benefits, if any, paid
or payable to such persons for the calendar year ended December 31, 2009 and
that are expected to be paid or payable to such persons for the calendar year
ending December 31, 2010. To the Company’s Knowledge, no officer or “Key
Employee” (which means, as used herein, any employee whose current annual
compensation is $70,000.00 or more), of the Company and/or its Subsidiary
intends to terminate his or her employment with the Company and/or its
Subsidiary, nor does the Company and/or its Subsidiary have any present
intention to terminate the employment of any officer or such Key Employee.
     4.15 Employee Benefit Plans.
          (a) Except as set forth in Section 4.15 of the Disclosure Schedule,
the Company does not sponsor, maintain or contribute to or have any obligation
to sponsor, maintain or contribute to, or have any direct or indirect liability,
whether contingent or otherwise, with respect to any plan, program, arrangement
or agreement that is a pension, profit-sharing, savings, retirement, employment,
consulting, severance pay, termination, executive compensation, incentive
compensation, deferred compensation, bonus, stock

26

--------------------------------------------------------------------------------

 

purchase, stock option, phantom stock or other equity-based compensation,
change-in-control, retention, salary continuation, vacation, sick leave,
disability, death benefit, group insurance, hospitalization, medical, dental,
life (including all individual life insurance policies as to which the Company
is the owner, the beneficiary, or both), “cafeteria” or “flexible” benefit,
employee loan, educational assistance or fringe benefit plan, program,
arrangement or agreement, whether written or oral, and whether or not subject to
U.S. law, including, without limitation, all (i) “employee benefit plans” (as
defined in Section 3(3) of ERISA), which are provided to, for the benefit of, or
relate to, any employees of the Company and/or its Subsidiary or (ii) other
employee benefit plans, agreements, programs, policies, arrangements or payroll
practices, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise) under which any current or former
officer, director, employee, leased employee, consultant or agent (or their
respective beneficiaries) of the Company has any present or future right to
benefits. The items described in the foregoing sentence are hereinafter
sometimes referred to collectively as “Employee Benefit Plans,” and each
individually as an “Employee Benefit Plan.” True and correct copies of all the
Employee Benefit Plans, including all amendments thereto, have heretofore been
made available to Buyer. All references to “the Company” in this Section 4.15
shall refer to the Company, its Subsidiary and any employers that would be
considered a single employer with the Company under Sections 414(b), (c), (m) or
(o) of the Code.
          (b) The Company has made available to Buyer with respect to each
Employee Benefit Plan, a true, correct and complete copy (or, to the extent no
such copy exists or the Employee Benefit Plan is not in writing, an accurate
written description) thereof and, to the extent applicable: (i) the most recent
documents constituting the Employee Benefit Plan and all amendments thereto,
(ii) any related trust agreement or other funding instrument and all other
material contracts currently in effect with respect to such Employee Benefit
Plan (including, without limitation, all administrative agreements, group
insurance contracts and group annuity contracts); (iii) the most recent IRS
determination letter, if any; (iv) the most recent summary plan description and
a summary of material modifications; and (v) the three most recent (A) Forms
5500 and attached schedules, and (B) audited financial statements.
          (c) The Company does not sponsor, maintain, contribute or have any
liability, whether contingent or otherwise, with respect to, and has never
sponsored, maintained, contributed or had any liability, whether contingent or
otherwise, with respect to any Employee Benefit Plan (including, for such
purpose, any “employee benefit plan,” within the meaning of Section 3(3) of
ERISA, which the Company previously maintained or contributed to in the past),
that is, or has been, (i) subject to Title IV of ERISA or Section 412 or
Section 430 of the Code, (ii) maintained by more than one employer within the
meaning of Section 413(c) of the Code, (iii) subject to Sections 4063 or 4064 of
ERISA, (iv) a “multiemployer plan,” within the meaning of Section 4001(a)(3) of
ERISA, (v) a “multiple employer welfare arrangement” as defined in Section 3(40)
of ERISA, or (vi) an “employee pension benefit plan” within the meaning of
Section 3(2) of ERISA and that is not intended to be qualified under Section
401(a) of the Code.
          (d) The Company has no obligation to provide or make available any
post-employment benefit under any Employee Benefit Plan that is a “welfare plan”
(which for U.S.

27

--------------------------------------------------------------------------------

 

purposes, shall be as defined in Section 3(1) of ERISA, and which for all other
purposes, shall be any Employee Benefit Plan that does not provide for pension
benefits) (“Welfare Plan”) for any current or former officer, director,
employee, leased employee, consultant or agent (or their respective
beneficiaries) of the Company, except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and at the sole expense
of such individual. Unless otherwise disclosed on the Company’s Financial
Statements, there are no reserves, assets, surpluses or prepaid premiums with
respect to any Employee Benefit Plan that is a Welfare Plan.
          (e) With respect to each Employee Benefit Plan (i) all payments due
from the Company and/or its Subsidiary to date have been made and all amounts
properly accrued to date as liabilities of the Company and/or its Subsidiary
which have not been paid have been properly recorded on the books of the Company
and/or its Subsidiary; (ii) with respect to each Employee Benefit Plan, the
Company and the Subsidiary are in compliance with all Laws, including, without
limitation, ERISA and the Code; (iii) each such Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and
has received a favorable determination or opinion letter from the IRS regarding
its qualification thereunder and nothing has occurred since the date of such
letter that could reasonably be expected to cause the loss of such qualification
or the imposition of any liability, penalty, or tax under ERISA, the Code or any
other applicable Law; (iv) there are no actions, suits or claims pending (other
than routine claims for benefits) and, to the Company’s Knowledge, there are no
threatened actions, suits or claims, with respect to any Employee Benefit Plan
or against the assets of such Employee Benefit Plan; and (v) no accumulated
funding deficiency, as defined in ERISA or the Code, or reportable event, as
defined in ERISA, currently exists.
          (f) Neither the Company nor any other “party in interest” or
“disqualified person” with respect to any Employee Benefit Plan has engaged in a
non-exempt “prohibited transaction” within the meaning of Section 406 of ERISA
or Section 4975 of the Code involving such Employee Benefit Plan which,
individually or in the aggregate, could reasonably be expected to subject the
Company to a tax or penalty imposed by Section 4975 of the Code or Sections 501,
502 or 510 of ERISA. No fiduciary has any liability for breach of fiduciary duty
or any other failure to act or comply with the requirements of ERISA, the Code
or any other applicable Laws in connection with the administration or investment
of the assets of any Employee Benefit Plan.
          (g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
combination with another event) (i) result in any payment becoming due, or
increase the amount of any compensation due, to any current or former officer,
director, employee, leased employee, consultant or agent (or their respective
beneficiaries) of the Company; (ii) increase any benefits otherwise payable
under any Employee Benefit Plan; (iii) result in the acceleration of the time of
payment or vesting of any such compensation or benefits; (iv) result in a
non-exempt “prohibited transaction” within the meaning of Section 406 of ERISA
or Section 4975 of the Code; or (v) result in the payment of any amount that
could, individually or in combination with any other such payment, constitute an
“excess parachute payment,” as defined in Section 280G(b)(1) of the Code.

28

--------------------------------------------------------------------------------

 

     4.16 Environmental Matters.
          (a) The Company, its Subsidiary and SJC Real Estate have each
materially complied and are each in material compliance with all applicable
Environmental Laws except for any such noncompliance that would not result in a
Material Adverse Effect if remediated.
          (b) Except as set forth in Section 4.16 of the Disclosure Schedule,
neither the Company, its Subsidiary nor SJC Real Estate has received any written
claim, complaint, citation, report or other written notice regarding any actual
or alleged liabilities or potential liabilities (including any investigatory,
remedial or corrective liabilities) or violations, relating to them or its
facilities from any governmental entity or other Person arising under applicable
Environmental Laws that are, as of the Closing Date, unresolved.
          (c) The Company, its Subsidiary and SJC Real Estate have each
obtained, complied with, and is in compliance with all Permits that are required
pursuant to Environmental Laws for the occupation of its facilities and the
operation of the Business except where the failure to comply would not result in
a Material Adverse Effect. A list of all such Permits is set forth in
Section 4.16 of the Disclosure Schedule. Except as set forth in Section 4.16 of
the Disclosure Schedule, such Permits are in full force and effect.
          (d) Except as set forth in Section 4.16 of the Disclosure Schedule, to
Shareholder’s Knowledge, no above ground or underground storage tank, asbestos
containing material in any form or condition, polychlorinated biphenyls (PCBs)
above 50 parts per million in electrical equipment owned by the Company, its
Subsidiary or SJC Real Estate, or landfill, surface impoundments, or disposal
areas, exists on any Real Property (including real property previously owned or
operated).
          (e) Except as set forth in Section 4.16 of the Disclosure Schedule,
neither the Company, its Subsidiary nor SJC Real Estate treated, recycled,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or released any substance, including any Hazardous Substance, or owned
or operated any facility or property (and no such property or facility is
contaminated by any such substance), in a manner that has given or could
reasonably be expected to give rise to any damages, including any damages for
response costs, corrective action costs, personal injury, property damage or
natural resources damages, pursuant to Environmental Laws.
          (f) To the extent they exist in the Company’s files, true and complete
copies of all reports, studies, assessments, audits, and similar documents in
the possession or control of the Company or Shareholder that address any issues
of actual or potential noncompliance in any material respect with, or actual or
potential material liability under, any Environmental Laws that may affect the
Company have been provided to Buyer.
          (g) Neither the Company, its Subsidiary nor SJC Real Estate has
expressly assumed or undertaken any liability, including any obligation for
corrective or remedial action, of any other Person relating to environmental
matters.

29

--------------------------------------------------------------------------------

 

     4.17 Proprietary Rights.
          (a) Section 4.17 of the Disclosure Schedule contains a complete and
accurate list of all (i) Patents, Marks and Copyrights used or held for use by
the Company and its Subsidiary for use in connection with the Business and
(ii) licenses, sublicenses or other agreements under which the Company and/or
its Subsidiary is granted rights by others in any Intellectual Property Assets
(other than commercial off the shelf software which is made available for a
total cost of less than $20,000.00), and licenses, sublicenses or other
agreements under which the Company and/or its Subsidiary has granted rights to
others in any Company Intellectual Property Assets.
          (b) Except as set forth in Section 4.17 of the Disclosure Schedule:
               (i) the Company and/or its Subsidiary, as applicable, owns or
possesses adequate and enforceable rights to use, without payment to a third
party, all of the Company Intellectual Property Assets necessary for the
operation of the Business, free and clear of all Encumbrances granted by the
Company or such Subsidiary of the Company;
               (ii) all Patents, Marks and Copyrights owned by the Company
and/or its Subsidiary which are issued by, or registered or the subject of an
application filed with, as applicable, the U.S. Patent and Trademark Office, the
U.S. Copyright Office or any similar office or agency anywhere in the world have
been duly maintained (including the payment of maintenance fees) and are not
expired, cancelled or abandoned, except for such issuances, registrations or
applications that the Company and/or its Subsidiary has permitted to expire or
allow to be cancelled or abandoned in its reasonable business judgment;
               (iii) there are no pending, or, to the Company’s Knowledge,
threatened claims against the Company and/or its Subsidiary alleging that the
Company, its Subsidiary or the operation of the Business has infringed upon,
misappropriated, or otherwise violated the Intellectual Property Assets of any
other Person (“Third Party Rights”);
               (iv) to the Company’s Knowledge, the Company and its Subsidiary
have not and the operation of the Business does not infringe any Third Party
Right; and
               (v) to the Company’s Knowledge, there is no infringement by a
third party of any of the Company Intellectual Property Assets.
     4.18 Brokerage. Except for fees payable to William Blair & Co., which fees
will be paid by Shareholder, neither the Company nor its Subsidiary nor any
officers, directors or employees of the Company and/or its Subsidiary has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders’ fees in connection with the transactions contemplated by
this Agreement.
     4.19 Inventories. The inventories of the Company and its Subsidiary
consists of raw materials, work in process, consigned goods, and finished goods
of a quality and quantity usable or salable in the ordinary course of the
business of the Company and its Subsidiary, except for any slow moving, obsolete
inventory or inventory of below-standard quality, all of which is immaterial or
has been written off or written down to realizable value or for which there has
been

30

--------------------------------------------------------------------------------

 

a reserve established pursuant to the Financial Statements. The valuation at
which the inventories of the Company are carried reflects the normal inventory
valuation policy of the Company (applied in accordance with GAAP) which states
inventory at the lower of cost (last-in-first-out-method) or market and the
Company’s regular cost accounting standards with respect to work in process and
finished goods inventory.
     4.20 Insurance. Section 4.20 of the Disclosure Schedule sets forth a list
of the material insurance policies held by, or for the benefit of, the Company
and/or its Subsidiary as of the date of this Agreement, identifying the type of
coverage, the coverage limit, the term thereof, and the annual premiums payable
thereon. To the Company’s Knowledge, all such policies are adequate to insure
the risks covered thereby. Neither the Company nor its Subsidiary is in default
in any material respect under any such policy.
     4.21 NHTSA; Other Safety Standards. Neither the Company nor its Subsidiary
has received any notices or other correspondence from the National Highway
Traffic Safety Administration (“NHTSA”) relating to the Company’s and its
Subsidiary’s products which are unresolved. To the Company’s Knowledge, the
Company and its Subsidiary have each complied with all NHTSA requirements,
including but not limited to Federal Motor Vehicle Safety Standards, to the
extent applicable, AMD Standards and KKK-A-1822 standards, each as in effect
from time to time in connection with the manufacture of the Company’s and its
Subsidiary’s products. To the Company’s Knowledge, all of the Company’s and its
Subsidiary’s products are, and have been, at the time of sale in material
compliance with all other safety standards, including, but not limited to, all
standards of the General Services Administration, those imposed on the Business
by Law and neither the Company nor its Subsidiary has received notice of any
such infractions which are unresolved or been required to undertake any remedial
measures in response thereto.
     4.22 Product Liability; Product Recalls.
          (a) To the Company’s Knowledge, all of the Company’s and its
Subsidiary’s products that the Company or the Subsidiary has manufactured or
sold have been merchantable, free from defects in material workmanship, and
suitable for the purpose for which they were sold. The Company’s and its
Subsidiary’s products have not been subject to any product recall (including any
safety or NHTSA-related recall) or service bulletin and, to the Company’s
Knowledge, there is no fact or facts existing which may reasonably be expected
to result in any such recall or service bulletin. Except as disclosed in
Section 4.22 of the Disclosure Schedule, there is no legal action, suit,
arbitration, or other legal or administrative proceeding or investigation before
any Governmental Authority, pending or, to the Company’s Knowledge, threatened,
involving any product liability, product recall or otherwise involving any
Product of the Company and/or its Subsidiary. To the Company’s Knowledge, except
as disclosed in Section 4.22 of the Disclosure Schedule, there is no fact or
facts existing which would be reasonably expected to result in, nor is there any
basis for, any such action, suit, arbitration, or other proceeding or
investigation relating to the Company and/or its Subsidiary’s products.
          (b) The Company and its Subsidiary have insurance against loss or
damage arising out of product liability, true and complete copies of which have
been made available to Buyer in the data room maintained by William Blair & Co.
Such insurance covers all incidents

31

--------------------------------------------------------------------------------

 

of loss which have occurred prior to the date hereof or which may occur during
the applicable policy period resulting from the Company’s or its Subsidiary’s
products manufactured or sold prior to the Closing. All incidents of damage
claims paid by the Company or by its insurance carrier in the two (2) year
period preceding the date of this Agreement are described in Section 4.22 of the
Disclosure Schedule. The Financial Statements include an adequate reserve,
determined in accordance with GAAP, for all liability or potential liability
resulting or arising from any product recall that has been initiated or breach
of warranty claims that have been asserted, or that are reasonably likely to be
initiated or asserted, in connection with products manufactured or sold by the
Company and its Subsidiary, including the matters set forth in Section 4.22 of
the Disclosure Schedule, in each case, as of the date of such Financial
Statements.
     4.23 Warranty. Copies of all warranties of the Company and its Subsidiary
presently in force with respect to the products manufactured, sold, or delivered
by the Company and/or its Subsidiary have been made available to Buyer in the
data room maintained by William Blair & Co. Other than such warranties, neither
the Company no the Subsidiary has provided any other oral or written express
warranties on the products manufactured, sold, or delivered by the Company
and/or its Subsidiary.
     4.24 Dealer Network.
          (a) Section 4.24 of the Disclosure Schedule sets forth a true, correct
and complete list of the Company’s and its Subsidiary dealers (each a “Dealer”),
together with (i) the geographic region applicable to each such Dealer, (ii) an
indication of whether such relationship is exclusive, and (iii) the sales made
thereto, for the last three years. True, correct and complete copies of all
dealer agreements have been made available to Buyer in the data room maintained
by William Blair & Co. To the Company’s Knowledge, there has been no adverse
change in the Company’s relationship with any of the Dealers, nor, to the
Company’s Knowledge, has any such Dealer indicated to the Company and/or its
Subsidiary that it does not intend to continue to carry the Company’s or its
Subsidiary’s Products.
          (b) The Company has disclosed to Buyer (i) all significant refunds,
rebates, discounts and return policies or practices that the Company and/or its
Subsidiary has engaged in with respect to persons supplying goods and services
to the Company and (ii) all annual programs relating to refunds, rebates,
discounts and return policies or practices that the Company and/or its
Subsidiary has engaged in with respect to furnishing the Company’s or any
Subsidiary’s products to others in connection with the Business.
     4.25 Machinery and Equipment. Except as listed on Section 4.24 of the
Disclosure Schedule, all machinery, equipment and other tangible assets of the
Company and/or its Subsidiary, necessary and utilized in the operation of the
Business, are in good operating condition and in a state of repair sufficient
for the conduct of normal operations without the necessity of any known capital
expenditure in excess of $25,000.00. The Company’s assets and Real Property
owned by SJC Real Estate that is used in connection with the Business are
adequate to enable the Company and its Subsidiary to conduct the Business as now
being conducted. The Company does not have any commitment or plan to make any
capital

32

--------------------------------------------------------------------------------

 

expenditure in excess of $25,000.00 that has not been set forth in Section 4.25
of the Disclosure Schedule.
     4.26 Accounts Receivable. Except as listed on Section 4.24 of the
Disclosure Schedule, the accounts receivable of the Company and its Subsidiary
result from and will result from bona fide sales made by the Company and/or its
Subsidiary in the ordinary course of business consistent with past practices and
have been collected in the ordinary course after provision for doubtful accounts
and other reserves required by GAAP. The amounts due, or to become due, in
respect of such accounts receivable are not, to the Company’s Knowledge, in
dispute and there are no, and will not be, any setoffs or counterclaims asserted
against any of the accounts receivable of the Company and/or its Subsidiary. To
the Company’s Knowledge, the accounts receivable of the Company and its
Subsidiary are or will be good and will be collectible, without resort to
litigation or extraordinary collection activity, within 120 days after the
Closing, except to the reserve for doubtful accounts in the Estimated Closing
Date Balance Sheet. To the extent that there is a downward adjustment to the
Purchase Price pursuant to Section 2.3, which is related to an adjustment to the
amount of accounts receivables of the Company characterized as “doubtful or
uncollectible” accounts, Buyer’s exclusive remedy for such adjustment shall be
the purchase price adjustment pursuant to Section 2.3 and Buyer shall have no
right to seek any right of indemnification for such adjustment pursuant to
Section 9.2.
     4.27 Certain Interests
          (a) Except as set forth in Section 4.27 of the Disclosure Schedule,
neither the Company and/or its Subsidiary or Shareholder or the spouse of
Shareholder or any relative of Shareholder who resides with, or is a dependent
of, Shareholder:
               (i) has any direct or indirect financial interest in any
competitor, supplier or customer of the Company and/or its Subsidiary or the
Business; provided, however, that the ownership of securities representing no
more than one percent (1%) of the outstanding voting power of any competitor,
supplier or customer and that are also listed on any national securities
exchange or traded in the over the counter market, shall not be deemed to be a
“financial interest” so long as the Person owning such securities has no other
connection or relationship with such competitor, supplier or customer;
               (ii) owns, directly or indirectly, in whole or in part, or has
any other interest in, any tangible or intangible property that the Company
and/or its Subsidiary uses or has used in the conduct of the Business or
otherwise; or
               (iii) has outstanding any Indebtedness to the Company or any
Subsidiary.
          (b) Except as set forth in Section 4.27 of the Disclosure Schedule,
none of Shareholder, the Company and/or its Subsidiary has any liability of any
nature whatsoever to any officer, director or shareholder of the Company and/or
its Subsidiary or to any relative or spouse who resides with, or is a dependent
of, any such officer, director or shareholder.
     4.28 Business Conduct The Company has not, directly or indirectly, paid or
delivered any fees, commissions or other sums of money or items of property
however characterized to any finders, agents, customers, government officials or
other parties, in the United States or in any

33

--------------------------------------------------------------------------------

 

other country, which in any manner are related to the Business, or engaged in
any practice or activity for business purposes or otherwise, which has been
illegal under any Laws of the United States or any other country or territory
having jurisdiction over the Company.
     4.29 Compliance with the Foreign Corrupt Practices Act (FCPA), other
Anti-bribery Laws and other U.S. Trade Laws.
          (a) Compliance with the FCPA and Other Antibribery Laws. Neither the
Company, including its officers, directors, managers, employees and agents, or
any other Persons acting on any of their behalf, nor any of the Company’s
Dealers (“Company Persons”), have taken any action, directly or indirectly, that
would result in a violation by such Persons of the U.S. Foreign Corrupt
Practices Act of 1977, as amended (“FCPA”) or applicable comparable anti-bribery
laws of any other country. For the purposes of this representation, “U.S.
Foreign Corrupt Practices Act” means 15 U.S.C. §§ 78dd-1, et seq.
Such action in violation of the FCPA would include, without limitation, paying
or giving, or offering to pay or to give, anything of value to any foreign
official, foreign political party or party official, or any candidate for
foreign political office in order to influence an official act or decision that
would assist the Company, including its officers, directors, managers,
employees, and agents, or its Dealers. “Foreign officials” include any officer
or employee of a foreign government, a public international organization, or
department or agency thereof, any institution owned or controlled by a foreign
government or public international organization or any person employed by or
acting in an official capacity thereof, in order to influence an official act or
decision that would assist the Company, including its officers, directors,
managers, employees, and agents, or its Dealers in obtaining or retaining
business from such agencies, institutions or organizations.
          (b) Compliance with U.S. Sanctions. Neither the Company, including its
officers, directors, managers, employees and agents, nor any other persons
acting on any of their behalf, has taken any action, directly or indirectly,
that would result in a violation by the Company of any of the U.S. embargo or
sanctions regulations enforced by the Office of Foreign Assets Control (“OFAC”)
of the U.S. Department of the Treasury.
For purposes of this representation, these regulations include 31 C.F.R. Parts
500-598 and any executive orders enforced by OFAC.
          (c) Compliance with U.S. Export Control Laws. Neither the Company,
including its officers, directors, managers, employees and agents, nor any other
persons acting on any of their behalf, has taken any action, directly or
indirectly, that would result in a violation by the Company of any applicable
U.S. Export Control Laws.
For purposes of this representation, “U.S. Export Control Laws” means: U.S.
export control laws including the Export Administration Act, 50 U.S.C. app. §§
2401-2420, the Arms Export Control Act, 22 U.S.C. §§ 2751-2794, the Trading With
the Enemy Act, 50 U.S.C. App. § 5 et seq. and the International Emergency
Economic Powers Act, 50 U.S.C. § 1701 et seq., and regulations including the
Export Administration Regulations, 15 C.F.R. Parts 730-774, and International

34

--------------------------------------------------------------------------------

 

Traffic in Arms Regulations, 22 C.F.R. Parts 120-130; U.S. Foreign Trade
Regulations, 15 C.F.R. Part 30.
     4.30 Internal Controls The Company and its Subsidiary each maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (a) transactions are executed in accordance with management’s
general or specific authorizations, (b) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (c) access to assets is permitted only in
accordance with management’s general or specific authorization, and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
     4.31 Business Names. Neither the Company nor its Subsidiary has conducted
business under any fictitious business name during the past ten years, except as
set forth in Section 4.31 of the Disclosure Schedule.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer represents and warrants to Shareholder as follows:
     5.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware. Buyer has all
requisite corporate and other power and authority to enter into this Agreement
and the other documents and instruments to be executed and delivered by Buyer
and to carry out the transactions contemplated hereby and thereby.
     5.2 No Violation. The execution and delivery of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby will not cause
a breach or violation of or default or result, with or without the giving of
notice or the lapse of time or both, in a default or violation of, any provision
of (a) the Certificate of Incorporation or Bylaws of Buyer; (b) any material
mortgage, lien, lease, agreement, license, instrument, judgment or decree to
which Buyer or any of its properties or assets (real, personal or mixed,
tangible or intangible) are bound; or (c) any Law.
     5.3 Authority; Validity. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary actions or proceedings of
Buyer. No other corporate act or proceeding on the part of Buyer is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Buyer pursuant hereto or the consummation by Buyer of the
transactions contemplated hereby and thereby. This Agreement constitutes, and
when executed and delivered, the other documents and instruments to be executed
and delivered by Buyer pursuant hereto will constitute, valid and binding
agreements of Buyer, enforceable against Buyer in accordance with their
respective terms, except as such may be limited by bankruptcy,

35

--------------------------------------------------------------------------------

 

insolvency, reorganization or other Laws affecting creditors’ rights generally,
and by general equitable principles.
     5.4 Brokerage. Neither Buyer nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders’ fees in connection with the transactions
contemplated by this Agreement.
     5.5 Third Party Consents. No approval, authorization, notice, consent or
other action by or filing with any Person is required for Buyer’s execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE VI
COVENANTS
     From and after the date of this Agreement, the Parties shall comply with
the following covenants:
     6.1 Confidentiality. The Confidentiality Agreement shall remain in full
force and effect.
     6.2 Indemnification of Directors, Officers and Others.
          (a) From and after the Closing Date, Buyer shall cause the Company and
its Subsidiary to indemnify, defend and hold harmless, to the fullest extent
permitted under applicable Law, the individuals who on or prior to the Closing
Date were directors, officers or employees of the Company or the Subsidiary
(collectively, the “Indemnitees”) with respect to all acts or omissions by them
in their capacities as such. All rights of the Indemnitees to indemnification
and exculpation from liabilities for acts or omissions occurring at or prior to
the Closing Date as provided in the respective Articles of Incorporation or
Bylaws or comparable organizational documents of the Company and/or its
Subsidiary as now in effect, and any indemnification agreements or arrangements
of the Company and the Subsidiary which have been made available to Buyer in the
data room maintained by William Blair & Co shall survive the Closing Date and
shall continue in full force and effect in accordance with their terms. For a
period of six (6) years from the Closing Date, such rights shall not be amended,
or otherwise modified in any manner that would adversely affect the rights of
the Indemnitees, unless such modification is required by Law. In addition, Buyer
shall cause the Company and its Subsidiary to pay any reasonable expenses of any
Indemnitee under this Section 6.2, as incurred to the fullest extent permitted
under applicable Law, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances to the extent required by
applicable Law. Notwithstanding the foregoing, any breach of a representation or
warranty made by Shareholder herein or any indemnification obligation owing by
Shareholder hereunder shall not be deemed for any reason to be a claim covered
by indemnification or advancement of expenses owing to such Indemnitee under
this Agreement, any Law, Articles of Incorporation or Bylaw. In the event the
Subsidiary is liquidated, dissolved or otherwise ceases to exist, Buyer shall
cause the Company to assume all of its obligations hereunder and in the event
the Company is

36

--------------------------------------------------------------------------------

 

liquidated, dissolved or otherwise ceases to exist, Buyer shall assume all of
its obligations hereunder.
          (b) Each of Buyer and the Indemnitee shall cooperate, and cause their
respective Affiliates to cooperate, in the defense of any claim and shall
provide reasonable access during normal business hours to properties and
individuals as reasonably requested and furnish or cause to be furnished
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials or appeals, as may be reasonably requested in
connection therewith.
          (c) The provisions of this Section 6.2: (i) are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and
his or her representatives; and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by Contract or otherwise.
          (d) In the event that within the six (6) year period commencing
immediately after the Closing Date, Buyer, the Company and/or its Subsidiary or
any of their successors or assigns (i) consolidates with or merges into any
other Person and is not the continuing or surviving corporation or entity of
such consolidation or merger; or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
proper provision shall be made for the satisfaction of Buyer’s obligations under
this Section 6.2.
          (e) The obligations of Buyer under this Section 6.2 shall not be
terminated or modified in such a manner as to adversely affect any Indemnitee to
whom this Section 6.2 applies without the consent of the affected Indemnitee (it
being expressly agreed that the Indemnitees to whom this Section 6.2 applies
shall be third-party beneficiaries of this Section 6.2).
     6.3 Section 338(h)(10) Election.
          (a) At Buyer’s option, Shareholder shall join Buyer in making an
election under Section 338(h)(10) of the Code (the “Election”) and any
corresponding articles under state, local or foreign tax Laws (including an
election under Section 338(g) of the Code in those jurisdictions where an
election under Section 338(h)(10) is not permitted). Buyer shall notify
Shareholder in writing on or prior to thirty (30) days following the Closing
Date if Buyer decides to make such an Election and the Purchase Price shall be
allocated among the assets and liabilities of the Company and its Subsidiary
pursuant to subparagraph (c) below. If such Election is made, Shareholder shall
include any income, gain, loss, deduction, or other Tax item resulting from the
Election on their Tax Returns to the extent required by applicable law.
Shareholder shall also pay any Tax imposed on the Company attributable to the
making of the Election and the related deemed sale of assets, including (i) any
Tax imposed under section 1374 of the Code, (ii) any Tax imposed under U.S.
Treasury Regulations Section 1.338(h)(10)-1(d) or (iii) any Tax imposed on the
Company’s gain, and Shareholder shall indemnify Buyer against any Losses arising
out of any failure to pay any such Taxes; provided, however, that Buyer shall
pay, as additional Purchase Price (payable in cash at least thirty (30) days
before additional taxes are due and payable by Shareholder), such amount as is
required to cause Shareholder to receive the same after Tax proceeds as if such
election would not have been

37

--------------------------------------------------------------------------------

 

made, including any additional Taxes payable by Shareholder by virtue of the
receipt of such additional Purchase Price but excluding any built-in gains Tax;
provided that in no event shall any amount required to be paid by Buyer to
Shareholder pursuant to this Section 6.3(a) exceed $325,000.00 (the “Make-Whole
Amount”).
          (b) Buyer shall calculate the Make-Whole Amount and promptly deliver
the calculation (accompanied by reasonable detail as to how it was computed) to
Shareholder. For purposes of calculating the Make Whole Amount under this
Section 6.3, the total amount of gain realized by the Company pursuant to a
deemed asset purchase pursuant to Section 338(h)(10) of the Code shall be the
same as the total amount of gain realized by Shareholder pursuant to a stock
purchase. Buyer shall provide Shareholder with reasonable access during normal
business hours to and the right to copy any documentation reasonably requested
by Shareholder in connection with Buyer’s determination of the Make-Whole
Amount. Shareholder may object to the calculation of the Make-Whole Amount by
notifying Buyer in writing of such objection, and the basis therefore within
thirty (30) days of Shareholder’s receipt of Buyer’s calculation of the
Make-Whole Amount. Shareholder and Buyer shall use reasonable efforts to resolve
any dispute over the calculation of the Make-Whole Amount; provided, however, if
the Parties are unable to agree on the calculation of the Make-Whole Amount
within thirty (30) days following Shareholder’s notice to Buyer that they
disagree with Buyer’s calculation of the Make-Whole Amount, the issue shall be
referred to Independent Accountant to resolve such dispute using the procedures
set forth in Section 2.3(e)(iv) and the decision of Independent Accountant shall
be conclusive and binding on the Parties. The expenses pertaining to any dispute
resolution regarding the Make-Whole Amount shall be shared by the Parties in
accordance with the applicable terms provided for in Section 2.3.
          (c) If an Election is made, Buyer, the Company, and Shareholder agree
that the AGUB of the Company (plus other relevant items) initially will be
allocated to the assets of the Company for all purposes (including Tax and
financial accounting) as shown on the allocation schedule derived from the
calculation of the Make Whole Amount. Buyer may amend Section 6.3 of the
Disclosure Schedules from time to time (i) to account for (A) adjustments, if
any, to the Purchase Price or (B) distributions, if any, of Escrow Funds to
Shareholder, or (ii) to reflect differences, if any, between the asset
allocation for Tax purposes and the asset allocation for financial accounting
purposes; provided that the allocation schedule derived from the Make Whole
Amount shall not be amended in any manner that adversely effects Shareholder.
Buyer, the Company, and Shareholder shall file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with the determination relied upon for purposes of calculating the
Make Whole Amount.
          (d) If an Election is made, Buyer shall prepare all federal tax forms,
including U.S. federal tax Forms 8023 and 8883, and comparable state and local
tax forms that may be required to effect a valid Election for federal and
comparable state and local tax purposes (“338(h)(10) Election Forms”). As soon
as practicable after the Closing Date, Buyer shall furnish Shareholder with a
copy of the 338(h)(10) Election Forms.
               (i) As soon as practicable, but not later than 30 days, after the
receipt of U.S. federal tax Form 8023 (and comparable state and local tax forms)
(the “Election

38

--------------------------------------------------------------------------------

 

Forms”) from Buyer, Shareholder shall furnish Buyer with the Election Forms
signed by each Shareholder. Buyer shall file the Election Forms within the
applicable time period.
               (ii) As soon as practicable, but not later than thirty (30) days,
after the date of (i) any adjustment to the Purchase Price or (ii) any
distribution of Escrow Funds to Shareholder, Buyer shall furnish Shareholder
with a copy of the appropriate amended 338(h)(10) Election Forms, including an
amended U.S. federal tax Form 8883.
               (iii) Buyer shall work together with Shareholder to address any
comments Shareholder may have to the 338(h)(10) Election Forms; provided
however, subject to the restrictions set forth in sub-paragraph (c) above, Buyer
shall not be obligated to modify such forms in accordance with any such
comments.
     6.4 Straddle and Tax Election.
          (a) The Company, Shareholder and Buyer agree that the Company’s 2010
fiscal year shall be treated as if the taxable year consisted of two taxable
years, the first of which begins January 1, 2010 and ends on the Closing Date
(the “Pre-Closing Period”) and the second of which begins after the Closing Date
and ends December 31, 2010. This election shall be binding on the Company and
any of the Company’s successors or assigns for the taxable year in question.
          (b) The accountant(s) for Shareholder shall prepare the Company’s
state and federal income Tax Returns for the period from January 1, 2010,
through the Closing Date. D&T shall prepare the Company’s state and federal
income Tax Returns for the period after the Closing Date through July 31, 2010
(“Closing Date Tax Return”). Shareholder and their respective representatives
shall be permitted to review the Closing Date Tax Return and the work papers
pertaining to the Closing Date Tax Return, prior to the issuance of the Closing
Date Tax Return, and to consult with D&T in the course of their preparation of
the Closing Date Tax Return, and to discuss D&T’s conclusions therein.
     6.5 Retention of Records. Buyer shall cause the Company and its Subsidiary
to retain all books and records relating to pre-closing tax, accounting or legal
matters for a period of at least five (5) years from the Closing; provided,
however, that at the end of such five (5) year period any such document or
record may be disposed of by the Company and its Subsidiary if they first offer
to surrender possession thereof to Shareholder at their expense. Shareholder
shall have the right during business hours, upon reasonable notice to Buyer, to
inspect and make copies of any such records for any reasonable purpose.
     6.6 Bonus and Continuing Employees. Buyer shall cause the Company and its
Subsidiary to pay out all bonuses to existing employees (other than James Evans
and Chuck Drake) pursuant to existing bonus plans of the Company, including
paying any and all discretionary bonuses consistent with past practice. For a
period of one (1) year following the Closing Date, Buyer shall cause the Company
and its Subsidiary to provide to each Company Employee who remains employed by
the Company and/or its Subsidiary with compensation and benefits that are, in
the aggregate, at least substantially equivalent to those provided to such
Company Employee immediately prior to the Closing Date.

39

--------------------------------------------------------------------------------

 

     6.7 Litigation Support. In the event and for so long as any Party hereto
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated under this Agreement, or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company or Shareholder, each of the other
Parties shall reasonably cooperate with the contesting or defending Party and
his, her or its counsel in the contest or defense, make available his, her or
its personnel, and provide such testimony and access to his, her or its books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under this
Agreement).
     6.8 Action as to Certain Assets. Notwithstanding any other provision in
this Agreement to the contrary, the parties agree as follows:
          (a) Intentionally Omitted.
          (b) Tax Refunds. Shareholder shall be entitled to all claims for
refund of Taxes and other charges, fees or payments of any kind to any
governmental authority, in each case, in respect of the operation of the
Business prior to the Closing.
     6.9 Transfer Taxes. All sales, use, transfer, documentary, stamp or other
similar Taxes payable as a result of the consummation of the transactions
contemplated hereby shall be paid one hundred percent (100%) by Shareholder.
     6.10 Further Action. Each of the Parties shall use its respective
commercially reasonable efforts to take or cause to be taken all appropriate
action, do or cause to be done all things necessary, proper or advisable and
execute and deliver such documents and other papers, as may be required to carry
out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS
     Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of the
following conditions:
     7.1 Representations and Warranties True on the Closing Date. Each of the
representations and warranties made by Shareholder and the Company in this
Agreement shall be true and correct in all respects at and as of the time of the
Closing.
     7.2 Compliance With Agreement. Shareholder or the Company shall have in all
respects performed and complied with all of the agreements and obligations under
this Agreement which are to be performed or complied with by them prior to or on
the Closing Date.
     7.3 Consents and Approvals. All approvals, consents and waivers that are
listed in Section 7.3 of the Disclosure Schedules shall have been received, and
executed counterparts thereof shall have been delivered to Buyer at or prior to
the Closing.

40

--------------------------------------------------------------------------------

 

     7.4 Documents to be Delivered by Shareholder. At the Closing, Shareholder
shall have delivered to Buyer the following documents, in each case duly
executed or otherwise in proper form:
          (a) Escrow Agreement. Escrow Agreement signed by Shareholder, Buyer
and Escrow Agent.
          (b) Certificate(s). Certificates representing the Purchased Shares.
          (c) Intentionally Omitted.
          (d) Good Standing Certificates. A good standing certificate (or its
equivalent) for each of the Company and its Subsidiary from the secretary of
state or similar governmental authority of the jurisdiction under the Laws in
which it is organized and each jurisdiction where either the Company and/or its
Subsidiary is qualified to do business.
          (e) Resignations. Resignations of the directors and officers of the
Company and its Subsidiary as requested by Buyer.
          (f) Other Documents. Such other documents or instruments as Buyer
reasonably requests and are reasonably necessary to consummate the transactions
contemplated by this Agreement.
          (g) Performance and Obligations of the Company. The Company shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
including, but not limited to, the Company shall have delivered a certificate of
an authorized officer of the Company, dated as of the Closing Date, certifying
as to (i) the incumbency of officers of the Company executing documents executed
and delivered in connection herewith, (ii) the copies of the Articles of
Incorporation and Bylaws of the Company and its Subsidiary, each as in effect
from the date of this Agreement until the Closing.
     7.5 Release Agreements. Christopher J. Graff, Chuck Drake and James Evans
shall have delivered their respective release agreements (the “Release
Agreements”) to Buyer.
     7.6 Non-Compete Agreement. Christopher J. Graff shall have delivered his
non compete agreement.
     7.7 SJC Real Estate Purchase Agreement. SJC Real Estate Purchase Agreement
signed by SJC Real Estate.
     7.8 SJC Real Estate Lease. SJC Real Estate Lease signed by SJC Real Estate.
     7.9 Payoff Letters. The Company shall have received and delivered to Buyer
payoff letters for all of the Indebtedness except Indebtedness assumed by Buyer
in connection with the Closing, as provided for on Schedule 7.9 of the
Disclosure Schedule.

41

--------------------------------------------------------------------------------

 

     7.10 Legal Restraints; Proceedings. No law, injunction, judgment or ruling,
enacted, promulgated, issued, entered, amended or enforced by any Governmental
Authority shall be in effect enjoining, restraining, preventing or prohibiting
the consummation of the transactions contemplated hereby or the documents or
instruments delivered pursuant hereto or making such transactions illegal.
ARTICLE VIII
CONDITIONS PRECEDENT TO SHAREHOLDER’S OBLIGATIONS
     Each and every obligation of Shareholder to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following conditions:
     8.1 Representations and Warranties True on the Closing Date Each of the
representations and warranties made by Buyer in this Agreement shall be true and
correct in at and as of the time of the Closing.
     8.2 Compliance With Agreement Buyer shall have performed and complied in
all respects with its obligations under Section 2.3 hereof and shall have
performed and completed with its other agreements and obligations under this
Agreement which are to be performed or complied with by it prior to or on the
Closing Date.
     8.3 Absence of Litigation No action, suit or proceeding shall have been
instituted by any Person which seeks to prohibit, restrict or delay consummation
of the transaction contemplated herein or any of the conditions to the
transactions contemplated herein, or seeks damages as a result of the
consummation of the transactions contemplated herein or speaks to the conduct of
the business of the Company after the Closing Date.
     8.4 Consents and Approvals. All approvals, consents and waivers that are
listed in Section 7.3 of the Disclosure Schedules shall have been received, and
executed counterparts thereof shall have been delivered to Shareholder at or
prior to the Closing.
     8.5 Intentionally Omitted.
     8.6 Documents to be Delivered by Buyer. At the Closing, Buyer shall deliver
to Shareholder the following documents, in each case duly executed or otherwise
in proper form:
          (a) Good Standing Certificate. A good standing certificate (or its
equivalent) for Buyer from the secretary of state or similar governmental
authority of the jurisdiction under the Laws in which it is organized.
          (b) Other Documents. Such other documents or instruments as
Shareholder reasonably request and are reasonably necessary to consummate the
transactions contemplated by this Agreement.
          (c) Shareholder and Company shall have delivered a certificate as
described in U.S. Treasury Regulation Sections 1.1445-2(c)(3)(i) and 1.897-2(h).

42

--------------------------------------------------------------------------------

 

     8.7 Personal Guaranty Releases. Shareholder shall have received releases of
all personal guaranty’s made by Shareholder and/or spouses for all debt or other
liabilities or obligations of the Company for Indebtedness assumed by Buyer in
connection with the closing of this transaction. Notwithstanding the foregoing,
Shareholder acknowledges and agrees that any personal guaranty securing the
obligations of the Company under any bid or performance bond issued for the
benefit of the Company prior to the Closing shall remain in place until the
earlier of (a) such bid or performance bond (as applicable) is replaced by Buyer
in the ordinary course of business or (b) performance is completed and such
performance bond obligation is released (in the case of a performance bond).
     8.8 SJC Real Estate Purchase Agreement. SJC Real Estate Purchase Agreement
signed by Buyer.
     8.9 SJC Real Estate Option Agreement. SJC Real Estate Option Agreement
signed by Buyer.
     8.10 SJC Real Estate Lease. SJC Real Estate Lease signed by Buyer.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
     9.1 Survival.
          (a) Subject to the limitations and other provisions of this Agreement,
the representations and warranties of the Company and Shareholder hereto
contained herein shall survive the Closing and shall remain in full force and
effect for twelve (12) months from and including the Closing Date; provided,
however, that (i) the representations and warranties made pursuant to
Section 3.1 (Power), Section 3.2 (Purchased Shares), Section 3.4
(Enforceability), Section 3.7 (Brokerage), Section 3.5 (No Violation),
Section 4.1 (Organizational Matters), Section 4.2 (Capitalization), Section 4.3
(Subsidiary), Section 4.4 (No Violation), Section 4.5 (Third Party Consents) and
Section 4.18 (Brokerage) shall survive indefinitely and (ii) the representations
and warranties set forth in Section 4.7 (Tax Matters), Section 4.12 (Compliance
with Laws), Section 4.16 (Environmental Matters), Section 4.22 (Product
Liability; Product Recalls), Section 4.23 (Warranty) and Section 4.29
(Compliance with the Foreign Corrupt Practices Act (FCPA), other Anti-bribery
Laws and other U.S. Trade Laws) shall survive until sixty (60) days after the
expiration of the applicable statute of limitations in question (giving effect
to any waiver, mitigation or extension thereof), ((i) and (ii) collectively, the
“Excluded Shareholder/Company Representations”). Neither the period of survival
nor the liability of Shareholder with respect to Shareholder’s representations
and warranties shall be reduced by any investigation made at any time by or on
behalf of Buyer. If written notice of a claim has been given prior to the
expiration of the applicable representations and warranties by Buyer to
Shareholder, then the relevant representations and warranties shall survive as
to such claim, until such claim has been finally resolved.
          (b) Subject to the limitations and other provisions of this Agreement,
the representations and warranties of Buyer contained herein shall survive the
Closing and shall remain in full force and effect for twelve (12) months from
and including the Closing Date;

43

--------------------------------------------------------------------------------

 

provided, however, that the representations and warranties made pursuant to
Section 5.1 (Organization), Section 5.2 (No Violation), and Section 5.4
(Brokerage) (collectively, the “Excluded Buyer Representations”) shall survive
indefinitely. Neither the period of survival nor the liability of Buyer with
respect to Buyer’s representations and warranties shall be reduced by any
investigation made at any time by or on behalf of Shareholder. If written notice
of a claim has been given prior to the expiration of the applicable
representations and warranties by Shareholder to Buyer, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved.
     9.2 Indemnification by Shareholder.
          (a) Subject to the other terms and conditions of this Agreement,
Shareholder agrees to indemnify Buyer and its Affiliates (including following
the Closing, the Company and its Subsidiary) and their respective officers,
directors, stockholders and each of their respective Affiliates (each a “Buyer
Indemnified Party”) against and hold them harmless to the extent of any Losses
arising out of or resulting from (i) the breach of any representation or
warranty of the Company or Shareholder contained herein; (ii) the breach of any
representation or warranty of the Company or Shareholder contained in the SJC
Real Estate Purchase Agreement, SJC Real Estate Option Agreement, or SJC Real
Estate Lease; (iii) any breach of any covenant or agreement of the Company or
Shareholder contained herein; (iv) any breach of any covenant or agreement of
the Company or Shareholder contained in the SJC Real Estate Purchase Agreement,
SJC Real Estate Option Agreement, or SJC Real Estate Lease; (v) any claim by the
spouse of Shareholder related to the authority of Shareholder to consummate the
transactions contemplated by this Agreement or the delivery of the Purchase
Price to Shareholder as contemplated herein or (vi) subject to the limitations
set forth in Section 9.2(b)(ii), the litigation matter styled as Ken-Mac Metals,
a division of Thyssenkrupp Materials NA, Inc. v. SJC Industries Corp. (Cause
No. 20D03-0910-PL-74) (as identified on Section 4.11 of the Disclosure Schedule)
(the “Ken-Mac Litigation”).
          (b) Buyer Indemnified Parties’ indemnification rights pursuant to
Section 9.2(a) shall be limited as follows:
               (i) Buyer Indemnified Parties shall not be entitled to any
indemnification until the aggregate dollar amount of all Losses that would
otherwise be indemnifiable pursuant to Section 9.2(a) exceeds $250,000.00 (the
“Basket”), whereupon, Buyer Indemnified Party shall be entitled to
indemnification for the full amount of such Losses over and above $125,000.00.
               (ii) Notwithstanding anything to the contrary in this Agreement,
Buyer Indemnified Parties shall not be entitled to indemnification under
Section 9.2(a):
                    (A) with respect to any Loss that is set forth in the
Disclosure Schedule or which has been expressly reserved for on the Audited
Closing Date Balance Sheet;
                    (B) in connection with any claim for indemnification based
upon a claim, assessment or deficiency for any Tax which arises from adjustments
having the effect only of shifting income, credits and/or deductions from one
fiscal period to another;

44

--------------------------------------------------------------------------------

 

                    (C) with respect to any claim for indemnification under
Section 9.2(b)(i), unless the Buyer Indemnified Party has given Shareholder
written notice of such claim, setting forth in reasonable detail the facts and
circumstances pertaining thereto, (x) as soon as practicable following the Buyer
Indemnified Party’s discovery of such claim and (y) prior to the expiration of
the representation and warranty; and
                    (D) to the extent of any insurance proceeds actually
received by the Buyer Indemnified Party, the Company or a Subsidiary in
connection with the facts giving rise to such indemnification.
               (iii) Buyer Indemnified Parties shall not be entitled to any
indemnification for any amount of indemnifiable Losses in excess of
$4,000,000.00 (the “Indemnification Cap”); provided, however, that the
Indemnification Cap shall not apply to claims for indemnification based upon one
or more (A) breaches of the representations and warranties contained in
Section 4.7 (Tax Matters), Section 4.12 (Compliance with Laws), Section 4.16
(Environmental Matters) or Section 4.29 (Compliance with the Foreign Corrupt
Practices Act (FCPA), other Anti-bribery Laws and other U.S. Trade Laws), (B)
fraud or willful misconduct, or (C) Losses related to Taxes. With respect to any
claim for indemnification based upon one or more breaches of the representation
or warranty contained in Section 4.22 (Product Liability; Product Recalls), the
right of a Buyer Indemnified Party to indemnification pursuant to this
Section 9.2 shall be limited to the aggregate amount of Losses not to exceed the
Purchase Price; provided however, to the extent that the basis for any Losses
claimed by a Buyer Indemnified Party pursuant to the foregoing is otherwise
covered by a warranty, including a warranty provided by the Company, a Buyer
Indemnified Party shall not be entitled to any indemnification from Shareholder
pursuant to this Section 9.2(b)(iii). In connection with the Ken-Mac Litigation,
the Parties agree that Buyer will bear Losses of the Company (in the form of
defense costs) (“Ken-Mac Defense Costs”) up to $20,000.00 in the aggregate;
provided that, in the event (A) Ken-Mac Defense Costs exceed $20,000.00 and/or
(B) the Company incurs an adverse judgment from the Ken-Mac Litigation that
results in Losses to the Company (excluding Ken-Mac Defense Costs for the
avoidance of duplication), Shareholder shall be responsible for reimbursing
Buyer for all Ken-Mac Defense Costs on a dollar-for-dollar basis above
$20,000.00 and/or for all Losses incurred by the Company in connection with any
adverse judgment (excluding Ken-Mac Defense Costs for the avoidance of
duplication), without any application of the Indemnification Cap or the Basket.
Shareholder shall deliver such reimbursement (“Ken-Mac Reimbursement
Obligation”) to Buyer within three (3) Business Days of receipt of an invoice
from Buyer evidencing incurred Losses of the Company. In the event Shareholder
fails to satisfy its Ken-Mac Reimbursement Obligation within three (3) Business
Days of receipt of the respective invoice, Buyer shall have the right to satisfy
the Ken-Mac Reimbursement Obligation out of the Escrow Funds and Shareholder
irrevocably and unconditionally waives any right of objection to such
satisfaction, as contemplated by the Escrow Agreement.
          (c) The amount of any Loss subject to indemnification under this
Section 9.2 shall be calculated net of (i) any insurance proceeds actually
received by Buyer Indemnified Party on account of such Loss, and (ii) any
indemnification payments made by any third party.
          (d) A Buyer Indemnified Party shall give Shareholder written notice of
any claim, assertion, event or proceeding as to which such Buyer Indemnified
Party has determined

45

--------------------------------------------------------------------------------

 

has given or could give rise to a right of indemnification under this Agreement,
within sixty (60) days of such determination, stating the amount of the Loss, if
known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises and shall include copies of all correspondence received
from any third party in connection with any such claim; provided, however, that
the failure to provide such notice shall not release the Indemnifying Parties
from any of their obligations under this Article IX except to the extent that
the Indemnifying Parties are materially prejudiced by such failure and shall not
relieve any Indemnifying Party from any other obligation or Liability that it
may have to any Buyer Indemnified Party otherwise than under this Article IX.
          (e) With respect to any Third Party Claim for which indemnification is
sought under Section 9.2(a), Shareholder shall have the right to direct, through
counsel of its own choosing, the defense or settlement of any such claim or
proceeding at Shareholder’s expense, provided that Shareholder acknowledges on
behalf of the Indemnifying Parties in writing their obligation to indemnify
Buyer Indemnified Party hereunder against any Losses that may result from such
Third Party Claim. If Shareholder elects to assume the defense of any such claim
or proceeding, Shareholder shall consult with Buyer Indemnified Party for the
purpose of allowing Buyer Indemnified Party to participate in such defense, but
in such case the expenses of Buyer Indemnified Party shall be paid for by Buyer
Indemnified Party and shall not be recoverable as part of any indemnification
claim. In the event Shareholder assumes the defense of a Third Party Claim,
Shareholder shall not have the right to settle such claim without the consent of
any Buyer Indemnified Party, unless such settlement (i) includes injunctive or
other equitable relief imposed against any Buyer Indemnified Party,
(ii) contains an admission of wrongdoing or liability on behalf of any Buyer
Indemnified Party or its Affiliates, (iii) would reasonably involve
indemnifiable Losses which taken together with all previous indemnifiable Losses
would exceed the Indemnification Cap, or (iv) would reasonably be expected to
have a Material Adverse Effect on the Company and/or its Subsidiary in any
taxable period other than a Pre-Closing Period. Each Buyer Indemnified Party
shall, and shall cause the Company and its Subsidiary to, reasonably cooperate
with Shareholder and to provide Shareholder and their counsel with reasonable
access to all records and personnel relating to any such claim, assertion, event
or proceeding during normal business hours and shall otherwise reasonably
cooperate with Shareholder in the defense or settlement thereof. If Shareholder
elects to direct the defense of any such claim or proceeding, Buyer Indemnified
Party shall not pay, or permit to be paid, any part of any claim or demand
arising from such asserted liability unless Shareholder consents in writing to
such payment, which consent shall not be unreasonably withheld or delayed. If
Shareholder fails to defend or if, after commencing or undertaking any such
defense, Shareholder fails to prosecute or withdraw from such defense, Buyer
Indemnified Party shall have the right to undertake the defense or settlement
thereof. If Buyer Indemnified Party assumes the defense of any such claim or
proceeding and proposes to settle such claim or proceeding, then Buyer
Indemnified Party shall give Shareholder prompt written notice thereof, and
Shareholder shall have the right to participate in the settlement of such claim
or proceeding and to consent thereto or assume or reassume the defense of such
claim or proceeding. In the event Shareholder assumes the defense of a Third
Party Claim, any and all Losses paid in connection with such claim by
Shareholder shall be limited to any remaining amount under the Indemnification
Cap to the extent applicable thereto, and nothing herein shall be construed as
an assumption of liability of any such claim by Shareholder beyond the
Indemnification Cap (to

46

--------------------------------------------------------------------------------

 

the extent applicable to such claim). In all circumstances, Buyer Indemnified
Parties shall reasonably cooperate and in good faith with Shareholder with
respect to any claims subject to this Article IX.
          (f) With respect to any non-Third Party Claim for indemnification
hereunder, if the parties hereto are unable to negotiate a settlement of such
claim, then such claim shall be resolved in accordance with Article XI.
          (g) No Buyer Indemnified Party shall be entitled to indemnification
hereunder for any Loss arising from a breach of any representation, warranty,
covenant or agreement set forth herein (and the amount of any Loss incurred in
respect of such breach shall not be included in the calculation of any
limitations on indemnification set forth herein) to the extent that such
liability is included in the calculation of the Estimated Purchase Price and/or
the Purchase Price.
          (h) Anything herein to the contrary notwithstanding, except in the
case of fraud or willful misconduct, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any right on the part
of Buyer or a Buyer Indemnified Party, after the consummation of the
transactions contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
          (i) Except in the case of fraud or willful misconduct, Buyer
Indemnified Parties shall not be entitled to indemnification for any
consequential, special, exemplary or punitive damages or any multiple of damages
or diminution in value.
          (j) Any liability for indemnification under this Section 9.2 shall be
determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.
     9.3 Tax Indemnification.
          (a) Each Buyer Indemnified Party shall be indemnified, held harmless
and reimbursed by Shareholder for and against any and all liability for Taxes
and related Losses imposed on or borne by Buyer with respect to any Pre-Closing
Period in excess of the amounts set forth on the Estimated Closing Date Balance
Sheet, and with respect to any Pre-Closing Period, for the portion thereof
ending on the Closing Date in excess of the amounts set forth on the Audited
Closing Date Balance Sheet.
          (b) In the case of any Pre-Closing Period, the amount of Taxes
allocable to the portion of the Pre-Closing Period ending on the Closing Date
shall be deemed to be:
               (i) In the case of Taxes imposed on a periodic basis (such as
real or personal property Taxes), the amount of such Taxes for the entire period
(or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period) multiplied by a fraction, the
numerator of which is the number of calendar days in the Pre-Closing Period
ending on and including the Closing Date and the denominator of which is the
number of calendar days in the entire relevant Pre-Closing Period; and

47

--------------------------------------------------------------------------------

 

               (ii) In the case of Taxes not described in (i) above (such as
franchise Taxes, Taxes that are based upon or related to income or receipts,
based upon occupancy or imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible)), the amount
of any such Taxes shall be determined based on an interim closing of the books
of the Company as of the close of business on the Closing Date.
          (c) Buyer may withhold, from amounts otherwise due to Shareholder, the
amount of any indemnity amount payable under this Section 9.3.
     9.4 Indemnification by Buyer.
          (a) Subject to the other terms and conditions of this Agreement,
Shareholder and their respective officers, directors, stockholders and each of
their respective affiliates (each a “Shareholder Indemnified Party”) shall be
held harmless and indemnified by Buyer to the extent of any Losses resulting
from (i) the breach of any representation or warranty of Buyer contained herein;
or (ii) any breach of any covenant or agreement of Buyer contained herein.
Additionally, Shareholder shall be held harmless and indemnified by Buyer to the
extent of any Losses resulting from any personal liability incurred by
Shareholder under a performance bond of the Company (which was in place prior to
the Closing) where Shareholder agreed to personally guarantee the obligations of
the Company.
          (b) The Shareholder Indemnified Parties’ indemnification rights
pursuant to Section 9.4(a) shall be limited as follows:
               (i) The Shareholder Indemnified Parties shall not be entitled to
any indemnification until the aggregate dollar amount of all Losses that would
otherwise be indemnifiable pursuant to Section 9.4(a) exceeds the Basket,
whereupon, the Seller Indemnified Party shall be entitled to indemnification for
the full amount of such Losses over and above $125,000.00.
               (ii) The Shareholder Indemnified Parties shall not be entitled to
any indemnification for any amount of indemnifiable Losses in excess of an
amount equal to the Indemnification Cap; provided, however, that the
Indemnification Cap shall not apply to claims for indemnification based upon (A)
breaches of the Excluded Buyer Representations or (B) fraud and or willful
misconduct.
          (c) The amount of any Loss subject to indemnification under this
Section 9.4 shall be calculated net of (i) any insurance proceeds actually
received by the Shareholder Indemnified Party on account of such Loss and
(ii) any indemnification payments made by any third party.
          (d) A Shareholder Indemnified Party shall give Buyer written notice of
any claim, assertion, event or proceeding as to which such Shareholder
Indemnified Party has determined has given or would give rise to a right of
indemnification under this Agreement, within sixty (60) days of such
determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or arises
and shall include copies of all correspondence received from any third party in
connection with any such claim; provided,

48

--------------------------------------------------------------------------------

 

however, that the failure to provide such notice shall not release the
Indemnifying Parties from any of their obligations under this Article IX except
to the extent that the Indemnifying Parties are materially prejudiced by such
failure and shall not relieve any Indemnifying Party from any other obligation
or Liability that it may have to any Shareholder Indemnified Party otherwise
than under this Article IX.
          (e) With respect to any Third Party Claim for which indemnification is
sought under Section 9.4(a), Buyer shall have the right to direct, through
counsel of its own choosing, the defense or settlement of any such claim or
proceeding at its own expense, provided, that Buyer acknowledges on behalf of
the Indemnifying Parties in writing its obligation to indemnify the Shareholder
Indemnified Party hereunder against any Losses that may result from such Third
Party Claim. If Buyer elects to assume the defense of any such claim or
proceeding, Buyer shall consult with the Shareholder Indemnified Party for the
purpose of allowing the Shareholder Indemnified Party to participate in such
defense, but in such case the expenses of the Shareholder Indemnified Party
shall be paid for by the Shareholder Indemnified Party and shall not be
recoverable as part of any indemnification claim. A Shareholder Indemnified
Party shall provide Buyer and its counsel with reasonable access to all records
and personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise reasonably cooperate with Buyer in the
defense or settlement thereof. If Buyer elects to direct the defense of any such
claim or proceeding, the Shareholder Indemnified Party shall not pay, or permit
to be paid, any part of any claim or demand arising from such asserted liability
unless Buyer consents in writing to such payment, which consent shall not be
unreasonably withheld or delayed. If Buyer fails to defend or if, after
commencing or undertaking any such defense, Buyer fails to prosecute or
withdraws from such defense, the Shareholder Indemnified Party shall have the
right to undertake the defense or settlement thereof. If the Shareholder
Indemnified Party assumes the defense of any such claim or proceeding and
proposes to settle such claim or proceeding, then the Shareholder Indemnified
Party shall give Buyer prompt written notice thereof, and Buyer shall have the
right to participate in the settlement of such claim or proceeding and consent
thereto or assume or reassume the defense of such claim or proceeding.
          (f) With respect to any non-Third Party Claim for indemnification
hereunder, if the parties are unable to negotiate a settlement of such claim,
then such claim shall be resolved in accordance with Article XI.
          (g) Anything herein to the contrary notwithstanding, except in the
case of fraud or willful misconduct, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any right on the part
of a Shareholder Indemnified Party, after the consummation of the transactions
contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.
          (h) Except in the case of fraud or willful misconduct, the Shareholder
Indemnified Parties shall not be entitled to indemnification for any
consequential, special, exemplary or punitive damages or any multiple of damages
or diminution in value.
          (i) Any liability for indemnification under this Section 9.4 shall be
determined without duplication of recovery by reason of the state of facts
giving rise to such

49

--------------------------------------------------------------------------------

 

liability constituting a breach of more than one representation, warranty,
covenant or agreement.
     9.5 Tax Treatment of Indemnification. Buyer and Shareholder agree to treat
any indemnity payment made pursuant to this Article IX as an adjustment to the
AGUB.
     9.6 Other Indemnification Provisions.
          (a) Buyer hereby acknowledges and agrees that prior to the Closing,
Buyer shall have no right or remedy to take any action in respect of, and the
Company, and Shareholder shall have no liability to Buyer in respect of, any
breach by the Company or Shareholder of any representations or warranties
contained herein or any failure to comply with any of the covenants, conditions
or agreements contained herein, except (i) to terminate this Agreement pursuant
to Article X hereof, in which event, the Company and Shareholder shall thereupon
have no obligation or liability to Buyer whatsoever hereunder or (ii) to seek
specific performance or injunctive relief.
          (b) From and after the Closing, except in the case of fraud or willful
misconduct, the rights of the Parties to indemnification relating to this
Agreement or the transactions contemplated hereby shall be strictly limited to
those contained in this Article IX and such indemnification rights shall be the
sole and exclusive remedies of the parties subsequent to the Closing with
respect to any matter in any way relating to this Agreement or arising in
connection herewith. To the maximum extent permitted by law, the Parties hereby
waive all other rights and remedies with respect to any matter in any way
relating to this Agreement or arising in connection herewith, whether at common
law or otherwise.
ARTICLE X
TERMINATION OF AGREEMENT
     10.1 INTENTIONALLY OMITTED
ARTICLE XI
DISPUTE RESOLUTION
     11.1 Dispute. As used in this Agreement, “Dispute” shall mean any dispute
or disagreement between Buyer and Shareholder concerning the interpretation of
this Agreement, the validity of this Agreement, any breach or alleged breach by
any Party under this Agreement or any other matter relating in any way to this
Agreement other than a dispute concerning the Audited Closing Date Balance Sheet
or the Purchase Price, which shall be resolved as described in Section 2.3(d) or
a dispute concerning the Make-Whole Amount which shall be resolved as described
in Section 6.3.
     11.2 Process. If a Dispute arises, the Parties to the Dispute shall follow
the procedures specified in Sections 11.3, Section 2.3(e)(i) and 11.4 of this
Agreement.
     11.3 Negotiations. The Parties shall promptly attempt to resolve any
Dispute by negotiations between Buyer and Shareholder. Either Buyer or
Shareholder may give the other Party written notice of any Dispute not resolved
in the normal course of business. Buyer and

50

--------------------------------------------------------------------------------

 

Shareholder shall meet at a mutually acceptable time and place within five
(5) calendar days after delivery of such notice, and thereafter as often as they
reasonably deem necessary, to exchange relevant information and to attempt to
resolve the Dispute. If the Dispute has not been resolved by these Persons
within ten (10) Business Days of the disputing Party’s notice, or if the Parties
fail to meet within such five (5) calendar days, either Buyer or the negotiator
intends to be accompanied at a meeting by legal counsel, the other negotiator
shall be given at least three (3) Business Days notice of such intention and may
also be accompanied by legal counsel.
     11.4 Submission to Adjudication. If a Dispute is not resolved by
negotiation pursuant to Section 11.3 of this Agreement within ten (10) Business
days after initiation of the negotiation process pursuant to Section 11.3 of
this Agreement, such Dispute and any other claims arising out of or relating to
this Agreement may be heard, adjudicated and determined in an action or
proceeding filed in any state or federal court sitting in Indianapolis, Indiana.
For purposes of clarity, each of the Parties consents to the non-exclusive
personal jurisdiction, service of process and venue in such federal court
sitting in Indianapolis, Indiana for any claim, suit or proceeding arising under
this Agreement, or in the case of a Third Party Claim subject to indemnification
hereunder, in the court where such claim is brought.
     11.5 General.
          (a) Provisional Remedies. At any time during the procedures specified
in Sections 11.3 of this Agreement, a Party may seek a preliminary injunction or
other provisional judicial relief if in its judgment such action is necessary to
avoid irreparable damage or to preserve the status quo. Despite such action, the
Parties will continue to participate in good faith in the procedures specified
in this Article XI of this Agreement.
          (b) Tolling Statue of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time shall be tolled while the
procedures specified in this Article XI of this Agreement are pending. The
parties will take such action, if any, as is required to effectuate such
tolling.
          (c) Performance to Continue. Each Party is required to continue to
perform its obligations under this Agreement pending final resolution of any
Dispute.
          (d) Extension of Deadlines. All deadlines specified in this Article XI
of this Agreement may be extended by mutual agreement between Buyer and
Shareholder.
          (e) Enforcement. The Parties regard the obligations in this Article XI
of this Agreement to constitute an essential provision of this Agreement and one
that is legally binding on them. In case of a violation of the obligations in
this Article XI of this Agreement by either Buyer or Shareholder, the other
Party may bring an action to seek enforcement of such obligations in any court
of Law having jurisdiction thereof.
          (f) Costs. Except as contemplated by Sections 2.3 and 6.3, the Parties
to the dispute shall pay their own costs, fees, and expenses incurred in
connection with the application of the provisions of this Article XI of this
Agreement.

51

--------------------------------------------------------------------------------

 

ARTICLE XII
MISCELLANEOUS
     12.1 Further Assurance From time to time, at a Party’s request and without
further consideration, the other Parties will execute and deliver to the
requesting Party such documents and take such other action as the requesting
Party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
     12.2 Law Governing Agreement. This Agreement shall be construed and
interpreted according to the internal Laws of the State of New York, excluding
any choice of law rules that may direct the application of the Laws of another
jurisdiction.
     12.3 Assignment; Amendment and Modification.
          (a) Except as expressly permitted by the terms hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (including by merger or operation of law) by any of the parties hereto
without the prior written consent of the other parties; provided, however, that
Buyer may assign this Agreement or any of its rights and obligations hereunder
to one or more Affiliates of Buyer without the consent of any other party
hereto.
          (b) This Agreement may not be amended or modified, nor may compliance
with any condition or covenant set forth herein be waived, except by a writing
duly and validly executed by Buyer, the Company and Shareholder, or in the case
of a waiver, the party waiving compliance.
     12.4 Notice All notices and other communications under this Agreement or
any other Ancillary Agreement must be in writing and shall be (i) transmitted by
hand delivery or nationally recognized overnight courier, (ii) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or (iii) sent by facsimile, addressed as follows:
          (a) If to Buyer, to:
Thor Industries, Inc.
419 West Pike Street
Jackson Center, Ohio 45334
Attn: Chief Executive Officer
Facsimile: 937-596-6539
Telephone: 937-596-6849

52

--------------------------------------------------------------------------------

 

(with a copy to)
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Attn: Ackneil M. Muldrow, III
Facsimile: 212-872-1002
Telephone: 212-872-1000
E-mail: tmuldrow@akingump.com
          (b) If to Shareholder:
Christopher J. Graff
505 North McClurg Court
Suite 2703
Chicago, Illinois 60611
Telephone: 574-536-5963
Email: chris.graff@sbcglobal.net
(with a copy to)
Yoder, Ainlay, Ulmer & Buckingham, LLP
130 North Main Street, Goshen, Indiana 46526
P.O. Box 575, Goshen, Indiana 46527-0575
Attention: R. Gordon Lord, Esq. and Denise C. Davis, Esq.
Facsimile: 574-534-4174
          (c) If to Company, to:
SJC Industries Corp.
419 West Pike Street
Jackson Center, Ohio 45334
Attn: Chief Executive Officer
Facsimile: 937-596-6539
Telephone: 937-596-6849
(with a copy to)
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Attn: Ackneil M. Muldrow, III
Facsimile: 212-872-1002
Telephone: 212-872-1000
E-mail: tmuldrow@akingump.com

53

--------------------------------------------------------------------------------

 

          (d) All such notices and other communications shall be deemed to have
been received:
               (i) if transmitted by hand delivery, on the day of delivery
               (ii) if mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, on the third Business Day after
mailing;
               (iii) if sent prepaid by a nationally recognized overnight
delivery service, on the first Business Day after mailing; and
               (iv) if sent by facsimile and the transmitting Party receives a
transmission receipt dated the day of transmission in the recipient’s
jurisdiction, on the day of transmission.
     12.5 Expenses. Except as otherwise expressly provided herein, Buyer and
Shareholder will each pay all of their own fees, costs and expenses (including
fees, costs and expenses of legal counsel, investment bankers, accountants,
brokers or other representatives and consultants and appraisal fees, costs and
expenses) incurred in connection with the preparation, negotiation, execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
     12.6 Entire Agreement; Binding Effect. This Agreement, together with the
Ancillary Agreements and the Confidentiality Agreement, embodies the entire
agreement between the Parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements, representations
or warranties between the Parties other than those set forth or provided for
herein or executed contemporaneously or in connection herewith. This Agreement
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective legal representatives, successors and permitted assigns.
     12.7 No Third Party Beneficiary. This Agreement is not intended to and
shall not confer upon any person other than the parties hereto any rights or
remedies hereunder.
     12.8 Counterparts and Fax and Electronic Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
and all such counterparts shall constitute a single instrument. The parties
agree that a fax signature or an electronically transmitted signature of a party
hereto shall be deemed to be as legally effective and binding as a signed
original; provided, however, any party providing a fax signature hereof shall be
required to promptly forward a signed original to any requesting party.
     12.9 Headings. The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
     12.10 No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent.
In the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the Parties, and no
presumption or burden of proof will arise favoring or disfavoring any Person by
virtue of the authorship of any of the provisions of this Agreement.

54

--------------------------------------------------------------------------------

 

     12.11 Severability. If any provision of this Agreement, or the application
thereof to any Person or circumstance is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
Persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
     12.12 No Agreement Until Executed. Irrespective of negotiations among the
Parties or the exchanging of drafts of this Agreement, this Agreement shall not
constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the Parties unless and until this Agreement is executed and
delivered by the parties hereto.
     12.13 Interpretation. When a reference is made in this Agreement to an
Article, Section, Schedule or Exhibit, such reference will be to an Article or
Section of, or a Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they will be deemed to be followed by
the words “without limitation.” The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms used
herein with initial capital letters have the meanings ascribed to them herein
and all terms defined in this Agreement will have such defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein, or in any
agreement or instrument that is referred to herein, means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
     12.14 Specific Performance. The Parties agree that the Company and its
Subsidiary as a going concern constitute unique property and that there would be
no adequate remedy at law for the damage which any Party might sustain for the
failure of the other to consummate the transaction contemplated by this
Agreement. Accordingly, each Party will be entitled, at its option, to the
remedy of specific performance to enforce the consummation of the transaction
described in this Agreement.

55

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                  SHAREHOLDER:    
 
           
 
  Name:  
 
Christopher J. Graff    
 
                BUYER:    
 
                THOR INDUSTRIES, INC.    
 
           
 
  By:        
 
  Name:  
 
Peter B. Orthwein    
 
  Title:   Chairman, President and CEO    
 
                COMPANY:    
 
                SJC INDUSTRIES CORP.    
 
  By:        
 
  Name:  
 
   
 
  Title:        

Signature Page to SJC Industries Stock Purchase Agreement

 

--------------------------------------------------------------------------------

 

Exhibit 1-A
Company Total Assets
Current Assets:

§   Cash;   §   Accounts Receivable;   §   Allow Doubtful Accounts;   §  
Investment in Subsidiary;   §   Prepaid Expense; and   §   Inventories, which
shall include (a) raw materials, (b) work in process, (c) finished goods,
(d) chassis and (e) LIFO reserve.

Fixed Assets:

§   Leasehold Improvements;   §   Machinery & Equipment;   §   Tools and Dies;  
§   Autos & Trucks;   §   Office Equipment; and   §   Certifications   §   Less
accumulated depreciation and amortization

2

--------------------------------------------------------------------------------

 

Exhibit 1-B
Company Total Liabilities
Current Liabilities:

§   Accounts Payable;   §   Accrued Expense;   §   Chassis Payable;   §   Line
of Credit;   §   Loan Payable;   §   Customer Deposits

Non-Current Liabilities:

§   Note Payable Non-Current.

3

--------------------------------------------------------------------------------

 

Exhibit 2
Estimated Closing Date Balance Sheet
(attached)

4