Exhibit 10.54

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of
December 31, 2010, by and among Quaker Chemical Corporation, a Delaware
corporation (the “Purchaser”), Summit Lubricants Inc., a New York corporation
(the “Target”), Ronald Krol (“Krol”), Brian Caputi (“Caputi”), Dale M. Perry and
Anthony Musilli (each, a “Shareholder” and collectively, the “Shareholders”).

RECITALS

A. The Purchaser and the Shareholders believe it is in their respective best
interests that the Purchaser acquires all of the outstanding capital stock of
Target (the “Stock”). Pursuant to this Agreement, among other things, the Stock
shall be acquired by the Purchaser in consideration of the Purchase Price
(defined herein) and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.

B. The Purchaser, Target and the Shareholders desire to make certain
representations and warranties and other agreements in connection with the
acquisition.

AGREEMENT

The parties hereto, intending to be legally bound, hereby agree as follows:

SECTION ONE

1. The Transaction.

1.1. The Purchase. On the Closing Date (as defined in Section 1.2) and subject
to and upon the terms and conditions of this Agreement, the Purchaser shall
purchase the Stock from the Shareholders.

1.2. Closing. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place on or before 11:59, p.m., on December 31, 2010
unless extended by the parties (the “Closing Date”), provided that each of the
conditions set forth in Section 7 below have been satisfied, waived or modified
by the Shareholders and the Purchaser, or at such other time as the parties
agree, but in any event the Closing shall be deemed effective as of the Closing
Date. The Closing shall take place at the offices of Fox Rothschild LLP, 2000
Market St., 20th Floor, Philadelphia PA 19103, or at such other location as the
parties shall agree.

1.3. Purchase Price. The purchase price for the Stock shall be Thirty Million
Dollars ($30,000,000) (the “Initial Purchase Price”), subject to adjustment
pursuant to Sections

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1.4, 1.5 and 1.6 hereof (as adjusted, the “Purchase Price”). The Purchaser shall
pay the Shareholders Twenty Six Million Dollars ($26,000,000) of the Initial
Purchase Price on the Closing Date (the “Cash Portion of the Purchase Price”),
in immediately available funds, to bank accounts designated in writing by the
Shareholders at least one (1) week prior to the Closing Date, and pay the
balance of Four Million Dollars ($4,000,000) to RBS Citizens Bank, N. A., as
escrow agent (the “Escrow Agent”), pursuant to the terms of the escrow deposit
agreement attached hereto as Exhibit A (the “Escrow Agreement”), to satisfy all
or part of any claims for indemnity pursuant to Section 9 hereof and for any
other purpose specifically set forth in the Escrow Agreement. All payments to
the Shareholders hereunder shall be made on a pro-rata basis as set forth on
Section 1.3 of the Target Disclosure Schedule (defined herein). In addition, the
Purchaser shall pay to M&T Bank an amount up to $95,000 on account of any
pre-payment penalty incurred by Target in connection with pre-paying its Debt
(defined herein) with such Bank. Notwithstanding the foregoing, there shall be
deducted from the Cash Portion of the Purchase Price to the Shareholders an
amount equal to $738,463, which is the amount the parties have agreed is
necessary to complete the Treadeasy Plant, less any Excluded Cash (as defined
herein).

1.4. Adjustment for Working Capital at Closing. The Initial Purchase Price shall
be subject to adjustment as provided in this Section 1.4.

1.4.1. Not less than two (2) business days prior to the Closing Date, the
Shareholders shall deliver to the Purchaser a balance sheet and statement of
Working Capital (as defined below) of Target dated as of November 30, 2010 (the
“Working Capital Estimate”). Within ninety (90) days after the Closing Date, the
Shareholders shall deliver to the Purchaser a final statement of Working Capital
of Target dated as of the Closing Date (the “Closing Working Capital
Statement”). For purposes of this Section 1.4, “Working Capital” shall mean the
sum of all Inventory (defined herein and meeting the requirements of
Section 2.24(b) herein and valued at the lower of cost or market), Accounts
Receivable (defined herein and meeting the requirements of Section 2.24(a)
herein) and prepaid expenses minus accounts payable and accrued expenses,
calculated in accordance with generally accepted accounting principles. For
purposes of calculating the Closing Working Capital Statement, accounts
receivable over 90 days shall be excluded. To the extent that the Working
Capital Estimate is greater or less than $3,900,000 (the “Working Capital
Threshold”) the Cash Portion of the Purchase Price shall be increased or
decreased, as the case may be, on a dollar for dollar basis by that excess or
deficiency.

1.4.2. The Purchaser shall have thirty (30) days after receipt of the Closing
Working Capital Statement to notify the Shareholders in writing of any
exceptions the Purchaser may have to the Closing Working Capital Statement, and
the reasons for such exceptions. If the Purchaser raises no such exceptions, the
Closing Working Capital Statement shall become final (the “Final Working Capital
Statement”). In the event that the Purchaser timely raises an exception, the
Purchaser and the Shareholders shall negotiate in good faith for a period of up
to thirty (30) days to resolve any such exceptions. If the Purchaser and the
Shareholders are unable to resolve such exceptions within such thirty (30) day
period, then the Purchaser and the Shareholders shall jointly engage Chiampou
Travis Besaw & Kershner LLP (“CPA”) to resolve the dispute. Each of the
Purchaser and the Shareholders shall direct CPA to

 

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complete its review within thirty (30) days after its engagement. The
determination of CPA as to the resolution of such exceptions shall be binding
upon the Purchaser and the Shareholders. The fees and expenses relating to CPA’s
review and report shall be borne equally by the Purchaser and the Shareholders.
In the event the process of this 1.4.2 is invoked, the Closing Working Capital
Statement, adjusted, if applicable to reflect the resolution of the Purchaser’s
exceptions, shall be the Final Working Capital Statement for purposes of this
Agreement.

1.4.3. If the Working Capital amount on the Final Working Capital Statement
exceeds the amount on the Working Capital Estimate, the Purchaser shall pay to
the Shareholders a sum equal to such excess by wire transfer of immediately
available funds to a bank account or accounts designated by the Shareholders in
writing to the Purchaser. If the Working Capital amount on the Final Working
Capital Statement is less than the Working Capital on the Working Capital
Estimate, the Escrow Agent shall pay an amount equal to such deficit to the
Purchaser out of the amounts held under the Escrow Agreement. Any payment
required under this Section 1.4.3 shall be paid within ten (10) days of the
final determination of such amount in accordance with this Section 1.4.3.

1.4.4. Each party, and to the extent necessary, CPA, shall have reasonable
access to Target’s books and records and to any work papers for purposes of
calculating and confirming the Working Capital Estimate and the Closing Working
Capital Statement.

1.5. Earn Out. In addition to the Initial Purchase Price, the Shareholders shall
be entitled to receive the amounts, if any, set forth in this Section 1.5.

1.5.1. Within sixty (60) days after the Closing Date, the Shareholders shall
present to the Purchaser a calculation showing the Net Revenues (defined herein)
and related Contribution Margin (defined herein) for the period beginning
July 1, 2010 and ending December 31, 2010 (the “2010 Target Net Revenues” and
the “2010 Target Contribution Margin”, respectively). “Net Revenues” shall mean
the total receipts from sales of Target’s products and services net of any
discounts, returns and allowances during such period. “Contribution Margin”
shall mean the value determined by subtracting from Net Revenues the raw
material costs and, where applicable, containers costs and in-bound freight
charges comprising the products sold which make up Net Revenues. The Purchaser
shall have thirty (30) days after receipt of such calculations to notify the
Shareholders in writing of any exceptions Purchaser may have with respect to
such calculations. In the event any such exceptions are made, the Purchaser and
the Shareholders shall negotiate in good faith for a period of up to thirty
(30) days to resolve such exceptions. If the Purchaser and the Shareholders are
unable to resolve such exceptions within such thirty (30) day period, then the
Purchaser and the Shareholders shall jointly engage CPA, pursuant to the
procedures set forth in Section 1.4.2 herein, whose determination shall be
binding on the parties.

1.5.2. Within sixty (60) days after December 31, 2013, the Purchaser shall
present to the Shareholders a calculation showing the Net Revenues for the
period beginning July 1, 2013 and ending December 31, 2013 (the “2013 Target Net
Revenues”) and the related Contribution Margin for such period (the “2013 Target
Contribution Margin”). In

 

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calculating 2013 Target Net Revenues and the 2013 Target Contribution Margin,
(A) sales of products and services from Target’s customers who were customers of
Target as of the Closing Date and those prospective customers listed on
Section 1.5.2 of the Target Disclosure Schedule attached hereto shall be
included as well as sales to any other customer that is not an Excluded
Customer, as defined below (collectively, the “Included Customers”), and
(B) sales of products and services to customers of the Purchaser or its
Affiliates as of the Closing Date or that resulted from sales efforts of the
Purchaser’s sales force post-Closing shall be excluded (other than, in each
case, to customers that are Included Customers listed on Section 1.5.2 of the
Target Disclosure Schedule)(collectively, the “Excluded Customers”). In
addition, within sixty (60) days after December 31, 2013, the Purchaser shall
present to the Shareholders a calculation showing the Net Revenues for all sales
from Excluded Customers during the period beginning July 1, 2013 and ending
December 31, 2013 (“2013 Purchaser Net Revenues”). The Shareholders shall have
thirty (30) days after their receipt of such calculations to notify the
Purchaser in writing of any exceptions they may have with respect to such
calculations. In the event any such exceptions are made, the Purchaser and the
Shareholders shall negotiate in good faith for a period of up to thirty
(30) days to resolve such exceptions. If the Purchaser and the Shareholders are
unable to resolve such exceptions within such thirty (30) day period, then the
Purchaser and the Shareholders shall jointly engage CPA, pursuant to the
procedures set forth in Section 1.4.2 herein, whose determination shall be
binding on the parties. The Purchaser shall promptly make available to
Shareholders and, upon request, to CPA, the books, records, documents and work
papers necessary to calculate the 2013 Target Net Revenues and the 2013
Purchaser Net Revenues.

1.5.3. In the event that the 2013 Target Contribution Margin exceeds the 2010
Target Contribution Margin, the Shareholders shall be entitled to receive, as
additional consideration for the Stock, an amount equal to the product of two
times such excess multiplied by 1.35 (the “Target Earn Out Amount”) by wire
transfer of immediately available funds to bank accounts designated by the
Shareholders in writing to the Purchaser. No amount shall be payable under this
Section 1.5.3 if the 2013 Target Contribution Margin does not exceed the 2010
Target Contribution Margin.

1.5.4. In addition, the Purchaser shall pay to the Shareholders, as additional
consideration for the Stock, an amount equal to twenty-five percent (25%) of two
times the 2013 Purchaser Net Revenues (the “Purchaser Earn Out Amount”) by wire
transfer of immediately available funds to bank accounts designated by the
Shareholders in writing to the Purchaser.

1.5.5. The Purchaser shall pay any Target Earn Out Amount and/or Purchaser Earn
Out Amount to the Shareholders within ten (10) days after completion of the
calculations set forth above.

1.6. Repayment of Debt at the Closing. (a) At the Closing, the Shareholders
shall cause Target to deliver cash to the holders of any Debt in an amount
sufficient to repay all such Debt by wire transfer, or request and direct
Purchaser to pay such Debt and reduce the cash portion of the payment to be made
to the Shareholders at the Closing by the amount of such

 

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Debt, together with all pre-payment, breakage and other fees and expenses
necessary for the Purchaser to pay all such Debts at Closing, with the result
that immediately following the Closing there will be no further monetary
obligations of Target with respect to any Debt. As used in this Agreement,
“Debt” means, with respect to Target, without duplication: (i) all liabilities
for borrowed money, whether current or funded; (ii) all obligations evidenced by
a note, bond, debenture, letter of credit, draft or similar instrument;
(iii) that portion of obligations with respect to capital leases, if any, that
is properly classified as a liability on a balance sheet; (iv) notes payable and
drafts accepted representing extensions of credit; (v) any obligation owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six months from the date of incurrence of the
obligation in respect thereof; (vi) all non-employment related obligations of
the Target to Shareholders; (vii) all interest on the items set forth in
(i) through (vi) above; (viii) all indebtedness and obligations of the types
described in the foregoing clauses (i) through (vii) above to the extent secured
by any lien on any property or asset owned or held by that person regardless of
whether the indebtedness secured thereby shall have been assumed by that person
or is nonrecourse to the credit of that person.

(b) Any Excluded Cash shall be paid to the Shareholders in accordance with their
applicable ownership percentages on the Closing Date by wire transfer subject to
the last sentence of Section 1.3. As used in this Agreement, “Excluded Cash”
shall mean any cash held by Target on the Closing Date after repayment by Target
of Debt in accordance with Section 1.6(a) hereof. As used in the preceding
sentence, “cash” shall mean cash and cash equivalents (including marketable
securities and short-term investments) of Target.

1.7. 338(h)(10) Election. Shareholders and each person set forth on Section 1.7
of the Target Disclosure Schedule shall join with Purchaser in the making of an
election under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the “Code”) and any comparable election under state or local laws (each
such election a “Section 338(h)(10) Election”) with respect to the purchase of
the Stock pursuant to this Agreement. The Section 338(h)(10) Elections shall
properly reflect the Allocation Schedule (as defined herein). The Shareholders
agree to take, or cause to be taken, any and all action necessary and to do, or
cause to be done, or to execute, or cause to be executed, such documents as may
be necessary or desirable to effect any Section 338(h)(10) Election, with
respect to Purchaser’s acquisition of the Stock (“Section 338 Forms”). Purchaser
shall, with Target’s cooperation, prepare all Section 338 Forms necessary in
order to effect the Section 338(h)(10) Elections (other than IRS Form 8883 and
any comparable state or local Tax (defined herein) forms) and Shareholders and
each person set forth on Section 1.7 of the Target Disclosure Schedule shall
execute, as of the Closing Date, the Section 338 Forms, and Purchaser shall
execute and shall timely file the Section 338 Forms. In the event that any
Section 338 form is not executed by the Closing Date, the Shareholders and each
person set forth on Section 1.7 of the Target Disclosure Schedule shall complete
and execute each such Section 338 Form and deliver it to Purchaser no later than
15 days prior to the date such Section 338 Form is required to be filed. Within
twenty (20) days after the date of this Agreement, Purchaser shall deliver to
the Shareholders a schedule setting forth the allocation of the Purchase Price
and the liabilities of the Target (plus any other required capitalized costs)
(the “Allocation Schedule”) which schedule shall be prepared in a manner
consistent with Section 338 of the Code. The Allocation Schedule shall be deemed
accepted by the Shareholders unless the Shareholders notify the Purchaser in
writing of items of disagreement within ten (10) days of

 

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receipt of the Allocation Schedule. If the Shareholders timely advise the
Purchaser of items of disagreement, the parties shall proceed in good faith to
negotiate a resolution of such dispute. If within ten (10) calendar days of such
notification, Purchaser and the Shareholders shall have been unable to resolve
their dispute, all unresolved items shall be resolved by CPA in accordance with
the method set forth for resolving disputes set forth in Section 1.4.2. Within
thirty (30) days after the date that the Final Working Capital Statement is
determined, the Purchaser shall deliver (i) a revised Allocation Schedule based
on the Final Working Capital Statement, using the same methodology as in the
initial Allocation Schedule, and (ii) a completed Form 8883 (and any similar
forms under applicable state or local law) that reflects the final Allocation
Schedule. Purchaser and the Shareholders shall timely file IRS Form 8883 (and
any similar forms under applicable state or local law) in a manner consistent
with this Section 1.7. Purchaser, Target and the Shareholders shall file all Tax
Returns (defined herein) and information reports in accordance with the final
Allocation Schedule and take no position inconsistent with the Allocation
Schedule on any applicable Tax Return or in any proceeding before any
Governmental Entity or otherwise.

1.8. Shareholders’ Representative; Actions.

1.8.1. Shareholders hereby appoint Krol as the representative of Shareholders
(the “Representative”), to be their true and lawful attorney-in-fact for all
matters in connection with this Agreement and the Escrow Agreement, including
without limitation the acceptance of any claim by Purchaser, and the compromise
of any disputes between Purchaser and Shareholders relating to this Agreement.
The Representative will act on behalf of Shareholders with respect to all
matters requiring action by Shareholders under this Agreement. The
Representative hereby accepts such appointment.

1.8.2. Upon the death, disability incapacity, or resignation of Krol as
Representative, Shareholders shall appoint a replacement. Any substituted
representative shall be deemed the Representative for all purposes of this
Agreement.

1.8.3. The Representative shall take all actions required to be taken by
Shareholders or the Representative under this Agreement and may take any action
contemplated by this Agreement. By giving notice to the Representative in the
manner provided by Section 10.2, Purchaser shall be deemed to have given notice
to Shareholders. Any action taken by the Representative may be considered by
Purchaser to be the action of Shareholders. The Purchaser agrees that the
Representative, in his capacity as such, shall have no personal liability to the
Purchaser for any action taken by the Representative in his capacity as
Representative. Purchaser shall have no responsibility for any actions by the
Representative.

1.8.4. In the event that Purchaser gives notice to the Representative of a claim
for which indemnification may be sought, the Representative shall have the
authority to determine, in the Representative’s sole judgment without
consultation with any other person who may represent Shareholders, whether to
retain counsel (and to select that counsel) to protect Shareholders’ interests,
whether to assume the defense of or otherwise to control the handling of the
claim, whether to consent to indemnification and to make all other decisions
required to be made by Shareholders pursuant to this Agreement, including
without limitation whether to consent or withhold his or her consent to any
settlement or compromise of a claim.

1.8.5. The Representative shall not be liable to Shareholders for any act or
omission taken pursuant to or in conjunction with this Agreement, except for his
own gross

 

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negligence or willful misconduct. The Representative shall not have by reason of
this Agreement a fiduciary relationship in respect of Shareholders. Shareholders
shall indemnify and hold the Representative, and each successor thereof,
harmless from any and all liability and expenses (including, without limitation,
counsel fees) which may arise out of any action taken or omitted by him or her
as Representative in accordance with this Agreement, as the same may be amended,
modified or supplemented, except such liability and expense as may result from
the gross negligence or willful misconduct of the Representative.

1.8.6. The Representative agrees that after receipt of notice of a claim, the
Representative shall promptly give Shareholders notice of same and shall from
time to time keep Shareholders apprised as to developments with respect to such
claim.

1.8.7. Nothing in this Section 1.8 shall be deemed to limit the personal
liability of any Shareholder hereunder.

SECTION TWO

2. Representations and Warranties of Target and the Shareholders.

In this Agreement, any reference to any event, change, condition or effect being
“material” with respect to any entity or group of entities means any material
event, change, condition or effect related to the condition (financial or
otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a “Material Adverse Effect” with
respect to any entity or group of entities means any event, change or effect
that, when taken individually or together with all other adverse changes and
effects, is or is reasonably likely to be materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or results of operations of such entity taken as a whole, or to prevent or
materially delay consummation of the transfer of the Stock or otherwise to
prevent such party from performing its obligations under this Agreement. To the
extent applicable, when representations, warranties or agreements of Target are
made in this Agreement, they shall be deemed to have also been made by or about
Gen-Val LLC and SL Exports Ltd. (each, a “Subsidiary” and collectively, the
“Subsidiaries”).

Target and each of the Shareholders jointly and severally represent and warrant
to the Purchaser as follows:

2.1. Organization Standing and Power; Subsidiaries. Target is a corporation duly
organized, validly existing and in good standing or subsisting under the laws of
its jurisdiction of organization. Except as set forth on Section 2.1 of the
Target Disclosure Schedule, attached hereto and made a part hereof (the “Target
Disclosure Schedule”), and except for the Subsidiaries, Target does not have,
and has never had, any other subsidiaries. Target has the requisite corporate
power and authority and all necessary government approvals to own, lease

 

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and operate its properties and to carry on its business as now being conducted.
Target is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a Material Adverse Effect. Target does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business association or entity other than as set forth on
Section 2.1 of the Target Disclosure Schedule.

2.2. Certificate of Incorporation and Bylaws. Target has delivered to the
Purchaser a true and correct copy of the Certificate of Incorporation, Bylaws
and organizational documents, as appropriate, as amended to date, of Target and
each Subsidiary. Target is not in violation of any of the provisions of its
Certificate of Incorporation or Bylaws.

2.3. Capital Structure. The authorized capital stock of Target consists of 200
shares of Common Stock of which there were issued and outstanding as of the date
of this Agreement 100 shares, which are owned by the Shareholders as set forth
in Section 2.3 of Target’s Disclosure Schedule. Except as set forth in
Section 2.3 of the Target’s Disclosure Schedule, there are no other outstanding
shares of capital stock or voting securities of Target. Except as set forth in
Section 2.3 of the Target’s Disclosure Schedule, Target does not have any
outstanding bonds, debentures, notes or other indebtedness the holders of which
(a) have the right to vote (or which are convertible or exercisable into
securities that have the right to vote) with holders of the Stock on any matter
or (b) are or will become entitled to receive any payment as a result of the
execution of this Agreement or the consummation of the transactions contemplated
hereby. Except as set forth in Section 2.3 of the Target’s Disclosure Schedule,
all outstanding shares of Stock are duly authorized, validly issued, fully paid
and non-assessable and are free of any liens or encumbrances and are not subject
to preemptive rights or rights of first refusal created by statute, the
Certificate of Incorporation or Bylaws of Target or any agreement to which
Target or any Shareholder is a party or by which any of them is bound. All
outstanding shares of Stock were issued in compliance with all applicable
federal and state securities laws. Except as set forth in Section 2.3 of the
Target’s Disclosure Schedule, all of the outstanding shares of Stock are owned
by the Shareholders free of all liens and encumbrances. Except as set forth in
Section 2.3 of the Target’s Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of Target,
or otherwise obligating Target to issue, transfer, sell, purchase, redeem or
otherwise acquire any such securities. Except as set forth in Section 2.3 of the
Target’s Disclosure Schedule, there are no contracts, commitments or agreements
relating to voting, purchase or sale of the Stock other than this Agreement. The
authorized capital of each Subsidiary is set forth in Section 2.3 of Target’s
Disclosure Schedule. Target owns all of the equity interests in each of the
Subsidiaries free of any liens or encumbrances.

 

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2.4. Authority. Target has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Target. This Agreement has been duly executed
and delivered by Target and the Shareholders and assuming due authorization,
execution and delivery by the Purchaser, constitutes the valid and binding
obligation of Target and each of the Shareholders enforceable against Target and
each of the Shareholders in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereinafter in effect affecting the enforcement rights of creditors generally,
and to the extent that the availability of equitable remedies may be limited by
equitable principles.

2.5. No Conflicts; Required Filings and Consents.

(a) Except as set forth in Section 2.5 of the Target Disclosure Schedule, the
execution and delivery of this Agreement by Target and the Shareholders do not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Articles of Incorporation or Bylaws of Target, or (ii) any material
agreement, including any note, bond, mortgage, indenture, lease, contract,
license, permit, franchise or other agreement, instrument or obligation or
concession, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Target or the Shareholders or any of their properties or assets.

(b) Except as set forth in Section 2.5 of the Target Disclosure Schedule, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (“Governmental
Entity”), is required by or with respect to Target or the Shareholders in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.

2.6. Financial Statements. Target has delivered to the Purchaser the following:
(the “Financial Statements”): true, correct and complete copies of Target’s
audited financial statements for the fiscal year ended December 31, 2009 (the
“December 31, 2009 Financial Statements”), reviewed financial statements for
each of the fiscal years ended December 31, 2008 and 2007 and its unaudited
financial statements (balance sheet and statement of operations) as of and for
the eleven-month period ended November 30, 2010 (the “November 30 Financial
Statements”). Except as set forth in Section 2.6 of the Target Disclosure
Schedule, the Financial Statements fairly present the financial condition and
operating results of Target as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments with respect to the
unaudited financial statements which will not be material in the aggregate.
Except as set forth in Section 2.6 of the

 

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Target Disclosure Schedule, throughout the period covered by the Financial
Statements, Target maintained and continues to maintain, and through the Closing
Date will continue to maintain, a standard system of accounting established and
administered in accordance with generally accepted accounting principles.

2.7. Absence of Undisclosed Liabilities. Target did not have obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) as of
December 31, 2009 that are required to be reflected on financial statements in
accordance with generally accepted accounting principles other than those set
forth or adequately provided for in the December 31, 2009 Financial Statements.
Since December 31, 2009, except as set forth in Section 2.7 of the Target
Disclosure Schedule, Target has not incurred any obligations or liabilities of
any nature (matured or unmatured, fixed or contingent) except (i) those
reflected on the November 30 Financial Statements, (ii) those incurred in the
ordinary course of business since that date and consistent with past practice
and not reflected on the November 30 Financial Statements and (iii) those
incurred in connection with the execution of this Agreement.

2.8. Absence of Certain Changes. Except as set forth in Section 2.8 of the
Target Disclosure Schedule, since December 31, 2009 there has not been, occurred
or arisen any:

(a) transaction by Target except in the ordinary course of business as conducted
on that date and consistent with past practices except as reflected on the
November 30 Financial Statements;

(b) amendments or changes to the Certificate of Incorporation or Bylaws of
Target;

(c) capital expenditure or capital commitment by Target in any individual amount
exceeding $25,000;

(d) destruction of, damage (normal wear and tear excepted) to, or loss of any
assets (including, without limitation, intangible assets) (whether or not
covered by insurance) which would constitute a Material Adverse Effect;

(e) claim of wrongful discharge or claim of other unlawful labor practice or
action;

(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in making
or reversing accruals, any change in capitalization of development costs or any
change in practices with respect to timing or payment of accounts payable) by
Target;

(g) revaluation by Target of any of its assets;

 

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(h) any direct or indirect redemption, purchase or other acquisition by Target
of any Stock;

(i) increase in the salary or other compensation payable or to become payable by
Target to any officers, directors, employees or advisors of Target, the
declaration, payment or commitment or obligation of any kind for the payment by
Target of a bonus or other additional salary or compensation to any such person,
or the establishment by Target of any bonus, insurance, deferred compensation,
pension, retirement, profit sharing, stock option (including without limitation,
the granting of stock options, stock appreciation rights, performance awards),
stock purchase or other employee benefit plan, except in the ordinary course of
business consistent with past practice;

(j) sale, lease, license or other disposition of any of the assets or properties
of Target, except sales of products or services in the ordinary course of
business and except other transactions not in excess of $10,000 in the
aggregate;

(k) termination (other than by expiration) or material amendment of any Material
Contract (defined herein);

(l) knowledge of any investigation of Target or any of its employees or any
individual or entity Target contracts or does business with, by any Governmental
Entity;

(m) loan by Target to any person or entity, or guaranty by Target of any loan,
except for (x) travel or similar advances made to employees in connection with
their employment duties in the ordinary course of business, consistent with past
practices and (y) trade payables in the ordinary course of business, consistent
with past practices;

(n) waiver or release of any material right or claim of Target, including any
write-off or other compromise of any account receivable of Target in excess of
$50,000 in the aggregate;

(o) notice of commencement, or, to Target’s and the Shareholders’ knowledge,
threat of commencement, of any lawsuit or proceeding against Target;

(p) to Target’s and the Shareholders’ knowledge, any investigation by any
Governmental Entity of Target or its affairs;

(q) notice or knowledge of any claim by a third party asserting ownership to any
of Target’s Intellectual Property (as defined in Section 2.13) or of any alleged
infringement by Target of any third party’s Intellectual Property rights;

(r) issuance or sale by Target of any of its shares of capital stock, or
securities exchangeable, convertible or exercisable therefor, or of any other of
its securities;

 

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(s) since July 1, 2010, written notice of any price increases in excess of 10%
from any material supplier of Target (other than price increases reflected in
invoices);

(t) change in business practices that would result in the recognition of revenue
by Target in advance of the time at which revenue would be recognized pursuant
to Target’s past practices; or

(u) agreement by Target or any officer or employee of Target, or agreement by
the Shareholders on behalf of Target to do any of the things described in the
preceding clauses (a) through (t) (other than pursuant to negotiations with the
Purchaser and its representatives regarding the transactions contemplated by
this Agreement).

2.9. Litigation. Except as set forth in Section 2.9 of the Target Disclosure
Schedule, there is no private or governmental action, suit, proceeding, claim,
arbitration or investigation pending before any court, arbitrator or
Governmental Entity, or, to the knowledge of the Shareholders or Target,
threatened against Target or any of its properties, officers or directors (in
their capacities as such). Except as set forth in Section 2.9 of the Target
Disclosure Schedule, there is no judgment, decree or order against Target or, to
the knowledge of Target and the Shareholders, any of Target’s directors or
officers (in their capacities as such), that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Material Adverse
Effect on Target. All litigation to which Target is a party (or, to the
knowledge of Target and the Shareholders, threatened to become a party) is
disclosed in Section 2.9 of the Target Disclosure Schedule.

2.10. Restrictions on Business Activities. Except as set forth in Section 2.10
of the Target Disclosure Schedule, there is no agreement, judgment, injunction,
order or decree binding upon Target which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any current or planned
business practice of Target, any acquisition of property by Target or the
overall conduct of business by Target as currently conducted by Target. Except
as set forth in Section 2.10 of the Target Disclosure Schedule, Target has not
entered into any agreement under which Target is restricted from providing,
selling, licensing or otherwise distributing any of its products or services to
any class of customers, in any geographic area, during any period of time or in
any segment of the market.

2.11. Permits; Company Products; Regulation.

Except as set forth in Section 2.11 of the Target Disclosure Schedule, Target is
in possession of all franchises, grants, authorizations, licenses, including
export licenses, classifications, certifications, registrations (including NSF
Registration for all actively sold food grade products) and exemptions, permits,
easements, variances, exceptions, consents, certificates, approvals, both
domestic and foreign, and orders necessary for Target to own, lease and operate
its properties or to carry on its business as it is now being conducted, except
where the failure to possess such item will not result in a Material Adverse
Effect (the “Target

 

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Authorizations”) and no suspension or cancellation of any Target Authorization
is pending or, to the Shareholders’ knowledge, threatened. Except as set forth
in Section 2.11 of the Target Disclosure Schedule, Target is not in conflict
with, or in default or violation of, (i) any laws applicable to Target by which
any property or asset of Target is bound or affected, (ii) any applicable laws,
regulations, rules and orders regarding the export of Target’s products to their
final destination and use of Target’s products at their final destination,
including but not limited to the Export Compliance Regulations, (iii) any
domestic or foreign laws, regulations, rules and orders applicable to Target’s
business activities including, but not limited to the Registration Evaluation,
Authorization and Restriction of Chemicals for sale into the European Union,
(iv) any Target Authorization or (v) any Material Contract to which Target is a
party or by which Target or any property or asset of Target is bound or
affected. A list of all such Target Authorizations is set forth in Section 2.11
of the Target Disclosure Schedule. Except as set forth in Section 2.11 of the
Target Disclosure Schedule, the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not adversely affect any
Target Authorization.

2.12. Title to Property.

(a) Target or a Subsidiary has good title to all of its personal property (other
than Intellectual Property described in Section 2.13 herein) and assets
reflected on the November 30 Financial Statements, or with respect to leased
properties and assets, valid leasehold interests in such properties and assets,
free and clear of all mortgages, liens, pledges, charges or encumbrances of any
kind or character, except (i) the lien of current Taxes not yet due and payable
and (ii) liens securing Debt, which Debt and liens will be discharged and
released at Closing. All such assets are located at one of Target’s Parcels
(defined herein) except as otherwise set forth on Section 2.12 of the Target
Disclosure Schedule. The plants, tangible personal property and equipment of
Target that are used in the operations of its business are in good operating
condition and repair (except for ordinary wear and tear). All assets used in the
operations of Target are reflected in the November 30 Financial Statements to
the extent generally accepted accounting principles require the same to be
reflected.

(b) Section 2.12(b) of the Target Disclosure Schedule sets forth a true, correct
and complete list of all equipment having an original purchase price equal to or
greater than $5,000 (the “Equipment”) owned or leased by Target, and, with
respect to leased Equipment, the name of the lessor, the date of the lease and
each amendment thereto and the aggregate annual rental and other fees payable
under such lease. Such Equipment is (i) adequate for the conduct of Target’s
business, as conducted on the date hereof, and (ii) except for Equipment that is
obsolete or otherwise no longer needed in operations, in good operating
condition (except for ordinary wear and tear).

(c) Section 2.12(c) of Target’s Disclosure Schedule identifies all real property
owned by Target (each, a “Parcel” and, collectively, the “Real Property”).

(i) Target has valid, good and marketable fee simple title to the Real Property,
free and clear of all liens and encumbrances other than Permitted Liens (defined
below).

 

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Target has delivered to the Purchaser copies of the deeds and other instruments
(as recorded) by which Target acquired the Real Property, and copies of all
title insurance policies, opinions, abstracts and surveys in the possession of
Target and relating to the Real Property. For purposes of this Agreement,
“Permitted Liens”, as such term relates to each Parcel of Real Property, means
the exceptions noted in Section 2.12(c) of the Target Disclosure Schedule.
Notwithstanding the foregoing, any liens or encumbrances which may be removed
from title by payment of money in satisfaction thereof shall be paid, discharged
and removed by Target at or prior to Closing.

(ii) Except for those Parcels so designated in Section 2.12(c)(ii) of the
Target’s Disclosure Schedule, each Parcel and the improvements, buildings and
structures thereon (the “Improvements”) (a) constitute all of the real property
used or operated by Target in the operation of its business, and (b) may
continue to be used for the operation of the business as currently operated by
Target after the Closing. To Target’s and the Shareholders’ knowledge, there are
no pending or threatened condemnation, expropriation or other proceedings (nor
is there any basis for any such action) affecting any Parcel or any assessments
made or threatened with respect thereto. Target does not own or hold, and is not
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, or dispose of any interest in any of the Parcels.

(iii) Except for those Parcels so designated in Section 2.12(c)(ii) of the
Target’s Disclosure Schedule, Target holds final, unappealable certificates of
occupancy and any other occupancy permits required to be issued by applicable
state and local authorities with respect to each Parcel. Each Parcel is in
conformity with all applicable zoning, building, health, safety, fire and
similar codes, ordinances, statutes or regulations, and the operation of each
Parcel is lawful under all applicable zoning and land use codes and ordinances.
No notice has been received from any Governmental Entity having jurisdiction
over zoning, land use, building, health, safety, fire or other codes,
ordinances, statutes or regulations applicable to such Parcel or to the
operation thereof stating that such Parcel fails to comply with such codes,
ordinances, statutes or regulations, and neither Target nor the Shareholders
have any knowledge of any such failure of compliance.

(iv) Except for Improvements located on those Parcels so designated in
Section 2.12(c)(ii) of the Target’s Disclosure Schedule, to the Shareholders’
knowledge, all of the Improvements are structurally sound, adequately supported,
free from past damage and in reasonably good condition, normal wear and tear
excepted. No such Improvement encroaches upon any other property, there are no
encroachments by other buildings onto any Real Property, and to the
Shareholders’ knowledge, none of such Improvements are located in a flood hazard
area. Except for those Parcels so designated in Section 2.12(c)(ii) of the
Target’s Disclosure Schedule, each Parcel is fully accessible by public roads
and no condition exists that would result in the termination of current access
from such Parcel. Except for those Parcels so designated in Section 2.12(c)(ii)
of the Target’s Disclosure Schedule and any Improvements located thereon, all of
the Parcels and all of the Improvements are served by all utilities necessary
and adequate for the operation of

 

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Target’s business. Except for those Parcels so designated in Section 2.12(c)(ii)
of the Target’s Disclosure Schedule, all of the Parcels are located in an Empire
Zone.

(v) Target does not owe any money to any contractor or materialman for labor or
materials performed on any Parcel, and Target does not owe any money in
connection with any construction or other improvement work being done at any
Real Property. Target has fully signed lien waivers from all persons currently
performing any construction or other improvement work being done at any Parcel.

(vi) Except as set forth in Section 2.12(c)(ii) of the Target’s Disclosure
Schedule, there are no leases, licenses, concessions or any other agreements
giving anyone, other than Target a right to use or occupy the Real Property or
any part thereof.

2.13. Intellectual Property.

(a) As used in this Agreement, “Intellectual Property” shall mean any and all
patents, trademarks, trade names, service marks, trade dress, copyrights, and
any applications for any of the foregoing, formulas, schematics, industrial
models, inventions, technology, know-how, trade secrets, ideas, processes,
computer software programs or applications (including source code, object code,
manuals and other materials related thereto) and all Internet domain names.
“Target Intellectual Property” shall mean any and all Intellectual Property used
by Target in the conduct of its business other than commercially available third
party software.

(b) Section 2.13 of the Target Disclosure Schedule sets forth a true, accurate
and complete list of all Target’s Intellectual Property to the extent it can be
listed. Section 2.13 of the Target Disclosure Schedule also lists, with respect
to products currently or previously sold by Target (i) the names of all formulas
for Target’s grease and lubricant products indicating whether such formulas are
owned by Target or a customer and whether the formula is exclusive to a
customer, (ii) all licenses, sublicenses and other agreements and arrangements,
written or oral, to which Target is a party and pursuant to which any person is
authorized to use any Target Intellectual Property (“Target Licenses”) and
(iii) all material licenses, sublicenses and other agreements and arrangements,
written or oral, to which Target is a party and pursuant to which Target is
authorized to use any Intellectual Property not owned by Target (“Third Party
Licenses”) other than commercially available third party software. Except as set
forth in Section 2.13 of the Target Disclosure Schedule, Target: (i) owns all of
the Target Intellectual Property, and all such Target Intellectual Property is
free and clear of any liens, mortgages, encumbrances, restrictions, licenses and
security interests of any kind or character whatsoever and (ii) is not
contractually obligated to pay any compensation of any kind to any third party
in respect of any such Target Intellectual Property. Each Target License and
Third Party License is the legal, valid and binding obligation of the parties
thereto, enforceable against such parties in accordance with its terms. To the
Shareholders’ knowledge, no default thereunder by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such party, except where such default, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the business of Target as conducted as of the date hereof.

 

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(c) Except for the Target Intellectual Property, Target Licenses and Third Party
Licenses, no Intellectual Property is required or necessary to conduct the
business of Target as conducted as of the date hereof, consistent with past
practices.

(d) To Target’s knowledge, (A) the Target Intellectual Property does not
infringe the intellectual property or other proprietary rights of any third
party, (B) there is no material unauthorized use, disclosure, infringement or
misappropriation of any Target Intellectual Property or of any trade secret that
is material to Target or any Third Party Licenses by any third party, including,
without limitation, any officer, director or employee, or former officer,
director or employee, of Target, (C) no third party is challenging the ownership
by Target, or the validity or effectiveness of, any of the Target Intellectual
Property, and (D) Target has not infringed or misappropriated any rights in any
Intellectual Property of any other person or entity, nor is Target aware of any
infringement or misappropriation which will occur as a result of the continued
operation of the business of Target as conducted as of the date hereof.

2.14. Environmental Matters.

(a) The following terms shall be defined as follows:

(i) “Environmental and Safety Laws” shall mean any federal ,state or local laws,
ordinances, codes, regulations, rules, policies and orders, as they may be
amended from time to time that are intended to regulate the disposal, handling,
use, storage and release into the environment of Hazardous Materials or which
are intended to assure the protection, safety and good health of employees,
workers or other persons, including the public.

(ii) “Hazardous Materials” shall mean any toxic or hazardous substance, material
or waste or any pollutant or contaminant, or infectious or radioactive substance
or material, including without limitation, those substances, materials and
wastes defined in or regulated under any Environmental and Safety Laws;
petroleum and petroleum products including crude oil and any fractions thereof;
natural gas, synthetic gas, and any mixtures thereof; radon; asbestos; and any
other pollutant or contaminant.

(iii) “Property” shall have the meaning set forth in Section 2.12(c) plus all
real property currently leased by Target or owned or leased by Target in the
past.

(iv) “Facilities” shall mean all buildings and improvements on the Real Property
of Target.

(b) Except as set forth on Section 2.14 of the Target Disclosure Schedule (i) no
methylene chloride or asbestos is contained in or has been used at or released
from the Facilities by Target or, to the Shareholder’s knowledge, by any other
person, (ii) except for the minor presence of asbestos, which is properly
encapsulated, all Hazardous Materials and wastes have been disposed of by Target
or, to Target’s knowledge, by any other person in accordance with all
Environmental and Safety Laws, (iii) Target has received no notice (verbal or
written) of any noncompliance of the Facilities or of its past or present
operations with applicable

 

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Environmental and Safety Laws that is unresolved or that was received in the
past five (5) years, (iv) no notices, administrative actions or suits are
pending or, to the Shareholder’s knowledge, threatened relating to Hazardous
Materials or a violation of any applicable Environmental and Safety Laws
relating to Target, (v) Target has not received notice (verbal or written) of
any third party alleging that Target is a potentially responsible party under
the federal Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”), or any applicable state analog statute, (vi) there has not been in
the past, and are not now, any unremediated contamination, disposal, spilling,
dumping, incineration, discharge, storage, treatment or handling of Hazardous
Materials by Target or, to Target’s or the Shareholders’ knowledge, by any other
person on, under or migrating to or from the Facilities or any Property
(including without limitation, soils and surface and ground waters) or any
location used by Target for disposal, (vii) there have not been in the past, to
Target’s or the Shareholders’ knowledge, and are not now, any underground tanks
or underground improvements at, on or under any Property including without
limitation, treatment or storage tanks, sumps, or water, gas or oil wells,
(viii) no polychlorinated biphenyls (“PCBs”) have been deposited, stored,
disposed of or located on any Property or Facilities or any equipment on any
Property containing PCBs at levels in excess of 50 parts per million, (ix) there
is no formaldehyde on any Property or in the Facilities, nor any insulating
material containing urea formaldehyde in the Facilities, (x) to Target’s or the
Shareholders’ knowledge, the Facilities and Target’s uses and activities therein
have at all times complied with all applicable Environmental and Safety Laws,
(xi) Target has all the permits and licenses required for its operation and is
in material compliance with the terms and conditions of those permits and
(xii) Target has not been alleged or found liable under any applicable
Environmental and Safety Laws and is not liable for any off-site contamination.

2.15. Employee Benefit Plans.

(a) Section 2.15 of the Target Disclosure Schedule lists, with respect to Target
and any trade or business (whether or not incorporated) which is treated as a
single employer with Target (an “ERISA Affiliate”) within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)), (ii) each loan to a non-officer employee in excess of
$25,000 and each loan, in any amount, to officers and directors, (iii) any stock
option, stock purchase, phantom stock, stock appreciation right, supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit, dependent care, life insurance or
accident insurance plans, programs or arrangements, including any health savings
account, health reimbursement account or flexible spending account plans,
(iv) all written contracts and agreements relating to employment and all
severance agreements, with any of the directors, officers or employees of
Target, (v) all bonus, pension, profit sharing, savings, deferred compensation
or incentive plans, programs or arrangements, (vi) other fringe or employee
benefit plans, programs or arrangements that apply to senior management of
Target and that do not generally apply to all employees and (vii) any current or
former employment or executive compensation or severance agreements, written or
otherwise, as to which, in any case, (i) through (vii), unsatisfied obligations
of Target of greater than $25,000

 

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remain for the benefit of, or relating to, any present or former employee,
consultant or director of Target (together, the “Target Employee Plans”).

(b) Target has furnished to the Purchaser a copy of each of Target Employee
Plans and related plan documents (including trust documents, insurance policies
or contracts, employee booklets, summary plan descriptions and other authorizing
documents, and, to the extent still in its possession, any material employee
communications relating thereto) and has, with respect to each Target Employee
Plan that is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years. Any Target Employee Plan
intended to be qualified under Section 401(a) of the Code either has obtained
from the Internal Revenue Service a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and subsequent legislation, or has applied to the
Internal Revenue Service for such a determination letter prior to the expiration
of the requisite period under applicable Treasury Regulations or Internal
Revenue Service pronouncements in which to apply for such determination letter
and to make any amendments necessary to obtain a favorable determination
(“Remedial Amendment Period”), or is still within the Remedial Amendment Period
for such an application, or is maintained pursuant to a prototype plan document
that is covered by a favorable Internal Revenue Service opinion upon which the
plan may rely. Target has also furnished the Purchaser with the most recent
Internal Revenue Service determination or opinion letter issued with respect to
each such Target Employee Plan, and nothing has occurred since the issuance of
each such letter which could reasonably be expected to cause the loss of the
tax-qualified status of any Target Employee Plan subject to Code Section 401(a).

(c) Except as set forth in Section 2.15(c) of the Target Disclosure Schedule,
(i) none of the Target Employee Plans promises or provides retiree medical or
other retiree welfare or life insurance benefits to any person, (ii) there has
been no “prohibited transaction,” as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Target Employee Plan
which could reasonably be expected to have, in the aggregate, a Material Adverse
Effect on Target, (iii) each Target Employee Plan has been administered in all
material respects in accordance with its terms and in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), and Target has performed in all material
respects all obligations required to be performed by it under, and is not in any
material respect in default under or violation of, and has no knowledge of any
material default or violation by any other party to, any of Target Employee
Plans, (iv) neither Target nor any ERISA Affiliate is subject to any liability
or penalty under Sections 4976 through 4980 of the Code with respect to any of
Target Employee Plans, (v) all material contributions required to be made by
Target or any ERISA Affiliate to any Target Employee Plan have been made on or
before their due dates and a reasonable amount has been accrued for
contributions to each Target Employee Plan for the current plan year, (vi) with
respect to each Target Employee Plan, no “reportable event” within the meaning
of Section 4043 of ERISA (excluding any such event for which the 30 day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 or ERISA has occurred,
(vii) no Target Employee Plan is covered by, and neither Target nor any ERISA
Affiliate has incurred or expects to incur any direct or indirect liability
under,

 

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arising out of or by operation of Title IV of ERISA or under Section 412 of the
Code, in connection with the termination of, or an employee’s withdrawal from,
any Target Employee Plan or other retirement plan or arrangement, and no fact or
event exists that could give rise to any such liability, (viii) Target has not
incurred any liability under, and has complied in all respects with, the Worker
Adjustment Retraining Notification Act, (the “WARN Act”) and no fact or event
exists that could give rise to liability under the WARN Act and (ix) no
compensation paid or payable to any employee of Target has been, or will be,
non-deductible by reason of application of Section 162(m) of the Code. No suit,
administrative proceeding, action or other litigation has been brought or, to
the Shareholders’ knowledge, is threatened, against or with respect to any such
Target Employee Plan, including any audit or inquiry by the Internal Revenue
Service or United States Department of Labor. Neither Target nor any other ERISA
Affiliate is a party to, or has made any contribution to or otherwise incurred
any obligation under, any “multiemployer plan” as defined in Section 3(37) of
ERISA.

(d) With respect to each Target Employee Plan, Target has complied in all
material respects with (i) the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended including all regulations thereunder (“COBRA”) and (ii) the applicable
requirements of the Family Leave Act of 1993 and the regulations thereunder.

(e) Except as set forth on Section 2.15(e) of the Target Disclosure Schedule,
there has been no amendment to, written interpretation or announcement (whether
or not written) by Target or any other ERISA Affiliate relating to, or change in
participation or coverage under, any Target Employee Plan that would materially
increase the expense of maintaining such Target Employee Plan above the level of
expense incurred with respect to such Target Employee Plan for the most recent
fiscal year included in the Financial Statements.

2.16. Certain Agreements Affected by the Sale of the Stock. Except as set forth
in Section 2.16 of the Target Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any current or former director or employee of Target, (ii) materially increase
any benefits otherwise payable by Target or (iii) result in the acceleration of
the time of payment or vesting of any such benefits.

2.17. Employee Matters. Target is in compliance in all material respects with
all currently applicable federal, state, local and foreign laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice. Except as set forth
in Section 2.17 of the Target Disclosure Schedule, there are no pending claims
against Target under any workers compensation plan or policy or for long-term
disability. Except as set forth in Section 2.17 of the Target Disclosure
Schedule, there are no controversies pending before any Governmental Entity or,
to the knowledge of Target or the Shareholders, threatened, between Target and
any of its

 

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employees. Except as set forth in Section 2.17 of the Target Disclosure
Schedule, Target is not a party to any collective bargaining agreement or other
labor union contract nor does Target or the Shareholders know of any activities
or proceedings of any labor union or other group to organize any such employees.
The Shareholders have no knowledge indicating that (a) the consummation of the
transaction contemplated by this Agreement will have a Material Adverse Effect
on Target’s labor relations; (b) any employee of Target intends to terminate his
or her employment with the Company; or (c) any employee has received an offer to
join a business that may be competitive with the business of Target.
Section 2.17 of the Target Disclosure Schedule sets forth the name, job
description and compensation of each employee of Target.

2.18. Material Contracts.

(a) Section 2.18(a) of the Target Disclosure Schedule contains a list of those
contracts and agreements as specified below to which Target is a party other
than (x) routine purchase orders and pricing quotes in the ordinary course of
business covering a period of less than one year, and (y) agreements that can be
canceled by Target without penalty or payment (such contracts, agreements and
arrangements as are required to be set forth in Section 2.18(a) of the Target
Disclosure Schedule being referred to herein collectively as the “Material
Contracts”). Subject to such limitations, Material Contracts shall include,
without limitation, the following:

(i) each contract and agreement for the purchase of inventory, other materials
or personal property with any supplier or for the furnishing of services to
Target in excess of $5,000;

(ii) each customer contract and agreement in excess of $5,000;

(iii) all contracts with independent contractors or consultants (or similar
arrangements) to which Target is a party in excess of $5,000 and excluding
routine property maintenance, snow removal and similar contracts;

(iv) all contracts and agreements (excluding routine checking account overdraft
agreements involving petty cash amounts) under which Target has created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
indebtedness or under which Target has imposed (or may impose) a security
interest or lien on any of its assets, whether tangible or intangible, to secure
indebtedness;

(v) all contracts and agreements that limit the ability of Target to compete in
any line of business or with any person or in any geographic area or during any
period of time, or to solicit any customer;

(vi) all contracts and agreements between Target, on the one hand, and any
affiliate of Target on the other hand; and

 

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(vii) all equipment leases, rental agreements and similar arrangements having a
value greater that $5,000.

(b) Each Material Contract and each other material contract or agreement of
Target which would have been required to be disclosed in Section 2.18 of the
Target Disclosure Schedule had such contract or agreement been entered into
prior to the date of this Agreement, is a legal, valid and binding agreement.
Target is not in default of and to the Shareholders’ knowledge, no other party
is in default of, any Material Contract; none of the Material Contracts have
been canceled by Target or by any other party; Target is not in receipt of any
written claim of default under any such agreement; and Target does not
anticipate any termination or change to, or receipt of a proposal with respect
to, any such agreement as a result of the transactions contemplated hereby or
otherwise. Target has furnished the Purchaser with true and complete copies of
all such agreements, together with all amendments, waivers or other changes
thereto.

2.19. Interested Party Transactions. Except as set forth in Section 2.19 of the
Target Disclosure Schedule, Target is not indebted to any director, officer,
employee or agent of Target (except for amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to Target.

2.20. Insurance. Section 2.20 of the Target Disclosure Schedule sets forth a
description of all policies of insurance carried by Target, including names of
carrier and insured party, premiums, coverage limits and deductible amounts.
Except as set forth in Section 2.20 of the Target Disclosure Schedule, there is
no claim pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
paid and Target is otherwise in compliance with the terms of such policies and
bonds. Neither Target nor the Shareholders have any knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.

2.21. Compliance With Laws. Except as set forth in Section 2.21 of Target’s
Disclosure Schedule, Target (a) has conducted and continues to conduct its
business in all material respects in accordance with all applicable Laws and
Orders (as defined below) applicable to it and its business, (b) has complied
with and will continue to comply with in all material respects all Laws and
Orders applicable to it and its business, (c) is not in violation in any
material respect of any such Law or Order, and (d) has not received any notice
that any violation of any such Law or Order is being or may be alleged. For
purposes of this Agreement “Order” means any order, writ, judgment, injunction,
decree, rule, ruling, directive, stipulation, determination or award made,
issued or entered by or with any Governmental Entity, whether preliminary,
interlocutory or final and “Law” means any federal, national, supranational,
foreign, state, provincial, local, county, municipal or similar statute, law,
common law, writ, injunction, decree, guideline, policy, ordinance, regulation,
rule, code, Order, constitution, treaty, requirement, judgment or judicial or
administrative doctrines enacted, promulgated, issued, enforced or entered by
any Governmental Entity.

 

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2.22. Minute Books. The minute books of Target provided to Purchaser contain a
summary of all meetings of directors and the Shareholders or actions by written
consent since the time of incorporation of Target through the date of this
Agreement, except where the failure to contain such materials would not have a
Material Adverse Effect, and reflect all transactions referred to in such
minutes accurately in all material respects.

2.23. Brokers’ and Finders’ Fees. Except as set forth in Section 2.23 of the
Target Disclosure Schedule, Target has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders’ fees or agents’
commissions or investment bankers’ fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.

2.24. Accounts Receivable/ Inventory.

(a) Target has made available to the Purchaser a list of all accounts receivable
of Target reflected on the Working Capital Estimate (“Accounts Receivable”),
along with a range of days elapsed since invoice. All Accounts Receivable of
Target arose in the ordinary course of business and are collectible in the
ordinary course of business. Except for existing liens securing any outstanding
Debt, which will be released at Closing, no person has any lien on any of such
Accounts Receivable and no request or agreement for deduction or discount has
been made with respect to any of such Accounts Receivable.

(b) All inventory reflected on the November 30 Financial Statements, including
raw materials, work in process and finished goods inventory set forth in the
Working Capital Estimate (the “Inventory”) is saleable or useable in the
ordinary course of business without material discount.

2.25. Customers and Suppliers. Except as set forth on Schedule 2.25 of the
Target Disclosure Schedule, no customer which individually accounted for more
than 5% of Target’s gross revenues during the 12-month period preceding the date
of this Agreement, and no material supplier of Target, has cancelled or
otherwise terminated, or made any written threat to Target to cancel or
otherwise terminate, its relationship with Target, or has at any time on or
after December 31, 2009 materially decreased its services or supplies to Target
in the case of any such supplier, or its purchase of the products or services of
Target in the case of any such customer, and to the Shareholders’ knowledge, no
such supplier or customer intends to cancel or otherwise terminate its
relationship with Target or to materially decrease its projected services or
supplies to Target or its projected purchase or usage of the products or
services of Target, as the case may be.

2.26. Third Party Consents. Except as set forth in Section 2.26 of the Target
Disclosure Schedule, no material consent or approval is needed from any third
party in order to effect this Agreement or any of the

 

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transactions contemplated hereby. Without limiting the foregoing, Section 2.26
of the Target Disclosure Schedule lists all consents or approvals required in
connection with any Material Contracts, Governmental Entity (including any
approval or authorization required in connection with any military application)
whether pursuant to change of control provisions or otherwise.

2.27. [Reserved].

2.28. Banks. Section 2.28 of the Target Disclosure Schedule lists the name of
each bank in which Target has an account or safe deposit box, a description and
account number of each such account, and the names of all persons who are
authorized to draw thereon or who have access thereto.

2.29. Fiscal Year 2010/2011 Projections. The projections of Target’s operating
income, which indicates revenues of $24.4 million and EBITDA of $4.8 million for
fiscal year 2010 and revenues of $34.6 million and EBITDA of $7.7 million for
fiscal year 2011, a copy of which projections are attached as Section 2.29 of
the Target Disclosure Schedule, reflects Target’s and the Shareholders’ good
faith best estimate of expected results of operations for the period covered
thereby. Such projections are not guaranteed and are inherently subject to a
variety of risks, uncertainties and assumptions that could cause actual results
to differ materially from those that have been projected. Such risks,
uncertainties and assumptions include, among others, changes in economic
conditions and various other events, conditions and circumstances, many of which
are beyond the control of the Shareholders and Target.

2.30. Representations Complete. None of the representations or warranties made
by Target and the Shareholders herein or in any Schedule hereto, including the
Target Disclosure Schedule, or the certificate furnished by Target pursuant to
this Agreement, when all such documents are read together in their entirety,
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading.

SECTION THREE

3. Taxes.

3.1. Definitions.

(a) For purposes of this Agreement, the term “Taxes” shall mean all taxes,
however denominated, including any interest, penalties or other additions to tax
that may become payable in respect thereof, (A) imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers’ compensation, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
or (B) any liability for amounts referred to in (A) as a result of any
obligations to indemnify another person.

 

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(b) For purposes of this Agreement, the term “Tax Returns” shall mean all
reports, estimates, declarations of estimated tax, information statements and
returns required to be filed in connection with any Taxes of the Target and/or
the Subsidiaries, including information returns with respect to backup
withholding and other payments to third parties.

3.2. Tax Representations and Warranties.

(a) At all times from and after January 1, 1992, Target has been and will be at
all times through the Closing Date treated as a validly electing S corporation
within the meaning of Sections 1361 and 1362 of the Code (and any analogous
provisions of state and local Law) until the “S” status of the Target is
terminated as a result of the purchase of the Stock or the Section 338(h)(10)
Election contemplated by this Agreement. Other than in connection with this
Stock purchase, none of the Shareholders has taken or omitted or caused to be
taken or omitted to take any actions that could cause the Target to cease to be
treated as an S corporation for federal and applicable state and local income
Tax purposes.

(b) Target and each of the Subsidiaries have timely filed (or obtained timely
extensions with respect thereto) all federal, state, local and other Tax Returns
required to be filed by or on behalf of Target or the Subsidiaries on or before
the Closing Date. All such Tax Returns are true, correct and complete in all
material respects. Except for tax liabilities reflected as a liability on the
Final Working Capital Statement, each of the Target and the Subsidiaries has
timely paid, or will timely pay, all Taxes due or claimed to be due by any
taxing authority for all Pre-Closing Tax Periods (as defined in Section 9.1)
(whether or not such Taxes are the subject of a Tax Return and including any
Taxes due from the Target or a Subsidiary as a transferee of the assets of, or
successor to, any Person).

(c) Each of Target and the Subsidiaries have timely collected and withheld and
duly paid to the appropriate taxing authority all Taxes that it is required to
collect or withhold from amounts paid or owing to any employee, shareholder,
creditor or other person.

(d) The Purchaser has been furnished by Target true and complete copies of all
federal, state and foreign income or franchise Tax Returns and state sales and
use Tax Returns for or including Target for the three full years immediately
preceding the date of this Agreement.

(e) No audit of the Tax Returns of, or including, Target by a government or
taxing authority is in process, threatened or, to the Shareholders’ knowledge,
pending. No deficiencies exist or have been asserted (in writing) with respect
to Taxes of Target or any Subsidiary, and Target has not received written notice
that it has not filed a Tax Return or paid Taxes required to be filed or paid.
Except as set forth in Section 3.2 of the Target Disclosure Schedule, Target is
not a party to any action or proceeding for assessment or collection of Taxes,
nor has such event been asserted or threatened in writing against Target, any
Subsidiary, or any of such entities’ respective assets. No waiver or extension
of any statute of limitations is in effect with respect to Taxes or Tax Returns
of Target. Except as set forth in

 

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Section 3.2 of the Target Disclosure Schedule, neither Target nor the
Shareholders has executed any power of attorney with respect to any Taxes, other
than powers of attorney that are no longer in force. No closing agreements,
private letter rulings, technical advice memoranda or other agreements or
rulings relating to Taxes have been entered into or issued by a government or
taxing authority with or in respect of Target that materially affects any “open”
Pre-Closing Tax Period. Target has properly and adequately disclosed on its
federal and state income and franchise Tax Returns all positions taken therein
that could give rise to a substantial understatement penalty within the meaning
of Section 6662 of the Code or comparable provisions of applicable state Tax
Laws.

(f) Target is not and has not been required to make any adjustment pursuant to
Section 481(a) of the Code (or any predecessor provision) or any similar
provision of state, local, or foreign law that materially affects any “open” tax
period by reason of any change in any accounting methods, and there is no
application pending with any government or taxing authority requesting
permission for any changes in any of its accounting methods for tax purposes,
except as set forth in Section 3.2 of the Target Disclosure Schedule. To the
knowledge of Target and the Shareholders, no government or taxing authority has
proposed any such adjustment or change in accounting method.

(g) Target is not (nor has it ever been) a party to any tax sharing, tax
indemnity, or tax allocation agreement or other similar arrangement except with
its Subsidiaries.

(h) Target will not be liable for any Tax under Section 1374 of the Code in
connection with the deemed sale of Target’s assets (including the assets of any
qualified subchapter S subsidiary) caused by the Section 338(h)(10) Election.
Neither the Target nor any qualified subchapter S subsidiary has, in the past 7
years, (A) acquired assets from another corporation in a transaction in which
Target’s (or any qualified subchapter S subsidiary’s) Tax basis for the acquired
assets was determined, in whole or in part, by reference to the Tax basis of the
acquired assets (or any other property) in the hands of the transferor or
(B) acquired the stock of any corporation that is a qualified subchapter S
subsidiary.

(i) Target has satisfied (or will satisfied when due) any Taxes pursuant to
Section 1375 of the Code that arose from the effective date of its S corporation
election through the Closing Date.

(j) Section 3.2(k) of the Target Disclosure Schedule lists all the states with
respect to which either Target or any Subsidiary is required to file any
corporate, income or franchise Tax Returns and sets forth whether Target is and
has always been treated as the equivalent of an S corporation by or with respect
to each such state.

(k) Section 1.7 of the Target Disclosure Schedule lists each S corporation
shareholder that is required to sign a Section 338 Form and the percentage of
stock that each shareholder owns as of the Closing Date.

 

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3.3. Tax Covenants. The Shareholders, Target, and the Purchaser hereby covenant
as follows:

(a) The Shareholders through its representatives, at their expense, shall
prepare or cause to be prepared (in a manner consistent with past practice) and
timely file or cause to be timely filed all Tax Returns for Target for all
periods ending on or prior to the Closing Date which are filed after the Closing
Date (the “S Year Returns”) and shall pay or cause to be paid all Taxes due with
respect to the S Year Returns. The Purchaser shall prepare and timely file, or
cause to be prepared and timely filed, all Tax Returns required to be filed by
the Target for all periods beginning after the Closing Date and shall pay or
cause to be paid all Taxes due with respect to such Returns.

(b) Purchaser shall prepare or cause to be prepared and filed, all Tax Returns
for Target for all periods beginning before and ending after the Closing Date
(collectively, “Straddle Period Returns”). Purchaser shall pay or cause to be
paid all Taxes shown as due with respect to such Straddle Period Returns.
Purchaser shall permit Shareholders to review and comment on any Straddle Period
Returns for which Shareholders have any obligation under this Agreement, and
Purchaser shall make such revisions to such Tax Returns as are requested in
writing by the Representative if Purchaser consents to such changes (such
consent not to be unreasonably withheld). Purchaser shall provide the
Shareholders with a statement setting forth the allocation of liability for
Taxes shown on such Straddle Period Returns between the portion of the Straddle
Period ending on the Closing Date (the “Pre-Closing Portion”) and the portion of
the Straddle Period beginning after the Closing Date in accordance with
Section 3.3(b) hereof, and Shareholders shall pay over to Purchaser no fewer
than three (3) Business Days prior to the due date of the applicable Straddle
Period Return, an amount of cash equal to the Pre-Closing Portion of such Taxes.

(c) For purposes of this Agreement, income, deductions, and other items in
respect of a Straddle Period shall be allocated between the pre-Closing portion
of such Straddle Period and the post-Closing portion of such Straddle Period
based on an actual closing of the books of the Target or Subsidiary, as the case
may be, as of the end of the Closing Date provided, however, that in closing the
books, Taxes (such as property Taxes) that are not imposed on income, receipts
or otherwise on a transaction basis and exemptions, allowances or deductions
that are calculated on an annual basis (including, but not limited to
depreciation and amortization deductions) shall be allocated on a daily basis.

(d) The Purchaser, Target and the Shareholders shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section. Such cooperation shall include
the retention and (upon the other party’s request) the provision of records and
information which are relevant to any such filing or any audit, litigation or
other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. The Purchaser, Target and the Shareholders agree (A) to retain all
books and records with respect to Tax matters pertinent to Target relating to
any taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Purchaser or the
Shareholders, any extensions thereof) of the respective taxable periods, and to

 

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abide by all record retention agreements entered into with any taxing authority,
and (B) to give the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other party so
requests, Target or the Shareholders, as the case may be, shall allow the other
party to take possession of such books and records.

(e) All transfer, documentary, sales, use, stamp, registration and other similar
Taxes (including any penalties and interest) incurred in connection with the
transfer of Stock pursuant to this Agreement and the Section 338(h)(10) Election
shall be paid by the Purchaser and/or Shareholders in accordance with local
custom and the Purchaser shall file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes.

(f) Target, each Shareholder and any Shareholder set forth on Section 1.7 of the
Target Disclosure Schedule shall join with Purchaser in making any
Section 338(h)(10) Elections.

(g) Each Shareholder shall include any income, gain, loss, deduction, or other
tax item resulting from the Section 338(h)(10) Election on his tax returns to
the extent required by applicable law. Each Shareholder shall also pay any Tax
imposed on the Target attributable to the making of the Section 338(h)(10)
Election, including any Tax imposed under Code Section 1374 of the Code or any
comparable provision under applicable state and local law or the failure of any
jurisdiction to conform to federal income Tax treatment for the
Section 338(h)(10) Election.

(h) Neither the Target nor the Shareholders shall revoke the Target’s election
to be taxed as an S corporation for purposes of federal or any applicable State
or local law within the meaning of Sections 1361 and 1362 of the Code and any
applicable State or local provision. Furthermore, except as contemplated by this
Agreement, neither the Target nor the Shareholders shall take any or allow any
action that would result in the termination of the Target’s status as a validly
electing S corporation within the meaning of Sections 1361 and 1362 of the Code
and any applicable State or local provision. In the event of a determination
that the status of Target as an S corporation is subject, for any reason, to
termination effective as of any date prior to the Closing Date, the Purchaser,
Target, and the Shareholders shall cooperate in seeking approval from the
Internal Revenue Service pursuant to Code Sections 1362(b)(5) or 1362(f) to
retain or restore Target’s status an S corporation for any Pre-Closing Tax
Period.

(i) Target shall terminate, or cause to be terminated, on or before the Closing
Date all Tax sharing or Tax allocation agreements or arrangements, if any,
relating to the Target, the Shareholders, and any Subsidiary (other than this
Agreement) and none of Target or any Subsidiary will have any liability
thereunder on or after the Closing Date.

SECTION FOUR

4. Representations and Warranties of the Purchaser. Except as disclosed in a
document dated

 

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as of the date of this Agreement and delivered by the Purchaser to Target and
the Shareholders prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the
“Purchaser Disclosure Schedule”), the Purchaser hereby represents and warrants
to Target and the Shareholders as follows:

4.1. Organization, Standing and Power. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. The Purchaser has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted and as
proposed to be conducted and is duly qualified to do business and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary.

4.2. Authority. The Purchaser has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and assuming the due authorization,
execution and delivery by Target and the Shareholders, constitutes the valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereinafter in effect affecting the
enforcement rights of creditors generally, and to the extent that the
availability of equitable remedies may be limited by equitable principles.

4.3. No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of the Articles of
Incorporation or By-Laws of the Purchaser, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Purchaser or its properties or assets.

(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to the Purchaser in connection with the execution and delivery of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated hereby.

 

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4.4. Litigation. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of the Purchaser, threatened
against the Purchaser, or any of its properties, officers or directors (in their
capacities as such) that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Purchaser. There is no
judgment, decree or order against the Purchaser or, to the knowledge of the
Purchaser or any of its directors or officers (in their capacities as such) that
could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on the Purchaser.

4.5. Broker’s and Finders’ Fees. The Purchaser has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or investment bankers’ fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.

4.6. Securities Law Compliance. Purchaser acknowledges that none of the Stock
has been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or under any state or foreign securities laws. Purchaser is
purchasing the Stock solely for investment, with no present intention to
distribute any of the Stock any person. Purchaser will not sell or otherwise
dispose of any Stock except in compliance with the registration requirements or
exemption provisions under the Securities Act and the rules and regulations
promulgated thereunder and any other applicable securities laws.

4.7. Funding. Purchaser will have sufficient funds to pay the Purchase Price and
all other amounts due hereunder when due.

SECTION FIVE

[RESERVED]

5. [Reserved]

SECTION SIX

6. Additional Agreements.

6.1 Non Competition.

Each Shareholder covenants and agrees with the Purchaser that during the period
commencing on the Closing Date and terminating five (5) years after the Closing
Date (the “Noncompete Term”), the Shareholders will not, without the prior
written consent of Purchaser, which may be withheld or given in its sole
discretion, directly or indirectly, or individually or collectively, for their
own benefit or the benefit of others engage in any activity or act in any
manner, and in any capacity whatsoever, (other than as the record or beneficial
owner of less than

 

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five percent (5%) of the outstanding shares of a publicly traded corporation)
for the purpose of establishing, operating, assisting or managing any business
or entity that is engaged in the business of the sale, development,
manufacturing of grease or lubricant products or is otherwise competitive with
the business of the Target (or its successor in interest), as it is then being
conducted.

6.2 Non Solicitation.

Each Shareholder covenants and agrees with the Purchaser that during the
Noncompete Term, the Shareholders will not, without the prior written consent of
the Purchaser, which may be withheld or given in its sole discretion, directly
or indirectly, for their own benefit or the benefit of others individually or
collectively, (i) solicit, counsel or attempt to induce any person who is then
in the employ of Target (or its successor in interest), or who is then providing
services as a consultant or agent of Purchaser, to leave the employ of or cease
providing services, as applicable, to Target (or its successor in interest), or
employ or attempt to employ any such person or persons who at any time during
the preceding one (1) year was in the employ of, or provided services to, Target
(or its successor in interest); or (ii) solicit, bid for or accept business from
any of the current or former customers of Target (or its successor in interest).

6.3 Injunctive Relief.

The Shareholders agree that the remedy of damages at law for the breach by any
of them of any of the covenants, obligations or other provisions contained in
this Agreement, including those in Sections 6.1 (Non Competition ), and 6.2 (Non
Solicitation) is an inadequate remedy. In recognition of the irreparable harm
that a violation of such covenants would cause Target and the Purchaser, the
Shareholders agree that in addition to any other remedies or relief that may be
available to Target and the Purchaser, Target and the Purchaser shall be
entitled to (a) a decree or order of specific performance or mandamus to enforce
the observance and performance of such covenant, obligation or other provision,
and (b) an injunction against and restraining any actual or threatened breach,
violation or violations. The parties hereto agree that both damages and specific
performance shall be proper modes of relief and are not to be considered
alternative remedies.

SECTION SEVEN

7. Conditions to the Transactions.

7.1. Conditions to Obligations of Each Party. The respective obligations of each
party to this Agreement to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, by agreement of all the parties hereto:

(a) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of

 

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competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, or any other person or entity seeking any of the foregoing be pending;
nor shall there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the transactions contemplated
hereby, which makes the consummation of the transactions contemplated hereby
illegal. In the event an injunction or other order shall have been issued, each
party agrees to use its reasonable diligent efforts to have such injunction or
other order lifted.

(b) Governmental Approval. The Purchaser and Target shall have timely obtained
from each Governmental Entity all approvals, waivers and consents, if any,
necessary for consummation of or in connection with the transactions
contemplated hereby and the several transactions contemplated hereby.

7.2. Additional Conditions to Obligations of the Shareholders. The obligations
of the Shareholders to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at, or prior to, the
Closing Date of each of the following conditions, any of which may be waived, in
writing, by the Shareholders:

(a) Representations, Warranties and Covenants. (i) Each of the representations
and warranties of the Purchaser in this Agreement that is expressly qualified by
a reference to materiality shall be true in all respects as so qualified, and
each of the representations and warranties of the Purchaser in this Agreement
that is not so qualified shall be true and correct in all material respects, on
and as of the Closing Date as though such representation or warranty had been
made on and as of such time (except that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date) and (ii) the Purchaser shall have performed and complied in all
material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it as of the Closing
Date.

(b) Certificates of the Purchaser.

(i) Compliance Certificate of the Purchaser. The Shareholders shall have been
provided with a certificate dated the Closing Date and executed on behalf of the
Purchaser by its President or its Chief Financial Officer to the effect that, as
of the Closing Date, each of the conditions set forth in Section 7.2(a) has been
satisfied with respect to the Purchaser.

(ii) Certificate of Secretary of the Purchaser. Target shall have been provided
with a certificate dated the Closing Date and executed by the Secretary or
Assistant Secretary of the Purchaser certifying:

 

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(A) Resolutions duly adopted by the Board of Directors of the Purchaser
authorizing the execution of this Agreement and the execution, performance and
delivery of all agreements, documents and transactions contemplated hereby;

(B) the incumbency of the officers of the Purchaser executing this Agreement and
all agreements and documents contemplated hereby.

(c) Third-Party Consents. The Shareholders shall have been furnished with
evidence satisfactory to them that the Purchaser has obtained those consents,
waivers, approvals or authorizations of those Governmental Entities and third
parties whose consent or approval is required in connection with the
transactions contemplated hereby as set forth in Section 2.5.

(d) Further Deliveries by Purchaser. At the Closing, in addition to any other
documents or agreements required under this Agreement, Purchaser shall deliver
to Shareholders the following:

(i) Amounts payable at the Closing pursuant to Section 1 of the Agreement; and

(ii) The Escrow Agreement.

In addition, at the Closing, Purchaser shall deliver the Escrow Amount to Escrow
Agent under the Escrow Agreement.

(e) Employment Agreements. Each of Target and Purchaser shall have delivered
executed copies of the Employment Agreements with Krol and Caputi respectively
in the form attached hereto as Exhibit B-1 and B-2 (the “Employment
Agreements”).

7.3. Additional Conditions to the Obligations of the Purchaser. The obligations
of the Purchaser to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, by the Purchaser:

(a) Representations, Warranties and Covenants. (i) Each of the representations
and warranties of Target and the Shareholders in this Agreement that is
expressly qualified by a reference to materiality shall be true in all respects
as so qualified, and each of the representations and warranties of Target and
the Shareholders in this Agreement that is not so qualified shall be true and
correct in all material respects, on and as of the Closing Date as though such
representation or warranty had been made on and as of such time (except that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date), and (ii) Target
and the Shareholders shall have performed and complied in all material respects
with all covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Date.

 

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(b) No Material Adverse Changes. There shall not have occurred any material
adverse change in the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations, results of
operations or prospects of Target, other than any change resulting from changes
in the state of the economy in general or from changes in federal or state
legislation.

(c) Certificates of Target and the Shareholders.

(i) Compliance Certificate of Target and the Shareholders. The Purchaser shall
have been provided with a certificate dated the Closing Date and executed on
behalf of Target, by its President or its Chief Financial Officer, and by the
Shareholders, to the effect that, as of the Closing Date, each of the conditions
set forth in Section 7.3(a) and Section 7.3(b) has been satisfied.

(ii) Certificate of Secretary of Target. The Purchaser shall have been provided
with a certificate dated the Closing Date and executed by the Secretary of
Target certifying:

(A) Resolutions duly adopted by the Board of Directors and the Shareholders of
Target authorizing the execution of this Agreement and the execution,
performance and delivery of all agreements, documents and transactions
contemplated hereby;

(B) The Certificate of Incorporation and Bylaws of Target, as in effect
immediately prior to the Closing Date, including all amendments thereto; and

(C) The incumbency of the officers of Target executing this Agreement and all
agreements and documents contemplated hereby.

(d) Third Party Consents. The Purchaser shall have been furnished with evidence
satisfactory to it that Target and the Shareholders have obtained those
consents, waivers, approvals or authorizations of those Governmental Entities
and third parties whose consent or approval are required in connection with the
transactions contemplated hereby as set forth in Section 2.26 or Section 2.5,
and including any consent required pursuant to any Material Contract.

(e) Injunctions or Restraints on the Sale of the Stock and Conduct of Business.
No temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction, or other legal or
regulatory restraint provision limiting or restricting the Purchaser’s conduct
or operation of the business of Target following the transactions, and
contemplated hereby shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other Governmental Entity, domestic or
foreign or any other person or entity, seeking the foregoing be pending.

 

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(f) Legal Opinion. The Purchaser shall have received opinions dated the Closing
Date from Drew & Drew, LLP, Target’s and the Shareholders’ legal counsel, and
Jaeckle Fleischmann & Mugel, LLP, Target’s and the Shareholders’ special
counsel, reasonably acceptable to the Purchaser and covering the matters set
forth in Exhibit C attached hereto.

(g) Employment Agreements. Krol and Caputi shall have executed and delivered the
Employment Agreements. In addition, the Purchaser shall have received executed
copies of an employment memorandum acceptable to the Purchaser from Brian Kusak.

(h) Resignation of Officers and Directors. The officers and directors of Target
shall have delivered their resignations.

(i) Delivery of Stock. The Shareholders shall have delivered the Stock to the
Purchaser, together with duly executed stock powers.

(j) Title to Real Property. With respect to each Parcel, the Purchaser shall
have received fully effective title insurance policy on ALTA form under which
the title insurer insures fee simple title to the Purchaser, subject only to
Permitted Liens (each, a “Title Policy” and collectively, the “Title Policies”).
Except as otherwise agreed by the Purchaser, each Title Policy shall be in the
amount of the portion of the Purchase Price allocated to each Parcel insured
thereby and shall contain such endorsements as the Purchaser may reasonably
require. The costs and fees of the Title Policies, and the costs for any
surveys, and any recording fees and transfer taxes, shall be borne by the
Shareholders, who shall have the right to select the title company, which
selection shall be reasonably acceptable to the Purchaser.

(k) Section 338(h)(10). Each Shareholders and each of the Shareholders listed on
Section 1.7 of the Target’s Disclosure Schedule shall have executed and
delivered to Purchaser a completed copy of IRS Form 8023 (and any comparable
form under any state or local Tax law).

(l) Non-Foreign Person Affidavits. The Purchaser shall have received a
non-foreign person affidavit from each of the Shareholders pursuant to
Section 1445 of the Code.

SECTION EIGHT

8. [Reserved]

SECTION NINE

9. Indemnification.

9.1. Indemnification by the Shareholders. Subject to the other provisions of
this Section 9, each of the Shareholders shall, jointly and severally,
indemnify, hold harmless and

 

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defend the Purchaser and Target and their respective officers, directors,
shareholders, employees and agents (each, an “Indemnified Party” and
collectively, the “Indemnified Parties”), from and against any and all claims,
liabilities, losses, damages, demands, suits, costs and expenses, whether or not
based upon a liability or potential liability to a third party, including
reasonable counsel fees and costs incurred in investigation (each of the
foregoing being referred to herein as a “Loss” and collectively, “Losses”)
incurred or suffered by an Indemnified Party by reason of: (i) any breach by
Target (prior to Closing) or any of the Shareholders of any of the
representations, warranties or covenants made by Target (prior to Closing) or
any of the Shareholders contained in this Agreement or the breach by Target or
any of the Shareholders of any other term of this Agreement; (ii) Taxes of the
Target and its Subsidiaries for all Taxable periods ending on or before the
Closing Date and the portion through the end of the Closing Date for any Taxable
period that includes (but does not end on) the Closing Date (“Pre-Closing Tax
Period”); (iii) any and all Taxes of any Affiliated Group, including pursuant to
Treasury Regulation Section 1.1502-6 or any analogous or similar state, local,
or foreign law or regulation; (iv) any and all Taxes of any Person (other than
the Target and the Subsidiaries) imposed on the Target or its Subsidiaries as a
transferee or successor, by contract or pursuant to any law, rule or regulation,
which Taxes relate to an event or transaction occurring before the Closing Date;
and (v) any claims listed on Section 2.9 of the Target Disclosure Schedule. For
purposes of this indemnity, the representations, warranties and covenants of
Target and the Shareholders shall not be deemed to be qualified by any reference
to materiality, except for Section 2.30 of this Agreement.

9.2. Indemnification by the Purchaser. The Purchaser shall indemnify, hold
harmless, and defend the Shareholders from and against all Losses incurred or
suffered by the Shareholders by reason of (i) any breach by the Purchaser or any
inaccuracy of any of the representations and warranties or covenants made by the
Purchaser contained in this Agreement or for the breach by the Purchaser of any
other terms of this Agreement or (ii) any liabilities or obligations of, or
claims against, the Shareholders which arise from or relate to the ownership of
Target on or after the Closing Date, or the operation of Target’s business on or
after the Closing Date, or (ii) any liability or obligation of Target set forth
or properly reserved for in the Final Working Capital Statement. For purposes of
this indemnity, the representations, warranties and covenants of the Purchaser
shall not be deemed to be qualified by any reference to materiality.

9.3. Notice of Indemnification Claim. Any party which may be entitled to
indemnification under this Agreement (the “Indemnitee”) shall give notice to the
indemnifying party (the “Indemnifying Party”) following receipt of notice of any
fact that would give rise to a claim for indemnification hereunder. In the event
the indemnity claim is based upon a liability or potential liability to a third
party (including any taxing authority), then (a) the Indemnifying Party shall
have the right, at its expense, to assume and direct the investigation and
defense of the claim, action or proceeding, including selection of counsel,
provided any counsel selected by the Indemnifying Party is reasonably
satisfactory to the Indemnitee and (b) the Indemnifying Party shall be entitled
to any and all rights the Indemnitee may have against such third party with
respect to the subject matter of that claim, by subrogation or otherwise. If the
Indemnifying Party so assumes the defense of the claim, the Indemnitee shall not
be entitled to indemnification for separate counsel retained by Indemnitee with
respect to that claim. No settlement for monetary

 

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payment to a third party which is or may be the subject of indemnity under this
Agreement shall be made without the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld), and the Indemnifying Party shall
have the right to a direct proceedings with respect to such settlement.

9.4. Failure to Give Notice. Failure by an Indemnitee to give prompt notice to
the Indemnifying Party specified in Section 9.3 above shall not release, waive,
or otherwise affect the Indemnifying Party’s obligation to indemnify hereunder
except to the extent that the Indemnifying Party can demonstrate actual loss and
prejudice as a result of such failure.

9.5. Limitations. Notwithstanding anything herein to the contrary, the right of
the Indemnified Parties and the Shareholders to indemnification hereunder is
limited as follows:

(a) The Indemnified Parties shall not have any right to indemnification until
aggregate Losses exceed $200,000 (the “Basket”), and in such event, the
Indemnified Parties will be entitled to indemnification from the first dollar of
Losses with respect to such claims.

(b) The indemnification obligations of Shareholders hereunder shall be limited
in the aggregate to Six Million Dollars ($6,000,000), plus twenty percent
(20%) of any amounts payable pursuant to Section 1.5. (the “Cap”).

(c) The limitations set forth in Sections 9.5(a) and (b) shall not apply to any
Loss arising out of a breach of a representation, warranty or covenant of Target
or any of the Shareholders contained in Sections 1.6, 1.7, 2.1, 2.3, 2.4, claims
listed on Section 2.9 of the Target Disclosure Schedule, 2.14 (provided,
however, that the Basket shall apply to any Loss arising out of a breach of
Section 2.14), 3 and any Loss arising from fraud or a knowing misrepresentation
or intentional breach of this Agreement by any such party. In connection with
any Loss arising out of a breach of Section 2.14 of the Target Disclosure
Schedule, the Shareholders’ liability shall be limited to Five Million Dollars
($5,000,000).

(d) No party shall be liable hereunder, and the term “Losses” shall not include,
punitive damages or damages of a remote or speculative nature, it being
understood that the foregoing limitations shall not be applicable to Losses
sought or recovered by a third party. No claim for indemnification may be made
hereunder if the Indemnitee has not given notice of such claim within the
applicable time period for that claim as set forth in Section 10.1 hereto.

9.6. Other Limitations.

(a) An Indemnitee shall use commercially reasonable efforts to obtain under any
applicable insurance policies any insurance proceeds in respect of any Losses
for which the Indemnitee seeks indemnification under this Section 9. The amount
of any indemnified Losses hereunder shall be determined net of the amount, if
any, of the recovery

 

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actually received with respect to such indemnified Losses under any such
insurance or similar policy less any out-of-pocket collection costs. In the
event that an insurance recovery is received by an Indemnitee with respect to
any Losses for which any Indemnitee has previously been indemnified and paid by
the Indemnifying Party pursuant hereto, then such Indemnitee shall promptly make
a refund to the Indemnifying Party in an amount equal to the lesser of (x) the
total amount of such insurance recovery (net of any reasonable out-of-pocket
collection costs) and (y) the amount previously paid by the Indemnifying Party
to the Indemnitee as indemnification for such Losses.

(b) The amount of any Losses for which indemnification is provided pursuant to
this Agreement shall be determined net of any reserves, liabilities, accruals or
other provisions for such Losses taken into account in determining the Final
Working Capital Statement.

(c) The Indemnitee shall use commercially reasonable efforts to mitigate any
Losses that could reasonably be expected to give rise to a claim for
indemnification under this Agreement with respect to those Losses.

9.7. Limitations on Environmental Indemnity.

(a) In addition to other limitations contained in this Section 9, the following
terms and conditions apply to Shareholders’ indemnification obligations for any
breach of the representations and warranties in Section 2.14 (“Indemnified
Environmental Losses”):

(i) The Shareholders shall have no indemnification obligations with respect to
any Indemnified Environmental Losses to the extent resulting from willful
misconduct or negligence by the Indemnitee; and

(ii) The Shareholders shall have no indemnification obligations with respect to
any remediation or cleanup that is otherwise an Indemnified Environmental Loss
to the extent that such remediation or cleanup undertaken by the Purchaser
exceeds the standard for such remediation or cleanup required under applicable
Environmental Law.

(b) With respect to the premises owned and/or occupied by the Target or any of
its predecessors prior to the Closing Date, the Shareholders shall control the
defense or negotiation (including without limitation, any investigatory,
response and remedial actions) of any litigation involving any claim for which
indemnification with respect to Indemnified Environmental Losses (“Environmental
Matter”), including the compromise or settlement of the Environmental Matter
with counsel and environmental consultants selected by the Shareholders and
reasonably acceptable to Purchaser. No compromise or settlement in respect of
such Environmental Matter may be reached by the Shareholders without the
Purchaser’s written consent (which consent shall not be unreasonably withheld,
conditioned or delayed).

The Purchaser shall control any remediation or cleanup with respect to any
Environmental Matter, provided that such remediation or cleanup is conducted in
accordance

 

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with applicable legal standards and in a manner so as to not unreasonably
increase any amounts due under the indemnification obligation of the
Shareholders.

The Purchaser, Target and the Shareholders agree to take all reasonable measures
to minimize any Indemnified Environmental Losses and cooperate with the other
party in their efforts with respect thereof. Purchaser agrees that neither it
nor the Target post-Closing shall undertake environmental investigations or
testing with respect to any real property occupied or formerly occupied by the
Target prior to the date of Closing unless all of the following are met:
(i) Purchaser gives the Shareholders at least two business days prior notice of
such testing or investigation unless such testing or investigation is required
immediately by applicable law, any governmental authority or by reason of an
immediate threat to human health or the environment (in which event notice to
the Shareholders shall be by telephone or similar means at the earliest possible
opportunity and followed by written notice); (ii) such investigation or testing
is required by and conducted in accordance with applicable law; and (iii) the
results of all testing and investigation shall be made available to the
Shareholders. Notwithstanding the forgoing, after the Closing, Purchaser and/or
the Target may undertake environmental investigations or testing with respect to
any real property occupied or formerly occupied by the Target prior to the
Closing Date that is (a) in connection with the possible sale of the business
(through an asset sale, sale of stock, merger, or otherwise), or the expansion,
modification or capital improvement undertaken on any Parcel, (b) in connection
with or any financing or refinancing for Purchaser, the Target or any of their
Affiliates, or (c) in response to a condition, event or circumstance (not
currently known) in, on or near such real property that makes it reasonably
necessary or advisable to conduct such an investigation provided that Purchaser
complies with clauses (i) and (iii) of the immediately preceding sentence For
the purpose of clarification, this Section 9.7(b) shall not apply to any
property owned or leased by Purchaser or the Target after the Closing which is
not currently owned or leased by the Target as of the Closing Date.

Notwithstanding any other provision of this Agreement, any obligation of the
Shareholders to indemnify with respect to Indemnified Environmental Losses shall
be for the benefit of only the Indemnitees associated with Purchaser and no
other person.

(c) The Purchaser agrees to maintain Target’s environmental insurance that is
currently in place for a period of five (5) years after Closing so long as such
insurance continues to be available at approximately the same cost as such
current policy.

9.8. Escrow. In the event an Indemnified Party associated with the Purchaser is
entitled pursuant to the provisions of this Agreement to receive any
indemnification payment under this Agreement, such Indemnified Party shall first
recover all or any portion of such indemnification amount to which the Purchaser
is entitled from the Escrow Fund in accordance with the terms of the Escrow
Agreement. Only after the Escrow Fund has been exhausted shall such Party be
entitled to seek recovery from the Shareholders.

9.9. Exclusivity for Breach. Except in the case of fraud or a knowing breach of
any representation or warranty by a party, the indemnification provided for in
this Section 9 shall be the sole and exclusive remedy for all matters arising
under or in connection with this

 

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Agreement for any inaccuracy or breach of any representation, warranty, covenant
or agreement set forth herein or made pursuant hereto. Notwithstanding the
foregoing, nothing herein shall preclude any party from seeking any rights or
remedies under any other agreements executed in connection herewith or from
seeking injunctive or other equitable relief under Section 6.3 hereof as may be
reasonably necessary to protect that party’s rights hereunder.

9.10. Right of Set Off Against Additional Purchase Price. Subject to the
limitations of this Section 9, the Purchaser shall be entitled to set off any
amounts that it is entitled to receive pursuant to this Section 9 against the
payments due and owing to the Shareholders pursuant to Section 1.4 and/or 1.5
hereof if the Escrow Fund is exhausted.

SECTION TEN

10. General Provisions.

10.1. Survival of Representations and Warranties. The representations and
warranties set forth in Sections 1.6, 2.1, 2.3, 2.4, 4.1 and 4.2 of this
Agreement and all covenants shall survive the Closing Date for a period equal to
the duration of the statute of limitations applying to contracts entered into in
the State of New York. The representations and warranties set forth in
Section 2.14 of this Agreement shall survive for a period of five (5) years. The
representations and warranties set forth in Section 3.2 and the covenants set
forth in Sections 1.7 and 3.3 shall survive the Closing Date until thirty
(30) days following the expiration of the statute of limitations (giving effect
to any waiver, mitigation or extension thereof) applicable to the Taxes covered
by such representations, warranties and covenants. The balance of the
representations and warranties set forth in this Agreement shall survive the
Closing Date for a period of eighteen (18) months.

10.2. Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service or confirmed facsimile, or 48 hours
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party’s address or facsimile
number as set forth below, or as subsequently modified by written notice,

if to the Purchaser, to:

Quaker Chemical Corporation

One Quaker Park

901 Hector Street

Conshohocken, PA 19428

Attention: Craig Bush

Facsimile: (610) 832-4494

with a copy to:

 

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Quaker Chemical Corporation

One Quaker Park

901 Hector Street

Conshohocken, PA 19428

Attention: Robert Traub, Esquire

Facsimile: (610) 832-4494

Fox, Rothschild LLP

2000 Market Street, Twentieth Floor

Philadelphia, PA 19103-3291

Attention: Kevin B. Scott, Esquire

Facsimile: (215) 299-2150

if to Target, or the Shareholders, to:

Ronald Krol, as Shareholders’ Representative

1980 Hall Road

Elma, NY 14059

with a copy to:

Jaeckle Fleischmann & Mugel, LLP

12 Fountain Plaza, Suite 800

Buffalo, New York 14202

Attention: Peter G. Klein, Esquire

                  Jessica E. Lankford, Esquire

Facsimile: (716) 856-0432

with a copy to:

Drew & Drew, LLP

159 Linwood Avenue

Buffalo NY 14209

Attention: Dean M. Drew, Esquire

Facsimile: (716) 884-3707

10.3. Interpretation. When a reference is made in this Agreement to Exhibits or
Schedules, such reference shall be to an Exhibit or Schedule to this Agreement
unless otherwise indicated. The words “include,” “includes” and “including” when
used herein shall be deemed in each case to be followed by the words “without
limitation.” The phrase “made available” in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases “the date of this
Agreement,” “the date hereof,”

 

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and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to December 31, 2010. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. The phrase “to
Target’s knowledge” and terms of similar import shall be deemed to refer to the
knowledge of either Krol or Caputi.

10.4. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

10.5. Entire Agreement; Nonassignability; Parties in Interest. This Agreement
and the documents and instruments and other agreements specifically referred to
herein or delivered pursuant hereto, including the Exhibits, the Schedules,
including the Target Disclosure Schedule and the Purchaser Disclosure Schedule
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, including but not limited to the Letter of Intent among the parties
dated November 15, 2010, and shall survive any termination of this Agreement or
the Closing, in accordance with its terms; (b) are not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be assigned
by operation of law or otherwise except as otherwise specifically provided.
Notwithstanding the foregoing, the Purchaser may assign this Agreement to an
Affiliate provided no such assignment shall relieve Purchaser of its obligations
hereunder.

10.6. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of this Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of this
Agreement shall be enforceable in accordance with its terms.

10.7. Remedies Cumulative. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

10.8. Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of law.

 

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10.9. Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY
RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN,
AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH
WAIVER.

10.10. Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

10.11. Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 10.11 shall be binding upon the parties and their respective successors
and assigns.

[Remainder of Page Intentionally Left Blank. Signature Page Follows.]

 

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IN WITNESS WHEREOF, Target, the Purchaser and the Shareholders have executed
this Agreement as of the date first written above.

 

TARGET: SUMMIT LUBRICANTS INC. By:   /s/ Ronald Krol Name:   Ronald Krol Title:
  President THE PURCHASER: QUAKER CHEMICAL CORPORATION By:   /s/ Mark A.
Featherstone Name:   Mark A. Featherstone Title:   President

 

SHAREHOLDERS: /s/ Ronald Krol Ronald Krol /s/ Brian Caputi Brian Caputi /s/ Dale
M. Perry Dale M. Perry /s/ Anthony H. Musilli Anthony Musilli

 

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