Exhibit 10.1

EXECUTION COPY

STOCK PURCHASE AGREEMENT

by and among

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION,

STANDARD CAR TRUCK COMPANY

and

ROBCLIF, INC.

Dated September 12, 2008

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TABLE OF CONTENTS

(continued)

 

          Page

ARTICLE I

   DEFINITIONS    1

ARTICLE II

   TRANSACTIONS; PURCHASE PRICE    10

2.1

   Sale of Shares and Durox Shares    10

2.2

   Purchase Price    10

2.3

   Payment of Closing Payment and Escrow Amount    11

2.4

   Tax Treatment of Sale of Shares and Durox Shares    11

2.5

   Allocation of Purchase Price    11

ARTICLE III

   ADJUSTMENTS TO PURCHASE PRICE    11

3.1

   Pre-Closing Calculation    11

3.2

   Post-Closing Calculation    11

3.3

   Dispute Notice    12

3.4

   Adjustments    12

3.5

   Payment    13

ARTICLE IV

   REPRESENTATIONS AND WARRANTIES OF THE COMPANY    13

4.1

   Corporate Existence    13

4.2

   Corporate Authority    13

4.3

   Absence of Conflicts    14

4.4

   Capitalization    14

4.5

   Subsidiaries    14

4.6

   Governmental Approvals; Consents    14

4.7

   Financial Statements    15

4.8

   Absence of Changes    15

4.9

   Real Property    16

4.10

   Contracts    16

4.11

   Litigation; Orders    17

4.12

   Intellectual Property Rights    18

4.13

   Tax Matters    18

4.14

   Labor Matters    19

4.15

   Employee Benefit Plans; Employees    20

4.16

   Permits; Compliance with Laws    21

4.17

   Assets, Inventories and Receivables    22

4.18

   Environmental Matters    22

 

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TABLE OF CONTENTS

(continued)

 

          Page

4.19

   Insurance    23

4.20

   Absence of Undisclosed Liabilities    23

4.21

   Related Party Transactions    23

4.22

   Product Warranties    24

4.23

   Product Liability    24

4.24

   Finders; Brokers    24

ARTICLE V

   REPRESENTATIONS AND WARRANTIES OF SELLER    25

5.1

   Corporate Existence    25

5.2

   Corporate Authority and Ownership    25

5.3

   Absence of Conflicts    25

5.4

   Governmental Approvals; Consents    25

ARTICLE VI

   REPRESENTATIONS AND WARRANTIES OF THE BUYING PARTIES    26

6.1

   Corporate Existence    26

6.2

   Corporate Authority    26

6.3

   Absence of Conflicts    26

6.4

   Governmental Approvals; Consents    26

6.5

   Finders; Brokers    27

6.6

   Purchase for Investment    27

6.7

   Financing    27

6.8

   Litigation    27

6.9

   Independent Investigation    27

ARTICLE VII

   AGREEMENTS OF ALL PARTIES    28

7.1

   Operation of the Business    28

7.2

   Mutual Cooperation; No Inconsistent Action    29

7.3

   Public Disclosures    31

7.4

   Access to Records and Personnel    31

7.5

   Employee Relations and Benefits    33

7.6

   Update to Disclosure    34

7.7

   Director and Officer Indemnification.    35

7.8

   Tax Matters    36

7.9

   No Negotiation    38

 

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TABLE OF CONTENTS

(continued)

 

          Page

7.10

   Divestiture    38

ARTICLE VIII

   CONDITIONS    39

8.1

   Conditions to the Obligations of the Buying Parties    39

8.2

   Conditions to the Obligations of Seller    39

8.3

   Conditions to Obligations of Buying Parties and Seller    40

8.4

   Frustration of Closing Conditions    40

ARTICLE IX

   CLOSING    40

9.1

   Closing Date    40

9.2

   The Buying Parties’ Deliveries to Seller    41

9.3

   The Buying Parties’ Delivery to Escrow Agent    41

9.4

   Seller’s Deliveries    41

ARTICLE X

   INDEMNIFICATION    42

10.1

   Agreement to Indemnify    42

10.2

   Survival of Representations and Warranties    44

10.3

   Notice of Claims for Indemnification    45

10.4

   Defense of Claims    45

10.5

   Settlement or Compromise    46

10.6

   Subrogation and Mitigation    46

10.7

   Environmental Actions    46

10.8

   Indemnification Calculations    48

10.9

   Tax Treatment    48

10.10

   Escrow Amount    48

10.11

   Asbestos Losses, Designated Losses and Designated Environmental Losses    50

10.12

   Exclusive Remedy    51

ARTICLE XI

   TERMINATION    51

11.1

   Termination Events    51

11.2

   Effect of Termination    52

ARTICLE XII

   GUARANTEE    52

12.1

   Buyer Guarantee    52

12.2

   Joint and Several Obligations    53

ARTICLE XIII

   MISCELLANEOUS AGREEMENTS OF THE PARTIES    53

 

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TABLE OF CONTENTS

(continued)

 

          Page

13.1

   Notices    53

13.2

   Transfer Taxes    54

13.3

   Expenses    54

13.4

   Non-Assignability    54

13.5

   Amendment; Waiver    54

13.6

   Third Parties    55

13.7

   Currency    55

13.8

   Governing Law; Submission to Jurisdiction; Waivers    55

13.9

   Specific Performance    55

13.10

   Entire Agreement    56

13.11

   Interpretation and Rules of Construction    56

13.12

   Severability    56

13.13

   Disclosure Letter    57

13.14

   Language    57

13.15

   Counterparts    57

 

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STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT, dated this 12th day of September, 2008, is by and
among Westinghouse Air Brake Technologies Corporation, a Delaware corporation
(“Buyer”), Standard Car Truck Company, a Delaware corporation (the “Company”),
and Robclif, Inc., a Delaware corporation (“Seller”). Buyer, the Company and
Seller may be referred to in this Agreement individually as a “Party” or
collectively as “Parties.” Capitalized terms used herein shall have the meanings
set forth in Article I unless otherwise defined herein.

WHEREAS, the Company owns 100% of the Durox Shares and the Company desires to
sell to RFPC Holding Corp., a Delaware corporation and Subsidiary of Buyer
(“RFPC”), and RFPC desires to purchase from the Company, all, but not less than
all, of the Durox Shares upon the terms and subject to the conditions set forth
in this Agreement. As a result of the transactions contemplated hereby, RFPC
will acquire all of the Durox Shares, and Seller, as the parent of the Company,
will receive the consideration described in Article II of this Agreement; and

WHEREAS, Seller owns 100% of the Shares and Seller desires to sell to Buyer, and
Buyer desires to purchase from Seller, all, but not less than all, of the Shares
upon the terms and subject to the conditions set forth in this Agreement. As a
result of the transactions contemplated hereby, Buyer will acquire all of the
Shares, and Seller will receive the consideration described in Article II of
this Agreement.

NOW, THEREFORE, in consideration of the premises, promises and covenants set
forth herein, and intending to be legally bound hereby, the Parties agree as
follows:

ARTICLE I

DEFINITIONS

Defined terms used in this Agreement shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person that controls,
is controlled by, or is under common control with such Person. The term
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, by ownership
of securities, contract, credit arrangement or otherwise.

“Agreement” means this Stock Purchase Agreement, including all Exhibits,
Schedules, the Disclosure Letter and the Buyer Disclosure Letter, as each may be
amended, modified or supplemented from time to time in accordance with its terms
or this Agreement.

“Allocation” has the meaning set forth in Section 2.4.

“Anchor Obligations” has the meaning set forth in Section 7.10.

“Ancillary Agreements” has the meaning set forth in Section 13.13.

“Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the
Federal Trade Commission Act and all other applicable Laws issued by any
Governmental Authority that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.

 

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“Asbestos Claims” means (a) any claims against the Company or any SCT Subsidiary
arising out of or relating to the use, sale, distribution or handling of
asbestos or any asbestos containing product prior to the Closing Date by the
Company, any SCT Subsidiary, any of their Affiliates or any of their
predecessors or successors (including products liability claims or premises
liability claims) and (b) any claims described on Exhibit I.

“Asbestos Loss” means cash paid by the Company, any SCT Subsidiary or Buying
Parties to an unaffiliated third party of Buying Parties with respect to an
Asbestos Claim and the reasonable out-of-pocket costs, fees and expenses
incurred in defending such Asbestos Claim.

“Asbestos Protocol” means the Company’s and the SCT Subsidiaries’ historical
practice, as of the Closing Date, of managing, communicating and reporting the
Asbestos Claims as set forth on Exhibit F.

“Benefit Plans” means all material employee benefit plans (as defined in Section
3.3 of ERISA), pension, retirement savings, stock purchase, stock option,
welfare, severance, employment, change-in-control, vacation, fringe benefit,
collective bargaining, bonus, incentive and deferred compensation plans and
agreements maintained on or before the Closing Date by the Company or any of the
SCT Subsidiaries or to which on or before the Closing Date the Company or any of
the SCT Subsidiaries contributes or is a party or is bound or under which it may
have liability.

“Books and Records” has the meaning set forth in Section 7.4(b).

“Brake Shoe Business” means the business conducted by Anchor Brake Shoe Company,
including the sintered brake shoe business.

“Business” means the business of designing, manufacturing, distributing,
marketing and selling railway-related components, parts and products to the
railroad freight car and locomotive markets as conducted by the Company and the
SCT Subsidiaries on the date hereof, other than the Brake Shoe Business.

“Business Day” means any day, excluding Saturday, Sunday and any other day on
which commercial banks in Chicago, Illinois are authorized or required by Law to
close.

“Buyer” has the meaning set forth in the introductory paragraph of this
Agreement.

“Buyer Disclosure Letter” means the letter delivered by the Buying Parties to
Seller in a letter executed by the Buying Parties dated the date hereof.

“Buyer Indemnitees” has the meaning set forth in Section 10.1(a).

“Buyer Material Adverse Effect” means a material adverse effect on the ability
of any of the Buying Parties to consummate the Transactions and perform all of
their obligations hereunder.

 

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“Buying Parties” means the Buyer, RFPC and the Designated Buyer, if any.

“Cash” means all cash and cash equivalents of the Company and SCT Subsidiaries.

“Clayton Act” means the Clayton Act of 1914, as amended, and the rules and
regulations promulgated thereunder, and any successor to such statute, rules or
regulations.

“Closing” has the meaning set forth in Section 9.1.

“Closing Date” has the meaning set forth in Section 9.1.

“Closing Payment” means $300,000,000 less (i) the Preliminary Net Funded Debt,
(ii) the Preliminary Customer Deposits and (iii) the Escrow Amount.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder, and any successor to such statute, rules or
regulations.

“Company” has the meaning set forth in the introductory paragraph of this
Agreement.

“Company Intellectual Property” has the meaning set forth in Section 4.12(a).

“Company’s Auditors” means Grant Thornton LLP.

“Confidentiality Letter” means the letter agreement dated April 4, 2008 between
the Company and Buyer.

“Contract” means any contract or other legally binding agreement, whether
written or oral.

“Customer Deposits” means the cash deposit by Companhia Vale Do Rio Doce.

“Deemed Asset Sale” has the meaning set forth in Section 2.4.

“Designated Buyer” shall be a 100% wholly-owned Subsidiary of Buyer designated
by Buyer to purchase the Shares by Buyer providing prior written notice to
Seller at least ten (10) Business Days prior to the Closing Date.

“Designated Claims” means the claims specifically described on Exhibit D
attached hereto.

“Disclosed Contracts” has the meaning set forth in Section 4.10(a).

“Designated Environmental Conditions” means the conditions specifically
described on Exhibit E attached hereto.

“Designated Environmental Conditions Protocol” means the Company’s and the SCT
Subsidiaries’ historical practice, as of the Closing Date, of managing
communicating and reporting the Designated Environmental Conditions as set forth
on Exhibit G.

 

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“Designated Environmental Losses” means cash paid by the Buying Parties after
the Closing Date as a result of any Third Party Claim with respect to any
Designated Environmental Conditions.

“Designated Losses” means cash paid by the Company, any SCT Subsidiary or Buying
Parties to an unaffiliated third party of Buying Parties with respect to a
Designated Claim and the reasonable out-of-pocket costs, fees and expenses
incurred in defending such Designated Claim.

“Disclosure Letter” means the letter delivered by Seller to the Buying Parties
dated the date hereof.

“Dispute Notice” has the meaning set forth in Section 3.3.

“Divestiture” means the sale of Anchor Brake Shoe Company and the Brake Shoe
Business.

“Divestiture Adjustment” means the adjustment to the Purchase Price, if any, as
set forth on Exhibit C attached hereto.

“Durox” means Durox Company, an Ohio corporation and a wholly-owned Subsidiary
of the Company.

“Durox Shares” means all of the issued and outstanding shares of capital stock
of Durox.

“Employees” has the meaning set forth in Section 4.15(a)

“Environmental Law” means all federal, state and local statutes and regulations
having the force of law and as in force on the date of this Agreement and
concerning pollution or protection of the environment, including all those
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, investigation, remediation,
remedial action, or cleanup of any Hazardous Substances.

“Environmental Work” has the meaning set forth in Section 10.7(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder, and any successor to such
statute, rules or regulations.

“Escrow Agent” means Manufacturers and Traders Trust Company, a New York
commercial bank with trust powers.

“Escrow Agreement” means the Escrow Agreement in the form attached hereto as
Attachment I.

“Escrow Amount” means an amount equal to Twenty-Five Million Dollars
($25,000,000).

 

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“Escrow Fund” has the meaning set forth in Section 10.10(a).

“Exchange Rate” means the applicable exchange rate for converting the relevant
foreign currency into U.S. currency that was used to calculate the Preliminary
Working Capital.

“Executive Incentive Plan” means the Standard Car Truck Company and Affiliates
Executive Incentive Compensation Plan, as amended and restated effective as of
January 1, 2005.

“Federal Trade Commission Act” means the Federal Trade Commission Act of 1914,
as amended, and the rules and regulations promulgated thereunder, and any
successor to such statute, rules or regulations.

“Final Closing Balance Sheet” has the meaning set forth in Section 3.2.

“Final Distribution Date” has the meaning set forth in Section 10.10(b)(iii).

“Financial Statements” has the meaning set forth in Section 4.7(a).

“First Distribution Date” has the meaning set forth in Section 10.10(b)(i).

“Funded Debt” means all interest rate swap agreements and debt for borrowed
money of the Company and the SCT Subsidiaries owed to any bank or other
financial institution as of the Closing Date, excluding trade accounts payable
of the Company and the SCT Subsidiaries.

“GAAP” means United States generally accepted accounting principles.

“Governmental Authority” means any foreign, federal, state, provincial or local
governmental or regulatory commission, board, bureau, agency, court or
regulatory or administrative body.

“Hazardous Substances” means any chemical, material or substance whether solid,
liquid or gaseous, designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance by any applicable
Environmental Law, including any petroleum, petroleum products or other
hydrocarbon products, by-products, derivatives, additives or fractions
(including used or spent products), asbestos or asbestos containing materials,
polychlorinated biphenyls, or radioactive materials.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder, and any successor
to such statute, rules or regulations.

“Indemnifying Party” has the meaning set forth in Section 10.3.

“Indemnitees” has the meaning set forth in Section 10.1(c).

“Independent Auditor” has the meaning set forth in Section 3.3.

 

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“Intellectual Property” means any of the following intellectual property:
(a) patents and patent applications, (b) trademarks, service marks, trade names,
trade dress and domain names, together with the goodwill associated exclusively
therewith, (c) copyrights, including copyrights in computer software,
(d) confidential and proprietary information, including Trade Secrets and
(e) registrations and applications for registration of the foregoing.

“Interim Loss” means cash paid at any time by or on behalf of any Buyer
Indemnitee to an unaffiliated third party of any Buyer Indemnitee and the
reasonable out-of-pocket costs, fees and expenses incurred in defending any
related Third Party Claim.

“Knowledge”, when used to qualify any representation or warranty, means that
such Party has no actual knowledge after reasonable inquiry that such
representation or warranty is not true and correct to the same extent as
provided in the applicable representation or warranty. For the purpose of this
definition, the “actual knowledge” of the Company shall mean the actual present
awareness, upon reasonable inquiry, of Rick Mathes, Dan Schroeder, Mark Pace,
David Watson and Mickey Korzeniowski and the “actual knowledge” of a Buying
Party for purposes of Article VI and Section 7.2(e) shall mean the actual
present awareness, upon reasonable inquiry, of Mark Cox, David M. Seitz and Pat
Dugan.

“Law” means any foreign, federal, state or local law, statute, ordinance,
regulation, rule, constitution, code, order or treaty of any Governmental
Authority.

“Lease” has the meaning set forth in Section 4.9(b).

“Leased Real Property” has the meaning set forth in Section 4.9(b).

“Liens” mean all liens, charges, security interests, pledges, mortgages or other
material encumbrances (other than restrictions on transfer generally arising
under the Securities Act or other applicable securities Laws).

“Loss” means any liability, expense (including reasonable attorney’s fees),
loss, damage, or obligation, including Asbestos Losses, Interim Losses,
Designated Environmental Losses and Designated Losses.

“Management” means the members of management of the Company who are entitled to
receive payments under the Management Incentive Program.

“Management Escrow Amount” means that portion of the Escrow Amount to be
contributed by Management, which amount will be provided to Buyer three (3) days
prior to the Closing.

“Management Incentive Compensation Program” means the Standard Car Truck Company
Senior Management Incentive Compensation Program dated October 24, 2006.

“Management Incentive Payment” means the aggregate amount to be paid to
Management pursuant to the Management Incentive Compensation Program less the
Management Escrow Amount.

 

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“Material Adverse Effect” means a material adverse effect on (a) the results of
operations or financial condition of the Company and the SCT Subsidiaries taken
as a whole, after taking into effect any insurance recoveries; provided,
however, that none of the following shall be deemed in and of themselves, either
alone or in combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Material
Adverse Effect: (i) any failure by the Company and the SCT Subsidiaries to meet
internal projections or forecasts or revenue or earnings predictions for any
period ending (or for which revenues or earnings are released) on or after the
date of this Agreement, (ii) changes, effects, events, occurrences or
circumstances that generally affect the United States or the global economy or
the securities, financial capital or credit markets in the United States or
elsewhere or the industries in which the Company and the SCT Subsidiaries
operate, (iii) general economic, financial or securities market conditions in
the United States or elsewhere, (iv) the execution, delivery or announcement of
this Agreement or the announcement or pendency of the Transactions (including
any cancellations of or delays in customer orders, any reductions in sales, any
disruption in supplier, distributor, partner or similar relationships or any
loss of employees), (v) changes in GAAP or legal requirements applicable to the
Company and the SCT Subsidiaries, (vi) changes in Laws or interpretations
thereof by a Governmental Authority, (vii) changes, effects or events caused by
or resulting from the taking of any action required by this Agreement or
approved by Buyer, (viii) any actions required to be taken under this Agreement
to obtain any approval or authorization under any Antitrust Laws for the
consummation of the Transactions, (ix) national or international political or
social conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, any
outbreak or material escalation of hostilities in which the United States is
involved or the occurrence of any military or any terrorist attack upon the
United States, or any of its territories, possessions or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States or directed against United States’ facilities or citizens wherever
located or (x) as described on Exhibit H; or (b) the ability of the Company or
Seller to consummate the Transactions.

“Maximum Amount” has the meaning set forth in Section 10.1(b)(ii).

“Media” has the meaning set forth in Section 10.7(a).

“Minimum Amount” has the meaning set forth in Section 10.1(b)(i).

“Multiple Employer Plan” has the meaning set forth in Section 4.15(a).

“Net Funded Debt” means the amount equal to the Funded Debt less Cash, in each
case as of the Closing Date.

“Owned Real Property” has the meaning set forth in Section 4.9(a).

“Party” or “Parties” has the meaning set forth in the introductory paragraph of
this Agreement.

“Permits” means licenses, permits or franchises issued by any Governmental
Authority and other certificates, authorizations and approvals of any
Governmental Authority.

 

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“Permitted Liens” means all (a) Liens set forth on Section 1.1 of the Disclosure
Letter; (b) Liens disclosed in the Financial Statements; (c) Liens for Taxes,
assessments and other governmental charges not yet due and payable or, if due,
(i) not delinquent or (ii) being contested in good faith by appropriate
proceedings described on Section 4.13(d) of the Disclosure Letter;
(d) materialmen’s, mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’
or other like Liens arising or incurred in the ordinary course of business;
(e) Liens associated with original purchase price conditional sales contracts
and equipment leases with third parties entered into in the ordinary course of
business; and (f) with respect to any parcel of the Real Property:
(i) easements, licenses, covenants, rights-of-way and other similar
restrictions, including any other agreements or restrictions which would be
shown by a current title report or other similar report or listing, (ii) any
conditions that may be shown by a current survey or physical inspection of the
Real Property and (iii) zoning, building and other similar restrictions, so long
as none of (i), (ii) or (iii) prevent the use of such Real Property
substantially as currently used.

“Permitted Transactions” has the meaning set forth in Section 7.1.

“Person” means any individual, firm, partnership, association, trust,
corporation, joint venture, unincorporated organization, limited liability
company, Governmental Authority or other entity.

“Post-Signing Supplemental Information” has the meaning set forth in
Section 7.6(a).

“Post-Signing Supplemental Information Losses” has the meaning set forth in
Section 7.6(c).

“Pre-Signing Supplemental Information” has the meaning set forth in
Section 7.6(a).

“Preliminary Closing Balance Sheet” has the meaning set forth in Section 3.1.

“Preliminary Customer Deposits” means the good faith estimate of Customer
Deposits as of the Closing Date as determined in accordance with Article III.

“Preliminary Net Funded Debt” means the good faith estimate of the Net Funded
Debt as of the Closing Date as determined in accordance with Article III.

“Proceeding” means any action, arbitration, litigation, suit or formal
investigation (whether civil, criminal, administrative, judicial or
investigative) commenced, brought, conducted or heard by or before any
Governmental Authority or arbitrator.

“Product” has the meaning set forth in Section 4.23(a).

“Proper Courts” has the meaning set forth in Section 13.8.

“Purchase Price” has the meaning set forth in Section 2.2.

“QSub Election” has the meaning set forth in Section 4.13(f).

“Qualified Claims” has the meaning set forth in Section 10.1(b)(i).

 

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“Real Property” has the meaning set forth in Section 4.9(d).

“Recalls” has the meaning set forth in Section 4.23(a).

“Release” means any spilling, leaking, emitting, discharging, disposing,
injecting, depositing, escaping, leaching, dumping, or other releasing into the
environment, whether intentional or unintentional.

“Restrictions” means any transfer restrictions, proxies, voting agreements,
agreements to sell or purchase and similar restrictions (other than restrictions
on transfer generally arising under the Securities Act or other applicable
securities Laws).

“RFPC” has the meaning set forth in the recitals of this Agreement.

“S Corporation Parent” has the meaning set forth in Section 4.13(f).

“S Election” has the meaning set forth in Section 4.13(f).

“SCT Subsidiary” or SCT Subsidiaries” means any or all Standard Research and
Design Corporation, SanCasT, Inc., Durox Company, Standard Car Truck-Asia, Inc.,
Barber Truck International, Inc., Standard Car Truck of Canada, Inc., SCT Europe
Ltd., SCT Technology, LLC, Barber Tian Rui Railway Supply, LLC and Barber Brake
Beam LLC.

“Second Distribution Date” has the meaning set forth in Section 10.10(b)(ii).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and any successor to such statute, rules or
regulations.

“Seller” has the meaning set forth in the introductory paragraph of this
Agreement.

“Seller Indemnitees” has the meaning set forth in Section 10.1(c).

“Seller Representative” shall mean H.S. Russell, or such other person as
designated, from time to time, by Seller in writing to Buyer.

“Shares” means all of the issued and outstanding shares of capital stock of the
Company.

“Sherman Act” means the Sherman Act of 1890, as amended, and the rules and
regulations promulgated thereunder, and any successor to such statute, rules or
regulations.

“Straddle Period” has the meaning set forth in Section 7.8(b).

“Subsidiary” or “Subsidiaries” of any Person means any corporation, partnership,
limited liability company or other legal entity in which such Person (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, 25% or more of the stock or other equity or ownership interests.

“Taxes” means any federal, state, provincial, local, territorial and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, real estate, excise, value added, estimated, stamp, withholding and
any other taxes, duties or assessments, together with all interest, penalties
and additions imposed with respect to such amounts.

 

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“Tax Returns” means all federal, state, local, provincial and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended tax return relating to Taxes (as they relate to the
Business).

“Termination Date” means December 31, 2008; provided, however, that the Parties
may, by mutual agreement, extend such date if the Closing has not occurred due
to the condition set forth in Section 8.3(b) not being fulfilled.

“Third Party Claim” has the meaning set forth in Section 10.4.

“Trade Secrets” means all secret, proprietary or confidential information of the
Company or any SCT Subsidiary, including any and all information not generally
known to, or ascertainable by, Persons not employed by the Company or any SCT
Subsidiary, the disclosure or knowledge of which would permit those Persons to
derive actual material economic value therefrom or to cause material economic or
material financial harm to the Company or any SCT Subsidiary.

“Transactions” means the transactions contemplated by this Agreement.

“Working Capital” has the meaning set forth in Section 3.2. Any amounts which
are to be included in any calculation of Working Capital which are expressed in
a currency other than U.S. dollars shall be converted into U.S. dollars at the
Exchange Rate.

ARTICLE II

TRANSACTIONS; PURCHASE PRICE

2.1 Sale of Shares and Durox Shares. Subject to the satisfaction or waiver of
the conditions set forth in Article VIII, at the Closing and as of the Closing
Date:

(a) The Company shall sell, convey, assign and transfer to RFPC, and RFPC shall
purchase, acquire and accept from the Company, all of the Company’s right, title
and interest in and to all of the Durox Shares free and clear of any Liens; and

(b) Immediately after the transfer of the Durox Shares to RFPC pursuant to
Section 2.1(a) above, Seller shall sell, convey, assign and transfer to Buyer,
and Buyer shall purchase, acquire and accept from Seller, all of Seller’s right,
title and interest in and to all of the Shares free and clear of any Liens.

2.2 Purchase Price. The aggregate purchase price for the Durox Shares and the
Shares shall be $300,000,000 less (a) Net Funded Debt and (b) Customer Deposits,
subject to adjustment pursuant to Article III below (the “Purchase Price”);
provided, however, that the Purchase Price shall be adjusted by the Divestiture
Adjustment, if any.

 

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2.3 Payment of Closing Payment and Escrow Amount. At the Closing, Buyer shall
(a) pay to Seller in immediately available U.S. federal funds the Closing
Payment and (b) deposit with Escrow Agent in immediately available U.S. federal
funds the Escrow Amount pursuant to the Escrow Agreement.

2.4 Tax Treatment of Sale of Shares and the Durox Shares. Pursuant to Treasury
Regulation Section 1.1361-5(b), the Parties shall treat the purchase and sale of
the Shares and the purchase and sale of the Durox Shares hereunder for U.S.
federal income tax purposes (and, where applicable, for state and local income
tax purposes), as a sale of the assets of the Company and each of the SCT
Subsidiaries for which a QSub election has been made by Seller to Buyer in
exchange for the Purchase Price plus the amount of liabilities as of the Closing
Date of the Company and the SCT Subsidiaries for which a QSub election has been
made (the “Deemed Asset Sale”). Any amounts received by Seller for the purchase
and sale of the Durox Shares shall be deemed received by the Company and
distributed by the Company to Seller immediately prior to the Buyer’s purchase
and sale of the Shares. Consistent with such treatment, Seller will include any
income, gain, loss, deduction or other Tax item resulting from the Deemed Asset
Sale on its Tax Returns in accordance with applicable Law.

2.5 Allocation of Purchase Price. The Purchase Price (as adjusted pursuant to
Article III) plus the amount of liabilities as of the Closing Date of the
Company and each of the SCT Subsidiaries for which a QSub election has been made
shall be allocated among the assets pursuant to the methodology set forth on the
attached Exhibit A (the “Allocation”). Buyer and Seller shall prepare all
relevant Tax Returns in a manner consistent with the Allocation and shall
cooperate with each other in the preparation thereof. At least five (5) Business
Days prior to the Closing, the Parties shall submit a mutually acceptable
Allocation of the Purchase Price, which Allocation will not be changed without
both Parties’ written consent.

ARTICLE III

ADJUSTMENTS TO PURCHASE PRICE

3.1 Pre-Closing Calculation. Three (3) Business Days prior to the Closing Date,
the Company shall prepare and deliver to Parent a consolidated balance sheet of
the Company and the SCT Subsidiaries (the “Preliminary Closing Balance Sheet”)
setting forth the Preliminary Net Funded Debt and the Preliminary Customer
Deposits. The Preliminary Closing Balance Sheet shall be calculated in
accordance with GAAP and the Financial Statements and shall be reasonably
acceptable to Buyer.

3.2 Post-Closing Calculation. Within seventy-five (75) days following the
Closing Date, Buyer shall, at its sole expense, prepare and deliver to Seller a
consolidated balance sheet of the Company and the SCT Subsidiaries as of the
Closing Date (the “Final Closing Balance Sheet”) setting forth in reasonable
detail the Net Funded Debt, the Customer Deposits and the Working Capital. The
Final Closing Balance Sheet shall be prepared in accordance with GAAP and the
Financial Statements. In connection therewith, from and after Closing, the
Buying Parties shall provide Seller and its advisors with reasonable access
during normal working hours to all Company records and work papers used in
preparing the Final Closing Balance Sheet and necessary to compute the Net
Funded Debt, the Customer Deposits and the Working Capital, as

 

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well as the right to make copies of all such records and work papers. The Buying
Parties shall also make available to Seller and its advisors the Company’s
personnel and advisors involved in preparing the foregoing. Without limiting or
prejudicing Seller’s rights with respect to access to records, work papers,
personnel and advisors as set forth above, the Parties, however, agree that in
the event that there is a dispute with respect to the calculations, the Parties
shall not have the right to discovery under the Federal Rules of Procedures. The
calculation of the Net Funded Debt, the Customer Deposits and the Working
Capital as delivered to Seller shall be final and binding on the Parties unless,
within thirty (30) Business Days after delivery to Seller, Seller shall deliver
to Buyer a Dispute Notice. After delivery of a Dispute Notice, Buyer and Seller
shall promptly negotiate in good faith with respect to the subject of the
Dispute Notice, and if they are unable to reach an agreement within fifteen
(15) Business Days after delivery to Buyer of the Dispute Notice, the dispute
shall be submitted to the Independent Auditor. In the event that Buyer and
Seller disagree on the process and procedure relating to the resolution of the
dispute, the Independent Auditor shall conclusively resolve such dispute and
establish the process and procedure to be used in connection with its review of
the disputed items. The Independent Auditor shall be directed to issue a final
and binding decision within thirty (30) days of submission of the Dispute
Notice, as to the issues of disagreement referred to in the Dispute Notice and
not resolved by the Parties. The calculation of the Net Funded Debt, the
Customer Deposits and the Working Capital, as so adjusted by agreement or by the
Independent Auditor (if required), shall be final and binding on the Parties.
“Working Capital” shall mean the amount equal to Seller’s total current assets
(excluding Cash) less Seller’s total current liabilities, calculated in
accordance with GAAP consistently applied and applied on a basis consistent with
the Financial Statements (including the calculation of the value of inventory on
a “last in-first out” basis) as of the Closing Date. A sample calculation of the
Working Capital as of December 31, 2007 is attached hereto as Exhibit B.

3.3 Dispute Notice. In connection with the calculations of the Net Funded Debt,
the Customer Deposits and the Working Capital, a “Dispute Notice” shall mean a
written notice from Seller indicating disagreement with the calculations of the
Net Funded Debt, the Customer Deposits and/or the Working Capital and
summarizing the items in dispute. The “Independent Auditor” shall mean a
national public accounting firm with no material relationship to either of the
Parties or their respective Affiliates chosen by agreement of the Parties, or,
if they are unable to agree, shall mean a national firm with no such material
relationship chosen by lot. The fees and expenses of the Independent Auditor
retained as a result of any dispute related to any statement shall be equitably
allocated by the Independent Auditor, based on the accuracy of the Parties’
positions relative to the final determination by the Independent Auditor.

3.4 Adjustments.

(a) If the Net Funded Debt as determined pursuant to Section 3.2 is more than
the Preliminary Net Funded Debt, then Buyer shall be entitled to recover from
the Escrow Fund the amount of the difference within three (3) Business Days
following the determination thereof. If the Net Funded Debt as determined
pursuant to Section 3.2 is less than the Preliminary Net Funded Debt, then Buyer
shall promptly, but in no event later than three (3) Business Days following the
determination thereof, pay the amount of the difference to Seller.

 

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(b) If the Customer Deposits as determined pursuant to Section 3.2 are more than
the Preliminary Customer Deposits, then Buyer shall be entitled to recover from
the Escrow Fund the amount of the difference within three (3) Business Days
following the determination thereof. If the Customer Deposits as determined
pursuant to Section 3.2 are less than the Preliminary Customer Deposits, then
Buyer shall promptly, but in no event later than three (3) Business Days
following the determination thereof, pay the amount of the difference to Seller.

(c) If the Working Capital as determined pursuant to Section 3.2 is less than
$40,349,000, then Buyer shall be entitled to recover from the Escrow Fund the
amount of the difference within three (3) Business Days following the
determination thereof. If the Working Capital as determined pursuant to Section
3.2 is more than $40,349,000, then Buyer shall promptly, but in no event later
than three (3) Business Days following the determination thereof, pay the amount
of the difference to Seller.

3.5 Payment. Any amounts due to Buyer or to Seller under Section 3.4 shall be
netted against one another such that only one payment shall be necessary to
satisfy the Parties’ obligations under Section 3.4. Amounts due to Seller under
Section 3.4 shall be reduced by any payments required to be paid under the
Management Incentive Compensation Program as a result of the adjustments to the
Purchase Price set forth herein, such amounts to be paid to Management by the
Company or the Buyer at the same time payment is made to Seller. The Seller
Representative shall provide Buyer in writing no later than two (2) Business
Days prior to the payment date with the amounts to be paid to each member of
Management along with wire transfer instructions.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth on the Disclosure Letter, the Company hereby represents and
warrants to Buying Parties that, as of the date of this Agreement:

4.1 Corporate Existence. The Company and each SCT Subsidiary is a corporation or
limited liability company validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all necessary
corporate power and authority to carry on its business as now conducted. The
Company and each SCT Subsidiary is legally qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction where the
nature of its properties and the conduct of its business requires such
qualification, except for those jurisdictions where the failure to so qualify or
be in good standing would not reasonably be expected to have a Material Adverse
Effect.

4.2 Corporate Authority. This Agreement and the consummation of the Transactions
have been duly authorized by all requisite corporate acts or proceedings of the
Company prior to Closing, and the Company has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery hereof by the Buying
Parties, constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms.

 

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4.3 Absence of Conflicts. Except as set forth on Section 4.3 of the Disclosure
Letter, the execution and delivery of this Agreement by the Company and, subject
to the required compliance with Antitrust Laws related to the Transactions, the
consummation by the Company of the Transactions will not (a) violate, conflict
with or result in the breach of the certificate of incorporation, bylaws or
operating agreement (or similar organizational documents) of the Company or any
of the SCT Subsidiaries, (b) conflict with or violate any Law, judgment or
decree of any Governmental Authority applicable to the Company or any of the SCT
Subsidiaries or (c) conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any rights
of termination or cancellation, modification or acceleration of, any Disclosed
Contract to which the Company or any of the SCT Subsidiaries is a party.

4.4 Capitalization. Section 4.4 of the Disclosure Letter sets forth the
authorized, issued and outstanding shares of capital stock of the Company.
Seller is the sole record and beneficial owner of, and has good and valid title
to, all of the Shares, free and clear of all Liens and Restrictions. The Company
is the sole record and beneficial owner of, and has good and valid title to, all
of the Durox Shares, free and clear of all Liens and Restrictions. All of the
Shares and the Durox Shares are duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding options, warrants, preemptive rights,
agreements or other rights of any kind relating to the sale or issuance of
additional shares of capital stock or other securities convertible into,
exchangeable for or evidencing the right to purchase, any shares of capital
stock or other securities in the Company.

4.5 Subsidiaries.

(a) Section 4.5(a) of the Disclosure Letter sets forth for each SCT Subsidiary
(i) its name and jurisdiction of formation, (ii) the authorized, issued and
outstanding equity ownership interests of such entity, and (iii) the names of
the holders thereof, and the number of ownership interests held by each such
holder.

(b) Each holder of the ownership interests of each SCT Subsidiary has good and
valid title to, and is the sole record and beneficial owner of, such ownership
interests, free and clear of all Liens and Restrictions.

(c) All of the equity ownership interests of each SCT Subsidiary are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth on
Section 4.5(c) of the Disclosure Letter, there are no outstanding options,
warrants, agreements or other rights of any kind relating to the sale or
issuance of additional shares of capital stock or other securities convertible
into, exchangeable for or evidencing the right to purchase any shares of capital
stock or other securities in any SCT Subsidiary. Except for the ownership of the
equity interests in each SCT Subsidiary, neither the Company nor any SCT
Subsidiary legally and beneficially owns any equity interest in any other
Person.

4.6 Governmental Approvals; Consents. No claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative Proceeding is
pending or, to the Knowledge of the Company, threatened in writing against the
Company or any SCT Subsidiary which would enjoin or delay the Transactions.
Except as set forth on Section 4.6 of the

 

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Disclosure Letter and except as required by Antitrust Laws, no consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with any Governmental Authority, or any
third party with respect to a Disclosed Contract, is required on the part of the
Company or any SCT Subsidiary in connection with the execution and delivery of
this Agreement or the consummation of the Transactions, except for such
consents, approvals, orders or authorizations of, licenses or permits, filings,
registrations, declarations or notices which have been obtained or which may be
necessary as a result of any facts relating solely to the Buying Parties or
their Affiliates.

4.7 Financial Statements.

(a) The Company has heretofore delivered to Buyer the following consolidated
financial statements of the Company (the “Financial Statements”), copies of
which are attached as Section 4.7(a) of the Disclosure Letter:

(i) audited financial statements of the Company for the fiscal years ended
December 31, 2006 and December 31, 2007;

(ii) consolidated balance sheet as of June 30, 2008;

(iii) consolidated statement of operations for the six-month period ended
June 30, 2008; and

(iv) consolidated cash flow statement for the six-month period ended June 30,
2008.

(b) The Financial Statements have been prepared from the books, records and
accounts of the Company and the SCT Subsidiaries in accordance with GAAP
consistently applied during the periods covered thereby (except for the absence
of footnotes in the interim period Financial Statements). Each balance sheet
included in the Financial Statements fairly presents in all material respects
the consolidated financial position of the Company and the SCT Subsidiaries as
of the respective dates thereof, and the consolidated operations and cash flow
statements included in the Financial Statements fairly present in all material
respects the results of operations and the cash flows of the Company and the SCT
Subsidiaries for the respective periods indicated therein, in accordance with
GAAP (except for the absence of footnotes in the interim period Financial
Statements). The books of account, ledgers and other records of the Company and
each of the SCT Subsidiaries are complete and correct in all material respects.

4.8 Absence of Changes. Except as set forth in Section 4.8 of the Disclosure
Letter, since June 30, 2008 to the date hereof:

(a) except as contemplated or permitted by this Agreement, the Business has been
conducted in all material respects in the ordinary course consistent with past
practice; and

(b) there has not occurred any change or event that has resulted in, or would
reasonably be expected to have, a Material Adverse Effect.

 

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4.9 Real Property.

(a) Section 4.9(a) of the Disclosure Letter lists all of the real property and
interests therein owned by the Company or any of the SCT Subsidiaries (with all
easements and other rights appurtenant to such property, the “Owned Real
Property”). The Company or a SCT Subsidiary, as the case may be, holds fee
simple title to the applicable parcel of Owned Real Property, free and clear of
any Liens, except Permitted Liens.

(b) Section 4.9(b) of the Disclosure Letter lists all of the real property and
interests therein leased or subleased by the Company or any of the SCT
Subsidiaries (the “Leased Real Property”). For each item of Leased Real
Property, Section 4.9(b) of the Disclosure Letter lists the lease or sublease,
pursuant to which the Company or a SCT Subsidiary, as the case may be, holds a
possessory interest in the Leased Real Property and all material amendments,
renewals, or extensions thereto (each, a “Lease”). The leasehold interest of the
Company or a SCT Subsidiary, as the case may be, with respect to each item of
Leased Real Property is held free and clear of any Liens, except Permitted
Liens. Except as set forth on Section 4.9(b) of the Disclosure Letter, neither
the Company nor any of the SCT Subsidiaries is a sublessor of, and has not
assigned any Lease covering, any portion of the Leased Real Property.

(c) Each Lease is valid and binding on the Company or the applicable SCT
Subsidiary and, to the Knowledge of the Company, is valid and binding on the
other parties thereto. The Company or the applicable SCT Subsidiary that is a
party to the Lease and, to the Knowledge of the Company, the other parties
thereto are not in material default or breach under any such Lease, and there
are no pending claims affecting the Leases as of which the Company and the SCT
Subsidiaries have written notice.

(d) The Owned Real Property and the Leased Real Property (collectively, the
“Real Property”) constitute all material interests in real property currently
owned or leased by the Company or any of the SCT Subsidiaries in connection with
the Business. Neither the Company nor any of the SCT Subsidiaries has received
written notice that the location, construction, occupancy, operation or use of
the buildings located on the Real Property violates any restrictive covenant or
deed restriction recorded against such Real Property or any other Laws.

4.10 Contracts.

(a) Except as set forth on Section 4.10 of the Disclosure Letter, there are no
outstanding Contracts to which the Company or any of the SCT Subsidiaries is a
party or by which the Company or any of the SCT Subsidiaries is bound that:

(i) involve commitments by such Person for terms in excess of three (3) years
and involve annual payments or sales of more than $100,000;

(ii) individually and currently involve annual payments or sales of more than
$500,000 in the aggregate by such Person;

(iii) consist of obligations for Funded Debt;

(iv) involve employment, severance, change in control, or other agreements
involving compensation of any employees of such Person for services rendered or
to be rendered, other than offer letters to (a) current salaried employees in
the ordinary course of business and (b) hourly employees;

 

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(v) involve the retention of any sales representative, marketing representative,
agent or consultant to the Company or to any SCT Subsidiary;

(vi) consist of Contracts between the Company or any of the SCT Subsidiaries, on
one hand, and Seller or its Affiliates (other than the Company and the SCT
Subsidiaries), on the other hand;

(vii) involve any political contribution;

(viii) by their express terms purport to limit or restrain the Company or any
SCT Subsidiary from engaging or competing in any business;

(ix) involve any license, sublicense or agreement pursuant to which the Company
or any SCT Subsidiary has granted rights to a third Person pertaining to the
Company’s or any SCT Subsidiary’s Intellectual Property, which license,
sublicense or agreement is material to the Company and the SCT Subsidiaries;

(x) involve any license, sublicense or agreement pursuant to which the Company
or any SCT Subsidiary has been granted any rights to the Intellectual Property
of any third Person, which grant of rights is material to the Company and the
SCT Subsidiaries;

(xi) represent a joint venture or similar arrangement; and

(xii) represent a guaranty or suretyship arrangement.

Contracts required to be disclosed on Section 4.10 of the Disclosure Letter are
hereafter referred to as the “Disclosed Contracts”.

(b) Each Disclosed Contract is valid and binding on the Company or the
applicable SCT Subsidiary and, to the Knowledge of the Company, is valid and
binding on the other parties thereto. The Company or the applicable SCT
Subsidiary that is a party to the Disclosed Contract and, to the Knowledge of
the Company, the other parties thereto are not in material default or breach
under any such Disclosed Contract, and there are no pending claims affecting the
Disclosed Contracts as of which the Company and the SCT Subsidiaries have
written notice.

4.11 Litigation; Orders. Except as set forth on Section 4.11 of the Disclosure
Letter, there is no pending or, to the Knowledge of the Company, threatened in
writing legal or administrative Proceeding, against the Company or any of the
SCT Subsidiaries. There is no judgment, order, injunction or decree imposed upon
the Company or any of the SCT Subsidiaries by any Governmental Authority.

 

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4.12 Intellectual Property Rights.

(a) Section 4.12(a) of the Disclosure Letter sets forth an accurate and complete
list of all patents and patent applications, registered trademarks and trademark
applications, and registered copyrights and copyright applications which are
owned by the Company and the SCT Subsidiaries and are material to the operation
of the Business as currently conducted (“Company Intellectual Property”). With
respect to each item of Company Intellectual Property, the Company or a SCT
Subsidiary, as the case may be, owns the entire right, title and interest in and
to such Company Intellectual Property, free and clear of all Liens (other than
Permitted Liens). To the Knowledge of the Company, and as described on Exhibit
D, (i) except as set forth on Section 4.12(a)(i) of the Disclosure Letter no
Person is engaging in any activity that infringes any Company Intellectual
Property, (ii) except as set forth on Section 4.12(a)(ii) of the Disclosure
Letter no claim has been asserted to the Company in writing that the use of any
Company Intellectual Property or the operation of the Business as currently
conducted infringes or violates the Intellectual Property of any third Person
and (iii) the Company or a SCT Subsidiary, as the case may be, owns or has the
right to use all Intellectual Property material to the operation of the Business
as currently conducted.

(b) The Company or a SCT Subsidiary, as the case may be, owns or has the right
to use all computer software (including data bases and related documentation)
which is used in the conduct of the Business.

(c) Except as described on Exhibit D, none of the Company Intellectual Property
infringes upon or is in misappropriation of any patent, copyright, trade secret
or other proprietary right of any third Person.

4.13 Tax Matters.

(a) All Tax Returns required to be filed by, or with respect to, the Company and
the SCT Subsidiaries have been timely filed and are true, accurate and complete
in all material respects. All Taxes (whether or not shown to be due on any Tax
Returns) have been paid or have been accrued for on the Financial Statements.

(b) The Company and each SCT Subsidiary has duly and timely withheld and paid
all Taxes and other amounts required by any Governmental Authority to be
collected or withheld by it (including any Taxes and other amounts required to
be withheld by it in respect of any amount paid or credited or deemed to be paid
or credited by it to or for the account or benefit of any Person, including any
employees, officers, directors and any non-resident Person), and have properly
prepared in all material respects and timely filed all Form W-2s and 1099s (and
any similar state, local or foreign forms) with the appropriate Governmental
Authorities.

(c) No waivers of statute of limitations or any agreement to extend the time
with respect to a Tax assessment or deficiency have been given or requested with
respect to any Taxes payable by the Company or any of the SCT Subsidiaries.

(d) There are no Liens for Taxes (other than for Taxes not yet due or being
contested in good faith and by appropriate proceedings, which proceedings, if
any, are set forth on Section 4.13(d) of the Disclosure Letter) on any of the
assets of the Company or the SCT Subsidiaries.

 

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(e) No Tax is required to be withheld pursuant to Section 1445 of the Code as a
result of the transfer contemplated by this Agreement.

(f) From May 1, 1997 through December 31, 2000, Seller (i) had in effect and
maintained a valid election pursuant to Section 1362 of the Code to be subject
to taxation under Subchapter S of the Code (an “S Election”), (ii) was an S
corporation within the meaning of Section 1361(a)(1) of the Code, (iii) filed
all income Tax Returns in a manner consistent with its status as an S
corporation, and (iv) had in effect and maintained, with respect to the Company
and each SCT Subsidiary set forth on Section 4.13(f) of the Disclosure Letter,
valid “qualified subchapter S subsidiary” elections pursuant to
Section 1361(b)(3) of the Code (a “QSub Election”). Since December 31, 2000 and
at all times thereafter, Russell Enterprises, Inc., the owner of all of the
outstanding capital stock of Seller (“S Corporation Parent”), has had in effect
and maintained a valid S Election and has been an S corporation within the
meaning of Section 1361(a)(1) of the Code, and has had in effect and maintained,
with respect to Seller, the Company and each of the SCT Subsidiaries set forth
on Section 4.13(f) of the Disclosure Letter, a valid QSub Election. Neither the
Company nor any SCT Subsidiary set forth on Section 4.13(f) of the Disclosure
Letter has in the past ten years: acquired assets from another corporation in a
transaction in which the 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 acquired the stock of any
corporation which is a qualified subchapter S subsidiary.

(g) Except as set forth on Section 4.13(g) of the Disclosure Letter, neither the
Company nor any SCT Subsidiary will be required to include any item of income in
or exclude any item of deduction from any Tax period (or portion thereof)
beginning on or after the Closing Date as a result of: (i) a change in
accounting method for a Tax period (or portion thereof) beginning on or before
the Closing Date; (ii) any “closing agreement” as described in Section 7121 of
the Code (or any similar provision of state, local or foreign Law); (iii) any
installment sale or open transaction made on or prior to the Closing Date; or
(iv) any prepaid amount received on or prior to the Closing Date.

(h) Neither the Company nor any SCT Subsidiary constitutes either a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of shares qualifying for
tax-free treatment under Section 355 of the Code (i) in the five years prior to
the date of this Agreement or (ii) in a distribution that could otherwise
constitute part of a “plan” or “series of related transactions” (within the
meaning of Section 355(e) of the Code) in conjunction with the purchase of the
Shares.

4.14 Labor Matters. Except as described on Section 4.14 of the Disclosure
Letter, (a) as of August 15, 2008, there are no pending unfair labor practice
charges, grievances or complaints filed with any Governmental Authority based on
the employment or termination by the Company or any of the SCT Subsidiaries of
any employee, (b) there is no labor strike, dispute, slowdown or work stoppage
actually pending or, to the Knowledge of the Company, threatened in writing
against the Company or any of the SCT Subsidiaries, (c) neither the Company nor
any of the SCT Subsidiaries is a party to a collective bargaining agreement, and
no collective bargaining agreement relating to the employees of the Company or
any of the SCT

 

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Subsidiaries is currently being negotiated, and (d) neither the Company nor any
SCT Subsidiary has committed any violation of any Law prohibiting discrimination
in employment in any form (including claims for harassment and/or other
discrimination on the basis of age, race, color, religion, sex, national origin
and/or mental or physical disability) and no events or circumstances exist which
would reasonably be expected to give rise to such a claim against the Company.

4.15 Employee Benefit Plans; Employees.

(a) Section 4.15(a) of the Disclosure Letter sets forth a complete list of all
Benefit Plans covering the current or former employees of the Business, the
Company and the SCT Subsidiaries (“Employees”), and neither the Company nor any
SCT Subsidiary has any other Benefits Plans. Each Benefit Plan has in all
material respects been established and administered in accordance with its terms
and in compliance with applicable Laws. Except as provided in Section 4.15(a) of
the Disclosure Letter, the Internal Revenue Service has issued a favorable
determination letter with respect to each Benefit Plan that is intended to be a
“qualified plan” within the meaning of Section 401(a) of the Code.
Section 4.15(a) of the Disclosure Letter lists each Benefit Plan subject to
Title IV or Section 302 of ERISA or Section 412 of the Code. Except as provided
in Section 4.15(a) of the Disclosure Letter, no Benefit Plan is a “multiemployer
plan” within the meaning of Section 3(37) of ERISA. Except as provided in
Section 4.15(a) of the Disclosure Letter, no Benefit Plan has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”), nor has the
Company or any SCT Subsidiary at any time contributed to, or been obligated to
contribute to, any Multiple Employer Plan or any “multiemployer plan”.

(b) Except as provided in Section 4.15(b) of the Disclosure Letter, except for
continuation coverage as required by Section 4980(B) of the Code or by
applicable state insurance Laws, no Benefit Plan provides life, health, medical
or other welfare benefits to former employees or beneficiaries or dependents
thereof and the Company and the SCT Subsidiaries have no current or projected
liability with respect to post employment or post retirement health or medical
or life insurance benefits for retired, former or current employees, except as
required to avoid excise tax under Section 4980B of the Code.

(c) With respect to any Benefit Plan for current or former Employees, no event
has occurred and no condition or set of circumstances exists other than the
Divestiture under which any of the Company, the SCT Subsidiaries or the Business
has indemnified or is required to indemnify any person against any liability
(except liability for benefit claims and funding obligations payable in the
ordinary course). Except as provided in Section 4.15(c) of the Disclosure Letter
neither the Company, the SCT Subsidiaries or their Affiliates nor any defined
benefit plan maintained by the Company, the SCT Subsidiaries or their Affiliates
have incurred any material liability to the Pension Benefit Guaranty Corporation
or the Internal Revenue Code except liabilities to the PBGC pursuant to
Section 4007 of ERISA, all of which have been paid as due. Except as provided in
Section 4.15(c) of the Disclosure Letter no reportable event (as such term is
used in section of 4043 of ERISA) or no “accumulated funding deficiency” (as
such term is used in section 412 or 4971 of the Code) has occurred with respect
to Benefit Plan subject to Title IV of ERISA.

 

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(d) Except as set forth on Section 4.15(d) of the Disclosure Letter, neither the
execution and delivery of this Agreement, nor the consummation of the
Transactions will (i) entitle any current or former employee of the Company or
the SCT Subsidiaries to any increased or modified benefit or payment;
(ii) increase the amount of compensation due to any such employee, consultant,
officer or director; (iii) accelerate the vesting, payment or funding of any
compensation, stock-based benefit, incentive or other benefit; or (iv) result in
any “parachute payment” under Section 280G of the Code (whether or not such
payment is considered to be reasonable compensation for services rendered).

(e) Section 4.15(e) of the Disclosure Letter sets forth a complete and accurate
list of all of the Employees together with the following information for each
such Employee: name, position held, current salary, 2008 (anticipated) annual
bonus and long-term incentive payments, (if any), Fair Labor Standards Act
status, date of hire, annual vacation entitlement, accrued but unused vacation
and service date for employee benefit plan purposes. Section 4.15(e) of the
Disclosure Letter indicates which Employees are inactive employees due to an
approved medical, family, military or personal leave and, to the extent known,
the date on which each inactive employee is expected to return to active
employment. Section 4.15(e) of the Disclosure Letter will be updated as of the
date that is five (5) Business Days prior to the Closing Date and will be true
and correct as of that date.

(f) Except as set forth in Section 4.15(f) of the Disclosure Letter, all
Employees are employees “at will” whose employment is terminable without
liability therefor. Except as described in Section 4.15(f) of the Disclosure
Letter and other than offer letters to (i) current salaried employees in the
ordinary course of business and (ii) hourly employees, none of the Employees
have contracts or other agreements relating to stay bonuses and offer letters
providing for retention or stay payments, commissions, compensation, special
monetary or vacation awards, non-compete provisions or agreements, perquisites
(e.g., club memberships), stock options, warrants or other benefits to
Employees.

(g) Except as provided in Section 4.15(g) of the Disclosure Letter, the Company
and the SCT Subsidiaries have not received written notification of any
impediment to the employment of the Employees under applicable Laws and the
Company does not otherwise have Knowledge of any impediment. Except as set forth
in Section 4.15(g) of the Disclosure Letter, each of the Company and the SCT
Subsidiaries is in material compliance with the requirements of IRCA and none of
the Employees is working based upon a non-resident Visa. Seller and its
Affiliates have each complied in all material respects with the requirements of
Executive Order 11246.

4.16 Permits; Compliance with Laws. The Company and the SCT Subsidiaries have
all Permits required by any Governmental Authority that are material to the
operation of the Business and the use of its properties as presently conducted
or used, and all such Permits are in full force and effect. No action, claim or
proceeding is pending, nor, to the Knowledge of the Company, threatened in
writing, to suspend, revoke, revise, limit, restrict or terminate any of such
Permits or declare any such Permit invalid. The Company and the SCT Subsidiaries
are in compliance in all material respects with the Permits and all applicable
Laws, and the Company has not received any written notice to the contrary.

 

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4.17 Assets, Inventories and Receivables.

(a) Except as set forth on Section 4.17 of the Disclosure Letter, the Company or
one of the SCT Subsidiaries has good and valid title to, and is the lawful owner
of, all of the tangible assets the Company or such SCT Subsidiary purports to
own, free and clear of all Liens, other than Permitted Liens. The tangible
assets of the Company and the SCT Subsidiaries are in good working condition,
reasonable wear and tear and loss due to normal operations excepted.

(b) The inventories of the Business consist of a quality and quantity usable
and, with respect to finished goods, saleable, in the ordinary course of the
Business, and do not include obsolete items (consistently calculated in
accordance with the Company’s and the SCT Subsidiaries’ current methodology) in
excess of any reserves for obsolete inventory included in the Financial
Statements and the Final Closing Balance Sheet.

(c) (i) No fact or circumstance exists which would result in the
un-collectability of any accounts receivables of the Company or any SCT
Subsidiary and (ii) there is no contest, claim, defense or right of setoff
pending, other than returns in the ordinary course of business, under any
Contract with any account debtor of an account receivable relating to the amount
or validity of such account receivable, in each case in excess of any reserves
included in the Financial Statements and the Final Closing Balance Sheet.

4.18 Environmental Matters.

(a) Except as set forth on Section 4.18(a) of the Disclosure Letter:

(i) The Company and SCT Subsidiaries have complied in all material respects with
all Environmental Laws;

(ii) Neither the Company nor any SCT Subsidiary has received written notice of
any violation of Environmental Laws by any Governmental Authority or other
Person;

(iii) None of the Company or any SCT Subsidiary has received any written notice
that any property owned, operated or leased by the Company or any SCT Subsidiary
is listed on any list of sites requiring investigation or cleanup; and no Lien
has been filed against either the personal or real property of the Company or
any SCT Subsidiary under any Environmental Law or any regulation promulgated
thereunder or order issued with respect thereto;

(iv) There has been no Release of any Hazardous Substance in, on or affecting
any properties owned, leased or operated by the Company or any SCT Subsidiary
other than in accordance with applicable Environmental Laws;

(v) None of the Company or any SCT Subsidiary has treated, stored, disposed of,
arranged for disposal or treatment of, or arranged with a transporter for
disposal or treatment of, or Released any Hazardous Substance at or to any third
party owned property or facility, so as to give rise to any current or future
liability, including any liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney’s fees,
or any investigative, corrective or remedial obligation, pursuant to any
Environmental Laws;

 

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(vi) The Company and the SCT Subsidiaries have obtained all material Permits
required under applicable Environmental Laws necessary for the operation of the
Business, and all such Permits are in full force and effect, and no action,
claim or proceeding is pending, nor, to the Knowledge of the Company,
threatened, to suspend, revoke, revise, limit, restrict or terminate any of such
Permits or declare any such Permit invalid; and

(vii) There are no underground or above ground storage tanks regulated pursuant
to RCRA § 9001 (42 U.S.C. § 6991) or equivalent authorized state program located
at, on, in or under the Real Property.

(b) Notwithstanding the generality of any other representations and warranties
in this Agreement, the representations and warranties in this Section 4.18 shall
be deemed the only representations and warranties in this Agreement with respect
to matters directly or indirectly relating to, or arising out of, Environmental
Laws or Hazardous Substances.

4.19 Insurance. Section 4.19 of the Disclosure Letter sets forth the following
information with respect to each insurance policy to which the Company or any of
the SCT Subsidiaries is a party: the name of the insurer, the policy number, the
period of coverage and the amount of coverage. To the Knowledge of the Company,
all of the insurance policies set forth on Section 4.19 of the Disclosure Letter
are in full force and effect. All premiums due with respect to the insurance
policies set forth on Section 4.19 of the Disclosure Letter have been paid and
no notice of cancellation or termination or intent to cancel any such insurance
policy has been received by the Company or any SCT Subsidiary, and neither
Company nor any SCT Subsidiary is in default under any such insurance policy.

4.20 Absence of Undisclosed Liabilities. Except (a) for liabilities incurred in
connection with the Transactions; (b) for liabilities set forth in the Financial
Statements or otherwise disclosed in the notes thereto; (c) for liabilities or
obligations arising under any Contract to which the Company or any of the SCT
Subsidiaries is a party or is bound (excluding any liability for a breach by the
Company or any of the SCT Subsidiaries of any such Contract); (d) for
liabilities incurred in the ordinary course of business since June 30, 2008; or
(e) as set forth on Section 4.20 of the Disclosure Letter, the Company has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company or in the notes thereto.

4.21 Related Party Transactions. Except as set forth on Section 4.21 of the
Disclosure Letter, no stockholder, director or officer of the Company or any SCT
Subsidiary:

(a) owns or leases any asset used in the Business, or

(b) is a party to any Contract with the Company or any of the SCT Subsidiaries.

4.22 Product Warranties. Except as set forth on Section 4.22 of the Disclosure
Letter, each product manufactured, sold, leased or delivered by the Company or
any SCT Subsidiary in

 

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connection with the Business has been in conformity in all material respects
with all applicable Contracts and all express and implied warranties. None of
the Company or any SCT Subsidiary has any liability for replacement or repair of
any product manufactured, sold, leased or delivered by the Company or any SCT
Subsidiary in connection with the Business in excess of the reserves therefor
set forth on the Financial Statements and the Final Closing Balance Sheet.

4.23 Product Liability.

(a) Except as set forth on Section 4.23(a) of the Disclosure Letter, (i) there
is no Proceeding, nor has the Company received any written notice of violation
or investigation of a civil, criminal or administrative nature by or before any
court or other Governmental Authority against or involving any product,
substance or material manufactured, assembled, produced, distributed, serviced
or sold by or on behalf of the Company or any SCT Subsidiary (collectively,
“Product”), or class of claims or lawsuits involving a Product which is pending
or, to the Knowledge of the Company, threatened in writing, on behalf of the
purchaser of any Product, resulting from an alleged defect in design,
manufacture, materials or workmanship of any Product, or any alleged failure to
warn or from any breach of express or implied specifications or warranties or
representations, and (ii) there has not been, and there is not under
consideration or investigation by the Company or any SCT Subsidiary, any Product
recall or post-sale warning (collectively, such recalls and post-sale warnings
are referred to as “Recalls”) conducted by or on behalf of the Company or any
SCT Subsidiary concerning any Product, or, to the Knowledge of the Company, any
Recall conducted by or on behalf of any third Person as a result of any alleged
defect in any Product in excess of the reserves therefor set forth on the
Financial Statements and the Final Closing Balance Sheet for product warranty
and product liability.

(b) No event has occurred and no circumstance exists that would reasonably be
expected to give rise to any liability in excess of the reserves therefor set
forth on the Financial Statements and the Final Closing Balance Sheet for
product warranty and product liability or serve as a basis for the commencement
of any Proceeding, hearing, charge, complaint or claim against the Company or
any SCT Subsidiary or otherwise relating to the Business based on or related to
any Product.

4.24 Finders; Brokers. Except as set forth on Section 4.24 of the Disclosure
Letter, the Company is not party to any agreement with any finder or broker, or
in any way obligated to any finder or broker for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or performance
of this Agreement for which the Buying Parties will be liable.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth on the Disclosure Letter, Seller hereby represents and
warrants to Buying Parties that, as of the date of this Agreement:

5.1 Corporate Existence. Seller is a corporation validly existing and in good
standing under the laws of the State of Delaware and has all necessary corporate
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the Transactions.

5.2 Corporate Authority and Ownership. This Agreement and the consummation of
the Transactions have been duly authorized by all requisite corporate acts or
proceedings of Seller, and Seller has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Seller and,
assuming due authorization, execution and delivery hereof by the Buying Parties,
this Agreement constitutes a valid and binding obligation of Seller, enforceable
in accordance with its terms. Seller is the sole record and beneficial owner of,
and has good and valid title to, all of the Shares, free and clear of all Liens
and Restrictions.

5.3 Absence of Conflicts. The execution and delivery of this Agreement by Seller
and, subject to the required compliance with Antitrust Laws related to the
Transactions, the consummation by Seller of the Transactions will not
(a) violate, conflict with or result in the breach of the certificate of
incorporation or bylaws of Seller, (b) conflict with or violate any Law,
judgment or decree of any Governmental Authority applicable to Seller or
(c) conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination or
cancellation, modification or acceleration of, any Contract to which Seller is a
party.

5.4 Governmental Approvals; Consents. No claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative Proceeding is
pending or, to the Knowledge of Seller, threatened in writing against Seller
which would enjoin or delay the Transactions. Except as required by Antitrust
Laws, no consent, approval, order or authorization of, license or permit from,
notice to or registration, declaration or filing with any Governmental Authority
or of any third party, is or has been required on the part of Seller in
connection with the execution and delivery of this Agreement or the consummation
of the Transactions, except for such consents, approvals, orders or
authorizations of, licenses or permits, filing, registrations, declarations or
notices which have been obtained or which may be necessary as a result of any
facts relating solely to the Buying Parties or their Affiliates.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE IV AND
ARTICLE V, NONE OF SELLER, THE COMPANY OR ANY SCT SUBSIDIARY NOR ANY OTHER
PERSON MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPANY AND THE SCT
SUBSIDIARIES OR THE BUSINESS,

 

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OPERATIONS, ASSETS, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR PROSPECTS
OF THE COMPANY AND THE SCT SUBSIDIARIES OR THE NEGOTIATION, EXECUTION, DELIVERY
OR PERFORMANCE OF THIS AGREEMENT BY THE COMPANY OR SELLER. MORE SPECIFICALLY,
EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE IV, THE COMPANY AND SELLER DO NOT MAKE
OR PROVIDE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE
QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO
SAMPLES, OR CONDITION OF THE COMPANY’S AND THE SCT SUBSIDIARIES’ ASSETS OR ANY
PART THEREOF.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BUYING PARTIES

Except as set forth on Buyer Disclosure Letter, the Buying Parties jointly and
severally represent and warrant to the Company and Seller, as of the date of
this Agreement:

6.1 Corporate Existence. Each of the Buying Parties is a corporation validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to enter into
this Agreement, to carry out its obligations hereunder and to consummate the
Transactions.

6.2 Corporate Authority. This Agreement and the consummation of all of the
Transactions have been duly authorized by all requisite corporate acts or
proceedings of each Buying Party, and each Buying Party has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement has been duly executed and
delivered by each Buying Party and, assuming due authorization, execution and
delivery hereof by the Company and Seller, constitutes a valid and binding
obligation of each Buying Party, enforceable in accordance with its terms.

6.3 Absence of Conflicts. The execution and delivery of this Agreement by the
Buying Parties and, subject to the required compliance with Antitrust Laws
related to the Transactions, the consummation by the Buying Parties of the
Transactions will not (a) violate, conflict with or result in the breach of the
certificate of incorporation or bylaws (or similar organizational documents) of
any Buying Party, (b) conflict with or violate any Law, judgment or decree of
any Governmental Authority applicable to any Buying Party or (c) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination or cancellation,
modification or acceleration of, any Contract to which either of the Buying
Parties is a party, except, in the case of clauses (b) and (c), as would not
reasonably be expected to have a Buyer Material Adverse Effect.

6.4 Governmental Approvals; Consents. No claim, legal action, suit, arbitration,
governmental investigation, action, or other legal or administrative Proceeding
is pending or, to the Knowledge of either Buying Party, threatened in writing
against a Buying Party which would enjoin or delay the Transactions. Except as
required by Antitrust Laws, no consent, approval, order or authorization of,
license or permit from, notice to or registration, declaration or filing

 

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with any Governmental Authority or of any third party, is or has been required
on the part of either Buying Party in connection with the execution and delivery
of this Agreement or the consummation of the Transactions, except for such
consents, approvals, orders or authorizations of, licenses or permits, filings,
registrations, declarations or notices the failure of which to obtain or make
would not reasonably be expected to have a Buyer Material Adverse Effect or
which have been obtained.

6.5 Finders; Brokers. Neither Buying Party is a party to any agreement with any
finder or broker, or in any way obligated to any finder or broker for any
commissions, fees or expenses, in connection with the origin, negotiation,
execution or performance of this Agreement for which Seller or any of its
Affiliates will be liable.

6.6 Purchase for Investment. Each Buying Party is aware that the Shares and the
Durox Shares being acquired are not registered under the Securities Act, or
under any state or foreign securities Laws. Neither Buying Party is an
underwriter, as such term is defined under the Securities Act, and the Buying
Parties are purchasing such Shares and such Durox Shares solely for investment,
with no present intention to distribute any such Shares or such Durox Shares to
any Person, and neither Buying Party will sell or otherwise dispose of the
Shares or the Durox Shares except in compliance with the registration
requirements or exemption provisions under the Securities Act and the rules and
regulations promulgated thereunder, or any other applicable securities laws.

6.7 Financing. On the Closing Date, the Buying Parties will have sufficient
cash, available lines of credit or other sources of immediately available funds
to enable the Buying Parties to pay, in cash, the Purchase Price and all other
amounts payable pursuant to this Agreement or otherwise necessary to consummate
the Transactions.

6.8 Litigation. There is no pending or, to the Knowledge of the Buying Parties,
threatened in writing legal or administrative Proceeding, against either of the
Buying Parties which would reasonably be expected to affect the legality,
validity or enforceability of this Agreement or the consummation of the
Transactions.

6.9 Independent Investigation. The representations and warranties of the Company
and Seller set forth in Article IV and Article V constitute the sole and
exclusive representations and warranties of the Company and Seller to the Buying
Parties in connection with the Transactions, and the Buying Parties understand,
acknowledge and agree that all other representations and warranties of any kind
or nature expressed or implied, at common law, by statute or otherwise
(including, any relating to the future or historical financial condition,
results of operations, assets or liabilities of the Company and the SCT
Subsidiaries, or the quality, quantity or condition of the Company’s and SCT
Subsidiaries’ assets) are specifically disclaimed by the Company and Seller.
Except as expressly set forth in Article IV, the Company and Seller do not make
or provide any warranty or representation, express or implied, as to the
quality, merchantability, fitness for a particular purpose, conformity to
samples, or condition of the Company’s or the SCT Subsidiaries’ assets or any
part thereof. The Buying Parties hereby acknowledge and agree to the limitations
and acknowledgements set forth in all capital letters at the end of Article V.
Except as expressly provided in this Agreement and the Disclosure Schedules and
except for fraud, the Buying Parties hereby expressly waive and relinquish any

 

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and all rights, claims and causes of action against the Company, the SCT
Subsidiaries, Seller and their respective Affiliates and representatives in
connection with, the accuracy, completeness or materiality of any information,
data or other materials (written or oral) heretofore furnished to the Buying
Parties and their respective representatives by or on behalf of the Company or
Seller (including the confidential memorandum, management presentation and other
information provided to the Buying Parties by the Company, Seller or their
representatives). Without limiting the foregoing, neither the Company nor Seller
are making any representation or warranty to the Buying Parties with respect to
any financial projection or forecast relating to the business, operations,
assets, liabilities, condition (financial or otherwise) or prospects of the
Company and the SCT Subsidiaries or any subset thereof. With respect to any
projection or forecast delivered on behalf of the Company or Seller to the
Buying Parties or their respective representatives, the Buying Parties
acknowledge that (i) there are uncertainties inherent in attempting to make such
projections and forecasts, (ii) the Buying Parties are familiar with such
uncertainties, (iii) the Buying Parties are taking full responsibility for
making their own evaluation of the adequacy and accuracy of all such projections
and forecasts furnished to them and (iv) the Buying Parties shall have no claim
against Seller, the Company, the SCT Subsidiaries or their respective Affiliates
with respect solely thereto.

ARTICLE VII

AGREEMENTS OF ALL PARTIES

7.1 Operation of the Business. Except as contemplated by this Agreement or as
disclosed on Section 7.1 of the Disclosure Letter (such exceptions and disclosed
matters herein referred to as “Permitted Transactions”), from the date hereof
until the earlier of the Closing or the termination of this Agreement, Seller
shall cause the Company and the SCT Subsidiaries to use all commercially
reasonable efforts (i) to continue, in a manner consistent with the past
practices of the Business, operating and conducting the Business in the ordinary
course, and (ii) not to take any of the following actions in connection with or
on behalf of the Business without the prior written approval of Buyer (which
approval shall not be unreasonably withheld, conditioned or delayed):

(a) sell, lease, transfer or otherwise dispose of or encumber (other than
Permitted Liens) any of the properties or assets of the Business, other than
(i) in the ordinary course of business, (ii) properties or assets of the
Business with an aggregate value less than $500,000 or (iii) with respect to the
Divestiture;

(b) cancel any material debts or waive any material claims or rights pertaining
to the Business, except in the ordinary course of business;

(c) grant any increase in the compensation of officers or employees, except for
increases (i) in the ordinary course of business and consistent with past
practice, (ii) as a result of collective bargaining, (iii) as required by any
Benefit Plan or agreement, or (iv) as required by Law;

(d) except in the ordinary course of business, incur, assume or guarantee any
Funded Debt other than (i) purchase money borrowings, (ii) refunding of existing
Funded Debt, (iii) indebtedness to an Affiliate incurred in the ordinary course
of business, and (iv) other Funded Debt with an aggregate principal amount of
less than $1,000,000;

 

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(e) issue, sell or grant any shares of capital stock of the Company or any
capital stock or other equity interest of any SCT Subsidiary, or any securities
or rights convertible into, exchangeable or exercisable for, or evidencing the
right to subscribe for, any shares of such capital stock or other equity
interest other than with respect to the Divestiture;

(f) make voluntary investments in or acquisitions on behalf of or for the
Business (by purchase of securities or assets, merger or consolidation, or
otherwise) of other Persons, businesses or divisions thereof for consideration
in excess of $500,000 in the aggregate for all such investments and
acquisitions, except for acquisitions in settlement of outstanding debts or
pursuant to bankruptcy or restructuring plans of entities of which the Company
or any of the SCT Subsidiaries is a creditor;

(g) make loans or advances on behalf of or for the Business (other than travel
and similar advances to its employees and trade credit to customers in the
ordinary course of business) to any Person, except for those loans or advances
not in excess of $5,000 in the aggregate outstanding at any time without taking
into account any Permitted Transactions;

(h) amend in any respect the organizational or charter documents of the Company
or any of the SCT Subsidiaries;

(i) adopt a plan or agreement of complete or partial liquidation, dissolution,
restructuring, recapitalization, merger, consolidation or other reorganization
of the Company or any of the SCT Subsidiaries (other than as contemplated
hereby);

(j) enter into any new customer or supplier Contract involving aggregate
payments or sales in excess of $500,000;

(k) take any action that would cause the Company or any SCT Subsidiary (other
than any SCT Subsidiary that is not currently a qualified subchapter S
subsidiary) to not be a qualified subchapter S subsidiary as defined in
Section 1361(b)(3)(B) of the Code as of the Closing Date; or

(l) agree, whether in writing or otherwise, to do any of the foregoing;

provided, however, that the limitations set forth in clauses Section 7.1(a)
through Section 7.1(l) shall not apply to any action, transaction or event
occurring exclusively between the Company and any SCT Subsidiary or between any
of the SCT Subsidiaries in the ordinary course of business.

7.2 Mutual Cooperation; No Inconsistent Action.

(a) Subject to the terms and conditions of this Agreement, Seller and the
Company, on the one hand, and the Buying Parties, on the other hand, shall
cooperate with each other and use their respective commercially reasonable
efforts to promptly (i) take or cause to be taken all actions, and do or cause
to be done all things necessary, proper or advisable under this

 

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Agreement and applicable Laws to consummate the Transactions as soon as
practicable, including preparing and filing promptly and fully all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents (including any
required filings under applicable Antitrust Laws) and (ii) subject to this
Section 7.2, obtain all approvals, consents, registrations, permits,
authorizations and other confirmations from any Governmental Authority necessary
to consummate the Transactions. The Company shall in good faith consult with
Buyer regarding the material terms and progress of any negotiation or
renegotiation of any collective bargaining agreement or other union contract.
Subject to applicable Laws relating to the exchange of information and in
addition to Section 7.2(c), the Parties shall have the right to review in
advance, and to the extent practicable each will consult the other regarding,
all the information relating to the Party, as the case may be, that appears in
any filing made with, or written materials submitted to, any third party and/or
any Governmental Authority in connection with the Transactions.

(b) In furtherance and not in limitation of the foregoing, each Party agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the Transactions as promptly as practicable and in any event
within ten (10) Business Days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other applicable Antitrust Laws and
use its best efforts to take, or cause to be taken, all other actions consistent
with, and subject to, this Section 7.2 necessary to cause the expiration or
termination of the applicable mandatory waiting periods under the HSR Act as
soon as practicable, including requesting early termination of the waiting
period under the HSR Act.

(c) Each Party shall use commercially reasonable efforts to (i) cooperate in all
respects with each other in connection with any filing or submission with any
Governmental Authority in connection with the Transactions and in connection
with any investigation or other inquiry by or before a Governmental Authority
relating to the Transactions, including any Proceeding initiated by a private
party, and (ii) keep the other Party informed in all material respects and on a
reasonably timely basis of any communication received by such Party or its
Affiliates from, or given by such Party to, the Federal Trade Commission, the
Antitrust Division of the Department of Justice, or any other Governmental
Authority and of any communication received or given in connection with any
Proceeding by a private party, in each case regarding any of the Transactions.

(d) In furtherance and not in limitation of the covenants of the Parties
contained in this Section 7.2, and subject to the conditions below, each Party
shall use its best efforts to resolve such objections, if any, as may be
asserted by a Governmental Authority or other Person with respect to the
Transactions. Without limiting any other provision hereof, but subject to the
conditions below, the Parties shall each use its best efforts to (i) avoid the
entry of, or to have vacated or terminated, any decree, order or judgment that
would restrain, prevent or delay the consummation of the Transactions, on or
before the Termination Date, including by defending through litigation on the
merits any claim asserted in any court by any Person, and (ii) avoid or
eliminate each and every impediment under any Antitrust Law that may be asserted
by any Governmental Authority with respect to the Transactions so as to enable
the consummation of the Transactions to occur as soon as reasonably possible
(and in any event no later than the Termination Date). The Buying Parties agree
to negotiate, commit to or effect as promptly as

 

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practicable, by consent decree, hold separate orders, or otherwise, the sale,
divesture or disposition of such assets, properties or businesses of the Buying
Parties or of the Business to be acquired by them pursuant hereto, and the
entrance into such other arrangements, as are necessary or advisable in order to
avoid the entry of, and the commencement of litigation seeking the entry of, or
to effect the dissolution of, any injunction, temporary restraining order or
other order in any Proceeding, which would otherwise have the effect of
materially delaying or preventing the consummation of the Transactions;
provided, however, that the Buying Parties shall not be required to take any
such actions that would cause the Buying Parties or their Subsidiaries to
(i) divest any business, asset, or product line of the Business generating
either revenues in excess of Twenty-Five Million Dollars ($25,000,000), or
earnings before interest and taxes in excess of Three Million Dollars
($3,000,000), in fiscal year 2007, (ii) restrict, curtail, hold separate or
otherwise affect or limit the operation of any business, asset or product line
of the Business such that the Buying Parties’ or their Subsidiaries’ revenues
(or anticipated revenues in the case of the Business) would be decreased by more
than Twenty-Five Million Dollars ($25,000,000) or the Buying Parties’ or their
Subsidiaries’ earnings before interest and taxes (or anticipated earnings before
interest and taxes in the case of the Business) would be decreased by more than
Three Million Dollars ($3,000,000), based on the results of fiscal year 2007 or
(iii) divest any other business or product line of Buyer or its Affiliates
(other than as provided in subclauses (i) and (ii) above). In addition, the
Buying Parties shall use their best efforts to defend through litigation on the
merits any claim asserted in court by any party in order to avoid entry of, or
to have vacated or terminated, any decree, order or judgment (whether temporary,
preliminary or permanent) that would prevent the Closing from occurring as
promptly as practicable; provided, however, that such efforts shall not require
the Buying Parties to appeal any adverse decision beyond the United States Court
of Appeals.

(e) The Company and Seller, on the one hand, and the Buying Parties, on the
other hand, shall notify and keep the other advised as to any litigation or
administrative Proceeding pending and known to such Party, or, to its Knowledge,
threatened in writing, which challenges the Transactions. Subject to Section 7.2
and Article XI, the Company, Seller and the Buying Parties shall not take any
action inconsistent with their obligations under this Agreement or which would
materially hinder or delay the consummation of the Transactions.

7.3 Public Disclosures. Prior to the Closing Date, no Party shall (except in the
case of the Company with respect to disclosures made to the employees or
customers of the Company and the SCT Subsidiaries) issue any press release or
make any other public disclosures concerning this Transactions or the contents
of this Agreement without the prior written consent of the other Party, unless a
Party believes, upon advice of counsel, it is required by Law or regulation (of
any applicable stock or securities exchange or otherwise) to make such public
disclosure. The Parties shall reasonably cooperate as to the timing and contents
of any public announcement or communication.

7.4 Access to Records and Personnel.

(a) From the date hereof until the earlier of the Closing or termination of this
Agreement, upon reasonable notice, Seller shall cause the Company and the SCT
Subsidiaries to (i) afford the Buying Parties and their representatives
reasonable access to the senior managers of the Company and the SCT Subsidiaries
and (ii) furnish to the representatives of the Buying

 

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Parties such additional financial and operating data and other material
information regarding the Business (or copies thereof) as the Buying Parties may
from time to time reasonably request; provided, however, that any such access or
furnishing of information shall be conducted at the Buying Parties’ expense,
during normal business hours, and in such a manner as not to unreasonably
interfere with the normal operations of the Business. Notwithstanding anything
to the contrary in this Agreement, neither Seller, the Company nor the SCT
Subsidiaries shall be required to disclose any information to the Buying Parties
if such disclosure would (i) jeopardize any attorney-client or other legal
privilege, (ii) contravene any applicable Laws (including applicable Antitrust
Laws), fiduciary duty or binding agreement entered into prior to the date
hereof, (iii) disrupt or jeopardize any material customer or vendor relationship
or (iv) include Tax information pertaining to Seller or its Affiliates other
than the Company and the SCT Subsidiaries.

(b) From and after the Closing Date, the Parties shall, and the Buying Parties
shall cause the Company and the SCT Subsidiaries to, retain the books, records,
documents, instruments, accounts, correspondence, writings, evidences of title
and other papers relating to the Company and the SCT Subsidiaries in their
possession (the “Books and Records”) for seven (7) years or for such longer
period as may be required by Law.

(c) From and after the Closing Date, the Parties shall allow each other, and
Buyer shall cause the Company and the SCT Subsidiaries to allow Seller, its
Affiliates and their respective representatives, reasonable access during normal
business hours to the Books and Records and to personnel having knowledge of the
whereabouts and/or contents of the Books and Records, for legitimate
non-competitive business reasons, including all information required to
calculate and verify the amounts set forth in Article III, the preparation of
the Preliminary Closing Balance Sheet, the Final Closing Balance Sheet and
Seller’s Tax Returns and the defense of Proceedings. Each Party shall be
entitled to recover its out-of-pocket costs (including copying costs) incurred
in providing such Books and Records to the other Party, except with respect to
information provided by Buyer, the Company and the SCT Subsidiaries to Seller in
connection with the preparation of the Preliminary Closing Balance Sheet, the
Final Closing Balance Sheet or Seller’s Tax Returns or resolution of any dispute
with respect to Article III. The requesting Party shall, and the Buying Parties
shall cause the Company, the SCT Subsidiaries and their respective Affiliates to
hold in confidence all confidential information identified as such by, and
obtained after the Closing from, the disclosing Party or any of its officers,
agents, representatives or employees; provided, however, that information that
(i) was in the public domain; (ii) was in fact known to the requesting Party
prior to disclosure by the disclosing Party, its officers, agents,
representatives or employees; (iii) becomes known to the requesting Party from
or through a third party not under an obligation of non-disclosure to the
disclosing Party; or (iv) Seller is required by Law or otherwise deems necessary
and proper to disclose in connection with the filing, examination or defense of
any Tax Return or other document required to be filed, shall not be deemed to be
confidential information. In addition, the Parties agree that confidential
information may only be used for the purpose for which it was supplied.

 

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7.5 Employee Relations and Benefits.

(a) Immediately prior to the Closing, the Company shall pay to Management in
immediately available U.S. federal funds the Management Incentive Payment.
Seller shall be responsible for all Tax, withholding, reporting, accounting and
other obligations associated with the Management Incentive Payment and except as
provided in Section 3.5, the Buying Parties shall have no responsibility
therefor.

(b) (i) As soon as practicable after the Closing, Seller and the Company shall
take appropriate corporate action to distribute the balances of the incentive
compensation accounts of all participants in the Executive Incentive Plan in the
form of a lump sum in accordance with the terms of the Executive Incentive Plan.
Upon completion of such distribution, the Buying Parties shall be under no
obligation to continue to maintain the Executive Incentive Plan.

(ii) Buying Parties acknowledge and agree that the Company shall pay to the
employees all accrued benefits under the Annual SCT Bonus Plan including any
appropriate accruals related to the period beginning on January 1, 2008 and
ending on the Closing Date, in accordance with the terms of the Annual SCT Bonus
Plan, to the extent that such accrued benefits and 2008 accruals are reserved
against on the Preliminary Closing Balance Sheet; provided, however, that in no
event shall the Company pay to the employees pursuant to the Annual SCT Bonus
Plan any amounts that are less than the amount of such benefits that have been
reserved against on the Preliminary Closing Balance Sheet. After the Closing
Date, employees may become eligible to participate in Buyer bonus and incentive
plans in Buyer’s discretion.

(iii) Buying Parties acknowledge and agree that the accruals for the Company’s
existing 401(k) profit sharing plans (as described in Section 4.15(a) of the
Disclosure Letter) related to the period beginning on January 1, 2008 and ending
on the Closing Date shall be credited and funded to eligible Employees’ profit
sharing accounts as soon as practicable following the Closing Date.

All amounts described in this Section 7.5(b) shall be paid or credited, as
applicable, no later than the last day of the calendar month following the
calendar month in which the Closing Date occurs.

(c) The Buying Parties or one of its Affiliates shall recognize all service of
the employees with the Company and the SCT Subsidiaries prior to the Closing
Date as service with the Buying Parties and its Affiliates in connection with
any tax-qualified pension plan, 401(k) savings plan, welfare benefit plans and
employment policies (including vacations and holiday policies) maintained by the
Buying Parties or one of their Affiliates that are made available following the
Closing Date by the Buying Parties or one of their Affiliates for purposes of
any waiting period, vesting, eligibility and benefit entitlement (but excluding
pension plan accruals); provided, however, that with respect to any defined
benefit pension plan maintained by the Buying Parties or one of their Affiliates
in which such employee participates following the Closing Date, such service
credit shall be measured from the earliest date that such employee commenced
participation in a tax-qualified pension or savings plan maintained by the
Company and the SCT Subsidiaries.

 

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(d) The Buying Parties shall (i) waive, or use commercially reasonable efforts
to cause their insurance carriers to waive, all limitations as to pre-existing
and at-work conditions, if any, with respect to participation and coverage
requirements applicable to the employees of the Company and the SCT Subsidiaries
under any welfare benefit plan (as defined in Section 3(l) of ERISA) that is
made available to such employees following the Closing Date by the Buying
Parties or one of their Affiliates, and (ii) provide credit to such employees
for any co-payments, deductibles and out-of-pocket expenses paid by such
employees under the employee benefit plans, programs and arrangements of the
Company and the SCT Subsidiaries during the portion of the relevant plan year
including the Closing Date. The Buying Parties shall assume responsibility for
all liabilities arising under the Benefit Plans in accordance with Section 4980B
of the Code regardless of whether such liability accrued before or after the
Closing Date.

(e) Nothing herein, expressed or implied, shall confer upon any employee or
former employee of the Company or any of the SCT Subsidiaries, or the Buying
Parties or any of their respective Affiliates, any right to employment or
continued employment for any specified period, under or by reason of this
Agreement.

(f) The Buying Parties shall retain full responsibility for compliance with the
Worker’s Adjustment and Restraining Notification Act of 1988, as amended, and be
solely responsible for furnishing any required notice of any “plant closing” or
“mass layoff”, as applicable, which arise as a result of any facility closings,
reductions in work force or termination or other action, that the Company and
the SCT Subsidiaries may cause or initiate on or after the Closing Date and
shall jointly and severally indemnify Seller and its Affiliates for any
liability related thereto, including reasonable attorneys’ fees related thereto.

(g) If the terms of any Benefit Plan named in Section 4.15(b) of the Disclosure
Letter, provide any eligible current or former employee of the Company or the
SCT Subsidiaries, as a result of the Transactions, with (i) an increased or
modified benefit or payment; (ii) an increased amount of compensation due to any
such employee, consultant, officer or director; or (iii) accelerated vesting,
payment or funding of any compensation, stock-based benefit, incentive or other
benefit, then Buyer shall provide such benefit or compensation as soon as
reasonably practicable following the Closing Date. This Section 7.5(g) includes
the full and immediate vesting and payment of the balances in the incentive
compensation accounts of each individual who is a participant in the Standard
Car Truck Company and Affiliates Executive Incentive Compensation Plan on the
Closing Date, which payment shall be in the form of a lump sum and shall be made
as soon as practicable following the Closing Date.

7.6 Update to Disclosure.

(a) Between the date of this Agreement and the Closing, Seller shall promptly
inform Buyer in writing should it become aware of the existence or occurrence of
(i) any representation or warranty in this Agreement made as of the date hereof
being untrue or of any breach of any covenant of Seller in this Agreement
(“Pre-Signing Supplemental Information”) or (ii) any matter arising after the
date hereof but prior to the Closing that if existing or occurring

 

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at or prior to the date of this Agreement would have been required to be set
forth or described in the Disclosure Letter, (“Post-Signing Supplemental
Information”). Pre-Signing Supplemental Information and Post-Signing
Supplemental Information shall be taken into account in determining satisfaction
of the conditions specified in Section 8.1(a) and Section 8.1(c).

(b) If the Closing occurs, Buyer Indemnitees shall be entitled to
indemnification in accordance with and subject to Article X for any Losses
incurred as a result of a breach of representation and warranty or covenant
identified in the Pre-Signing Supplemental Information.

(c) If the Closing occurs, Buyer Indemnitees shall be entitled to
indemnification in accordance with and subject to Article X for any Interim
Losses incurred as a result of a breach of representation and warranty or
covenant identified in the Post-Signing Supplemental Information solely to the
extent such Interim Losses are in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000); provided, however, that any Interim Losses in relation to
Post-Signing Supplemental Information (whether indemnified or not)
(“Post-Signing Supplemental Information Losses”) shall be taken into account in
determining whether the Minimum Amount has been met.

7.7 Director and Officer Indemnification.

(a) For a period of six (6) years from and after the Closing Date, the Buying
Parties, shall cause the charter and other organizational documents of the
Company and the SCT Subsidiaries to contain provisions no less favorable in any
manner to the directors and officers of the Company and the SCT Subsidiaries
with respect to limitation of liabilities of directors and officers,
indemnification and advancement of expenses than are set forth as of the date of
this Agreement in the applicable organizational or charter documents of the
Company and the SCT Subsidiaries, which provisions shall not be amended,
repealed or otherwise modified in a manner that would adversely affect the
rights thereunder of the directors and officers of the Company and the SCT
Subsidiaries. In addition, the Buying Parties shall, and shall cause the Company
and the SCT Subsidiaries to, pay any expenses (including fees and expenses of
legal counsel) of any director or officer under this Section 7.7 (including in
connection with enforcing the indemnity and other obligations provided for in
this Section 7.7) as incurred to the fullest extent permitted under applicable
Law, provided that the Person to whom expenses are advanced provides an
undertaking to repay such advances to the extent required by applicable Law.

(b) The Company shall purchase a “run-off” or “tail” directors’ and officers’
liability and fiduciary liability insurance policy to the current policy of the
Company with a claims period of at least six (6) years from and after the
Closing Date from an insurance carrier with the same or better credit rating as
the Company’s current insurance carrier and having (i) the coverage levels,
benefits and other terms and conditions no less favorable as the current
policies of the Company with respect to matters existing or occurring at or
prior to the Closing Date (including in connection with this Agreement or the
Transactions) and (ii) an annual premium no greater than $12,000.

(c) In the event any claim is asserted or made, any determinations that are
required to be made with respect to whether a director’s or an officer’s conduct
complies with an

 

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applicable standard shall be made by independent legal counsel selected by the
director or officer in question; provided that nothing in this Section 7.7 shall
impair any rights of any current or former director or officers of the Company
or any of the SCT Subsidiaries, including pursuant to the respective
organizational or charter documents, under applicable Law or otherwise.

(d) For a period of six (6) years from and after the Closing Date, the
obligations of the Buying Parties, the Company and the SCT Subsidiaries under
this Section 7.7 shall continue in full force and effect following the Closing
and shall not be terminated or modified in such a manner as to adversely affect
the rights of any director or officer to whom this Section 7.7 applies unless
the affected director or officer shall have consented in writing to such
termination or modification (it being expressly agreed that the directors and
officers to whom this Section 7.7 applies shall be third party beneficiaries of
this Section 7.7). The provisions of this Section 7.7 are (i) intended to be for
the benefit of, and shall be enforceable by, each director and officer, his or
her heirs and his or her representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract, Law or otherwise.

(e) For a period of six (6) years from and after the Closing Date, if Buyer or
any of its successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Buyer, assume, honor and
discharge the obligations set forth in this Section 7.7.

7.8 Tax Matters.

(a) Seller will be responsible for the preparation and filing of all Tax Returns
of the Company and the SCT Subsidiaries for all periods ending on or prior to
the Closing Date. Seller will make all payments required with respect to any
such Tax Returns. If Seller utilizes in connection with the filing of any such
Tax Return any Tax asset taken into account in determining the Working Capital,
Seller shall immediately reimburse Buyer for such amount.

(b) Buyer will be responsible for the preparation and filing of all Tax Returns
of the Company and the SCT Subsidiaries for all periods ending after the Closing
Date including for any Tax year beginning before and ending after the Closing
Date (“Straddle Period”). Buyer shall provide Seller, at least 30 days prior to
the applicable deadline for filing Tax Returns relating to any Straddle Period,
a copy of such Tax Returns for Seller’s review and comment. Buyer will make all
payments required with respect to any such Tax Return; provided, however, that
Seller will reimburse Buyer for Taxes related to any Straddle Period to the
extent (i) any payment by Buyer relates to the operation of the Company or any
SCT Subsidiary for any period ending on or before the Closing Date as determined
pursuant to Section 7.8(e) and (ii) such portion exceeds the amount identified
for such Taxes and taken into account in determining the Working Capital.

(c) Buyer and Seller agree to utilize, or cause their respective affiliates to
utilize the alternative procedure set forth in Rev. Proc. 2004-53 with respect
to wage reporting.

 

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(d) Without regard to the limitations set forth in Section 10.1(b), Seller
agrees to indemnify and hold harmless Buyer, the Company and the SCT
Subsidiaries from and against any Loss that any of Buyer, Company, the SCT
Subsidiaries or any of their Affiliates may suffer from, arising out of,
relating to, in the nature of, or caused by: (i) any liability of Seller or its
stockholders that becomes a liability of Buyer, the Company, any SCT Subsidiary
or their Affiliates under any bulk transfer law of any jurisdiction, under any
common law doctrine of de facto merger or successor liability, or otherwise by
operation of Law; (ii) any liability of the Company or any SCT Subsidiary for
unpaid Taxes with respect to any Tax year or portion thereof ending on or before
the Closing Date (or for any Straddle Period) identified for such Taxes and to
the extent allocable to the portion of such year beginning before and ending on
the Closing Date to the extent such Taxes exceed the amount, if any, taken into
account in determining the Working Capital; (iii) any liability of the Company
or any SCT Subsidiary for unpaid Taxes of any Person (including Seller and its
subsidiaries) under Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Law), as a transferee or successor, by contract, or
otherwise; or (iv) any Tax liability of the SCT Subsidiaries, the Company or the
Buying Parties, with respect to payments made under the Management Incentive
Compensation Program (including liabilities arising under Code Sections 280G or
4999).

(e) For purposes of this Section 7.8, whenever it is necessary to determine the
liability for Taxes based on the income or receipts of the Company or a SCT
Subsidiary for a Straddle Period, the determination of the Taxes of the Company
or any SCT Subsidiary for the portion of the Straddle Period ending on and
including, and the portion of the Straddle Period beginning and ending after,
the Closing Date shall be determined by assuming that the Straddle Period
consisted of two taxable periods, one which ended at the close of the Closing
Date and the other which began at the beginning of the day following the Closing
Date and items of income, gain, deduction, loss or credit of the Company for the
Straddle Period shall be allocated between such two taxable years or periods on
a “closing of the books basis” by assuming that the books of the Company and any
SCT Subsidiary, as the case may be, were closed at the close of the Closing
Date; provided, however, that, occurrences or events occurring on the Closing
Date but after the Closing that are outside of the ordinary course of business
shall be apportioned to the post-Closing period; provided further, that,
exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned between such two
taxable years or periods on a daily basis. Notwithstanding the previous
sentence, any income associated with the Divestiture shall be apportioned to the
pre-Closing period. The amount of other Taxes of the Company for a Straddle
Period shall be allocated to the periods before and after the Closing Date pro
rata, based on the number of days of the Straddle Period in the period before
and ending on the Closing Date, on the one hand, and the number of days in the
Straddle Period in the period after the Closing Date, on the other hand. By way
of clarification, this Section 7.8(e) shall govern any and all indemnification
rights that Buyer Indemnitees, the Company and any SCT Subsidiary may have with
respect to any Tax matters and none of the Buyer Indemnitees, the Company or any
SCT Subsidiary shall have any additional rights to collect for the same matters
for a breach of Section 4.13.

(f) Seller, the Company and Buyer shall reasonably cooperate, and shall cause
their respective Affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Tax
Returns, including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits

 

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with respect to all taxable periods relating to Taxes. Buyer recognizes that
Seller and its stockholders may need access, from time to time, after the
Closing Date, to certain accounting and tax records and information held by the
Company to the extent such records and information pertain to events occurring
prior to the Closing Date; therefore, Buyer agrees that from and after the
Closing Date, Buyer shall, and shall cause the Company, the SCT Subsidiaries and
their affiliates and successors to (i) retain and maintain such records and
information until such time as Seller agrees in writing that such retention and
maintenance is no longer necessary, and (ii) allow Seller and its stockholders
(and their agents and representatives) to inspect, review and make copies of
such records and information as they may deem necessary or appropriate from time
to time. Buyer shall cause the Company to permit Seller and its stockholders to
control any Tax audit for or covering any pre-Closing Tax period, and shall
promptly forward and shall cause the Company to promptly forward to Seller and
its stockholders all notices or other communications received with respect to
any such Tax audit; provided that Seller shall promptly inform Buyer of any
material development in any such Tax Audit and promptly provide Buyer with
copies of any correspondence received from or sent to the relevant taxing
authority in connection with any such Tax Audit.

(g) Seller shall be entitled to receive any refunds of any Taxes of the Company
and the SCT Subsidiaries for any taxable year or period that ends on or before
the Closing Date and, with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable year
ending on and including the Closing Date, except (i) to the extent that any such
refunds are taken into account in determining the Working Capital and
(ii) occurs as a result of a carry back of a loss attributable to a post-Closing
Tax period.

(h) The Parties acknowledge and agree that any income Tax deductions related to
payments under the Management Incentive Compensation Program, whether paid at
Closing or thereafter, shall be claimed by the S Corporation Parent on its
income Tax Returns and the Parties shall not take any position inconsistent with
this Section 7.8(h).

(i) Following the Closing, Buyer shall not amend any Tax Returns for taxable
years or periods ending on or before the Closing Date without Seller’s prior
written consent.

7.9 No Negotiation. Until such time, if any, as this Agreement is closed or
terminated pursuant to Article XI, Seller will not, and will cause the Company
not to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Buying Parties) relating to any transaction involving the
sale of the Business or assets (other than in the ordinary course of business or
with respect to the Divestiture) of the Company or any SCT Subsidiary, or any of
the capital stock of the Company or any SCT Subsidiary, or any merger,
consolidation, business combination, or similar transaction involving the
Company or any SCT Subsidiary (other than with respect to the Divestiture).

7.10 Divestiture. Subject to any transition services or similar agreement
entered into between the Company and the purchaser of Anchor Brake Shoe Company
for the provision of administrative services, Seller will cause such purchaser
to (a) acknowledge and agree that

 

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neither the Company nor any SCT Subsidiary nor Buying Parties will have any
liability or obligation to indemnify purchaser with respect to Anchor Brake Shoe
Company or its operations (“Anchor Obligations”) and (b) agree to defend any and
all Anchor Obligations. In addition, the definitive agreement with respect to
the Divestiture shall expressly provide that Buyer is a third party beneficiary
of such agreement with respect to the Anchor Obligations. For a period not to
exceed eighteen (18) months from the Closing Date, Buyer agrees to provide
administrative or reasonable transition services to the third party buyer in
connection with the Divestiture.

ARTICLE VIII

CONDITIONS

8.1 Conditions to the Obligations of the Buying Parties. The obligations of the
Buying Parties to consummate the Transactions shall be subject to the
satisfaction or waiver at or prior to the Closing Date of the following
conditions:

(a) the representations and warranties of the Company and Seller contained in
this Agreement shall be true and correct in all material respects at and as of
the date hereof and as of the Closing Date (except for representations and
warranties qualified by materiality which shall be true and correct in all
respects) except (i) for changes specifically permitted by this Agreement,
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date and (iii) that
those instances in which the failure of the representations and warranties in
the aggregate to be true and correct would not reasonably be expected to have a
Material Adverse Effect;

(b) the Company and Seller shall have performed and complied in all material
respects with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date;

(c) since the date of this Agreement, there shall not have occurred or be
existing any fact, event or circumstance that would reasonably be expected to
have a Material Adverse Effect; and

(d) the Company and Seller shall have delivered to Buyer a certificate executed
by an executive officer of the Company on behalf of the Company and an executive
officer of Seller on behalf of Seller, respectively, dated as of the Closing
Date, certifying that the conditions specified in paragraphs (a), (b) and
(c) immediately above have been satisfied.

8.2 Conditions to the Obligations of Seller. The obligations of Seller to
consummate the Transactions shall be subject to the satisfaction or waiver at or
prior to the Closing Date of the following conditions:

(a) the representations and warranties of the Buying Parties contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such date,
(ii) that those representations and warranties which by their terms are
qualified by

 

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materiality shall be true in all respects, and (iii) those instances in which
the failure of the representations and warranties in the aggregate to be true
and correct would not reasonably be expected to have a Buyer Material Adverse
Effect;

(b) the Buying Parties shall have performed and complied with all of their
respective obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date; and

(c) the Buying Parties shall have delivered to Seller a certificate, dated as of
the Closing Date, and executed by an executive officer of Buyer on behalf of
Buyer, certifying that the conditions specified in paragraphs (a) and
(b) immediately above have been satisfied.

8.3 Conditions to Obligations of Buying Parties and Seller. The respective
obligations of the Buying Parties and Seller to consummate the Transactions
shall be subject to the satisfaction or waiver at or prior to the Closing Date
of the following conditions:

(a) No Injunction, Etc. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any Governmental Authority that is
in effect that prohibits or materially restricts the consummation of the
purchase by, or the transfer by Seller to Buyer of the Shares; provided,
however, that the benefits of this Section 8.3(a) shall not be available to a
Party whose failure to fulfill its obligations pursuant to Sections 7.2 and 7.4
shall have been the cause of, or shall have resulted in, such injunction,
restraining order or decree.

(b) Antitrust Approvals. All mandatory (i) waiting periods specified under the
HSR Act or similar domestic or foreign Antitrust Laws with respect to the
Transactions shall have elapsed or been terminated and (ii) approvals required
under foreign Antitrust Laws with respect to the Transactions have been
obtained, all of which are listed on Section 8.3(b) of the Buyer Disclosure
Letter.

(c) Divestiture. The Divestiture shall have been completed on or before the
Closing Date.

8.4 Frustration of Closing Conditions. Neither the Buying Parties nor Seller may
rely on the failure of any condition set forth in Section 8.1, Section 8.2 or
Section 8.3, as the case may be, to be satisfied if such failure was caused by
such Party’s failure to consummate the Transactions, as required by and subject
to Section 7.2.

ARTICLE IX

CLOSING

9.1 Closing Date. Unless this Agreement shall have been terminated pursuant to
Article XI hereof, the closing of the Transactions (the “Closing”) shall take
place at the offices of McDermott Will & Emery LLP, 227 West Monroe Street,
Chicago, Illinois, at 10:00 A.M., Chicago time, three (3) Business Days after
all of the conditions to the Closing set forth in Article VIII hereof have been
satisfied or waived, or such other date, time and place as shall be agreed upon
by Seller and Buyer (the actual date and time being herein called the “Closing
Date”).

 

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9.2 The Buying Parties’ Deliveries to Seller. At the Closing, the Buying Parties
shall deliver, or caused to be delivered, to Seller the following, in form and
substance reasonably acceptable to Seller:

(a) a copy of the certificate of incorporation and bylaws, partnership agreement
or analogous organizational document of each Buying Party, as amended, certified
by the corporate secretary or assistant secretary of such Buying Party;

(b) a copy of the resolutions duly adopted by the Board of Directors of each
Buying Party evidencing its authorization of the execution and delivery of this
Agreement and the consummation of the Transactions, certified by the corporate
secretary or assistant secretary of such Buying Party;

(c) the Closing Payment in immediately available U.S. federal funds;

(d) the Escrow Agreement duly executed by the Buying Parties; and

(e) a certificate of an officer of each Buying Party (i) certifying the names
and signatures of the officers of such Buying Party authorized to sign this
Agreement and the other agreements relating hereto and (ii) certifying those
matters set forth in Section 8.2 above.

9.3 The Buying Parties’ Delivery to Escrow Agent. At the Closing, the Buying
Parties shall deliver or cause to be delivered, to Escrow Agent, the Escrow
Amount in immediately available U.S. federal funds.

9.4 Seller’s Deliveries. At the Closing, Seller shall deliver, or cause to be
delivered, to the Buying Parties the following, in form and substance reasonably
acceptable to the Buying Parties:

(a) a copy of the certificate of incorporation and bylaws, partnership
agreement, operating agreement or analogous organizational document of Seller,
the Company and each of the SCT Subsidiaries certified by the corporate
secretary of such entity;

(b) certificates evidencing the Shares properly endorsed or with stock powers
executed in blank or otherwise in form suitable for transfer;

(c) certificates evidencing the Durox Shares properly endorsed or with stock
powers executed in blank or otherwise in form suitable for transfer;

(d) certificates of good standing dated not more than thirty (30) days prior to
the Closing Date with respect each of Seller, the Company and the SCT
Subsidiaries (other than Standard Car Truck of Canada, Inc. and SCT Europe Ltd.)
from the Secretary of State (or other appropriate governmental official) of the
state, province or country of its formation if such certificates or analogous
documents are issued by the appropriate Governmental Authority;

(e) a certificate of an officer of the Company (i) certifying the names and
signatures of the officers of the Company authorized to sign this Agreement and
any other agreements relating hereto and (ii) certifying those matters set forth
in Section 8.1 above;

 

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(f) a certificate of an officer of Seller (i) certifying the names and
signatures of the officers of Seller authorized to sign this Agreement and any
other agreements relating hereto and (ii) certifying those matters set forth in
Section 8.1 above;

(g) a copy of the resolutions duly adopted by the Board of Directors of the
Company and Seller evidencing its authorization of the execution and delivery of
this Agreement and the consummation of the Transactions, certified by the
corporate secretary of the Company and Seller, respectively;

(h) noncompetition agreements in substantially the form attached hereto as
Attachment II, from each of H.S. Russell, Patricia Russell and Diana Terlato;

(i) non-competition agreements in substantially the form attached hereto as
Attachment III duly executed by each of Rick Mathes, Dan Schroeder, Mark Pace,
Mickey Korzeniowski and David Watson;

(j) non-competition agreements in substantially the form attached hereto as
Attachment IV duly executed by each of David East, Donald Popernick, Wilson Pak,
Phillip Lindsell, Andrew Haas and Paul Bumby;

(k) the Escrow Agreement duly executed by Seller;

(l) written resignations of the officers and directors of the Company and the
SCT Subsidiaries;

(m) payoff letters and release and termination of all Liens associated with all
debt for borrowed money owed to any bank or other financial institution by the
Company and the SCT Subsidiaries, each in a form reasonably satisfactory to
Buyer; and

(n) evidence reasonably satisfactory to Buyer that Seller and/or the
S Corporation Parent has withheld and/or reported any Taxes required to be
withheld and/or reported in connection with the Management Incentive Payment.

ARTICLE X

INDEMNIFICATION

10.1 Agreement to Indemnify.

(a) Subject to the limitations provided in this Article X and in Sections 7.6
and 10.11, Seller shall indemnify and hold harmless the Buying Parties and their
respective Affiliates, the Company and any SCT Subsidiary (collectively, the
“Buyer Indemnitees”) to the extent set forth in this Article X in respect of any
Losses incurred by Buyer Indemnitees as a result of any (i) inaccuracy or
misrepresentation in any representation or warranty of the Company or Seller
made herein, (ii) breach of or failure to perform any covenant, agreement or
obligation of the Company or Seller in this Agreement or any agreement, document
or certificate delivered hereunder, (iii) Asbestos Claims (but only with respect
to Asbestos Losses), (iv) Designated Claim I (but only with respect to
Designated Losses), (v) Designated Claim II (but only with respect to Designated
Losses) or (vi) Designated Environmental Conditions (but only with respect to
Designated Environmental Losses).

 

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(b) Notwithstanding the foregoing paragraph (a):

(i) Seller shall not be liable under Section 10.1(a): (A) for any Losses (other
than any Designated Losses with respect to Designated Claim I) in respect of any
claim (or group of directly related claims) subject to Section 10.1(a) having an
aggregate value of not more than $5,000 (“Qualified Claims”), and (B) until all
Losses in respect of all Qualified Claims exceed $1,500,000 in the aggregate
(the “Minimum Amount”), and thereafter Seller shall be liable, subject to the
other limitations provided for elsewhere in this Agreement, for Qualified Claims
to the extent in excess of the Minimum Amount. Notwithstanding the foregoing,
any Designated Losses with respect to Designated Claim I and any Asbestos Losses
with respect to the Asbestos Claims described on Exhibit I shall not be subject
to the Minimum Amount.

(ii) Other than with respect to (a) fraud by Seller, (b) Section 7.8(d), and
(c) Section 11.2, the aggregate liability of Seller and its Affiliates for all
Losses under this Agreement and any agreement, document or certificate delivered
herewith and the Transactions shall not exceed the amount held in the Escrow
Fund (the “Maximum Amount”) and the rights of Buyer Indemnitees to assert claims
against the Escrow Fund under this Article X shall be the sole and exclusive
remedy of Buyer Indemnitees for any breach of this Agreement, the Asbestos
Claims, Designated Claims, Designated Environmental Conditions or the
Transactions contemplated hereby.

(iii) Buyer shall not be entitled to indemnification for any Losses under
Section 10.1(a)(i) in the event that Seller can prove by a preponderance of the
evidence that Mark Cox, David M. Seitz or Pat Dugan (i) had actual knowledge
prior to the Closing of facts which clearly and obviously constitute a breach by
the Company or Seller of a representation or warranty made in this Agreement,
(ii) had an actual understanding prior to the Closing that such facts constitute
a breach of a representation or warranty by the Company or Seller under this
Agreement, and (iii) fails to disclose such knowledge to the Company and Seller
prior to the Closing.

(iv) IN NO EVENT SHALL SELLER OR ITS AFFILIATES HAVE ANY LIABILITY OR OBLIGATION
TO INDEMNIFY ANY BUYER INDEMNITEE FOR CONSEQUENTIAL DAMAGES, SPECIAL DAMAGES,
SPECULATIVE DAMAGES, INCIDENTAL DAMAGES, INDIRECT DAMAGES, PUNITIVE DAMAGES,
DIMINUTION IN VALUE, LOST PROFITS OR SIMILAR ITEMS; PROVIDED, HOWEVER, THAT
INCIDENTAL DAMAGES, INDIRECT DAMAGES, PUNITIVE DAMAGES, DIMINUTION IN VALUE,
LOST PROFITS OR SIMILAR ITEMS PAID TO AN UNAFFILIATED THIRD PARTY OF ANY PARTY
HERETO WILL BE DEEMED TO BE DIRECT LOSSES UNDER THIS AGREEMENT AND NOT INCLUDED
IN THIS EXCEPTION; and

(v) Seller shall have no liability to indemnify any Buyer Indemnitee for any
Losses (A) related to any liability that is reflected or reserved for (i) in the
calculation of Working Capital or (ii) on the Financial Statements or the Final
Closing Balance Sheet, (B) as

 

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set forth in Section 10.1(b)(iii), (C), except with respect to actions taken by
Buying Parties pursuant to this Agreement, to the extent arising as a result of
any action taken or omitted to be taken by any Buying Party or their respective
Affiliates (including failure to comply with the Asbestos Protocol or the
Designated Environmental Conditions Protocol), or (D) to the extent arising from
a change in Law that becomes effective after the Closing Date.

(c) Buying Parties jointly and severally shall indemnify and hold harmless
Seller and its Affiliates (collectively the “Seller Indemnitees” and, together
with Buyer Indemnitees, the “Indemnitees”) to the extent set forth in this
Article X in respect of any and all Losses incurred by any Seller Indemnitee:
(i) as a result of any inaccuracy or misrepresentation in any representation or
warranty of a Buying Party made herein or any breach of or failure to perform
any covenant, agreement or obligation of any Buying Party in this Agreement or
any agreement, document or certificate delivered hereunder; or (ii) except as
specifically permitted in Article X, as a result of liabilities of the Company
and its Subsidiaries, including liabilities arising from matters, facts and
circumstances set forth in the Disclosure Letter to Article IV hereof. IN NO
EVENT SHALL THE BUYER OR ITS AFFILIATES HAVE ANY LIABILITY OR OBLIGATION TO
INDEMNIFY ANY SELLER INDEMNITEE FOR CONSEQUENTIAL DAMAGES, SPECIAL DAMAGES,
SPECULATIVE DAMAGES, INCIDENTAL DAMAGES, INDIRECT DAMAGES, PUNITIVE DAMAGES,
DIMINUTION IN VALUE, LOST PROFITS OR SIMILAR ITEMS; PROVIDED, HOWEVER, THAT
INCIDENTAL DAMAGES, INDIRECT DAMAGES, PUNITIVE DAMAGES, DIMINUTION IN VALUE,
LOST PROFITS OR SIMILAR ITEMS PAID TO AN UNAFFILIATED THIRD PARTY OF ANY PARTY
HERETO WILL BE DEEMED TO BE DIRECT LOSSES UNDER THIS AGREEMENT AND NOT INCLUDED
IN THIS EXCEPTION.

10.2 Survival of Representations and Warranties. All representations and
warranties shall survive the Closing and expire on the eighteen (18) month
anniversary of the Closing Date; provided, however, that (i) the representations
and warranties contained in Sections 4.1 (Corporate Existence), 4.2 (Corporate
Authority), 4.4 (Capitalization), 5.1 (Corporate Existence) and 5.2 (Corporate
Authority and Ownership) shall survive until the ten (10) year anniversary of
the Closing Date, (ii) the representation and warranties contained in Sections
4.13 (Tax Matters), 4.15 (Employee Benefit Plans) and 4.18 (Environmental
Matters) shall survive until the five (5) year anniversary of the Closing Date
and (iii) claims of fraud by Seller with respect to its representations and
warranties shall survive for the applicable statute of limitations. The
covenants, agreements or obligations of the Parties hereto shall survive the
Closing and expire on the first anniversary of the Closing Date, unless a
different term is expressly specified. All claims for indemnification of
Designated Environmental Losses shall survive the Closing and expire on the five
(5) year anniversary of the Closing Date. All claims for indemnification of
Asbestos Losses shall survive the Closing and expire on the ten (10) year
anniversary of the Closing Date. All claims for indemnification of Designated
Losses shall survive the Closing and shall expire at such time that the
applicable U.S. Proceedings referred to in the definition of Designated Claims
shall have ended conclusively and no right to appeal shall exist with respect to
such U.S. Proceeding or the Complaint. Any cause of action for any inaccuracy,
misrepresentation, failure or breach of a representation or warranty, covenant,
agreement or obligation (including any indemnification obligation for any
Asbestos Loss, Designated Environmental Loss or Designated Loss) contained
herein shall expire and terminate unless the Party claiming that such
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delivers to the other Party written notice and a reasonably detailed explanation
of the alleged inaccuracy, misrepresentation, failure, breach or obligation on
or before 5:00 P.M., Chicago time, on the date on which such representation or
warranty, covenant, agreement or obligation expires pursuant to this Section
10.2.

10.3 Notice of Claims for Indemnification. If any Indemnitee shall believe that
such Indemnitee is entitled to indemnification pursuant to Section 10.1 in
respect of any Losses, such Indemnitee shall give the appropriate indemnifying
Party (the “Indemnifying Party”) written notice within thirty (30) days of its
becoming aware thereof (but prior to the expiration of the survival period
specified in Section 10.2 for the relevant representation, warranty, covenant,
agreement, or obligation), which notice shall specify in reasonably sufficient
detail the facts alleged to give rise to a claim for indemnification and the
amount the Indemnitee seeks hereunder from the Indemnifying Party, together with
such information as may be necessary for the Indemnifying Party to determine
whether the limitations in Section 10.1(b)(i), have been satisfied; provided,
however, the failure to give such notice shall not release the Indemnifying
Party from its obligations under this Article X except to the extent the
Indemnifying Party has been prejudiced by the failure. If the Indemnifying Party
contests the assertion of a claim, the Parties covenant and agree to use their
commercially reasonable efforts to resolve their dispute with respect to such
claim.

10.4 Defense of Claims. Subject to the last sentence of this Section 10.4, in
connection with any claim for which indemnification has been sought under this
Article X resulting from or arising out of any claim or Proceeding against an
Indemnitee by a Person that is not a Party hereto (a “Third Party Claim”), the
Indemnifying Party may assume the defense of any such Third Party Claim (unless
such Indemnitee elects not to seek indemnity hereunder for such Third Party
Claim), upon written notice to the relevant Indemnitee. If the Indemnifying
Parties shall have assumed the defense of any Third Party Claim in accordance
with this Section 10.4, the Indemnifying Parties shall be authorized to settle,
or consent to the entry of any judgment arising from, any such Third Party
Claim, without the prior written consent of such Indemnitee; provided, however,
that the Indemnifying Parties shall pay or cause to be paid all amounts arising
out of such settlement or judgment concurrently with the effectiveness thereof
(less any unapplied portion of the Minimum Amount and up to the Maximum Amount);
provided, further, that the Indemnifying Parties shall not be authorized to
encumber any of the assets of any Indemnitee or to agree to any restriction that
would apply to any Indemnitee or to its conduct of business; and provided,
further, that a condition to any such settlement shall be a complete release of
such Indemnitee and its Affiliates, officers, employees, consultants and agents
with respect to such Third Party Claim. Each Indemnitee shall be entitled to
participate in (but not control) the defense of any such Third Party Claim, with
its own counsel and at its own expense. Each Indemnitee shall, and shall cause
each of its Affiliates, officers, employees, consultants and agents to,
cooperate fully with the Indemnifying Parties in the defense of any Third Party
Claim being defended by the Indemnifying Parties pursuant to this Section 10.4.
The assumption of any defense hereunder by an Indemnifying Party shall not be
deemed an admission of responsibility for the Third Party Claim. If the
Indemnifying Parties do not assume the defense of any Third Party Claim in
accordance with the terms of this Section 10.4, the Indemnitee must defend
against such Third Party Claim. The Indemnitee shall not pay, or permit to be
paid, any part of a settlement or a judgment arising from a Third Party Claim
unless the Indemnifying Parties consent in writing to such payment or unless a
final judgment from which no appeal may

 

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be taken by or on behalf of the Indemnifying Party is entered against the
Indemnitee for such Third Party Claim; provided, however, (a) that the
Indemnifying Party shall respond no later than the earlier of (i) ten
(10) Business Days or (ii) the response deadline required by the terms of such
settlement offer (provided the Indemnifying Party is given reasonable advance
notice of the deadline) with respect to its consent to such settlement or
judgment and (b) if Seller is the Indemnifying Party such consent (or
withholding of consent) shall be given by the Seller Representative. If the
Indemnitee assumes the defense of any Third Party Claim in accordance with this
Section 10.4 and proposes to settle such Third Party Claim prior to a final
judgment thereon or to forego any appeal with respect thereto, then the
Indemnitee shall give the Indemnifying Party prompt written notice thereof and
the Indemnifying Party shall have the right to participate in the settlement
negotiations or assume or reassume the defense of such Third Party Claim. Any
Asbestos Claims described on Exhibit I shall be handled in accordance with the
procedures described in Exhibit I.

10.5 Settlement or Compromise. Any settlement or compromise made or caused to be
made by the Indemnitee (unless the Indemnifying Party has the exclusive right to
settle or compromise under Section 10.4) or the Indemnifying Party, as the case
may be, of any such claim, suit, action or proceeding of the kind referred to in
Section 10.4 shall also be binding upon the Indemnifying Party or the
Indemnitee, as the case may be, in the same manner as if a final judgment or
decree had been entered by a court of competent jurisdiction in the amount of
such settlement or compromise; provided, that (i) no obligation, restriction or
Loss shall be imposed on the Indemnitee as a result of such settlement or
compromise without its prior written consent, which consent shall not be
unreasonably withheld, and (ii) the Indemnitee will not compromise or settle any
claim, suit, action or proceeding without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld; provided,
however, (a) that the Indemnifying Party shall respond no later than the earlier
of (i) ten (10) Business Days or (ii) the response deadline required by the
terms of such settlement offer (provided the Indemnifying Party is given
reasonable advance notice of the deadline) with respect to its consent to such
settlement or judgment and (b) if Seller is the Indemnifying Party, such consent
(or withholding of consent) shall be given by the Seller Representative. Any
Asbestos Claims described on Exhibit I shall be handled in accordance with the
procedures described in Exhibit I.

10.6 Subrogation and Mitigation. To the extent that any Indemnifying Party
discharges any claim for indemnification hereunder, such Indemnifying Party
shall be subrogated to all rights of any Indemnitee against third parties,
including all rights relating to claims under any insurance, contracts, common
law or otherwise. Such Indemnitee (and its Affiliates) and Indemnifying Party
will execute upon request all instruments reasonably necessary to evidence or
further protect such subrogation rights. The Indemnitee shall take, and shall
cause their respective Affiliates to take, all reasonable steps to mitigate and
otherwise minimize their Losses to the maximum extent reasonably possible upon
and after becoming aware of any event which would reasonably be expected to give
rise to any Losses.

10.7 Environmental Actions.

(a) With respect to the Designated Environmental Conditions, Buying Parties
shall not, directly or indirectly, initiate any communication with any
Governmental Authority authorized to enforce any Environmental Laws or any other
Person unless (i) Buying Parties are

 

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required to do so under applicable Environmental Law and such communication is
limited to those issues addressed in the applicable Environmental Laws or
(ii) approved by Seller (in Seller’s reasonable discretion) after Seller has
received reasonable prior notice of Buying Parties’ intended communications.
Buying Parties shall provide Seller with reasonable prior notice of actions or
communications to or from any Governmental Authority or other Person that are
reasonably likely to result in any Designated Environmental Losses, and shall
provide full access to information at Buyer’s disposal regarding such claims.
Nothing in this Agreement will be construed as an admission by any Party of any
Losses under the Environmental Laws. None of the Buying Parties or their
respective Affiliates, nor any of their consultants, contractors, agents or
representatives shall perform or undertake after the Closing Date any
investigation or sampling of any Hazardous Substance or contaminants in, on, at,
upon or under any surface soil, subsurface soil, surface water, groundwater,
building material or any other media of any form or type in, at, upon, under or
from the Real Property (collectively “Media”), except to the extent that Buyer,
in its sole discretion, concludes that an investigation and/or sampling of any
Media is (a) reasonably required in connection with a future sale of the Real
Property by Buyer to a bona fide third party purchaser; (b) reasonably required
in connection with a bona fide third party financing transaction in which Buyer
or any of its Affiliates is the borrowing entity; (c) warranted by any future
construction or development on the Real Property by Buyer (and then only to the
extent related to the area of construction or development); (d) required by Law;
or (e) reasonably required in connection with a response to a bona fide Third
Party Claim asserting liability for the Release of Hazardous Substances in, at,
upon, under or from the Real Property.

(b) To the extent that any environmental, health and safety compliance equipment
costs and corrective action activity costs related to the Designated
Environmental Conditions are incurred (“Environmental Work”):

(i) The Environmental Work shall be performed in a manner employing the most
cost effective reasonable means available that are acceptable to the applicable
Governmental Authority, including, for example, the development of site specific
clean-up standards, risk assessment, utilization of performance standards (e.g.,
capping) and/or institutional controls. Except as may be required by applicable
Law, all Environmental Work shall take into account and be based on the
industrial use of the affected Real Property.

(ii) The Environmental Work shall include only the equipment and activities that
are legally required to bring the Company and affected Real Property into
compliance with Environmental Laws for the Business as it was conducted as of
the Closing Date.

(iii) Management of the Buyer shall control and direct such environmental
consultants and contractors in the performance of the Environmental Work.

(c) If either Seller or Buyer disagrees as to whether any particular cost or
activity is included within the scope of the Environmental Work, as to whether
any particular non-compliance issue or release of Hazardous Substances existed
pre-Closing, or as to whether any cost or activity is required by Designated
Environmental Conditions or satisfies the conditions of subparts (i) or
(ii) above, then either Party can elect to have the issue decided by an
independent third party expert mutually agreed to by the Parties. If the Parties
cannot mutually agree on the selection and retention of a third party
environmental expert, then either Party can elect to have the issue decided in
accordance with subparagraph (e) below.

 

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(d) The Escrow Fund shall be the sole source for the satisfaction of all
Designated Environmental Losses. Buyer Indemnitee’s sole recourse against Seller
related to environmental matters and environmental claims or liabilities,
including all Designated Environmental Losses arising from or relating in any
way to any Designated Environmental Conditions, shall be the Escrow Fund and
Seller shall have no obligation to Buyer for any environmental matters and
environmental claims or liabilities, including all Designated Environmental
Losses arising from or relating in any way to any Designated Environmental
Conditions, beyond the Escrow Fund.

(e) In the event of a disagreement between the Parties on who the expert should
be, the Parties will select a nationally recognized third party expert with no
material relationship with any Party by lot. The decision of the third party
expert shall be final and binding upon the Parties. The fees and expenses of
such third party expert retained pursuant to this Section 10.7 as a result of
any dispute related to the Environmental Work shall be equitably allocated by
such third party expert based on the accuracy of the Parties’ positions relative
to the final determination by such third party expert.

10.8 Indemnification Calculations. The amount of any Losses for which
indemnification is provided under this Article X shall be computed net of any
insurance proceeds or other recoveries actually received by any Indemnitee in
connection with such Losses and net of any Tax benefits arising by reason of any
such Loss. Each Indemnitee shall exercise commercially reasonable efforts to
obtain such proceeds, benefits and recoveries. If any such proceeds, benefits or
recoveries are received by an Indemnitee (or any of its Affiliates) with respect
to any Losses after an Indemnifying Party has made a payment to the Indemnitee
with respect thereto, the Indemnitee (or such Affiliate) shall promptly pay to
the Indemnifying Party the amount of such proceeds, benefits or recoveries (up
to the amount of the Indemnifying Party’s payment).

10.9 Tax Treatment. The Parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for Tax purposes, as between Buyer
and Seller, as an adjustment to the Purchase Price, unless otherwise required by
applicable Law or Governmental Authority interpretations thereof.

10.10 Escrow Amount.

(a) On the Closing Date, Seller, Buyer and Escrow Agent shall enter into an
Escrow Agreement providing for the formation of an escrow fund. In order to
secure Seller’s indemnity obligations to Buyer under this Agreement, the Escrow
Amount shall be deposited by wire transfer into an account designated by Escrow
Agent in accordance with Section 2.3 to be held in escrow pursuant to the terms
of the Escrow Agreement (the amount held in escrow as reduced from time to time
pursuant to this Section 10.10 and this Article X, is hereinafter referred to as
the “Escrow Fund”).

 

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(b) Pursuant to the Escrow Agreement and subject to Section 10.11, the Escrow
Amount shall be released from the Escrow Fund as follows:

(i) On the eighteen (18) month anniversary of the Closing Date (the “First
Distribution Date”), Escrow Agent shall distribute to Seller an amount from the
Escrow Fund equal to Fifteen Million Dollars ($15,000,000) less the sum of
(x) any portion of the Escrow Fund previously distributed to Buyer on or prior
to the First Distribution Date, (y) any amounts to satisfy a claim for
indemnification made by Buyer under Section 10.1(a)(i), (ii), (iv) or (v) prior
to the First Distribution Date but which remains pending as of the First
Distribution Date (to the extent such amount is reasonably estimable) and
(z) any pending Asbestos Claims described on Exhibit I (to the extent such
amount is reasonably estimable). If on the First Distribution Date, there are
Asbestos Claims (other than any Asbestos Claims described on Exhibit I) that all
of the Company’s insurers are unwilling or unable to fully insure or indemnify
(as opposed to providing coverage with a reservation of rights) after proper
notice of such claim has been made to the insurers, then in that event only
$7,500,000 as adjusted pursuant to subsections (x), (y) and (z) shall be
distributed from the Escrow Fund by Escrow Agent to Seller on the First
Distribution Date; provided, however, that in the event Seller is able to obtain
a final, non-appealable judgment against the Company’s insurers awarding Seller
100% of the damages associated with such Asbestos Claims and the Buyer
Indemnitees have reasonable assurance that the Company’s insurers (either
jointly or severally) are liable for coverage of such Asbestos Claims and are
financially able to honor any liability with respect to such Asbestos Claims,
then, upon Seller providing Buyer with satisfactory evidence establishing the
foregoing, the Escrow Agent shall distribute to Seller an additional amount from
the Escrow Fund equal to Seven Million Five Hundred Thousand Dollars
($7,500,000).

(ii) On the fifth (5th) anniversary of the Closing Date (the “Second
Distribution Date”), Escrow Agent shall distribute to Seller an amount from the
Escrow Funds equal to (i) Five Million Dollars ($5,000,000) or (ii) if less than
Five Million Dollars ($5,000,000) is then remaining in the Escrow Fund, all
remaining amounts from the Escrow Fund, if on the Second Distribution Date
Asbestos Losses paid as of the Second Distribution Date are equal to or less
than One Million Dollars ($1,000,000) less (x) any amounts to satisfy a claim
for indemnification made by Buyer under Section 10.1(a)(i), (ii), (iv) or
(v) prior to the Second Distribution Date but which remains pending as of the
Second Distribution Date (to the extent such amount is reasonably estimable) and
(y) any pending Asbestos Claims described on Exhibit I (to the extent such
amount is reasonably estimable). If on the Second Distribution Date,
(i) Asbestos Losses (other than any Asbestos Claims described on Exhibit I) paid
as of the Second Distribution Date are greater than One Million Dollars
($1,000,000) or (ii) there are Asbestos Claims that all of the Company’s
insurers are unwilling or unable to fully insure or indemnify (as opposed to
providing coverage with a reservation of rights) after proper notice of such
claim has been made to the insurers, then no distributions from the Escrow Fund
shall be made by Escrow Agent to Seller on the Second Distribution Date;
provided, however, that in the event Seller is able to obtain a final,
non-appealable judgment against the Company’s insurers awarding Seller 100% of
the damages associated with such Asbestos Claims and the Buyer Indemnitees have
reasonable assurance that the Company’s insurers (either jointly or severally)
are liable for coverage of such Asbestos Claims and are financially able to
honor any liability with respect to such Asbestos Claims, then, upon Seller
providing Buyer with satisfactory evidence establishing the foregoing, the
Escrow Agent shall distribute to Seller that portion of the Escrow Fund retained
with respect to the Asbestos Claims.

 

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(iii) On the tenth (10th) anniversary of the Closing Date (the “Final
Distribution Date”), Escrow Agent shall distribute to Seller all remaining
amounts from the Escrow Fund less any amounts reasonably necessary to satisfy a
claim for indemnification made by Buyer under Section 10.1(a)(i) prior to the
Final Distribution Date, but which remain pending as of the Final Distribution
Date.

(c) In the event of a disagreement between the Parties on the reasonable
estimate of any amounts to satisfy a claim for indemnification made by Buyer
under Section 10.1(a)(i), (ii), (iv) or (v), or with respect to the Asbestos
Claims described in Exhibit I, prior to the First Distribution Date or the
Second Distribution Date but which remains pending as of the First Distribution
Date or the Second Distribution Date, as the case may be, the Parties will
select a third party expert with no material relationship with any Party by lot
to determine the reasonable estimated amount of such pending claim within thirty
(30) days following the Parties’ submission of the claim to such expert. The
decision of the third party expert shall be final and binding upon the Parties
and the estimated amount determined by the third party expert shall remain in
the Escrow Fund pending resolution of the indemnification claim in accordance
with Article X. The fees and expenses of such third party expert retained
pursuant to this Section 10.10(c) shall be equitably allocated by such third
party expert based on the accuracy of the Parties’ positions relative to the
final determination of the estimated amount by such third party expert.

10.11 Asbestos Losses, Designated Losses and Designated Environmental Losses.

(a) Notwithstanding anything in this Article X to the contrary and subject to
Section 10.1, Buyer Indemnitees shall only be entitled to indemnification for
Asbestos Claims to the extent any of the Company, any SCT Subsidiary or Buying
Parties have actually paid Asbestos Losses to unaffiliated third parties prior
to the First Distribution Date, the Second Distribution Date or the Final
Distribution Date, as applicable. More specifically, and for the avoidance of
doubt, to the extent there are any pending Asbestos Claims as of the First
Distribution Date, the Second Distribution Date or the Final Distribution Date
pursuant to which the Company, any SCT Subsidiary or Buying Parties have not
paid any Asbestos Losses prior to the First Distribution Date, the Second
Distribution Date or the Final Distribution Date, as applicable, Buyer
Indemnitees shall not be entitled to retain any portion of the Escrow Fund with
respect to such Asbestos Claims. The Buying Parties shall, and shall cause the
Company and the SCT Subsidiaries to, comply with the Asbestos Protocol and with
the protocol described on Exhibit I as of and from the Closing Date.

(b) Notwithstanding anything in Article X to the contrary and subject to
Section 10.1, Buyer Indemnitees shall only be entitled to indemnification for
Designated Environmental Conditions to the extent any of the Company, any SCT
Subsidiary or Buying Parties have actually paid Designated Environmental Losses
to unaffiliated third parties prior to the Second Distribution Date. In
addition, and for the avoidance of doubt, to the extent there are any pending
Third Party Claims with respect to Designated Environmental Conditions as of the
First Distribution Date or Second Distribution Date, the Buyer Indemnitees shall
be entitled to

 

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retain that portion of the Escrow Fund with respect to such pending Third Party
Claims relating to the Designated Environmental Conditions equal to a reasonable
estimate of the costs related to remediation based on a report or recommendation
prepared by a nationally recognized third party expert selected in accordance
with Section 10.7(e). The Buying Parties shall, and shall cause the Company and
the SCT Subsidiaries, to comply with the Designated Environmental Conditions
Protocol as of and from the Closing Date.

10.12 Exclusive Remedy. Except as set forth in Section 13.9 or as specifically
provided in this Agreement and except for fraud, the indemnification provisions
in Section 7.8 and in Article X of this Agreement shall provide the sole and
exclusive remedy of the Buying Parties with respect to any and all Losses of any
kind or nature whatever incurred because of or resulting from or arising out of
this Agreement, any agreement, document or certificate delivered herewith or
therewith, the Transactions, the Business, the Company and the SCT Subsidiaries
and any of their assets and liabilities.

ARTICLE XI

TERMINATION

11.1 Termination Events. Without prejudice to other remedies which may be
available to the Parties by Law or this Agreement, this Agreement may be
terminated and the Transactions may be abandoned prior to Closing:

(a) by mutual written consent of the Parties hereto;

(b) by Buyer or Seller, by written notice to the other if:

(i) the Closing shall not have been consummated on or before the Termination
Date, unless extended by written agreement of the Parties hereto; provided,
however, that the right to terminate this Agreement under this Section 11.1(b)
shall not be available to any Party whose failure to perform or comply with any
of its obligations under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Closing to occur by such date; or

(ii) any Governmental Authority shall have enacted, promulgated, issued, entered
or enforced (A) any Law prohibiting the Transactions or making them illegal, or
(B) any injunction, judgment, order or ruling or taking any other action, in
each case, permanently enjoining, restraining or prohibiting the Transactions,
which shall have become final and nonappealable.

(c) by Buyer:

(i) if the condition set forth in Sections 8.1 shall not have been satisfied on
or prior to the Termination Date; or

 

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(ii) if all of the conditions set forth in Article VIII shall have been
satisfied and Seller shall not have made all of the deliveries required by
Section 9.4 on or before ten (10) days following the date designated for Closing
pursuant to Section 9.1; or

(d) by Seller:

(i) if the condition set forth in Section 8.2 shall not have been satisfied on
or prior to the Termination Date; or

(ii) if all of the conditions set forth in Article VIII shall have been
satisfied and (i) the Buying Parties shall not have made all of the deliveries
required by Section 9.2 or Section 9.3 on or before ten (10) days following the
date designated for Closing pursuant to Section 9.1.

11.2 Effect of Termination. In the event of any termination of the Agreement as
provided in Section 11.1 above, then all further obligations of the Parties
under this Agreement shall terminate without further liability on the part of
any Party to the others, other than (a) with respect to the obligations of the
Buying Parties and Seller under the Confidentiality Letter and Sections 7.3,
11.2, 12.1, 12.2, and 13.3 of this Agreement, (b) liability for any intentional
or fraudulent misrepresentation, breach or default in connection with any
warranty, representation, covenant or obligation given, occurring or arising
pursuant to this Agreement, including failing to consummate the transactions
contemplated hereby and (c) specific performance as contemplated in
Section 13.9. Nothing herein nor any termination hereof shall limit the right of
the non-breaching Party to seek specific performance and all other remedies
available at Law or equity. A Party’s right to terminate this Agreement is in
addition to, and not in lieu of, any other legal or equitable rights or remedies
which such Party may have.

ARTICLE XII

GUARANTEE

12.1 Buyer Guarantee. In the event that Buyer designates a Designated Buyer,
Buyer hereby unconditionally and absolutely guarantees to Seller the prompt and
full payment and performance of all covenants, agreements and other obligations
of Buyer hereunder, including Buyer’s indemnification obligations pursuant to
Article X. The foregoing guarantee shall be direct, absolute, irrevocable and
unconditional and shall not be impaired irrespective of any modification,
release, supplement, extension or other change in the terms of all or any of the
obligations of Buyer hereunder, including payment of the Purchase Price or for
any other reason whatsoever. Buyer hereby waives any requirement of promptness,
diligence or notice with respect to the foregoing guaranty and any requirement
that Seller exhaust any right or take any action against Buyer in respect of any
of their obligations hereunder. The Parties hereto agree that any third party
beneficiaries to this Agreement shall be a third party beneficiary of, shall be
entitled to rely on and shall be entitled to enforce the provisions of this
Section 12.1.

 

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12.2 Joint and Several Obligations. All obligations of the Buying Parties and
each of them under this Agreement and in connection with the Transactions shall
be joint and several, regardless of whether specifically stated in each
instance.

ARTICLE XIII

MISCELLANEOUS AGREEMENTS OF THE PARTIES

13.1 Notices. All notices and other communications provided for hereunder shall
be in writing and deemed given if (i) delivered personally, (ii) sent by
facsimile, with conforming copy sent as set forth in clause (iii), or (iii) sent
by Federal Express, DHL, UPS or overnight courier (providing proof of delivery)
to the Parties, in each case at the following addresses:

 

If to any Buying Party:

Westinghouse Air Brake Technologies Corporation

1001 Air Brake Avenue

Wilmerding, PA 15148

Attention: Legal Department

Fax: 412-825-1305

with a copy to:

Reed Smith LLP

435 Sixth Avenue

Pittsburgh, PA 15219

Attention: David L. DeNinno

Fax: 412-288-3063

If to Seller prior to Closing:

Robclif, Inc.

865 Busse Highway

Park Ridge, IL 60068

Attention: Richard A. Mathes

Fax: 847-692-7404

with a copy to:

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, IL 60606

Attention:  

Michael R. Fayhee, P.C.

John P. Tamisiea

Fax.: 312-984-7700

 

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If to Seller or Seller Representative following Closing:

Robclif, Inc.

74 Pondsbury Road

Mount Pleasant, SC 29464

Attention: H.S. Russell

Fax: 843-216-3986

with a copy to:

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, IL 60606

Attention:   Michael R. Fayhee, P.C.   John P. Tamisiea Fax.: 312-984-7700

Unless otherwise specified herein, such notices or other communications shall be
deemed effective, (a) on the date received, if personally delivered or sent by
facsimile during normal business hours, or (b) if delivered by overnight
courier, on the date delivered as established by return receipt or courier
service confirmation or the date on which the return receipt or courier service
confirms that acceptance of delivery was returned by the addressee. Each of the
Parties hereto shall be entitled to specify a different address by giving notice
as aforesaid to each of the other Parties hereto.

13.2 Transfer Taxes. Buyer and Seller shall each be responsible for the payment
of fifty percent (50%) of any sales and transfer Taxes that may be payable with
respect to the consummation of the Transactions and, to the extent any
exemptions from such Taxes are available, Buyer and Seller shall cooperate to
prepare any certificates or other documents necessary to claim such exemptions.

13.3 Expenses. Subject to Section 13.2, Seller, Seller on behalf of the Company
and the Buying Parties shall each pay their respective expenses (such as legal,
investment banker and accounting fees) incurred in connection with the
origination, negotiation, execution and performance of this Agreement, except
that the Buying Parties shall be responsible for the payment of all filing fees
under the HSR Act and any other Antitrust Laws.

13.4 Non-Assignability. This Agreement shall inure to the benefit of and be
binding on the Parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by operation of Law or otherwise
by any Party hereto without the express prior written consent of the other
Parties, and any attempted assignment, without such consents, shall be null and
void. Notwithstanding the foregoing and subject to Article XII, Buyer may assign
its rights under this Agreement to a Designated Buyer without the prior consent
of Seller.

13.5 Amendment; Waiver. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the Parties hereto. No waiver
by any Party of any of the provisions hereof shall be effective unless
explicitly set forth in writing

 

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and executed by the Party so waiving. The waiver by any Party hereto of any
condition to this Agreement or breach of any provision of this Agreement shall
not operate or be construed as a waiver of any other condition of this Agreement
or subsequent breach.

13.6 Third Parties. Except for the rights provided in Sections 7.5 and 7.7 and
Article XII, this Agreement does not create any rights, claims or benefits
inuring to any Person that is not a Party hereto nor create or establish any
third party beneficiary hereto.

13.7 Currency. All references to currency, monetary values and dollars set forth
herein shall mean U.S. dollars and all payments hereunder shall be made in U.S.
dollars.

13.8 Governing Law; Submission to Jurisdiction; Waivers. This Agreement and each
other document delivered pursuant to this Agreement shall be determined under,
governed by, and construed in accordance with, the internal laws of the State of
Illinois without regard to principles of conflicts of laws. Each of the Parties
agrees that if any dispute is not resolved by the Parties, it shall be resolved
only in the courts of the State of Illinois sitting in Cook County or the United
States District Court for the Northern District of Illinois and the appellate
courts having jurisdiction of appeals in such courts (collectively, the “Proper
Courts”). In that context, and without limiting the generality of the foregoing,
each of the Parties irrevocably and unconditionally (a) submits for itself and
its property in any action relating to this Agreement or any document delivered
pursuant to this Agreement or for recognition and enforcement of any judgment in
respect thereof, to the exclusive jurisdiction of the courts, and agrees that
all claims in respect of any such action shall be heard and determined in such
Illinois state court or, to the extent permitted by Law, in such federal court;
(b) consents that any such action may and shall be brought in such Proper Court
and waives any objection that it may now or thereafter have to the venue or
jurisdiction of any such action in any such Proper Court or that such action was
brought in an inconvenient court and agrees not to plead or claim the same;
(c) waives all right to trial by jury in any action (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or any document
delivered pursuant to this Agreement, or its performance under or the
enforcement of this Agreement or any document delivered pursuant to this
Agreement; (d) agrees that service of process in any such action may be effected
by mailing a copy of such process by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Party at its
address as provided in Section 13.1; and (e) agrees that nothing in this
Agreement or any document delivered pursuant to this Agreement shall affect the
right to effect service of process in any other manner permitted by the Laws of
the State of Illinois.

13.9 Specific Performance. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. The Parties
hereto agree and acknowledge that, in the event of a breach of any provision of
this Agreement, the aggrieved Party may be without an adequate remedy at law.
The Parties therefore agree that in the event of a breach of any provision of
this Agreement the aggrieved party may elect to institute and prosecute
proceedings exclusively in the Proper Court to obtain specific performance or to
enjoin the continuing breach of such provision, as well as to obtain damages for
breach of this Agreement and to obtain reasonable attorneys’ fees, without bond
or other security being required. By seeking or obtaining any such relief, the
aggrieved Party will not be precluded from seeking or obtaining any other relief
to which it may be entitled at Law or in equity.

 

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13.10 Entire Agreement. This Agreement, the Disclosure Letter hereto and
Exhibits, Schedules and agreements referred to herein (including the
Confidentiality Letter) set forth the entire understanding of the Parties hereto
as to matters not expressly excepted or excluded herefrom.

13.11 Interpretation and Rules of Construction. In this Agreement, except to the
extent otherwise provided or that the context otherwise requires:

(a) when a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference is to an Article or Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated;

(b) the table of contents and headings for this Agreement are for reference
purposes only, are for convenience only and not deemed to be a part of this
Agreement and do not affect in any way the meaning or interpretation of this
Agreement;

(c) whenever the words “include,” “includes” or “including” are used in this
Agreement, they are deemed to be followed by the words “without limitation”;

(d) the words “hereof,” “herein” and “hereunder” and words of similar import,
when used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement;

(e) all terms defined in this Agreement have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;

(f) the definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms;

(g) reference to any agreement (including this Agreement), document, schedule,
exhibit or instrument means such agreement, document, schedule, exhibit or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof, and, if applicable, the terms hereof;

(h) references to a Person are also to its permitted successors and assigns;

(i) reference to a Person in a particular capacity excludes such Person in any
other capacity or individually; and

(j) the use of “or” is not intended to be exclusive unless expressly indicated
otherwise.

13.12 Severability. If any provision of this Agreement shall be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement

 

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shall not be affected and shall remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the fullest extent
possible. With respect to any provision of this Agreement finally determined by
a court of competent jurisdiction to be unenforceable, the Buying Parties and
Seller hereby agree that such court shall have jurisdiction to reform such
provision so that it is enforceable to the maximum extent permitted by Law, and
the Parties agree to abide by such court’s determination. If any such provision
of this Agreement cannot be reformed, such provision shall be deemed to be
severed from this Agreement, but every other provision of this Agreement shall
remain in full force and effect.

13.13 Disclosure Letter. Any information disclosed pursuant to a particular
section of the Disclosure Letter hereto shall be deemed to be disclosed with
respect to any other section of the Disclosure Letter to which it is reasonably
apparent that the information is applicable to such section of the Disclosure
Letter and corresponding representation and warranty, notwithstanding the
omission of a cross-reference thereto. Neither the specification of any dollar
amount or any item or matter in any provision of this Agreement or any
agreement, document or instrument entered into or delivered in connection with
the Transactions (the “Ancillary Agreements”) nor the inclusion of any specific
item or matter in the Disclosure Letter or any schedule to any Ancillary
Agreement is intended to imply that such amount, or higher or lower amounts, or
the item or matter so specified or included, or other items or matters, are or
are not material, shall not be employed as a point of reference in determining
any standard of materiality under this Agreement and no Party shall use the fact
of the specification of any such amount or the specification or inclusion of any
such item or matter in any dispute or controversy between the Parties as to
whether any item or matter is or is not material for purposes of this Agreement
or any Ancillary Agreement. Neither the specification of any item or matter in
any provision of this Agreement or any Ancillary Agreement nor the inclusion of
any specific item or matter in the Disclosure Letter or any schedule to any
Ancillary Agreement is intended to imply that such item or matter, or other
items or matters, are or are not in the ordinary course of business and no Party
shall use the fact or the specification or the inclusion of any such item or
matter in any dispute or controversy between the Parties as to whether any item
or matter is or is not in the ordinary course of business for purposes of this
Agreement or any Ancillary Agreement.

13.14 Language. Seller and the Buying Parties agree that the language used in
this Agreement is the language chosen by the Parties to express their mutual
intent, and that no rule of strict construction is to be applied against Seller
or the Buying Parties. Each of Seller and the Buying Parties and their
respective counsel have reviewed and negotiated the terms of this Agreement.

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

*    *    *

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.

 

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION By:  

/s/ Alvaro Garcia-Tunon

Name:   Alvaro Garcia-Tunon Title:   Senior Vice President, Chief Financial
Officer and Secretary STANDARD CAR TRUCK COMPANY By:  

/s/ Richard A. Mathes

Name:   Richard A. Mathes Title:   President ROBCLIF, INC. By:  

/s/ H.S. Russell

Name:   H.S. Russell Title:   Vice President

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Exhibit/Schedule List for SCT Stock Purchase Agreement*

Exhibits

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Exhibit E

Exhibit F

Exhibit G

Exhibit H

Exhibit I

Seller Disclosure Letter

Section 1.1 Permitted Liens

Section 4.3 Absence of Conflicts

Section 4.4 Capitalization

Sections 4.5 SCT Subsidiaries

Section 4.6 Governmental Approvals; Consents

Section 4.7 Financial Statements

Section 4.8 Absence of Changes

Section 4.9 Real Property

Section 4.10 Contracts

Section 4.11 Litigation

Section 4.12 Intellectual Property Rights

Section 4.13 Tax Matters

Section 4.14 Labor Matters

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

Section 4.15(a) Employee Benefit Plans

Section 4.17 Title to Assets

Section 4.18 Environmental Matters

Section 4.19 Insurance

Section 4.20 Undisclosed Liabilities

Section 4.21 Related Party Transactions

Section 4.22 Product Warranties

Section 4.23 Product Liability

Section 4.24 Finders; Brokers

Section 7.1 Operation of the Business

4.7 (i) Consolidated Financial Statements and Report of Independent Certified
Public Accountants Standard Car Truck Company and Subsidiaries December 31, 2007
and 2006

4.7 (ii) Balance Sheet 6/30/08

4.7 (iii) Income Statement 6/30/08

4.7 (iv) Cash Flow Statement 6/30/08

4.10 (iii) 2 Outstanding Letters of Credit 7/8/08

4.12 List of Patents and Trademarks

Section 4.15 (e) Schedule of Employee Compensation

Section 4.15 (e) Leave Schedule

4.22-2 SCT QER Report as of 8/22/08

4.22-3 Triangle QER Report as of 8/22/08

4.22-4 Durox QER Report as of 8/22/08

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Buyer Disclosure Letter

Section 8.3(b) Antitrust approvals

Attachment I – Escrow Agreement

Attachment II Wabtec Corporation Non-Competition and Confidentiality Agreement

Attachment III – Wabtec Corporation Employee Non-Competition and Confidentiality
Agreement

Attachment IV – Wabtec Corporation Employee Non-Competition and Confidentiality
Agreement

 

* The schedules and exhibits to this agreement have been omitted. A copy of the
omitted schedule and exhibits will be provided to the Securities and Exchange
Commission upon request.