Exhibit 10.12

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into this
6th day of May, 2008, by and among CUSTOM PRODUCTS CORPORATION, a Connecticut
corporation (the “Seller”), BOLT TECHNOLOGY CORPORATION, a Connecticut
corporation (the “Parent”), and A & A MANUFACTURING CO., INC., a Wisconsin
corporation (the “Buyer”). Capitalized terms used, but not otherwise defined
herein, shall have the meanings assigned to such terms in Article XII, below.

W I T N E S S E T H:

WHEREAS, the Seller is engaged in the business of manufacturing and selling
precision miniature clutches, brakes, motors and other motion control devices
(the “Subject Business”);

WHEREAS, the Seller and the Parent desire to sell the Subject Business and all
of the assets owned, used or held by the Seller in connection with the Subject
Business to the Buyer, and the Buyer desires to purchase the Subject Business
and such assets from the Seller, all on the terms and subject to the conditions
set forth herein; and

WHEREAS, the Parent holds all of the issued and outstanding capital stock of the
Seller and the Parent will benefit financially from the transactions
contemplated herein.

NOW, THEREFORE, the Seller, the Parent and the Buyer, in consideration of the
mutual promises hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, do hereby promise
and agree as follows:

ARTICLE I

Assets to be Purchased

1.1. Subject Assets. Subject to the terms and conditions set forth in this
Agreement, the Seller agrees to sell to the Buyer and the Buyer agrees to
purchase from the Seller at the Closing, free and clear of all Encumbrances
other than the Permitted Encumbrances, all of the Seller’s right, title and
interest in and to all of the assets owned, used or held by the Seller in
connection with the Subject Business, including, without limitation, each of the
following as the same exist on the Closing Date:

(a) All tangible assets of every kind and description, including, without
limitation, all fixed assets, machinery, equipment, tools, tooling, molds,
leasehold improvements, fixtures, furniture, furnishings, vehicles, computer
hardware and software, data processing equipment and other items of a similar
character, wherever located, including, without limitation, those items listed
on Schedule 1.1(a) attached hereto;

(b) All inventories, wherever located, including, without limitation, all raw
materials, work-in-process and finished goods and all such items in transit as
of the Closing (collectively, the “Inventory”);

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(c) All supplies, packaging materials, marketing and sales literature,
advertising matter, consumable materials and other items of similar character;

(d) All books, records, manuals and other similar materials, wherever located
and in whatever form they may be maintained, including, without limitation, all
sales, account and customer records, personnel and payroll records, purchasing
and sale records, vendor lists and related historical information, supplier,
manufacturing and quality control records, price lists, correspondence and all
research and development files (collectively, the “Records”);

(e) All credits, prepaid expenses, deferred charges, advance payments, security
deposits and similar items (collectively, the “Prepaids”);

(f) Except for accounts receivable from the Parent, all accounts receivable,
whether billed or unbilled (collectively, the “Accounts Receivable”);

(g) All logos, product specifications, blue-prints, drawings, formulae, patents
and any applications therefor, trade names, trademarks, trademark registrations
and any applications therefor, copyrights, copyright registrations and any
applications therefor, whether issued or pending, including, without limitation,
those items listed on Schedule 1.1(g) attached hereto and the names “Custom
Products Corporation”, “Polyclutch”, “Polyvolt” and “Puljak” and any derivatives
of any of the foregoing, and all inventions, improvements, secret processes,
know-how, trade secrets and technical knowledge of the Subject Business;

(h) All backlog of customer orders;

(i) To the extent their transfer is permitted by applicable Law, all
Governmental Approvals, and any applications therefor, held by the Seller or
used in connection with the Subject Business;

(j) All telephone and facsimile numbers, email addresses, domain names and web
sites, including, without limitation, all right, title and interest in and to
“www.polyclutch.com” and “www.polyvolt.com”;

(k) All of the Seller’s right, title and interest in, to and under those
Contracts set forth on Schedule 1.1(k) attached hereto (collectively, the
“Assumed Contracts”), including, without limitation, any right to receive
payment for products sold or services rendered by the Subject Business pursuant
to the Assumed Contracts and to assert claims and to take other rightful actions
in respect of breaches, defaults and other violations of the Assumed Contracts;
and

(l) The goodwill, and all other intangible assets not previously referred to in
this Paragraph 1.1, of the Subject Business.

All of the assets being purchased by the Buyer as described in this Paragraph
1.1 are hereinafter referred to as the “Subject Assets”.

 

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1.2. Excluded Assets. Notwithstanding the provisions of Paragraph 1.1, above,
the Subject Assets shall not include (i) all cash, cash equivalents and
marketable securities of the Seller, (ii) the Seller’s corporate minute book and
related corporate records, (iii) the general ledger and other accounting records
of the Seller, provided, however, that the Subject Assets include software into
which the general ledger is incorporated, and (iv) those other assets of the
Seller set forth on Schedule 1.2 attached hereto (collectively, the “Excluded
Assets”).

ARTICLE II

Purchase Price and Payment

2.1. Purchase Price. The purchase price for the Subject Assets (the “Purchase
Price”) shall be an amount equal to the sum of (a) the Cash Purchase Price,
subject to adjustment to the Cash Purchase Price after the Closing in the manner
set forth in Paragraph 2.3, below, plus (b) the value as of the Closing Date of
the Assumed Liabilities, subject to the adjustments stated in Article III,
below. The Purchase Price shall be paid by (i) payment of the Cash Purchase
Price in the manner set forth in Paragraphs 2.2(a) and 2.3, below, and
(ii) assumption by the Buyer of the Assumed Liabilities in the manner set forth
in Paragraph 2.2(b), below.

2.2. Payment of Purchase Price. At the Closing, the Buyer shall pay the Purchase
Price by:

(a) Delivering to the Seller, by wire transfer of immediately available funds to
an account designated in writing by the Seller prior to the Closing, the Cash
Purchase Price; and

(b) Executing and delivering to the Seller, in accordance with Paragraph 4.3(c),
below, the Assignment and Assumption Agreement.

2.3. Final Cash Purchase Price.

(a) The parties acknowledge and agree that the exact amounts of the Trade
Accounts Payable Amount, the Current Asset Amount and the Capital Asset Amount
will not be known as of the Closing Date and, as a result, the parties have
agreed to consummate the transactions contemplated herein on the basis of a
mutually agreed upon estimate of $40,011 for the Trade Accounts Payable Amount
(the “Estimated Trade Accounts Payable Amount”), $1,196,951 for the Current
Asset Amount (the “Estimated Current Asset Amount”) and $202,438 for the Capital
Asset Amount (the “Estimated Capital Asset Amount”). The Estimated Current Asset
Amount plus the Estimated Capital Asset Amount minus the Estimated Trade
Accounts Payable Amount shall be the “Estimated Net Amount.” The parties further
acknowledge and agree that the Cash Purchase Price may need to be adjusted
subsequent to the Closing Date on the basis set forth in this Paragraph 2.3.
Accordingly, within sixty (60) days following the Closing Date, the Buyer shall
prepare and deliver to the Seller a reasonably detailed statement setting forth
the Buyer’s calculation of the Trade Accounts Payable Amount, the Current Asset
Amount and the Capital Asset Amount (the “Statement”), such calculation to be
made on a basis consistent with that used by the Seller to determine the
Estimated Net

 

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Amount; provided, however, the Buyer shall have the right to base such
calculation on a physical inventory of the Subject Assets. The Buyer’s
determination of the Trade Accounts Payable Amount, the Current Asset Amount and
the Capital Asset Amount shall be final, conclusive and binding upon the parties
for all purposes unless, within thirty (30) days after receipt of the Statement,
the Seller notifies the Buyer in writing (the “Dispute Notice”), setting forth
in reasonable detail, any dispute with any item contained in the Statement. Any
item or amount to which no dispute is raised in the Dispute Notice shall be
final, conclusive and binding upon the parties for all purposes. If the Seller
timely delivers a Dispute Notice, then the Seller and the Buyer shall attempt to
resolve the disputed items. If the Buyer and the Seller are unable to resolve
the disputed items within thirty (30) days after the Buyer’s receipt of the
Dispute Notice, such disputed items shall be referred to BDO Seidman, LLP (the
“Resolving Accounting Firm”); provided, however, that the scope of the
engagement of the Resolving Accounting Firm shall be limited to the resolution
of the disputed items described in the Dispute Notice, and the recalculation, if
any, of the Trade Accounts Payable Amount, the Current Asset Amount and/or the
Capital Asset Amount in light of such resolution. The determination of the
Resolving Accounting Firm shall be made as promptly as possible and shall be
final, conclusive and binding upon the parties for all purposes. The Seller and
the Buyer shall each be permitted to submit such data and information to the
Resolving Accounting Firm as each deems appropriate. The Seller and the Buyer
shall cooperate, and shall cause their respective representatives to cooperate,
fully with the Resolving Accounting Firm and its representatives in connection
with any engagement of the Resolving Accounting Firm hereunder, including,
without limitation, by signing the engagement or retainer letter, if any,
reasonably requested by the Resolving Accounting Firm. The Buyer and the Seller
shall each bear one half of the expenses and fees incurred by the Resolving
Accounting Firm in discharging its duties hereunder.

(b) Once the final Trade Accounts Payable Amount, Current Asset Amount and
Capital Asset Amount are determined in accordance with this Paragraph 2.3, then
the final Current Asset Amount plus the final Capital Asset Amount minus the
final Trade Accounts Payable Amount shall be calculated as the “Final Net
Amount,” and if the Final Net Amount is less than the Estimated Net Amount, the
Seller shall pay to the Buyer, within five (5) business days following the
determination of the Final Net Amount under this Paragraph 2.3, the amount of
such difference, by delivery of immediately available funds to the Buyer.

2.4. Allocation of Purchase Price. The parties hereto agree to allocate the
Purchase Price, as finally adjusted under Paragraph 2.3, above, among the
Subject Assets in accordance with the allocation schedule set forth on Schedule
2.4 attached hereto. The parties hereto agree to report all Tax consequences of
the transactions contemplated by this Agreement and make all required
submissions to Governmental Bodies in a manner consistent with such allocation
schedule.

 

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ARTICLE III

Assumption of Liabilities

As partial consideration for the Subject Assets, the Buyer shall assume all
obligations under and satisfy as the same shall become due (i) all of the
liabilities and obligations of the Seller which accrue after the Closing Date
under the Assumed Contracts, (ii) except for accounts payable to the Parent, the
Seller’s trade accounts payable as of or after the Closing Date, (iii) all
liabilities to fulfill outstanding customer orders of the Subject Business,
(iv) all liabilities to customers of the Subject Business arising under written
warranty agreements, (v) all liabilities to employees of the Subject Business
arising under the Seller’s vacation policies and practices, (vi) all accrued
commissions relating to the sales representative agreements which are Assumed
Contracts and which are identified in Sections 3 and 5 of Schedule 1.1(k), and
(vii) accrued Taxes relating to the Leased Real Property (collectively, the
“Assumed Liabilities”); provided, however, (A) with respect to the vacation
accrual liabilities identified in clause (v), above, a corresponding adjustment
to the Purchase Price shall be made to reflect the Buyer’s assumption of such
liabilities, (B) with respect to the commission accrual liabilities identified
in clause (vi), above, a corresponding adjustment to the Purchase Price shall be
made to reflect the Buyer’s assumption of such liabilities, and (C) with respect
to the accrued Taxes identified in clause (vii), above, a credit against the
Purchase Price shall be made to reflect the Buyer’s assumption of such
liability. Except for the Assumed Liabilities, the Buyer shall not be obligated
under, nor shall the Buyer assume or be or become liable for, any obligation,
Contract, Environmental Claim, debt, liability, cost or expense of or relating
to the Seller, the Parent, the Subject Business or any of the Excluded Assets
the basis for which exists on or before the Closing Date (collectively, the
“Excluded Liabilities”). The Seller and the Parent jointly and severally
covenant and agree to pay and discharge when due all of the Excluded
Liabilities.

ARTICLE IV

Closing

4.1. Time and Place of Closing. The Closing shall be held at such place as the
parties shall mutually agree on June 2, 2008, to be effective as of May 31, 2008
(May 31, 2008 to be the “Closing Date”) or on such other date as the parties
shall mutually agree; provided, however, the parties agree that the Closing may
be consummated by facsimile or electronic transmission or through the use of
mail or overnight delivery service.

4.2. Conditions Precedent to Buyer’s Obligation. The obligation of the Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction as of the Closing of each of the following conditions:

(a) Subject to the provisions of Article VIII, below, the respective warranties
and representations of the Seller and the Parent made in this Agreement shall be
true and correct in all respects as of the date hereof and on and as of the
Closing Date as though made on and as of the Closing Date; the Seller and the
Parent shall have performed in all respects the respective covenants of the
Seller and the Parent contained in this Agreement required to be performed on or
prior to the Closing Date; and the Seller and the Parent

 

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shall have delivered to the Buyer a certificate dated the Closing Date and
signed by a duly authorized representative of the Seller and a duly authorized
representative of the Parent confirming the foregoing (the “Seller’s Bring-Down
Certificate”).

(b) The Consents and Governmental Approvals listed on Schedule 4.2(b) attached
hereto, each in a form reasonably satisfactory to the Buyer, shall have been
received by the Buyer on or before the Closing. The Buyer, the Seller and the
Parent agree to cooperate with each other in connection with obtaining such
Consents and Governmental Approvals.

(c) No Proceeding shall have been instituted or threatened which seeks to
enjoin, restrain or prohibit, or which questions the validity or legality of,
any of the transactions contemplated by this Agreement or which otherwise seeks
to affect or could affect any of the transactions contemplated hereby or impose
Losses upon any party hereto if any such transactions are consummated.

(d) An employment agreement between the Buyer and each of Gerald Shaff,
Elizabeth Bacon and Philip Bacon, each in a form reasonably satisfactory to the
Buyer (the “Employment Agreements”), duly executed by Gerald Shaff, Elizabeth
Bacon and Philip Bacon, shall have been received by the Buyer on or before the
Closing.

(e) The Seller or the Parent, as the case may be, shall have delivered to the
Buyer each of the following:

(i) A bill of sale, certificate of title and such other instruments of
conveyance requested by the Buyer, each in a form reasonably satisfactory to the
Buyer, duly executed by the Seller;

(ii) Possession and control of the Subject Assets, free and clear of all
Encumbrances other than the Permitted Encumbrances;

(iii) An assignment of the lease between Walter H. Bacon and the Seller for the
North Haven, Connecticut real property and improvements located thereon occupied
and used by the Seller, in form and substance acceptable to the Buyer, duly
executed by the Seller;

(iv) An assignment and assumption agreement, in form and substance acceptable to
the Buyer (the “Assignment and Assumption Agreement”), duly executed by the
Seller;

(v) A certificate from the corporate Secretary or other duly authorized officer
of the Seller, in a form reasonably satisfactory to the Buyer, setting forth
resolutions of the Parent and the Board of Directors of the Seller, authorizing
the execution, delivery and performance by the Seller of this Agreement and the
Seller Ancillary Documents, and the taking by the Seller of any and all actions
deemed necessary or advisable to consummate the transactions contemplated hereby
and thereby;

 

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(vi) A copy of the Seller’s Articles of Incorporation, as amended, certified by
the Connecticut Secretary of State no earlier than ten (10) business days prior
to the Closing Date;

(vii) A good standing certificate for the Seller issued by the Connecticut
Secretary of State no earlier than ten (10) business days prior to the Closing
Date;

(viii) With regard to the Leased Real Property, the appropriate property
transfer form (i.e., Form I, II, III or IV) and requisite accompanying
documentation as specified in Connecticut General Statutes Section 22a-134a (the
“Property Transfer Act”) which has been signed by the Seller and which
identifies the Seller as the “certifying party” within the meaning of the
Property Transfer Act shall be provided to the Buyer and shall also have been
submitted to the Connecticut Department of Environmental Protection;

(ix) A patent assignment, in form and substance acceptable to the Buyer (the
“Patent Assignment”), duly executed by the Seller;

(x) A trademark assignment, in form and substance acceptable to the Buyer (the
“Trademark Assignment”), duly executed by the Seller;

(xi) An agreement on the terms set forth on Schedule 4.2(xi) and otherwise
reasonably acceptable to the Parent and the Buyer (the “Services Agreement”),
duly executed by the Parent pursuant to which the Buyer may purchase from the
Parent machining and assembly services for up to six months after the Closing
with respect to the “Puljak” product currently produced and sold by the Seller;
and

(xii) Appropriate executed originals of an amendment to the Seller’s Articles of
Incorporation changing the Seller’s legal name from “Custom Products
Corporation” to a name which is substantially different therefrom and not
deceptively similar thereto; provided, that such executed documents shall be in
such number and in such form as is required for effective filing with the
Connecticut Secretary of State; provided, further, that the Seller shall also
pay any filing or recording fees necessary for the effective filing of such
documents with the Connecticut Secretary of State.

If any of the foregoing conditions to the Closing shall not have been satisfied
on or prior to the Closing, the Buyer may elect to (i) terminate this Agreement
pursuant to Paragraph 11.1(a), below, or (ii) waive any such unsatisfied
condition and consummate the transactions contemplated by this Agreement despite
such failure.

4.3. Conditions Precedent to Seller’s and Parent’s Obligations. The obligations
of the Seller and the Parent to consummate the transactions contemplated by this
Agreement is subject to the satisfaction as of the Closing of each of the
following conditions:

(a) The warranties and representations of the Buyer made in this Agreement shall
be true and correct in all respects as of the date hereof and on and as of the
Closing

 

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Date as though made on and as of the Closing Date; the Buyer shall have
performed in all respects the covenants of the Buyer contained in this Agreement
required to be performed on or prior to the Closing Date; and the Buyer shall
have delivered to the Seller a certificate dated the Closing Date and signed by
a duly authorized representative of the Buyer confirming the foregoing (the
“Buyer’s Bring-Down Certificate”).

(b) No Proceeding shall have been instituted or threatened which seeks to
enjoin, restrain or prohibit, or which questions the validity or legality of,
any of the transactions contemplated by this Agreement or which otherwise seeks
to affect or could affect any of the transactions contemplated hereby or impose
Losses upon any party hereto if any such transactions are consummated.

(c) The Buyer shall have delivered to the Seller each of the following:

(i) The Cash Purchase Price, in the manner described in Paragraph 2.2(a), above;

(ii) The Buyer’s Bring-Down Certificate, duly executed by an authorized
representative of the Buyer;

(iii) The Employment Agreements, duly executed by the Buyer;

(iv) The Assignment and Assumption Agreement, duly executed by the Buyer;

(v) A certificate of status for the Buyer issued by the Wisconsin Department of
Financial Institutions no earlier than ten (10) business days prior to the
Closing Date;

(vi) The Patent Assignment, duly executed by the Buyer;

(vii) The Trademark Assignment, duly executed by the Buyer; and

(viii) The Services Agreement, duly executed by the Buyer.

If any of the foregoing conditions to the Closing shall not have been satisfied
on or prior to the Closing, the Seller and the Parent may elect to (i) terminate
this Agreement pursuant to Paragraph 11.1(b), below, or (ii) waive any such
unsatisfied condition and consummate the transactions contemplated by this
Agreement despite such failure.

ARTICLE V

Joint and Several Warranties and Representations of Seller and Parent

5.1. Joint and Several Warranties and Representations. Except as set forth in
the disclosure schedule attached hereto (the “Disclosure Schedule”), the Seller
and the Parent hereby jointly and severally warrant and represent to the Buyer,
which warranties and representations shall survive the Closing Date for the
periods set forth in Paragraph 5.2, below, as follows:

 

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5.1.1. Corporate Matters. The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Connecticut. The
Parent is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Connecticut. The Seller has the corporate power
and authority to own or lease its properties and assets, including, without
limitation, the Subject Assets, and to carry on all business activities now
conducted by the Seller, including, without limitation, the Subject Business.
The Seller is duly qualified and in good standing (or comparable status) in each
jurisdiction in which the nature of the Subject Business or the ownership,
leasing or holding of the Subject Assets is such that a failure to qualify would
have a Material Adverse Effect. Attached to the Disclosure Schedule is a true,
correct and complete list of all states in which the Seller is qualified to do
business as a foreign corporation.

5.1.2. Capitalization. The Parent holds all of the issued and outstanding
capital stock of the Seller of whatever class, series or designation. There are
no outstanding options, warrants, subscriptions, convertible or exchangeable
securities or other agreements pursuant to which the Seller is obligated to
issue, sell, purchase, retire or redeem any shares of its capital stock.

5.1.3. Authority. Each of the Seller and the Parent has the corporate power and
authority to enter into this Agreement and the Seller Ancillary Documents to
which it is a party, and to consummate the transactions contemplated hereby or
thereby. The execution, delivery and performance by the Seller and the Parent of
this Agreement and the Seller Ancillary Documents to which it is a party have
been approved by the Parent and the Board of Directors of the Seller and in
accordance with all other necessary corporate action. This Agreement and the
Seller Ancillary Documents to which the Seller or the Parent is a party are and
shall constitute the valid and legally binding obligations of the Seller and the
Parent, enforceable against each of them in accordance with their respective
terms.

5.1.4. No Conflict. The execution and delivery of this Agreement and the Seller
Ancillary Documents by the Seller and the Parent do not, and the consummation of
the transactions contemplated hereby or thereby and compliance with the terms
hereof or thereof by the Seller and the Parent will not (a) conflict with or
result in any breach or violation of (i) any provision of the Articles of
Incorporation of the Seller, the Articles of Incorporation of the Parent, the
By-Laws of the Seller, the By-Laws of the Parent, or any other constituent or
governing agreement, instrument or document of the Seller or the Parent, or
(ii) any Law or Order applicable to the Seller, the Parent, the Subject Business
or any of the Subject Assets, or (b) violate or conflict with, or result in a
breach or default under, or result in the imposition of any Encumbrance upon any
of the Subject Assets pursuant to, or require a consent, notice or waiver under
the provisions of or result in the acceleration of any of the provisions of, any
Assumed Contract to which the Seller or the Parent is a party or is subject or
which affects the Subject Business or any of the Subject Assets. No Governmental
Approval from, or registration, declaration or filing by the Seller or the
Parent with, any Governmental Body or other third Person (except to the extent
necessitated by the nature of the Buyer’s affiliates or business) is required to
be obtained or made by the Seller or the Parent in connection with such party’s
execution and delivery of this Agreement and the Seller Ancillary Documents to
which the Seller or the Parent is a party or the consummation or performance by
such party of any of the transactions contemplated hereby or thereby.

 

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5.1.5. Documentation. The Records are true, correct and complete and have been
maintained in all material respects in accordance with sound business practices.

5.1.6. Title To and Condition of Subject Assets. The Seller has good and
marketable title to all of the Subject Assets, tangible and intangible, free and
clear of all Encumbrances whatsoever, other than those Encumbrances set forth on
the Disclosure Schedule (collectively, the “Permitted Encumbrances”). The
Disclosure Schedule lists the location of all Subject Assets, including all of
the Inventory and the Records. The Subject Assets constitute all of the assets
owned by the Seller and/or used in the Subject Business, except for the Excluded
Assets. All of the tangible personal property included in the Subject Assets is:
(i) taking into account the age of the tangible personal property, in good
operating condition, working order and repair and with no defects, ordinary wear
and tear excepted; (ii) maintained in accordance with sound maintenance
practices; and (iii) in the Seller’s possession or control. The Subject Assets
are sufficient for the operation of the Subject Business in the Ordinary Course
of Business based on current levels of operation. To the Seller’s Knowledge, the
condition of the Subject Assets conforms in all material respects with all
applicable Laws. There is no Contract, including any option, right of first
refusal or other right of any Person, binding upon or which at any time in the
future may become binding upon the Seller or the Parent to sell, transfer,
assign, pledge, bequeath, charge, mortgage or in any other way dispose of or
subject to any other Encumbrance any of the Subject Assets, other than as
contemplated by this Agreement and the Ancillary Documents. Any leased personal
property included within the Subject Assets is in the condition required of such
property by the terms of the lease applicable thereto. Except for the Seller’s
interest and the Parent’s ownership interest in the Seller, neither the Parent
nor any Affiliate of the Seller or the Parent has or has had any interest in any
right, property or asset owned, used or required by the Seller in the operation
of the Subject Business, including any of the Subject Assets.

5.1.7. Inventory. The amount of Inventory on hand: (i) is sufficient for the
operation of the Subject Business in the Ordinary Course of Business based on
current levels of operation; (ii) has been purchased in the Ordinary Course of
Business consistent in quantity and quality with past practices of the Subject
Business; and (iii) with respect to Inventory on hand that is reflected on the
Seller’s most recent Financial Statements, such Inventory is not obsolete and is
of a quality and quantity usable and salable in the Ordinary Course of Business.
No write-down of Inventory has been made during the past three (3) years.

5.1.8. Accounts Receivable. The Accounts Receivable arose from bona fide
transactions in the Ordinary Course of Business and, to the Seller’s Knowledge,
are good and collectible within three (3) months after the Closing Date in the
Ordinary Course of Business at the aggregate recorded amount thereof, subject to
customary trade discounts and to the reserves, if any, for slow or uncollectible
accounts set forth on the Seller’s most recent monthly Financial Statements. All
Accounts Receivable arose from transactions for which the Seller has genuine
invoices, shipping documents or an otherwise valid and legally binding Contract
of the obligor named therein and reflect a binding and unconditional obligation
of such obligor to pay on the date specified therein. To the Seller’s Knowledge,
there is no contest, claim or right of set-off, other than returns made in the
Ordinary Course of Business, relating to the amount or validity of any Accounts
Receivable.

 

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5.1.9. Real Property.

(a) The Disclosure Schedule contains a true, correct and complete list and
description of all real property leased by the Seller (collectively, the “Leased
Real Property”), indicating the Person(s) from whom such Leased Real Property is
currently being leased.

(b) The Seller’s use and occupancy of the Leased Real Property is not in
violation of any Law, Order or Governmental Approval applicable thereto in such
a way that could result in a Material Adverse Effect.

(c) The Disclosure Schedule lists each Real Property Lease. Each Real Property
Lease is in full force and effect and is the valid and legally binding
obligation of the Seller and, to the Seller’s Knowledge, the other parties named
therein. No Real Property Lease has been amended, supplemented, modified,
assigned, encumbered, terminated or cancelled as of the date hereof. Neither the
Seller nor, to the Seller’s Knowledge, any other party to a Real Property Lease,
has breached or is in default under such Real Property Lease and no notice of
breach or default under such Real Property Lease has been given or received by
the Seller or the Parent. No condition exists which, but for the giving of
notice, the passage of time, or both, would constitute a default under any Real
Property Lease.

5.1.10. Proceedings; Orders. There is no Proceeding pending or, to the Seller’s
Knowledge, threatened against the Seller or the Parent with respect to the
Subject Assets and/or the Subject Business. To the Seller’s Knowledge, no event
has occurred or circumstances exist that may give rise or serve as a basis for
the commencement of any such Proceeding. Neither the Seller nor the Parent is
subject to any Order which would limit or restrict such party’s right to enter
into and carry out this Agreement or any of the Seller Ancillary Documents to
which the Seller or the Parent is a party or to consummate or perform the
transactions contemplated hereby or thereby or which would otherwise adversely
affect the Subject Business or any of the Subject Assets.

5.1.11. Intellectual Property.

(a) The Disclosure Schedule lists: (i) all United States of America (“U.S.”) and
foreign issued design patents and utility patents, and all pending applications
relating to any inventions, and all reissues, divisions, continuations-in-part
and extensions of them; (ii) all registered trademarks, registered service
marks, trademark and service mark applications, together with all unregistered
trademarks and service marks, trade names, trade dress, logos and designs which
are material to the Subject Business; and (iii) all registered U.S. copyrights
and copyright applications and all renewals and extensions owned by the Seller
or used in the Subject Business or in which the Seller has an interest and the
nature of such interest (items (i) through (iii), above, shall be collectively
referred to hereinafter as “Intellectual Property”). The Seller has delivered to
the Buyer true, correct and complete copies of all written documentation
evidencing ownership and prosecution (if applicable) of each item of
Intellectual Property.

 

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(b) The Disclosure Schedule lists: (i) all Contracts granted by the Seller or
the Parent which create rights in any third Person regarding any item of
Intellectual Property (other than licenses or rights to use granted to customers
as part of the Seller’s standard terms of sale in the Ordinary Course of
Business); and (ii) all Contracts granted to the Seller which create rights in
the Seller regarding any intellectual property owned by any third Person,
including, without limitation, trademarks, patents, copyrights, trade secrets
and know-how, other than “off the shelf” software and similar licenses
(hereinafter collectively referred to as “Licenses”).

(c) (i) The Seller is the sole and exclusive owner, free and clear of all
Encumbrances other than the Permitted Encumbrances, of all right, title and
interest in each item of Intellectual Property and the Seller has the absolute
right to use and assign those rights without seeking the approval or consent of
any third Person, without providing notice to any third Person, and without
making any payment or providing other consideration to any third Person;
(ii) each registration and application for each item of Intellectual Property is
in full force and effect; (iii) except for trade secrets and know-how and other
assets included in the Subject Assets, there are no other items of intellectual
property that are owned by the Seller or material to the Subject Business;
(iv) there are no claims addressed to the Seller or the Parent or pending
Proceedings or, to the Seller’s Knowledge, threatened claims by any Person
relating to the use by the Seller of any item of Intellectual Property or
challenging the Seller’s ownership of the same; (v) no item of Intellectual
Property is subject to any Order or Contract limiting the scope or use of such
Intellectual Property or declaring any of such Intellectual Property abandoned;
(vi) to the Seller’s Knowledge, there are no infringing or diluting uses of any
item of Intellectual Property and no Proceedings are pending or, to the Seller’s
Knowledge, threatened concerning the possibility of any such infringing or
diluting use; and (vii) except for Licenses, neither the Seller nor the Parent
has granted any Contract or other right to any third Person to use any item of
Intellectual Property.

(d) To the Seller’s Knowledge, the Seller has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any intellectual
property rights of third Persons and neither the Seller nor the Parent has
received any charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation or violation.

5.1.12. Financial Statements. The Financial Statements attached to the
Disclosure Schedule are true, correct and complete and fairly represent the
financial condition of the Subject Business on the dates designated therein and
the results of operations for the periods designated therein and were prepared
in accordance with GAAP (except for federal and state Taxes based on income)
subject to inter-company adjustments and, in the case of interim financial
statements, to appropriate year-end adjustments and the absence of footnotes.
There has been no Material Adverse Effect since June 30, 2007.

5.1.13. Taxes. All Tax Returns, reports and forms required to be filed on or
prior to the date hereof have been timely filed and accurately reflect the Tax
liability of the Seller. As of the date hereof, no currently outstanding
extensions of time within which to file any Tax Return have been requested by
the Seller and no deadline for filing any such Tax Return has been

 

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extended or waived. All Taxes and withholding amounts due and payable on or
prior to the date hereof (whether or not reflected on any Tax Return) have been
paid in full on or prior to the date hereof. No Tax deficiencies have been
proposed or assessed against the Seller. There are no pending or, to Seller’s
Knowledge, threatened Proceedings for or relating to any liability in respect of
Taxes and there are no matters under discussion with any Governmental Body or
arbitrator with respect to Taxes that are likely to result in an obligation by
the Seller to pay any additional amount of Taxes. No Encumbrances relating to
Taxes (other than for current Taxes not yet due and payable) have been filed
against the Seller. The Seller has made, or will make as of the Closing, all
filings necessary to make the transactions contemplated by this Agreement exempt
from sales, document, transfer or similar Taxes and in the event that any such
Tax arises as a result of any of such transactions, the Seller shall promptly
pay such Taxes.

5.1.14. Undisclosed Commitments or Liabilities. There are no commitments,
liabilities or obligations relating to the Seller or the Subject Business,
whether accrued, absolute, contingent or otherwise, for which adequate
provisions have not been made on the Financial Statements, except those
commitments, liabilities or obligations incurred in or as a result of the
Ordinary Course of Business since June 30, 2007 (none of which ordinary course
commitments, liabilities or obligations have had or could have a Material
Adverse Effect).

5.1.15. Contracts; Assumed Contracts. The Disclosure Schedule sets forth a true,
correct and complete list of all of the following with respect to which the
Seller is a party or by which the Seller, the Subject Business or the Subject
Assets is bound: (i) all purchase and sales orders not in the Ordinary Course of
Business and all purchase and sales orders in excess of $10,000 existing as of
the date hereof; (ii) all arrangements or agreements, whether written or oral,
between the Seller and the Parent or any Affiliate of the Parent; (iii) loan
agreements, supply agreements, sole source arrangements, security agreements,
notes, guarantees, mortgages, licenses, technology agreements, royalty
agreements, licensing agreements, construction permits, leases, employment
agreements, compensation agreements, covenants not to compete, confidentiality
agreements, commission agreements, sales representative, distributorship or
marketing agreements, employee benefit plans, profit sharing plans, group
insurance, bonus plans or other Contracts (excluding purchase and sales orders
if already disclosed pursuant to clause (i), above) made in the Ordinary Course
of Business for an amount greater than $10,000 or with a term extending more
than sixty (60) days from the date hereof; and (iv) all other Contracts not made
in the Ordinary Course of Business. True, correct and complete copies (or
memoranda describing each with respect to oral Contracts) of each Contract set
forth on the Disclosure Schedule, and all amendments and modifications thereto
and supplements thereof, have been delivered to the Buyer prior to the date
hereof. Except for the Assumed Contracts and the Assumed Liabilities, the Buyer
shall not assume and shall have no right under or liability or obligation for or
in respect of, any other Contract which relates to the Seller, the Subject
Business or any of the Subject Assets. Each Assumed Contract is and will
continue to be immediately after the Closing valid, binding and in full force
and effect in accordance with its terms as against the Seller and, to the
Seller’s Knowledge, as against the other party thereto. Neither the Seller nor,
to the Seller’s Knowledge, any other party to an Assumed Contract has breached
or is in default under such Assumed Contract (with or without the lapse of time,
the giving of notice, or both). Neither the Seller nor the Parent has given or
received any notice or other communication regarding any actual, alleged or
potential violation or breach of, or default under, any Assumed Contract or any
termination or potential termination thereof and there are no

 

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present renegotiations of or attempts to renegotiate any amounts paid or payable
under any Assumed Contract. No Assumed Contract has been amended, modified or
supplemented (whether orally or in writing) from its original terms. Except as
set forth on the Disclosure Schedule, each Assumed Contract is assignable by the
Seller to the Buyer at the Closing without obtaining any consent or waiver from,
or providing any notice to, any third Person and without causing the
acceleration of any provision under such Assumed Contract.

5.1.16. Products. No claim for product liability has been asserted against the
Seller with respect to the Subject Business during the five (5) year period
immediately preceding the date hereof and, to the Seller’s Knowledge, no event
has occurred or circumstance exists which may give rise to the assertion of any
such claim. To the Seller’s Knowledge, there is no deficiency or inadequacy in
the design, manufacture or labeling of any of the products of the Subject
Business which may result in any product liability claim. All products sold by
the Subject Business have been designed, manufactured and labeled in compliance
with all applicable Laws and manufacturing, quality control and labeling
standards and procedures. There have been no recalls with respect to products
sold by the Seller.

5.1.17. Product and Service Warranties. All products sold and services provided
by the Subject Business (and, as applicable, the delivery thereof) prior to the
date hereof have been sold or provided, as the case may be, in conformity with
all applicable contractual commitments and all expressed or implied warranties.
No liability or other obligation or damages, including any obligation to repair
or replace, in respect of any warranty claim exists in connection with the
products sold or services provided by the Subject Business, except for any such
claims incurred in the Ordinary Course of Business consistent in amount and
character with past experience of the Subject Business. There are no standard
terms and conditions and purchase and sale orders used in connection with the
Subject Business (including warranty provisions).

5.1.18. Employees. The Disclosure Schedule contains:

(a) A list of all employee handbooks and/or manuals relating to the employees of
the Seller, true, correct and complete copies of which have been delivered to
the Buyer; and

(b) A list of all employees of the Seller, together with their job descriptions,
rates of salary, wages or commissions, vacation benefits and accrual rates, and
each bonus, deferred compensation, incentive compensation, severance or
termination pay agreement or employment benefit applicable to each such
employee.

5.1.19. Labor Practices. With respect to the employees of the Seller:

(a) To the Seller’s Knowledge, the Seller is in compliance with all applicable
Laws relating to employment discrimination, employee welfare and labor
standards, including, without limitation, the Federal Fair Labor Standards Act
and the rules and regulations promulgated thereunder, each as amended to date.
There is no basis for any claim by any past or present employee of the Seller
that such employee was subject to a wrongful discharge or any employment
discrimination by the Seller or its management

 

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arising out of or relating to such employee’s race, sex, age, religion, national
origin, ethnicity, handicap or any other protected characteristic under
applicable Law.

(b) To the Seller’s Knowledge, the Seller is in compliance with all applicable
Laws relating to the safety of employees or the workplace or relating to the
employment of labor, including, without limitation, the Federal Occupational
Safety and Health Act and the rules and regulations promulgated thereunder, each
as amended to date, and any provisions of such Laws relating to wages, bonuses,
collective bargaining, equal pay and the payment of social security, payroll and
similar Taxes. No Proceedings are pending or, to the Seller’s Knowledge,
threatened, before any Governmental Body or arbitrator relating to labor or
employment matters.

(c) The Seller is not a party to any Contract with any union, labor
organization, employee group, or other Person which affects the employment of
employees of the Seller, including, without limitation, any collective
bargaining agreements or labor contracts.

(d) To the Seller’s Knowledge, none of the employees of the Seller are in the
process of being organized by or into labor unions or associations. The Seller
has not been subject to a strike, slowdown or other work stoppage during the
five (5) year period immediately preceding the date hereof and, to the Seller’s
Knowledge, there are no strikes, slow-downs or other work stoppages threatened
against the Seller.

(e) To the Seller’s Knowledge, no key employee or group of employees has
expressed plans to terminate employment with the Seller prior to the date hereof
or to not accept an offer of employment, if any were to be offered, with the
Buyer.

5.1.20. Plans; ERISA.

(a) The Disclosure Schedule lists all of the Seller’s bonus, deferred or
incentive compensation, profit sharing, retirement, vacation, sick leave,
hospitalization, health, cafeteria, insurance, disability, stock option,
severance plans and policies, employment policies and all “employee pension
benefit plans” (as defined in Section 3(2) of ERISA) or “employee welfare
benefit plans” (as defined in Section 3(1) of ERISA) (individually, a “Plan” and
collectively, the “Plans”) that are or have been sponsored or contributed to by
the Seller, or by any trade or business which is or has been treated as a single
employer with the Seller under Sections 414(b), (c), (m) or (o) of the Code (an
“ERISA Affiliate”), for the benefit of an employee or former employee of the
Seller or any ERISA Affiliate.

(b) Each such Plan is in material compliance with, and has been administered in
accordance with, the provisions of ERISA and the Code applicable to such Plan
and all other applicable Laws. The Seller has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each such
Plan and no accumulated funding deficiency exists with respect to each such
Plan. All contributions required to be made with respect to all Plans on or
prior to the date hereof have been timely made. None of the Seller, any ERISA
Affiliate, any Plan, or, to Seller’s

 

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Knowledge, any trust or trustee or administrator thereof has (i) engaged in any
transaction prohibited by ERISA or the Code, (ii) breached any fiduciary duty
owed by it with respect to the Plans described above, or (iii) failed to file
and distribute in a timely manner all reports and information required to be
filed or distributed in accordance with ERISA.

(c) Neither the Seller nor any ERISA Affiliate has ever maintained, sponsored,
participated in or contributed to, or been obligated to contribute to, nor does
the Seller or any such ERISA Affiliate have any liability with respect to, any
“employee pension benefit plan” (within the meaning of Section 3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code. Neither the Seller nor any ERISA Affiliate has ever
contributed to, nor does the Seller or any such ERISA Affiliate have any actual
or potential liability with respect to, any “multiemployer pension plan” (within
the meaning of Section 3(37) of ERISA).

(d) The Seller has provided to the Buyer, or presented to the Buyer’s
representatives for their review, true, correct and complete copies of all
available documents pursuant to which the Plans are maintained and administered
and the most recent applicable annual reports.

(e) No Plan is currently under audit or review by any Governmental Body and, to
the Seller’s Knowledge, no such audit or review is threatened. No Proceedings
are pending or, to the Seller’s Knowledge, threatened against any Plan.

5.1.21. Events Since June 30, 2007. Since June 30, 2007, the Seller has not
suffered any event which has had or would result in a Material Adverse Effect or
taken any action outside of the Ordinary Course of Business. Without limiting
the general applicability of the foregoing, since June 30, 2007, the Seller has:

(a) Used, preserved and maintained the Subject Assets, individually and in the
aggregate, on a basis consistent with past practices;

(b) Maintained all insurance and bonds covering the Seller, the Subject Business
or the Subject Assets (including the insurance policies attached to the
Disclosure Schedule) in full force and effect;

(c) Continued to purchase raw materials and supplies in accordance with current
production schedules for the Subject Business and in quantities and qualities
consistent with past practices of the Seller and not in excess of the reasonable
requirements of the Subject Business;

(d) Paid all debts and obligations incurred by the Seller in the operation of
the Subject Business as the same became due and payable, except to the extent
the Seller has contested such debts or obligations in good faith by appropriate
Proceedings and has established appropriate reserves therefor; and

(e) Maintained its Records in the usual manner and on a basis consistent with
past practices.

 

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Furthermore, from June 30, 2007 to the date hereof, the Seller has not, other
than in the Ordinary Course of Business:

(a) Subjected to any Encumbrance any of the Subject Assets;

(b) Sold, transferred, leased or otherwise disposed of any of the Subject
Assets;

(c) Suffered any damage, destruction or loss (whether or not covered by
insurance) in any single instance in excess of $10,000 or, in the aggregate with
other such instances, in excess of $25,000;

(d) Had any material change in its accounting principles, methods or practices,
except insofar as may be required by a generally applicable change in GAAP;

(e) Had any material change in the relationship or course of dealing with any
party to an Assumed Contract;

(f) Committed any act or omitted to do any act, or permitted any act or omission
to act, which has caused or may cause a breach or default under any Assumed
Contract or made any modification or amendment to any Assumed Contract or
terminated any Assumed Contract;

(g) Changed the Seller’s credit policies or the prices charged for any of the
Seller’s products or services, except in accordance with the Seller’s past
practices;

(h) Had any labor disputes, disturbances or grievances;

(i) Cancelled, waived, assigned or otherwise transferred any right of the Seller
with a value to the Seller equal to or in excess of $10,000;

(j) Entered into any Contract not in the Ordinary Course of Business; or

(k) Agreed or committed, whether orally or in writing, to do any of the
foregoing.

5.1.22. Compliance With Environmental Laws.

(a) Except in material compliance with all Environmental Laws, and all Orders
and Governmental Approvals applicable thereto (i) there are no and, to the
Seller’s Knowledge, there have never been any Hazardous Substances at, on, in,
above, under or removed from the Leased Real Property, (ii) there are no and, to
the Seller’s Knowledge, there have never been any Hazardous Substances on any
property adjacent to the Leased Real Property, including, without limitation,
any Hazardous Substances originating or emanating from any other property that
are present on, in, above or under the Leased Real Property or Hazardous
Substances originating or emanating from the Leased Real Property that are
present on, in, above or under any other property, and (iii) no Hazardous
Substances have ever been generated, treated, stored, disposed of, handled

 

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on, spilled, discharged or released on or removed from the Leased Real Property
by the Seller, the Parent or, to the Seller’s Knowledge, any third Person.

(b) None of the Seller, the Parent or, to the Seller’s Knowledge, any current or
former owner of the Leased Real Property has received any notice from any
Governmental Body or any other third Person of (i) any Hazardous Substances
which have been generated, treated, stored, handled or removed from or disposed
of on the Leased Real Property, (ii) any Hazardous Substance which has migrated
on, in, above, under or to the Leased Real Property from any adjacent property
or which has migrated, emanated or originated from the Leased Real Property onto
any other property, or (iii) any violation of any actual or potential liability,
responsibility or obligation arising out of or relating to any Environmental Law
with respect to the Seller or the Leased Real Property.

(c) The Seller has obtained all necessary Governmental Approvals from, made all
filings with and provided all notifications to any Governmental Body or other
third Person required for the operation of the Subject Business and the use of
the Leased Real Property as it is used as of the date hereof by the Seller. The
Disclosure Schedule contains a list of all Governmental Approvals held by the
Seller relating to any Environmental Law. All Governmental Approvals held by the
Seller or used in connection with the Subject Business are fully transferable to
the Buyer.

(d) No action concerning any Environmental Law has been taken or, to the
Seller’s Knowledge, is currently threatened against the Seller and no action
concerning any Environmental Law, to the Seller’s Knowledge, is currently
threatened against any current or former owner of the Leased Real Property by
any Governmental Body or other third Person.

(e) The Seller and the Subject Assets are and at all times in the past have been
in compliance in all material respects with each Environmental Law and with all
Governmental Approvals issued, granted, given or otherwise made available by or
under the authority of any Governmental Body under any Environmental Law.

(f) Except for filings required under the Property Transfer Act, the
consummation of the transactions contemplated by this Agreement do not
(i) impose any obligation on the Seller under any Environmental Law, including,
without limitation, for the investigation or cleanup of the Leased Real
Property, or (ii) require providing notification to or obtaining the consent of
any Governmental Body or other third Person pursuant to any Environmental Law.

(g) The Leased Real Property does not contain and, to the Seller’s Knowledge,
has never contained any (i) aboveground storage tanks, (ii) asbestos-containing
material, polychlorinated biphenyls, radon, or urea formaldehyde foam,
(iii) landfill or dumps, (iv) septic systems or wells of any type, or (v) a
hazardous waste management facility as defined under the Resource Conservation
and Recovery Act of 1976 (as amended by the Hazardous and Solid Waste Amendment
of 1984) and the rules

 

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and regulations promulgated thereunder, each as amended to date, or any
comparable Law.

(h) No action or failure to act by the Seller, the Parent or, to the Seller’s
Knowledge, any current or former owner of the Leased Real Property has occurred
with respect to the Leased Real Property which, with the passage of time, the
giving of notice, or both, would constitute a violation of any Environmental Law
or give rise to any Environmental Claim.

(i) The Subject Assets are not required to be upgraded, modified or replaced to
be in compliance with any existing Governmental Approval related to any
Environmental Law.

5.1.23. Insurance. The Seller maintains policies of fire and casualty, liability
and other forms of insurance and bonds in such amounts, with such deductibles,
and against such risks and losses as the Seller deems reasonable for the Subject
Business and the Subject Assets, individually and in the aggregate. A true and
complete list of all such insurance and bonds currently maintained by the Seller
is attached to the Disclosure Schedule. The Seller’s comprehensive general
liability insurance policy is endorsed so that it covers all occurrences
relating to products sold and services provided by the Seller prior to the
Closing Date, regardless of when the claim is made. Each such insurance policy
and bond is in full force and effect and neither the Seller nor the Parent has
received notice of or is otherwise aware of any cancellation or threat of
cancellation of any such insurance policy or bond. The Disclosure Schedule sets
forth all property damage, personal injury, workers’ compensation, products
liability or other claims that have been made against the Seller in the last
five (5) years or which are pending or, to the Seller’s Knowledge, threatened
against the Seller.

5.1.24. Governmental Approvals. Attached to the Disclosure Schedule is a true,
correct and complete list of all Governmental Approvals issued or granted to the
Seller which relate to the Subject Business or the Subject Assets, including the
Seller’s use or occupancy of the Leased Real Property. The Seller is in
compliance with and has all Governmental Approvals required by all applicable
Laws in the operation of the Subject Business, except such Governmental
Approvals where a failure to comply or to have such Governmental Approvals would
not have a Material Adverse Effect, and all such Governmental Approvals are
valid, current and effective. Neither the Seller nor the Parent has received any
notice that any applicable Governmental Body intends to modify, cancel,
terminate or fail to renew any Governmental Approval held by the Seller as a
result of the consummation of any of the transactions contemplated by this
Agreement or otherwise.

5.1.25. Compliance With Laws and Orders. The operation of the Subject Business
and the sale of its products and provision of its services is and has been in
compliance in all material respects with all applicable Laws and all Orders. No
notice has been issued nor is any Proceeding pending or, to the Seller’s
Knowledge, threatened (i) with respect to any alleged violation by the Seller or
any employee, agent or representative of the Seller of any applicable Law or
Order, or (ii) with respect to any alleged failure to have Governmental
Approvals required by applicable Law in connection with the operation of the
Subject Business or the ownership or use of the Subject Assets.

 

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5.1.26. Customers; Suppliers. The Disclosure Schedule sets forth, with respect
to the last three (3) fiscal years of the Seller and with respect to the
year-to-date period ended on April 16, 2008, a list of (i) the dollar amount
derived from each of the ten (10) largest (based on dollar amounts purchased
from the Seller) customers of the Seller, and (ii) the dollar amount purchased
from the ten (10) largest (based on dollar amounts purchased by the Seller)
suppliers of the Seller. Neither the Seller nor the Parent has received any
notice or indication of the intention of any of the customers, suppliers or
other third Persons to material Contracts of the Subject Business, including the
Assumed Contracts, to cease doing business or reduce in any material respect the
business transacted with the Subject Business or to terminate or modify any
Contracts with the Subject Business, including the Assumed Contracts (whether
upon consummation of the transactions contemplated by this Agreement or
otherwise).

5.1.27. Relationships with Related Persons. Neither the Parent nor any Affiliate
of the Parent is party to any Contract with, or has any claim or right against,
the Seller, or has owned an equity or any other financial or profit interest in
any Person that has (i) had business dealings or a financial interest in any
transaction with the Seller, or (ii) engaged in competition with the Seller with
respect to any line of products sold or services provided by the Seller.

5.1.28. Territorial Restrictions. Neither the Seller nor the Parent is
restricted by any Contract from conducting the Subject Business anywhere in the
world. The Buyer, as a result of the consummation of the transactions
contemplated by this Agreement, will not become restricted from conducting the
Subject Business anywhere in the world.

5.1.29. Brokers; Agents. Neither the Seller nor the Parent has dealt with any
agent, finder, broker or other representative in any manner which could result
in the Buyer being liable for any fee or commission in the nature of a finder’s
fee or originator’s fee in connection with the subject matter of this Agreement
and the Ancillary Documents.

5.2. Warranties and Representations Survive Closing. Notwithstanding any
investigation by or information supplied to the Buyer, the respective warranties
and representations of the Seller and the Parent contained in this Agreement,
the schedules attached hereto, including the Disclosure Schedule (as
supplemented pursuant to Paragraph 8.2, below), each Seller Ancillary Document
or in any writing to be furnished pursuant hereto shall be true and correct on
the Closing Date and shall survive the Closing Date: (i) as to the warranties
and representations contained in the first sentence of Paragraphs 5.1.6 and
5.19(b), above (but, with respect to Paragraph 5.19(b), only as such warranties
and representations relate to the payment of social security, payroll and
similar Taxes), clause (i) of Paragraph 5.1.11(c), above, the first three
sentences of Paragraph 5.1.1, above, and all of Paragraph 5.1.3, above,
indefinitely; (ii) as to the warranties and representations contained in all of
Paragraph 5.1.4, above, for five (5) years; (iii) as to the warranties and
representations contained in the first sentence of Paragraphs 5.1.10 and 5.1.25,
above, and all of Paragraphs 5.1.13, 5.1.20 and 5.1.22, above, for the same
period as the statute of limitations applicable thereto plus ninety (90) days;
and (iv) as to all other warranties and representations, for eighteen (18)
months. Except for the warranties and representations specified in clause (i) of
this Paragraph 5.2, each of which shall survive the Closing indefinitely, any
claim by the Buyer for indemnification under clause (i) of Paragraph 10.1,
below, made in writing prior to the expiration of the survival period applicable
thereto, and the rights of indemnity with respect thereto, shall survive such
expiration until resolved or judicially

 

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determined; and any such claim not so made in writing prior to the expiration of
such applicable survival period shall be deemed to have been waived.

5.3. Seller’s Knowledge. For those warranties and representations set forth in
this Article V which are subject to the qualification “to the Seller’s
Knowledge,” the Seller and the Parent shall be deemed to have knowledge of a
matter if (i) any member of the senior management of the Seller, consisting of
Gerald Shaff, Susan Peck, Elizabeth Bacon or Philip Bacon, has actual knowledge
of such matter, or (ii) such matter has come, or should reasonably be expected
to have come, to the attention of any of the Persons referred to in clause
(i) of this Paragraph 5.3 if such individual had conducted a reasonable due
diligence review of the Subject Business and the Subject Assets, including
reasonable inquiries to key personnel and a review of, and discussions with key
personnel regarding, the books, records and operations of the Subject Business
and the Subject Assets relating to the matters set forth in such warranties and
representations.

ARTICLE VI

Joint and Several Covenants of Seller and Parent

The Seller and the Parent jointly and severally covenant and agree as follows:

6.1. Conduct of Subject Business in Ordinary Course. Until the Closing, the
Seller shall use, and the Parent shall cause the Seller to use, its commercially
reasonable efforts to carry on the Subject Business diligently and substantially
in the manner as heretofore conducted, and shall not make or initiate any
unusual or novel methods of purchase, sale, management, accounting or operation,
or make any adjustments in the pricing or advertising of its products or
services not consistent with the past practices of the Seller. The Seller shall
use, and the Parent shall cause the Seller to use, its commercially reasonable
efforts to preserve for the Buyer the organization of the Subject Business as it
exists on the date hereof, including all key employees and the Seller’s
relationship with suppliers, customers and advertisers and others having
business relations with the Subject Business.

6.2. Employees. The Seller will terminate the employment of all of the employees
of the Subject Business as of the Closing Date. The Buyer may, but will not be
obligated to, offer employment to any or all of the employees of the Subject
Business. The Seller and the Parent will provide reasonable assistance, to the
extent requested, to the Buyer in retaining those employees of the Subject
Business whom the Buyer elects to hire in connection with the operation of the
Subject Business subsequent to the Closing. The Buyer shall not have any
liability or obligation under any Contract of the Seller or the Parent with
employees of the Subject Business, including, without limitation, any benefit
plan or program maintained by the Seller for employees of the Subject Business
(including any of the Plans). With respect to the employees of the Subject
Business (whether or not hired by the Buyer on or after the Closing Date), the
Seller shall retain responsibility for and shall pay when due any and all costs,
including wages, benefits, employment-related Taxes, health care costs,
severance and other termination-related costs, and any other employment-related
costs relating to the period during which such employees were employed by the
Seller or any predecessor of the Seller on or prior to the Closing Date. Within
thirty (30) days of the Closing Date, the Seller shall make its

 

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contribution for the 2008 plan year to the Custom Products Corporation Money
Purchase Pension Plan for the employees of the Subject Business, notwithstanding
any requirement that an employee complete 1,000 hours of service during 2008, or
be employed on the last day of the 2008 plan year or any other service
requirement that would restrict any employee’s right to receive an employer
contribution for the 2008 plan year. The Buyer shall pay bonuses for the 2008
calendar year to the employees of the Subject Business in an aggregate amount
not less than fifty percent (50%) of the amount, prorated through the Closing
Date, of the aggregate amount of the bonuses paid by the Seller to such
employees in 2007.

6.3. Use of Tradenames. After the Closing, neither the Seller nor the Parent
shall, directly or indirectly, use the name “Custom Products Corporation”,
“Polyclutch”, “Polyvolt” or “Puljak” or any derivatives of any of the foregoing.

6.4. Collection of Accounts Receivable. The Seller and the Parent jointly and
severally guarantee collection by the Buyer of the full face amount of the
Accounts Receivable within a six (6) month period (the “A/R Collection Period”)
commencing on the Closing Date. Subject to the following provisions of this
Paragraph 6.4, the Seller and the Parent jointly and severally agree to pay the
Buyer an amount equal to the then uncollected balance (the “Reassigned Balance”)
of those Accounts Receivable (subject to any reserve reflected on the Financial
Statements) which the Buyer elects to reassign (each, a “Notice of
Reassignment”) to the Seller (collectively, the “Reassigned Receivables”) within
five (5) days of receipt by the Seller of any Notice of Reassignment. The joint
and several obligations of the Seller and the Parent under this Paragraph 6.4
are subject to the following provisions:

(a) Unless the amount of, or obligation to pay, a specific Account Receivable is
disputed by the debtor named therein or if the account debtor under any Account
Receivable shall direct the application of any payment to a specific outstanding
account, all amounts collected by the Buyer from such debtor shall be applied in
chronological order starting with the oldest receivable or installment, as the
case may be, owing by such debtor.

(b) The Buyer shall deliver to the Seller, with each Notice of Reassignment, a
statement setting forth the Reassigned Receivables, including the name of the
debtor and the uncollected balance of each Reassigned Receivable, together with
the payment history of such debtor from the Closing Date and a copy of the
notification given by the Buyer pursuant to subparagraph (c), below.

(c) On or before the giving of a Notice of Reassignment, the Buyer shall provide
notification to the related debtors for the Reassigned Receivables to remit all
future payments, if any, directly to the Seller and, to the extent the Buyer
receives payment from such debtor after the Buyer provides a Notice of
Reassignment but before the Seller receives full payment of the uncollected
balance of such Reassigned Receivables, the Buyer shall hold such payment in
trust for the benefit of the Seller until the Seller is paid in full in
accordance with the provisions of this Paragraph 6.4.

 

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6.5. Restrictive Covenants.

(a) Non-Competition. The Seller and the Parent acknowledge and agree that at no
time for a period of five (5) consecutive years immediately after the Closing
Date shall either of them, directly or indirectly (including, without
limitation, through an Affiliate), whether as an agent, equity holder (except as
the holder of not more than five percent (5%) of the equity securities of a
publicly held enterprise as long as such party does not render advice or
assistance to such enterprise), employer, employee, consultant, representative,
trustee, partner, proprietor or otherwise:

(i) Acquire an ownership interest in, work for, render advice or assistance to,
or otherwise engage in or enter into any aspects of the business of, any
Competitor;

(ii) Contact, solicit or entice, or attempt to contact, solicit or entice, any
supplier, customer or independent contractor of the Subject Business from whom
the Subject Business received material or services or to whom the Subject
Business offered or sold products at any time during the two (2) year period
immediately preceding the Closing Date, so as to cause, or attempt to cause, any
of said suppliers, customers or independent contractors not to do business with
the Buyer or the Subject Business or to purchase products offered or sold by the
Subject Business or the Buyer from any source other than the Buyer; or

(iii) Contact, solicit or entice, or attempt to contact, solicit or entice, any
individual who is currently an employee of the Subject Business, or any
individual who is employed by the Buyer on or after the date hereof in
connection with the Subject Business, to induce such individual to leave the
employ or service of the Buyer or to accept employment elsewhere.

The restrictions set forth in subparagraphs (i) and (ii), above, shall not apply
to a Person unaffiliated with the Parent as of the Closing who subsequently
acquires the Parent, or who is an Affiliate of such unaffiliated Person, or who
is subsequently acquired by the Parent and has a pre-existing business
accounting for not more than 20% of the total revenues of such acquired entity.

(b) Nondisclosure. The Seller and the Parent acknowledge and agree that at no
time for a period of ten (10) consecutive years immediately after the Closing
Date shall either of them use or disclose any Confidential Information to anyone
other than to employees and representatives of the Buyer, except any such
Confidential Information which is required to be disclosed by the Seller or the
Parent in connection with any Proceeding or pursuant to any applicable Law, and
then only after the Seller or the Parent, as the case may be, has given written
notice to the Buyer of the intention so to disclose such Confidential
Information and has given the Buyer a reasonable opportunity to contest the need
for such disclosure or request a protective order protecting the confidentiality
of such information, and the Seller and the Parent shall cooperate with the
Buyer in connection with any such contest or request. Notwithstanding the
foregoing, the Seller and the Parent acknowledge and agree that nothing in this
Agreement shall be

 

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construed to limit or supersede the common law of torts or statutory or other
protection of trade secrets where such Law provides the Buyer with greater
protections or protections for a longer duration than that provided in this
Paragraph 6.5.

(c) Enforcement. In addition to all other legal remedies available to the Buyer
for the enforcement of the covenants set forth in this Paragraph 6.5, the Seller
and the Parent acknowledge and agree that the Buyer shall be entitled to
temporary and/or permanent injunctive relief by any court of competent
jurisdiction without the necessity of posting any bond or other security to
prevent or restrain any breach or threatened breach hereof.

6.6. Termination Notices. With respect to the sales representative and
employment agreements listed as items 3(a), 3(b) and 6 on Schedule 1.1(k)
attached hereto (the “Subject Agreements”), within two (2) business days of the
date of execution of this Agreement (or such later date requested by the Buyer),
the Seller shall deliver to each of the other parties to the Subject Agreements
a written notice of termination to be effective at the earliest date that is
permissible under the applicable provisions of each respective Subject
Agreement.

ARTICLE VII

Warranties and Representations of Buyer

7.1. Warranties and Representations. The Buyer hereby warrants and represents to
the Seller and the Parent, which warranties and representations shall survive
the Closing Date for the period set forth in Paragraph 7.2, below, as follows:

7.1.1. Corporate Matters; Authority. The Buyer is a corporation duly
incorporated, validly existing and in active status under the laws of the State
of Wisconsin. The Buyer has the corporate power and authority to carry on all
business activities now conducted by the Buyer. The Buyer has the corporate
power and authority to enter into this Agreement and the Buyer Ancillary
Documents and to consummate the transactions contemplated hereby or thereby. The
execution, delivery and performance by the Buyer of this Agreement and the Buyer
Ancillary Documents have been approved by all necessary corporate action of the
Buyer and are and shall constitute the valid and legally binding obligations of
the Buyer, enforceable against it in accordance with their respective terms.

7.1.2. No Conflict. The execution and delivery of this Agreement and the Buyer
Ancillary Documents by the Buyer do not, and the consummation of the
transactions contemplated hereby or thereby and compliance with the terms hereof
or thereof by the Buyer will not (a) conflict with or result in any breach or
violation of (i) any provision of the Articles of Incorporation or By-Laws of
the Buyer, or (ii) any Law or Order applicable to the Buyer; or (b) violate or
conflict with, or result in a breach or default under, or require any consent,
notice or waiver under, any Contract to which the Buyer is a party or is
subject. No Governmental Approval from, or registration, declaration or filing
by the Buyer with, any Governmental Body or other third Person is required to be
obtained or made by the Buyer in connection with the Buyer’s execution and
delivery of this Agreement and the Buyer Ancillary Documents or the

 

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consummation or performance by the Buyer of any of the transactions contemplated
hereby or thereby.

7.1.3. Brokers; Agents. The Buyer has not dealt with any agent, finder, broker
or other representative in any manner which could result in the Seller or the
Parent being liable for any fee or commission in the nature of a finder’s or
originator’s fee in connection with the subject matter of this Agreement and the
Ancillary Documents.

7.2. Warranties and Representations Survive Closing. Notwithstanding any
investigation by or information supplied to the Seller or the Parent, the
warranties and representations of the Buyer contained in this Agreement, the
schedules attached hereto, each Buyer Ancillary Document or in any writing to be
furnished pursuant hereto shall be true and correct on the Closing Date and
shall survive the Closing Date indefinitely.

ARTICLE VIII

Disclosure Schedule

8.1. Notice of Developments. From the date of this Agreement until the Closing
Date, the Seller and the Parent will give the Buyer prompt written notice upon
becoming aware of any event or circumstance that has resulted in a material
breach of, or material inaccuracy in, any of the Seller’s or the Parent’s
representations and warranties.

8.2. Updates to Disclosure Schedule. The Seller and the Parent shall have the
right to supplement the Disclosure Schedule prior to the Closing to reflect any
new events, circumstances or changes which arise after the date hereof (and
which, if existing on the date hereof, would have been required to be disclosed
in respect of the representations and warranties in Article V, above, in the
Disclosure Schedule (each, a “New Disclosure Matter”)) by delivery to the Buyer
prior to the Closing Date of one or more supplements (each, a “Disclosure
Supplement”); provided, however, that if a Disclosure Supplement is delivered to
the Buyer at any time during the five business day period immediately preceding
the parties’ projected Closing Date, or on the parties’ projected Closing Date
(but prior to the Closing), the Buyer may, in its sole discretion,
notwithstanding Paragraph 11.1(c), below, choose to delay the Closing for a
period of up to five business days so that the Buyer may consider fully the
matter(s) disclosed in such Disclosure Supplement. The Buyer shall have the
right under Article XI, below, to (i) terminate this Agreement by written notice
to the Seller within five business days after receipt of a Disclosure Supplement
setting forth any New Disclosure Matter that, if existing at the Closing and not
disclosed pursuant to this Paragraph 8.2, would have caused any of the
conditions set forth in Paragraph 4.2(a), above, to not be satisfied and such
New Disclosure Matter has had or could have a Material Adverse Effect, or
(ii) to consummate the transactions contemplated by this Agreement. To the
extent that the Buyer elects to so consummate such transactions, the Disclosure
Schedule shall be deemed amended and supplemented (including for the purposes of
determining the satisfaction of the conditions set forth in Section 4.2(a)) by
all information set forth in each Disclosure Supplement as if amended on the
date hereof, and each of the warranties and representations of the Seller or the
Parent, as the case may be, made in this Agreement shall be deemed amended and
supplemented by all such information set forth in each Disclosure Supplement as
if amended on the date hereof.

 

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ARTICLE IX

Mutual Covenants

The Seller, the Parent and the Buyer each covenant and agree as follows:

9.1. Cooperation. The Seller, the Parent and the Buyer will cooperate with each
other and will cause their respective officers, employees, agents, accountants,
attorneys and representatives to cooperate with each other after the Closing to
ensure the orderly transition of the ownership of the Subject Business from the
Seller to the Buyer and to minimize any disruption to the Subject Business that
might result from the transactions contemplated hereby.

9.2. Records.

(a) On the Closing Date, the Seller will deliver or cause to be delivered to the
Buyer all original Records in the possession or control of the Seller or the
Parent.

(b) After the Closing, upon reasonable written notice, the Seller and the
Parent, on the one hand, and the Buyer, on the other hand, agree to furnish or
cause to be furnished to each other and their respective representatives,
employees, counsel and accountants access, during normal business hours, to such
information and assistance relating to the Subject Business or the Subject
Assets as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any returns, reports or forms or the
defense of any Tax claim or assessment; provided, however, that such access does
not unreasonably disrupt the normal operations of the Buyer.

9.3. Publicity. During the period ending ten (10) days after the Closing Date,
neither party shall make any public release or announcements concerning the
transactions contemplated hereby without the consent of the other party, except
if required by law, including, without limitation, applicable securities laws,
and with advance notice to the other party of such required disclosure proposed
to be made.

9.4. Execution of Additional Documents. From time to time, as and when requested
by a party hereto and at the expense of such requesting party, each party hereto
will execute and deliver, or cause to be executed and delivered, all such
documents and instruments and will take, or cause to be taken, all such further
or other actions as are necessary to consummate the transactions contemplated by
this Agreement.

9.5. Risk of Loss. Risk of loss, damage or destruction to any of the Subject
Assets shall be upon the Seller until 11:59 p.m. (Connecticut time) on the
Closing Date and thereafter upon the Buyer.

9.6. Environmental Remediation. Following the Closing, the Seller shall, at its
sole cost and expense, promptly proceed to take all steps, including, without
limitation, any and all investigative and remedial measures, as are necessary to
satisfy all requirements and obligations of the Property Transfer Act; provided,
however, that, with respect to the initial $120,000 of costs associated with the
filing fees for the Property Transfer Act form described in Paragraph 4.2(viii),
above, filed by the Seller and such investigative and remedial measures (or such
lesser

 

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amount as may be required), the Buyer agrees to bear one-third of such costs.
For purposes of clarification, (i) the maximum amount of costs that the Buyer
may incur pursuant to the preceding sentence shall be $40,000 and (ii) the costs
that the Buyer may incur pursuant to the preceding sentence shall not include
any costs relating to the Phase I and Phase II Environmental Reports conducted
by LFR, Inc. and identified on Section 5.1.22 of the Disclosure Schedule prior
to the date hereof.

ARTICLE X

Indemnification

10.1. Indemnification of Buyer. The Seller and the Parent jointly and severally
agree to indemnify the Buyer and its directors, officers and employees
(collectively, the “Buyer Indemnitees”) and to hold each of the Buyer
Indemnitees harmless from and against any and all Losses of or against any of
the Buyer Indemnitees resulting from: (i) any misrepresentation or breach of
warranty or representation on the part of the Seller or the Parent in this
Agreement (as each such representation or warranty would read if all
qualifications as to materiality, including each reference to the defined term
“Material Adverse Effect”, were deleted therefrom); (ii) any breach or
nonfulfillment by the Seller or the Parent of any agreement or covenant
contained in this Agreement or in any Seller Ancillary Document; (iii) any
failure of the Seller or the Parent to pay and/or perform any of the Excluded
Liabilities; (iv) any assessments, claims or liabilities (including interest and
penalties) for any Taxes relating to, imposed upon, or assessed against any of
the Subject Assets, the Subject Business, the Seller or the Parent for periods
prior to and including the Closing Date; (v) any employment-related costs
relating to periods prior to and including the Closing Date, including, without
limitation, any and all wages, benefits, employment-related Taxes, health care
costs, severance, separation and other termination-related costs; and (vi) any
Environmental Claim.

10.2. Indemnification of Seller and Parent. The Buyer agrees to indemnify the
Seller and the Parent and their respective directors, officers and employees
(collectively, the “Seller Indemnitees”) and to hold each of them harmless from
and against any and all Losses of or against any of the Seller Indemnitees
resulting from: (i) any misrepresentation or breach of warranty or
representation on the part of the Buyer in this Agreement; (ii) any breach or
nonfulfillment by the Buyer of any agreement or covenant contained in this
Agreement or in any Buyer Ancillary Document; or (iii) any failure of the Buyer
to pay or perform any of the Assumed Liabilities.

10.3. Procedure Relative to Indemnification.

(a) In the event that any of the Buyer Indemnitees or the Seller Indemnitees, as
the case may be, shall claim that it is entitled to be indemnified pursuant to
the terms of this Article X, it (the “Claiming Party”) shall so notify the party
or parties against which the claim is made (the “Indemnifying Party”) in writing
(each, a “Claims Notice”) of such claim within thirty (30) days after the
Claiming Party receives notice of any demand, claim or circumstance which is
reasonably likely to give rise to a claim or the commencement of any Proceeding
(an “Asserted Liability”) that may reasonably be expected to result in a claim
for indemnification by the Claiming Party against the

 

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Indemnifying Party, which Claims Notice shall include the deadline of any
responsive filing or pleading of which the Claiming Party has actual notice;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually and materially prejudiced as a result of such failure.
Each Claims Notice shall describe the Asserted Liability in reasonable detail,
and shall indicate the amount (estimated, if necessary) of the Losses that have
been or may be suffered by the Claiming Party; provided, however, that failure
to provide such reasonable detail shall not affect the indemnification provided
hereunder except to the extent that such failure shall actually and materially
prejudice the Indemnifying Party; and provided, further, that in no event shall
the Claiming Party’s right to recover Losses from the Indemnifying Party be
limited to the amount set forth or estimated in such Claims Notice. If the
amount of Losses are liquidated, each Claims Notice shall so state and such
amount shall be deemed the amount of the claim of the Claiming Party. If the
amount of Losses are not liquidated, each Claims Notice shall so state and in
such event a claim shall be deemed asserted against the Indemnifying Party on
behalf of the Claiming Party, but no payment shall be made on account thereof
until the amount of Losses is liquidated and the claim is finally determined.

(b) The following provisions shall apply to claims of the Claiming Party which
are based upon a Proceeding filed or instituted by any third Person, including
by any Governmental Body:

(i) Upon receipt of a Claims Notice involving an Asserted Liability against or
sought to be collected by any such third Person, the Indemnifying Party shall
notify the Claiming Party prior to the earlier of twenty (20) days after its
receipt of such Claims Notice or fifteen (15) days prior to the deadline of any
responsive filing or pleading required in such Proceeding (A) if the
Indemnifying Party disputes the Indemnifying Party’s liability for
indemnification under this Article X with respect to such Asserted Liability and
whether the Indemnifying Party desires to defend against such Asserted
Liability; or (B) if the Indemnifying Party does not dispute the Indemnifying
Party’s liability for indemnification under this Article X with respect to such
Asserted Liability and whether the Indemnifying Party desires to defend against
such Asserted Liability.

(ii) If the Indemnifying Party notifies the Claiming Party, prior to the earlier
of twenty (20) days after its receipt of the Claims Notice or fifteen (15) days
prior to the deadline of any responsive filing or pleading required in such
Proceeding, that the Indemnifying Party does not dispute the Indemnifying
Party’s obligation to indemnify under this Article X and desires to defend
against such Asserted Liability, then the Indemnifying Party shall assume the
defense of such Asserted Liability with counsel of the Indemnifying Party’s
choice (reasonably acceptable to the Claiming Party) and, after notice from the
Indemnifying Party to the Claiming Party of its election to assume the defense
of such Asserted Liability, the Indemnifying Party will not, as long as it
diligently conducts such defense, be liable to the Claiming Party under this
Article X for any fees of other counsel or any other expenses with respect to
the defense of such Asserted Liability, in each case subsequently incurred by
the Claiming Party

 

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in connection with the defense of such Asserted Liability. The Claiming Party
shall cooperate, at the Indemnifying Party’s expense, in the compromise of, or
defense against, such Asserted Liability and may participate in, but not
control, such Asserted Liability at its own expense. If the Indemnifying Party
is controlling the defense of an Asserted Liability, no compromise or settlement
of such Asserted Liability may be effected without the Claiming Party’s prior
written consent (which consent shall not be unreasonably withheld or delayed)
unless (A) there is no finding or admission of any violation by the Claiming
Party of any Law or the rights of any Person, and no effect on any other claims
that may be made against the Claiming Party, and (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party. If the
Indemnifying Party notifies the Claiming Party, prior to the earlier of twenty
(20) days after its receipt of the Claims Notice or fifteen (15) days prior to
the deadline of any responsive filing or pleading required in such Proceeding,
that the Indemnifying Party does not dispute the Indemnifying Party’s obligation
to indemnify under this Article X, but does not notify the Claiming Party within
such period that the Indemnifying Party elects to assume the defense of such
Asserted Liability, then the Claiming Party will have the right to conduct a
defense of the Asserted Liability until and unless the Indemnifying Party
subsequently elects to assume the defense of such Assumed Liability, and the
Indemnifying Party will be bound by any determination made with respect to such
Asserted Liability or any compromise or settlement effected by the Claiming
Party and the Indemnifying Party will be responsible for paying all fees and
expenses incurred by the Claiming Party in connection with such defense incurred
up until the Indemnifying Party does in fact assume such defense.

(iii) If the Indemnifying Party notifies the Claiming Party prior to the earlier
of twenty (20) days after its receipt of the Claims Notice or fifteen (15) days
prior to the deadline of any responsive filing or pleading required in such
Proceeding, that the Indemnifying Party disputes the Indemnifying Party’s
obligation to indemnify under this Article X, or does not respond to the Claims
Notice as required by Paragraph 10.3(b)(i), above, within such period, then the
Claiming Party will have the right to conduct a defense of the Asserted
Liability and the Indemnifying Party will be bound by any determination made
with respect to such Asserted Liability or any compromise or settlement effected
by the Claiming Party; provided, that the Claiming Party’s assumption of such
defense shall not constitute a waiver of any right to receive indemnification
against Losses under Paragraphs 10.1 or 10.2, above, as the case may be,
including, without limitation, any fees and expenses relating to such defense.
If the Indemnifying Party subsequently requests to assume the defense of such
Asserted Liability and the Claiming Party elects to allow the Indemnifying Party
to assume such defense of such Asserted Liability, such election not to be
unreasonably withheld or delayed, then the Indemnifying Party shall assume the
defense of such Asserted Liability in accordance with the provisions of
Paragraph 10.3(b)(ii), above; provided, that (A) the Indemnifying Party shall
not have the right to seek reimbursement or payment from the Claiming Party of
any fees or expenses incurred, or payments made, by the Indemnifying Party in
defense, settlement or

 

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satisfaction of such Asserted Liability, (B) the Indemnifying Party shall agree
in writing to waive all rights and claims against the Claiming Party in
connection with such Asserted Liability, (C) all rights of the Claiming Party to
seek indemnification from the Indemnifying Party with respect to the Asserted
Liability shall remain in full force and effect, and (D) the Indemnifying
Party’s assumption of such defense shall not constitute an admission of any
liability for indemnification against Losses under Paragraphs 10.1 or 10.2,
above, as the case may be, with respect to such Asserted Liability.

(iv) Notwithstanding the foregoing, if the Claiming Party determines in good
faith that an Asserted Liability is likely to adversely affect it or any
Affiliate other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Claiming Party may, by
notice to the Indemnifying Party, assume the exclusive right to defend,
compromise or settle such Asserted Liability, but the Indemnifying Party will
not be bound by any determination of an Asserted Liability so defended or any
compromise or settlement effected without its prior written consent (which
consent shall not be unreasonably withheld or delayed).

(c) Upon receipt of a Claims Notice involving an Asserted Liability that does
not involve an Asserted Liability against or sought to be collected by any third
Person, including any Governmental Body, then the Indemnifying Party shall have
thirty (30) days from the receipt of such Claims Notice to notify the Claiming
Party that the Indemnifying Party disputes such Asserted Liability. If the
Indemnifying Party does not so notify the Claiming Party, then the amount of
such Asserted Liability shall be deemed, conclusively, a liability of the
Indemnifying Party hereunder. If the Indemnifying Party shall object in writing
to such Asserted Liability as provided herein, then the Claiming Party shall
have thirty (30) days to respond in a written statement to the objection of the
Indemnifying Party. If after such thirty (30) day period there remains a dispute
as to such Asserted Liability, then the parties shall attempt in good faith for
an additional period of thirty (30) days to agree upon the rights of the
respective parties with respect to such Asserted Liability. If the parties
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties. If the parties do not so agree, then the Claiming Party
may pursue any other remedies available to it hereunder or otherwise.

10.4. Limitations on Indemnification.

(a) Subject to Paragraph 10.4(c), below, neither the Seller nor the Parent shall
be required to indemnify any of the Buyer Indemnitees or make any payment with
respect to any Losses arising under clause (i) of Paragraph 10.1, above, unless
and until the aggregate amount of such Losses from a single claim (or series of
related claims) for which indemnification is sought under such clause exceeds
$5,000 and unless and until the aggregate amount of such Losses for which
indemnification is sought under such clause exceeds $50,000 (the “Threshold
Amount”), in which event the Buyer Indemnitees shall only be entitled to
indemnification for Losses in excess of the Threshold Amount.

 

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(b) Subject to Paragraph 10.4(c), below, neither the Seller nor the Parent shall
be required to indemnify any of the Buyer Indemnitees or make any payment with
respect to any Losses arising under clause (i) of Paragraph 10.1, above, in an
aggregate amount in excess of fifty percent (50%) of the Purchase Price.

(c) Notwithstanding the provisions of Paragraphs 10.4(a) and (b), above, the
limitations set forth in Paragraphs 10.4(a) and (b), above shall not apply with
respect to any claims by any of the Buyer Indemnitees for indemnification
(1) based upon clauses (ii) through (vi) of Paragraph 10.1, above, (2) based
upon breach of the warranties and representations set forth in the first
sentence of Paragraph 5.1.6, clause (i) of Paragraph 5.1.11(c) or Paragraphs
5.1.1, 5.1.2, 5.1.3, 5.1.4, 5.1.12 or 5.1.22, (3) based upon any failure of the
Seller to fully satisfy its obligations under Paragraph 9.6, above, or (4) for
fraud by the Seller or the Parent under this Agreement or any Seller Ancillary
Document.

(d) No party to this Agreement shall be liable for any punitive, exemplary,
consequential, special or similar damages arising out of or relating to this
Agreement, except to the extent any of the Buyer Indemnitees or the Seller
Indemnitees, as the case may be, suffers damages to any third Person (including
any Governmental Body) in connection with a claim by such third Person, in which
case such damages shall be recoverable to the extent recoverable under this
Article X without giving effect to this Paragraph 10.4(d).

ARTICLE XI

Termination

11.1. Termination Events. This Agreement may, by notice given prior to or at the
Closing, be terminated:

(a) By the Buyer if any of the conditions set forth in Paragraph 4.2, above (and
subject to the provisions of Paragraph 8.2, above), have not been satisfied as
of the later of the Closing Date or the stated deadline applicable thereto or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of the Buyer to comply with its obligations under this Agreement)
and the Buyer has not waived such condition on or before the Closing Date;

(b) By the Seller if any of the conditions set forth in Paragraph 4.3, above,
have not been satisfied as of the later of the Closing Date or the stated
deadline applicable thereto or if satisfaction of such a condition is or becomes
impossible (other than through the failure of the Seller or the Parent, as the
case may be, to comply with such party’s obligations under this Agreement) and
the Seller and the Parent have not waived such condition on or before the
Closing Date;

(c) By either the Buyer or the Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before June 30,
2008 or such later date

 

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as the Seller, the Parent and the Buyer may agree upon in writing, or as may
result from the Buyer electing to delay the Closing pursuant to Paragraph 8.2,
above; or

(d) By mutual written consent of the Seller, the Parent and the Buyer.

11.2. Effect of Termination. If this Agreement is terminated pursuant to
Paragraph 11.1, above, this Agreement shall forthwith become null and void and
there shall be no liability on the part of any party hereto except as set forth
in this Paragraph 11.2; provided, however:

(a) No such termination shall relieve any party hereto from liability for any
breach by such party of any provision of this Agreement occurring on or prior to
the date of such termination; and

(b) No such termination shall diminish, limit or affect in any way any right of
any party hereto to seek any remedy available to such party at law, in equity or
otherwise, in connection with any breach referred to in Paragraph 11.2(a),
above.

ARTICLE XII

Definitions

“A/R Collection Period” has the meaning set forth in Paragraph 6.4, above.

“Accounts Receivable” has the meaning set forth in Paragraph 1.1(f), above.

“Affiliate” means, with reference to any Person, another Person controlled by,
under the control of, or under common control with, such Person. For purposes of
this definition, the term “control” shall mean the power to elect a majority of
the members of the Board of Directors or other governing body of such Affiliate
or the power to direct the affairs of such Affiliate, whether by reason of the
ownership of voting equity, by contract or otherwise.

“Agreement” has the meaning set forth in the preface, above.

“Ancillary Documents” means, collectively, the Buyer Ancillary Documents and the
Seller Ancillary Documents.

“Asserted Liability” has the meaning set forth in Paragraph 10.3(a), above.

“Assignment and Assumption Agreement” has the meaning set forth in Paragraph
4.2(d), above.

“Assumed Contracts” has the meaning set forth in Paragraph 1.1(k), above.

“Assumed Liabilities” has the meaning set forth in Article III, above.

“Buyer” has the meaning set forth in the preface, above.

“Buyer Ancillary Documents” means, collectively, the agreements, instruments and
documents executed and delivered by the Buyer in connection with this Agreement.

 

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“Buyer Indemnitees” has the meaning set forth in Paragraph 10.1, above.

“Buyer’s Bring-Down Certificate” has the meaning set forth in Paragraph 4.3(a),
above.

“Capital Asset Amount” means (i) the aggregate book value of those Subject
Assets constituting capital assets, plus (ii) deposits made by the Seller and
included in the Subject Assets.

“Cash Purchase Price” means an amount equal to Five Million Two Hundred Fifty
Thousand Dollars ($5,250,000).

“Claiming Party” has the meaning set forth in Paragraph 10.3(a), above.

“Claims Notice” has the meaning set forth in Paragraph 10.3(a), above.

“Closing” means the closing of the purchase and sale contemplated by this
Agreement.

“Closing Date” has the meaning set forth in Paragraph 4.1, above.

“Code” means the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, each as amended.

“Competitor” means any business, incorporated or otherwise, which offers or
sells products anywhere in North America competitive with those offered or sold
by the Subject Business during the two (2) year period immediately preceding the
Closing Date or being developed by the Subject Business during the three
(3) month period immediately preceding the Closing Date.

“Confidential Information” means all non-public and all proprietary information
relating to the Subject Business, its customers and products, including, without
limitation, each of the following: (i) all test results, specifications,
know-how and all other technical information relating to the products or
services of the Subject Business or any of the Subject Assets; (ii) all
information and records concerning products being researched by, under
development by, or being tested by the Subject Business but not yet offered for
sale; (iii) all information concerning pricing policies of the Subject Business,
the prices charged by the Subject Business to its customers, the volume or
orders of such customers and other information concerning the transactions of
the Subject Business with its customers or proposed customers; (iv) financial
information concerning the Subject Business; (v) customer lists and the identity
of customers of the Subject Business; (vi) information concerning the marketing
programs or strategies of the Subject Business; (vii) information concerning
salaries or wages paid to, the work records of and other personnel information
relative to employees of the Subject Business; and (viii) all other confidential
and proprietary information of the Subject Business. The term “Confidential
Information” shall not include any information which: (a) at the time of
disclosure is publicly available or becomes publicly available through no act or
omission of the Seller or the Parent or (b) is thereafter disclosed or furnished
to the Seller or the Parent by a third person which did not acquire the
information under an obligation or confidentiality.

 

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“Consents” means agreements, from each party to an Assumed Contract which by its
terms prohibits assignment by the Seller, which specifically requires consent
for such assignment or under which, as a result of consummation of the
transactions contemplated by this Agreement, a breach or default will occur, and
from each Governmental Body promulgating a Governmental Approval held by the
Seller or used in connection with the Subject Business which by its terms or
applicable Law prohibits transfer by the Seller, which specifically requires
consent for such transfer or under which, as a result of consummation of the
transactions contemplated by this Agreement, a violation, breach or default will
occur, consenting to the assignment or transfer, as the case may be, to the
Buyer of such Assumed Contract or Governmental Approval under the same terms and
conditions as are applicable to the Seller and without amendment or modification
thereto, including without any acceleration of any provision thereof.

“Contracts” means any agreement, contract, obligation, promise or undertaking
(whether oral or written) that is legally binding.

“Current Asset Amount” means the aggregate book value of those Subject Assets
constituting current assets, including the Inventory, the Accounts Receivable
and the Prepaids.

“Disclosure Schedule” has the meaning set forth in Paragraph 5.1, above.

“Dispute Notice” has the meaning set forth in Paragraph 2.3(a), above.

“Encumbrances” means all liens, claims, encumbrances, pledges, mortgages,
restrictions on transfer and other security interests whatsoever.

“Environmental Claim” means any demand, liability, responsibility, obligation,
penalty, fine, claim, Proceeding or Order arising pursuant to, or in connection
with (i) an actual or alleged violation of any Environmental Law related to the
operation of the business or arising out of any practices or conditions
originating on or before the Closing Date, (ii) the presence, release, removal,
remedial, corrective or other response action in connection with Hazardous
Substances on, under or emanating to or from the Leased Real Property or the
Subject Assets on or before the Closing Date, (iii) the off-site disposal of any
Hazardous Substances by or on behalf of Seller or in connection with the
operation of the Subject Business prior to the Closing Date; or (iv) any actual
or alleged damage, injury, threat, or harm to health, safety, natural resources,
wildlife or the environment.

“Environmental Law” means any Law, Governmental Approval or Order pertaining to
(i) health, safety, natural resources, wildlife or the environment, (ii) the
U.S. Environmental Protection Agency, the Nuclear Regulatory Commission or the
Connecticut Department of Environmental Protection or any similar state agency
or department, or (iii) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
petroleum products or Hazardous Substances and all amendments, modifications and
additions thereto, in each case as amended, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
codified at 42 U.S.C. 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Solid Waste Disposal Act, codified at 42 U.S.C.
6901 et seq., as amended by the Resource

 

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Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendment of 1984, the Toxic Substances Control Act of 1976, codified at 15
U.S.C. 2601 et seq., the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, codified at 33 U.S.C. 1251 et seq., the Clean Air Act
of 1966, codified at 42 U.S.C. 741 et seq., the Hazardous Materials
Transportation Act, codified at 49, U.S.C. 651 et seq., the Oil Pollution Act of
1990, codified at 33 U.S.C. 2701 et seq., the Emergency Planning and Community
Right-To-Know Act of 1986, codified at 42 U.S.C. 11001, et seq., the National
Environmental Policy Act of 1969, codified at 42 U.S.C. 4321, et seq., the Safe
Drinking Water Act of 1974, codified at 42 U.S.C. 300(f), et seq., the Atomic
Energy Community Act of 1955, the Atomic Testing Liability Act, the Atomic
Energy Damages Act, the Atomic Energy Omnibus Act, the Atomic/Nuclear Waste
Policy Act of 1982, and the Atomic/Nuclear Waste Policy Amendments of 1987, each
as amended, or any similar, implementing or successor law.

“ERISA” means the Employee Retirement Income Security Act of 1974 and the rules
and regulations promulgated thereunder, each as amended.

“ERISA Affiliate” has the meaning set forth in Paragraph 5.1.20(a), above.

“Excluded Assets” has the meaning set forth in Paragraph 1.2, above.

“Excluded Liabilities” has the meaning set forth in Article III, above.

“Financial Statements” means the internally prepared financial statements of the
Seller attached to the Disclosure Schedule, including, without limitation, the
financial statements of the Seller as of and for the fiscal periods ended
June 30, 2005, June 30, 2006 and June 30, 2007, and the unaudited interim
financial statements of the Seller for the fiscal period ended March 31, 2008,
each as included in the financial statements of the Parent by segment.

“GAAP” means U.S. generally accepted accounting principles.

“Governmental Approval” shall mean any permit, license, license application,
product registration, variance, certificate, closure, exemption, decision,
directive, action or approval of a Governmental Body.

“Governmental Body” means any (i) federal, state, local, municipal, foreign or
other government, (ii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official or
entity and any court or other tribunal), or (iii) body exercising, or entitled
to exercise, any administrative, executive, judicial, legislative, police,
regulatory or Taxing authority or power of any nature.

“Hazardous Substances” shall mean and include any substance, chemical, compound,
product, solid, gas, liquid, waste, byproduct, material, pollutant or
contaminant which is hazardous, toxic or otherwise harmful to health, safety,
natural resources, wildlife or the environment, including, without limitation,
asbestos, polychlorinated biphenyls, radon and urea formaldehyde foam, petroleum
and petroleum products, hazardous waste, and raw materials which include
hazardous constituents, or any other similar substances, or materials which are
now, or in the future, included or defined under or regulated by any
Environmental Law.

 

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“Indemnifying Party” has the meaning set forth in Paragraph 10.3(a), above.

“Intellectual Property” has the meaning set forth in Paragraph 5.11(a), above.

“Inventory” has the meaning set forth in Paragraph 1.1(b), above.

“Law” means any constitution, statute, law, common law, ordinance, regulation or
rule of any jurisdiction or any state, federal, foreign, territorial or other
Governmental Body or subdivision, agency, department, commission, board, bureau
or instrumentality of a Governmental Body.

“Leased Real Property” has the meaning set forth in Paragraph 5.1.9(a), above.

“Licenses” has the meaning set forth in Paragraph 5.1.11(b), above.

“Losses” means all direct damages, losses, deficiencies, actions, demands,
judgments, fines, fees, costs and expenses actually paid by a party.

“Material Adverse Effect” means an event, condition, circumstance, act, omission
or effect which, individually or in the aggregate with other similar events,
conditions, circumstances, acts, omissions or effects, after taking into
consideration the relative amount, the absolute amount and the nature of the
item, would cause a reasonably prudent buyer to conclude that such effect
adversely affects the financial condition, assets, liabilities, prospects,
obligations or operations of the Seller, the Subject Business or the Subject
Assets, taken as a whole, in a manner or amount which would be material.

“Notice of Reassignment” has the meaning set forth in Paragraph 6.4, above.

“Order” means any award, decision, decree, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any Governmental Body
or by any arbitrator.

“Ordinary Course of Business” means any action taken by the Seller which (i) is
consistent with the past practices of the Seller and is taken in the ordinary
course of the normal day-to-day operations of the Seller, (ii) is not required
to be authorized by the governing body of the Seller or the Parent, and (iii) is
similar in nature and magnitude in actions customarily taken, without any
authorization by the governing body of the Seller or the Parent, in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as the Seller.

“Parent” has the meaning set forth in the preface, above.

“Permitted Encumbrances” has the meaning set forth in Paragraph 5.1.6, above.

“Person” means any individual, corporation, general or limited partnership,
limited liability company, joint venture, estate, trust, association,
organization, labor union or other entity.

 

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“Plan” and “Plans” have the meanings set forth in Paragraph 5.1.20(a), above.

“Prepaids” has the meaning set forth in Paragraph 1.1(e), above.

“Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.

“Property Transfer Act” has the meaning set forth in Paragraph 4.2(e)(viii).

“Purchase Price” has the meaning set forth in Paragraph 2.2, above.

“Real Property Lease” means any Contract pursuant to which the Seller leases any
Leased Real Property.

“Reassigned Balance” has the meaning set forth in Paragraph 6.4, above.

“Reassigned Receivables” has the meaning set forth in Paragraph 6.4, above.

“Records” has the meaning set forth in Paragraph 1.1(d), above.

“Resolving Accounting Firm” has the meaning set forth in Paragraph 2.3(a),
above.

“Seller” has the meaning set forth in the preface, above.

“Seller Ancillary Documents” means, collectively, the agreements, instruments
and documents executed and delivered by the Seller or the Parent in connection
with this Agreement.

“Seller Indemnitees” has the meaning set forth in Paragraph 10.2, above.

“Seller’s Bring-Down Certificate” has the meaning set forth in Paragraph 4.2(a),
above.

“Seller’s Knowledge” has the meaning set forth in Paragraph 5.3, above.

“Statement” has the meaning set forth in Paragraph 2.3(a), above.

“Subject Assets” has the meaning set forth in Paragraph 1.1, above.

“Subject Business” has the meaning set forth in the recitals, above.

“Subsidiaries” means, with respect to any Person, any corporation or other
Person of which (or in which) fifty percent (50%) or more of (i) the outstanding
capital stock or other equity interests having voting power to elect a majority
of the board of directors of such corporation or Persons having a similar role
as to an entity that is not a corporation, (ii) the interest in the profits of
such partnership or joint venture, or (iii) the beneficial interest of such
trust or estate, are, in each such instance, at directly or indirectly owned by
such Person or one or more of such Person’s Subsidiaries.

 

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“Tax” means all federal, state, county, local, foreign and other taxes or
assessments, including, without limitation, income, estimated income, business,
occupation, franchise, property (real and personal), sales, employment, gross
receipts, use, transfer, ad valorem, profits, license, capital, payroll,
employee withholding, unemployment, excise, goods and services, severance and
stamp taxes or assessments, including all interest, penalties and additions in
connection therewith.

“Tax Return” means all returns, informational returns and statements required to
be filed by a Person in respect of any Taxes.

“Threshold Amount” has the meaning set forth in Paragraph 10.4(a), above.

“Trade Accounts Payable Amount” means the aggregate amount of the Seller’s trade
accounts payable as of the Closing Date.

“U.S.” has the meaning set forth in Paragraph 5.1.11(a), above.

ARTICLE XIII

Miscellaneous

13.1. Expenses. Except as otherwise specifically provided in this Agreement, the
parties hereto shall pay their own expenses, including, without limitation,
accountants’, attorneys’ and investment bankers’ fees, incurred in connection
with the negotiation and consummation of the transactions contemplated by this
Agreement and in no event shall any such expenses be Assumed Liabilities. In
addition to fees and expenses specifically allocated to the parties in other
provisions of this Agreement, the Seller and the Parent shall be jointly and
severally liable for and covenant to pay and discharge when due (i) any sales,
use or transfer Taxes incurred or payable in connection with the purchase and
sale of the Subject Assets pursuant to this Agreement, and (ii) expenses agreed
in advance that are imposed on the Seller or the Buyer related to obtaining
Consents and estoppel certificates from third Persons enabling the Buyer to
receive the assignment or transfer, as the case may be, of any Assumed
Contracts, Governmental Approvals, or other third-party agreements related to
the Subject Business or any of the Subject Assets.

13.2. Notices. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered to be given and
received in all respects when hand delivered, when sent by prepaid express or
courier delivery service, when sent by facsimile transmission actually received
by the receiving equipment, or three (3) days after being deposited in the
United States mail, certified mail, postage prepaid, return receipt requested,
in each case addressed as follows, or to such other address as shall be
designated by notice duly given:

 

IF TO BUYER:     A&A Manufacturing Co., Inc.     2300 South Calhoun Road     New
Berlin, Wisconsin 53161     Attention:   Mr. James D. O’Rourke     Facsimile:  
(262) 796-3280

 

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With a Copy To:     Godfrey & Kahn, S.C.     780 North Water Street    
Milwaukee, Wisconsin 53202     Attention:   Mr. Charles G. Vogel     Facsimile:
  (414) 273-5198 IF TO SELLER OR PARENT:     Bolt Technology Corporation    
Four Duke Place     Norwalk, Connecticut 06854     Attention:   Raymond M. Soto
    Facsimile:   (203) 854-9601 With a Copy To:     Levett Rockwood P.C.     33
Riverside Avenue     Westport, Connecticut 06881     Attention:   Ms. Barbara
Young     Facsimile:   (203) 226-8025

13.3. Right to Specific Performance. The parties agree that the Subject Assets
and the Subject Business constitute unique property, that there is no adequate
remedy at law for the damage which any of them might sustain for the failure of
the others to consummate this Agreement, and, accordingly, that each of them is
entitled to the remedy of specific performance to enforce such consummation.

13.4. Entire Agreement; Waiver. This Agreement, the schedules and the exhibits
attached hereto and the Ancillary Documents constitute the entire agreement
between the parties hereto with respect to the subject matter hereof, and all
prior agreements, correspondence, discussions and understandings of the parties
(whether oral or written) are merged herein and made a part hereof, it being the
express intention of the parties hereto that this Agreement, the schedules and
exhibits attached hereto and the Ancillary Documents shall serve as the complete
and exclusive statement of the terms of their agreement together. No amendment,
waiver or modification hereto or hereunder shall be valid unless in writing and
signed by an authorized signatory of the party or parties to be affected
thereby.

13.5. Assignment. This Agreement and the rights and obligations of each party
hereunder shall not be assignable or transferable by such party without the
prior written consent of each of the other parties hereto.

13.6. Binding Effect. This Agreement shall be binding upon the parties hereto
and their respective heirs, personal and legal representatives, successors and
permitted assigns, as applicable.

13.7. Rules of Construction.

(a) The headings in this Agreement are for purposes of convenience and ease of
reference only and shall not be construed to limit or otherwise affect the
meaning of any part of this Agreement.

 

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(b) Unless the context of this Agreement clearly requires otherwise, references
to the plural include the singular, to the singular include the plural, to the
part include the whole, and to the male gender shall also pertain to the female
and neuter genders and vice versa.

(c) The terms “includes” and “including” are not limiting, and the term “or” has
the inclusive meaning represented by the phrase “and/or”.

(d) The words “hereof”, “herein”, “hereby”, “hereto” and “hereunder” and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement.

(e) Paragraph, Schedule, Exhibit and clause references are to this Agreement
unless otherwise specified.

13.8. Severability. The parties agree that if any provision of this Agreement
shall under any circumstances be deemed invalid or inoperative to any extent by
any court of competent jurisdiction, such provision shall be deemed modified to
the extent necessary to render it enforceable and the rights and obligations of
the parties hereunder shall be construed and enforced accordingly.

13.9. Governing Law; Jurisdiction. This Agreement and all questions arising in
connection herewith shall be governed by and construed in accordance with the
internal laws of the State of Connecticut, without regard to any conflicts of
law principles. Any dispute, claim or controversy relating to or arising under
this Agreement or the dealings of the parties which cannot be resolved amicably
by the parties shall be commenced and prosecuted exclusively in the state or
federal courts located in New Haven, Connecticut, and each party hereto consents
to the exercise of personal jurisdiction over such party by such state and
federal courts.

13.10. Counterparts; Facsimile Signatures. This Agreement may be executed in one
or more counterparts and by facsimile, all of which shall be considered but one
and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to the other
party.

13.11. Passage of Title. Legal title and equitable title with respect to the
Subject Assets shall not pass to the Buyer until the Subject Assets are
transferred at the Closing, which transfer, once it has occurred, will be deemed
effective for tax, accounting and other computational purposes as of 11:59 p.m.
(Connecticut time) on the Closing Date.

[Signatures follow]

 

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

 

SELLER: CUSTOM PRODUCTS CORPORATION By:  

/S/ RAYMOND M. SOTO

Print Name:   Raymond M. Soto Title:   Chairman PARENT:   BOLT TECHNOLOGY
CORPORATION By:  

/S/ RAYMOND M. SOTO

Print Name:   Raymond M. Soto Title:   Chairman, Chief Executive Officer and
President BUYER:   A & A MANUFACTURING CO., INC. By:  

/S/ JAMES D. O’ROURKE

Print Name:   James D. O’Rourke Title:   President

 

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