ASSET PURCHASE AGREEMENT

BY AND AMONG

HAMMONDS TECHNOLOGIES, LLC

AND

HAMMONDS INDUSTRIES, INC.

April 16, 2009

 
 

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Exhibits

Exhibit A                      Glossary
Exhibit B                      Forms of Release

 
 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, dated as of April 16, 2009 (this “Agreement”), is
by and among Hammonds Technologies, LLC, a Texas limited liability company (the
“Purchaser”), and Hammonds Industries, Inc., a Nevada corporation (including its
organizational predecessors, the “Seller”).  The Purchaser, on the one hand, and
the Seller, on the other hand, are each a “Party” and, collectively, they are
sometimes referred to as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Seller owns all of the issued and outstanding capital stock of each
of the following Subsidiary entities (collectively, the “Equity Interests”): (i)
Hammonds Fuel Additives, Inc., a Texas corporation (“Hammonds Fuel”), (ii)
Hammonds Technical Services, Inc., a Texas corporation (“Hammonds Technical”),
(iii) Hammonds Water Treatment Systems, Inc., a Texas corporation (“Hammonds
Water Treatment”) and (iv) Hammonds ODV, Inc., a Texas corporation (“Hammonds
ODV,” together with Hammonds Fuel, Hammonds Technical and Hammonds Water
Treatment, the “Acquired Entities”); and

WHEREAS, the Purchaser desires to purchase from the Seller, and the Seller
desires to sell, transfer, assign and deliver to the Purchaser, all of the
assets and contract rights used by the Seller in connection with the operation
of its Business, including without limitation the Equity Interests, on the terms
and subject to the conditions set forth herein; and

WHEREAS, the Seller is making certain representations, warranties, covenants and
indemnities herein as an inducement to Purchaser to enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements stated herein, the receipt and sufficiency
of which are hereby acknowledged, the Parties, intending to be legally bound,
covenant and agree as follows:

ARTICLE I
 
DEFINITIONS
 
Section 1.1 Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP.
 
Section 1.2 Defined Terms.  As used in this Agreement, certain words and terms
have the meanings ascribed to them in the Glossary attached hereto as Exhibit A.
Other capitalized terms have the meanings ascribed to them elsewhere in this
Agreement.
 
ARTICLE II
 
PURCHASE, SALE AND DELIVERY
 
Section 2.1 Acquisition Assets.  Subject to the terms and conditions of this
Agreement, and on the basis of the representations and warranties hereinafter
set forth, at the Closing (as hereinafter defined), the Seller shall sell,
transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall
acquire and purchase from the Seller, all of the assets, properties and rights
of the Seller, including without limitation all of the Seller’s right, title and
interest in and to the following:
 
(a) all right, title and interest in, to and under all real property leases set
forth on Schedule 2.1(a) (the “Assigned Leases”), and all leasehold improvements
and fixtures located on the Leased Premises (the premises leased  pursuant to
the Assigned Leases referred to herein as the “Leased Premises”);
 
(b) all of the machinery, equipment, trade fixtures, tools, furniture,
computers, appliances, implements, spare parts, supplies, leasehold
improvements, construction in progress and all other tangible personal property
owned by the Seller, or of which the Seller has the current possession and use,
on the Closing Date, including without limitation those listed on Schedule
2.1(b) hereto;
 
(c) all motor vehicles and rolling stock owned by the Seller on the Closing
Date, including without limitation those listed on Schedule 2.1(c) hereto;
 
(d) all supplies, spare parts, safety equipment, maintenance supplies, other
supplies used or consumed in the Business and other similar items which exist on
the Closing Date, including those shown on the books and records of the Seller
and the Acquired Entities, located on the Leased Premises or otherwise
(collectively, the “Supplies”);
 
(e) all right, title and interest in, to and under all contracts (including,
without limitation, all of the fee for service, operating, customer supply and
other contracts of Seller), personalty leases, agreements, equipment or other
lease licenses, contract awards, management agreements and building service
agreements to which the Seller is a party on the Closing Date or by which any of
the Acquisition Assets (as hereinafter defined) are then bound which are listed
on Schedule 2.1(e) hereto (collectively, the “Assigned Contracts”);
 
(f) all goodwill and going concern value;
 
(g) all right, title and interest in all licenses, permits, applications,
registrations, exemptions, notices of intent, franchises, consents, waivers,
variances, authorizations, approvals and orders issued by any federal, state,
municipal or other Governmental Authority (collectively, the “Assigned Permits”)
relating to the Acquisition Assets or the Business, including without limitation
those listed on Schedule 2.1(g) hereto;
 
(h) all prepaid items, deposits and other similar assets of the Seller which
exist at the Closing Date, including those shown on the books and records of the
Seller and the Acquired Entities;
 
(i) all rights and interest in, to and under the Intellectual Property, together
with any goodwill associated therewith and all rights of action on account of
past, present and future unauthorized use or infringement thereof;
 
(j) the right to use the names “Hammonds Industries”, “Hammonds Fuel Additives”,
“Hammonds Technical Services” and “Hammonds ODV” and all derivations thereof;
 
(k) all rights under express or implied warranties from the suppliers of Seller
with respect to the Acquisition Assets and the Business;
 
(l) all of the Books and Records of the Seller and the Acquired Entities (the
“Assigned Books and Records”), excluding any Books and Records of the Seller
that relate exclusively to (i) organizational or governance proceedings of the
Seller, (ii) the Excluded Assets or (iii) the Excluded Liabilities;
 
(m) all personnel files and other materials relating to employees of the Seller
who are to be offered employment by the Purchaser as contemplated by Section 7.7
hereof;
 
(n) all records of compliance and noncompliance with the laws, regulations,
ordinances and orders applicable to the Acquisition Assets or the Business;
 
(o) all right, title and interest in, to and under all rights, privileges,
claims, causes of action, and options relating or pertaining to the Acquisition
Assets or the Business;
 
(p) all insurance policies relating to the Acquisition Assets, the Business and
any underlying property on which the Business is or has been conducted and
rights to make claims under any such current or prior insurance policies;
 
(q) all accounts receivable of the Seller, including, without limitation, all
trade accounts receivable, notes receivable, and all rights of the Seller to
payment for services rendered prior to the Closing Date, whether or not they
have been earned by performance or have been written off or reserved against as
a bad debt or doubtful account in any financial statements;
 
(r) all of the issued and outstanding Equity Interests, free and clear of all
Encumbrances; and
 
(s) subject to the exclusions set forth in Section 2.2 hereof, all other or
additional privileges, rights, interests, properties and assets of every kind
and description and wherever located that are used or intended for use in
connection with, or that are necessary to the continued conduct of, the Business
as presently conducted.
 
Subject to Section 2.2 hereof, all of the assets referenced in this Section 2.1
are collectively referred to as the “Acquisition Assets”.

Section 2.2 Excluded Assets.  Notwithstanding Section 2.1 hereof, the Seller is
not selling and the Purchaser is not purchasing pursuant to this Agreement any
of the following, all of which shall be retained by the Seller (collectively,
the “Excluded Assets”):
 
(a) all cash and cash equivalents of the Seller which exist at the Closing Date;
 
(b) all employee benefit plans (as defined in ERISA) and all other similar
benefit plans, programs, arrangements and commitments (whether written or oral)
of the Seller;
 
(c) any employment agreements between the Seller and its employees including,
but not limited to, (i) the Employment Agreement, dated November 1, 2007,
between Hammonds Technical and Daniel Dror, (ii) the Employment Agreement, dated
April 26, 2005, between Hammonds Technical and Carl Hammonds, and (iii) the
Service Agreement, dated September 1, 2007, between the Seller and Sherry
Couturier; and
 
(d) any Subsidiaries other than the Acquired Entities.
 
Section 2.3 Purchase Price.  The aggregate consideration for the purchase of the
Business and the Acquisition Assets and the representations, warranties,
covenants and agreements referenced herein and the certificates and instruments
delivered at Closing (the “Purchase Price”) shall be an amount equal to the sum
of the aggregate Indebtedness owed by the Seller that is specifically described
on Schedule 2.3 hereto, including but not limited to that certain Senior
Promissory Note by and between the Seller and Vision Opportunity Master Fund,
Ltd., dated September 23, 2008 in the principal amount of $250,000.  The
Purchase Price shall be paid by the Purchaser directly to the parties listed on
Schedule 2.3 hereto on the Closing Date, in cash or other immediately available
funds to such account designated by such parties.
 
Section 2.4 Allocation Reporting.  Unless otherwise agreed in writing by
Purchaser and Seller, (i) Schedule 2.4 hereto sets forth the allocations
established by Purchaser and Seller of the Purchase Price (and any other items
constituting consideration paid by Purchaser or received by Seller in connection
with the disposition of the Acquisition Assets) among the Acquisition Assets;
(ii) the allocations set forth on Schedule 2.4 hereto will be used by Purchaser
and Seller as the basis for reporting asset values and other items for purposes
of all required Tax Returns (including any Tax Returns required to be filed
under Section 1060(b) of the Code and the Treasury Regulations thereunder); and
(iii) Purchaser and Seller shall not assert, in connection with any audit or
other proceeding with respect to Taxes, any asset values or other items
inconsistent with the allocations set forth on Schedule 2.4 hereto.
 
Section 2.5 Closing.  The closing (the “Closing”) of the Transactions shall take
place at the offices of Locke Lord Bissell & Liddell LLP, 600 Travis, Suite
3400, Houston, Texas, contemporaneously with the execution hereof (the “Closing
Date”) and shall be effective at 11:59 p.m. (Houston, Texas time) on the Closing
Date.
 
Section 2.6 Closing Deliveries.
 
(a) At the Closing, the Seller shall deliver to the Purchaser:
 
(i) the Acquisition Assets;
 
(ii) such bills of sale and other instruments of sale, transfer, conveyance,
assignment and delivery covering the Acquisition Assets or any part thereof,
executed by the Seller or other appropriate parties, as the Purchaser may
reasonably require to assure the full and effective sale, transfer, conveyance,
assignment and delivery to the Purchaser of the Acquisition Assets free and
clear of any Encumbrances and rights and claims of third parties including, but
not limited to, the following:
 
(1)  
a bill of sale, general assignment and conveyance by the Seller transferring to
the Purchaser good and marketable title to all of the Acquisition Assets in a
form satisfactory to the Purchaser;

 
(2)  
all documents, agreements and instruments necessary to effectuate the assignment
of Equity Interests, in form and substance satisfactory to the Purchaser (the
“Equity Assignment Documents”);

 
(3)  
all documents in a form satisfactory to the Purchaser required for the
assignment of the Seller’s rights under all registrations, Assigned Permits and
licenses (to the extent permitted by law), equipment or motor vehicle leasing
agreements, motor vehicle and rolling stock titles, rights under sales and/or
purchase orders and of the Seller’s rights under all other Assigned Contracts;

 
(4)  
originals of all of the Assigned Leases, Assigned Contracts, and Assigned
Permits; and

 
(5)  
such other instruments of transfer and assignment in respect of the Acquisition
Assets as the Purchaser shall reasonably require and as shall be consistent with
the terms and provisions of this Agreement.

 
(iii) all waivers, consents, orders, permit transfers and approvals required in
connection with (i) the execution, delivery and performance of this Agreement
and (ii) the assignment and transfer of the Acquisition Assets, including the
Assigned Contracts, the Assigned Leases and the Assigned Permits, financial
assurances and any other rights and benefits in connection with the
Transactions, or necessary for the consummation of the Transactions, and all
other agreements necessary for the Purchaser to conduct the Business as it is
currently being conducted by the Seller, including without limitation those
consents listed on Schedule 5.3 hereto in form satisfactory to the Purchaser;
 
(iv) documentary evidence that all Encumbrances on the Acquisition Assets have
been released;
 
(v) evidence of termination of (1) that certain Employment Agreement, dated
April 26, 2005, between Hammonds Technical and Carl Hammonds and (2) that
certain Employment Agreement, dated November 1, 2007, between Hammonds Technical
and Daniel Dror;
 
(vi) Releases by and between (1) the Purchaser and the Acquired Entities on the
one hand, and each of Daniel Dror, Daniel Dror II, the Dror Family Trust, Daniel
Dror II 1976 Trust, Daniel Dror II Trust of 1998, Carl Hammonds, Rick
Richardson, Sherry Couturier, John Stump III, Charles Zeller, American
International Industries, Inc., Vision Capital Advisors, LLC and Vision
Opportunity Master Fund, Ltd., on the other hand, and (2) Carl Hammonds, Rick
Richardson, and John Stump III on the one hand, and each of Daniel Dror, Daniel
Dror II, the Dror Family Trust, Daniel Dror II 1976 Trust, Daniel Dror II Trust
of 1998, Sherry Couturier, Charles Zeller, American International Industries,
Inc., Vision Capital Advisors, LLC and Vision Opportunity Master Fund, Ltd., on
the other hand, each in the  forms attached as Exhibit B hereto.
 
(vii) Landlord Estoppel Certificate for the Lease Agreement between Hammonds
Technical and Kenneth J. Bourguignon and Dorothy J. Bourguignon;
 
(viii) all the Assigned Books and Records and other data relating to the
Acquisition Assets and the Business;
 
(ix) certificates representing the capital stock of each of the Acquired
Entities, duly endorsed for transfer to the Purchaser or accompanied by duly
executed assignment documents, which shall transfer to the Purchaser good and
valid title to the capital stock, free and clear of all Encumbrances;
 
(x) an assignment and assumption of the Leased Premises, executed by Seller and
any other appropriate parties, as the Purchaser may reasonably require to assure
the full and effective assignment to the Purchaser of the Leased Premises free
and clear of all Encumbrances;
 
(xi) a certificate from an officer of the Seller, in a form mutually acceptable
to the Parties hereto, certifying (i) the bylaws of the Seller, (ii) the
resolutions of the directors and stockholders of the Seller authorizing and
approving the execution and delivery of this Agreement, including the exhibits
and schedules hereto, and the consummation of the Transactions and (iii) the
incumbency and signatures of the officers of the Seller executing the applicable
transaction documents;
 
(xii) certified copy of the Articles of Incorporation/Certificate of Formation
(as applicable) and Certificates of Existence/Good Standing issued by the state
of or organization for each of the Seller and the Acquired Entities, dated no
more than five (5) days prior to the Closing Date, reflecting that the Seller
and the Acquired Entities are duly organized, validly existing and in good
standing;
 
(xiii) the resignations of all of the officers and directors of the Acquired
Entities;
 
(xiv) such other separate instruments of sale, assignment or transfer reasonably
required by Purchaser; and
 
(xv) such other documents, certificates and instruments reasonably necessary to
consummate the Transactions.
 
(b) At the Closing, the Purchaser shall deliver:
 
(i) to  the parties listed on Schedule 2.3, the Purchase Price set forth in
Section 2.3;
 
(ii) to the Seller, such other documents, certificates and instruments
reasonably necessary to consummate the Transactions.
 

ARTICLE III
 
LIABILITIES AND OBLIGATIONS
 
Section 3.1 Liabilities not Assumed by Purchaser.  Subject to Section 3.2
hereof, the Purchaser does not assume or agree to pay, perform or discharge, and
shall not be responsible for, any commitments, contracts, agreements or
obligations or claims against, or liabilities of, the Seller whatsoever (and the
Seller will at all times indemnify and hold the Purchaser harmless from and
against any claim therefore or liability arising therefrom),  including without
limitation, the following (collectively, the “Excluded Liabilities”):
 
(a) any Taxes which may become payable by reason of the sale and transfer of the
Acquisition Assets under federal law or under the laws of any state, or may be
imposed upon the Seller by reason of receipt of the Purchase Price or relief
from any liability pursuant to this Agreement;
 
(b) any of the costs, expenses and Liabilities incurred in connection with the
future operations of Seller, and the costs and expenses of the Seller incurred
in negotiating, entering into and carrying out their obligations pursuant to
this Agreement;
 
(c) except as set forth in Schedule 2.3, any Indebtedness of the Seller
(including without limitation any prepayment penalties or other Liabilities
relating to retiring or extinguishing any Indebtedness);
 
(d) any commitments arising prior to the Closing Date pursuant to the Assigned
Contracts or Assigned Leases;
 
(e) any Taxes for which the Seller or any stockholder is liable (taking into
account the provisions of Section 7.8(a) hereof);
 
(f) any liabilities arising out of or in connection with periods or activity
prior to the Closing Date related to OSHA, EEOC, EPA or any other Governmental
Authority, or the violation of any Legal Requirement;
 
(g) any liability or obligation (contingent or otherwise) of the Seller arising
out of any claim, litigation, or proceeding threatened or pending on or before
the Closing Date or any claim, litigation, or proceeding threatened or initiated
after the Closing Date to the extent based on an act or omission of the Seller
or any current or former officer, director, employee, agent or representative of
the Seller, or the operation of the Business and/or Acquisition Assets occurring
before the Closing Date, whether or not set forth on Schedule 5.8;
 
(h) any Environmental Claim and any claims, violations or alleged violations of
Environmental Law, or conditions that could give rise to or relate to liability
under Environmental Laws or similar Legal Requirements attributable or relating
to the Acquisition Assets (including without limitation the operation  thereof),
the Business, or the Seller, including any liability (including without
limitation strict liability) or obligation arising under or relating to
Environmental Laws with respect to the Leased Premises arising after the Closing
Date resulting from, caused by or related to any act or omission of third party
or the Seller or any current or former officer, director, employee, agent,
representative, tenant or invitee of the Seller which occurred on or prior to
the Closing Date, or the continuation of practices or operations with respect to
the Acquisition Assets or the Leased Premises, that were occurring or in effect
on or prior to the Closing Date;
 
(i) any commitments arising prior to the Closing Date pursuant to any Assigned
Contract or Assigned Lease;
 
(j) any liability arising out of or in connection with the Seller’s defective
performance of any Assigned Contract or Assigned Lease, or any express or
implied warranty with respect to performance of any Assigned Contract or
Assigned Lease prior to the Closing Date;
 
(k) any liability or obligation arising out of any employee benefit plan (as
defined in ERISA) and all other similar benefit plans, programs, arrangements or
commitments (whether written or oral) of the Seller;
 
(l) any contingent or unknown liability of the Seller;
 
(m) any amounts owed by the Seller or its Subsidiaries to American International
Industries, Inc. including, but not limited to, the $250,000 bridge loan from
the Seller in favor of American International Industries, Inc.;
 
(n) any employment agreements between the Seller and its employees including,
but not limited to, (i) the Employment Agreement, dated November 1, 2007,
between Hammonds Technical and Daniel Dror, (ii) the Employment Agreement, dated
April 26, 2005, between Hammonds Technical and Carl Hammonds, and (iii) the
Service Agreement, dated September 1, 2007, between the Seller and Sherry
Couturier;
 
(o) any liability or obligation under or in connection with or related to the
Excluded Assets, the Acquisition Assets or the Business; and
 
(p) any accounts payable, accrued liabilities and any other liabilities of the
Seller incurred by the Seller as of the Closing Date.
 
Section 3.2 Assumed Liabilities.  The Purchaser assumes and agrees to pay,
perform and discharge when due solely the following debts, liabilities,
obligations and contracts of the Seller (collectively, the “Assumed
Liabilities”):
 
(a) liabilities of the Seller that (i) initially occur and are attributable
solely to the period after Closing in respect of the Assigned Contracts,
Assigned Leases and Assigned Permits transferred and assigned to Purchaser
hereunder in conformity with the provisions of such Assigned Contracts, Assigned
Leases or Assigned Permits and (ii) do not relate to or arise out of any breach
of any representation of the Seller hereunder or any breach or failure to
perform by the Seller under such Assigned Contracts, Assigned Leases or Assigned
Permits; and
 
(b) the accounts payable of the Acquired Entities specifically listed on
Schedule 3.2(b) but only to the extent such accounts payable are proper and
enforceable obligations.  The Purchaser shall have the right to apply any agreed
offsets, credits or otherwise compromise such accounts payable.  This Section
3.2(b) shall not inure to the specific benefit of any creditor.
 
ARTICLE IV
 
REPRESENTATIONS AND
 
WARRANTIES OF PURCHASER
 
Except as expressly set forth in the corresponding section or subsection of the
Disclosure Schedule attached hereto (the “Disclosure Schedule”), the Purchaser
represents and warrants to the Seller that the statements contained in this
Article IV are true and correct as of the Closing Date:

Section 4.1 Organization and Qualification.  The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of Texas and has full organizational power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted.  
 
Section 4.2 Authority; Binding Agreement.  The Purchaser has full power and
authority to execute and deliver this Agreement and to consummate the
Transactions.  This Agreement has been duly executed and delivered by the
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Seller, constitutes a valid and legally binding agreement of the Purchaser
and is enforceable against the Purchaser in accordance with its terms, except
that such enforcement may be subject to bankruptcy, insolvency, reorganization
or other similar laws affecting or relating to enforcement of creditors’ rights
generally.
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF THE SELLER
 
Except as expressly set forth in the corresponding section or subsection of the
Disclosure Schedule, the Seller represents and warrants to Purchaser the
statements contained in this Article V are true and correct as of the Closing
Date:

Section 5.1 Organization and Qualification.
 
(a) The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the requisite corporate
power and authority to own, lease and operate the Acquisition Assets and to
carry on its business as it is now being conducted.  The Seller is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the properties owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification necessary.
True, accurate and complete copies of the Seller’s Organizational Documents as
in effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Purchaser.
 
(b) Each of the Seller’s Subsidiaries is a corporation duly organized, valid
existing and in good standing under the laws of the State of Texas and has the
requisite corporate power and authority to own, lease and operate its assets and
to carry on its respective business as it is now being conducted.  Each of the
Seller’s Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by such entity
makes such qualification necessary. True, accurate and complete copies of each
of the Organizational Documents of the Seller’s Subsidiaries, in each case as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Purchaser.
 
Section 5.2 Capitalization.
 
(a) The authorized capital stock of the Seller consists of (i) 195,000,000
shares of common stock and (ii) 5,000,000 shares of preferred stock.  There are
(i) 50,223,664 shares of common stock, (ii) 8,333,333 shares of Series A
Convertible Preferred Stock, (iii) 8,333,333 shares of Series B Convertible
Preferred Stock and (iv) 2,102,960 shares of Series C Convertible Preferred
Stock issued and outstanding, and no other shares of capital stock of the Seller
are issued and outstanding.  All of the issued and outstanding shares of common
stock and preferred stock were validly issued and are fully paid, nonassessable
and free of preemptive rights and are owned beneficially and of record by the
Seller’s stockholders free and clear of any adverse claim of any other Person,
including without limitation, any Encumbrances (except for Encumbrances arising
under federal and state securities laws).  All dividends and other distributions
declared with respect to the issued and outstanding shares of the capital stock
or other equity interests of the Seller have been paid or distributed.
 
(b) Schedule 5.2(b) sets forth the authorized, issued and outstanding capital
stock of the each of the Seller’s Subsidiaries.  Except as set forth on Schedule
5.2(b), no other shares of capital stock of the Seller’s Subsidiaries are issued
and outstanding.  All of the issued and outstanding shares of capital stock of
the Seller’s Subsidiaries were validly issued and are fully paid, nonassessable
and free of preemptive rights and are owned beneficially and of record by the
Seller free and clear of any adverse claim of any other Person, including
without limitation, any Encumbrances (except for Encumbrances arising under
federal and state securities laws).  All dividends and other distributions
declared with respect to the issued and outstanding shares of the capital stock
or other equity interests of each of the Seller’s Subsidiaries have been paid or
distributed.
 
(c) Except as set forth on Schedule 5.2(c), there are no outstanding (i)
subscriptions, options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, debenture, instrument or
other agreement obligating the Seller or any Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock or other equity interests of the Seller or its Subsidiaries or obligating
the Seller or its Subsidiaries to grant, extend or enter into any such agreement
or commitment or (ii) obligations of the Seller or its Subsidiaries to
repurchase, redeem or otherwise acquire any securities referred to in clause (i)
above.  There are no voting trusts, proxies or other agreements or
understandings to which the Seller, its Subsidiaries or any stockholder of the
Seller is a party or is bound with respect to the voting of any ownership
interest of the Seller or its Subsidiaries.
 
Section 5.3 Authority; Non-Contravention; Approvals.
 
(a) The Seller has full corporate power and authority to execute and deliver
this Agreement and the other documents delivered by the Seller at Closing and to
consummate the Transactions.  This Agreement and the certificates, instruments
and other documents delivered in connection with this Agreement have been
approved by the board of directors of the Seller, and except for the required
approval and adoption of this Agreement and the Transactions by the
stockholders, no additional approvals or proceedings on the part of the Seller
are necessary to authorize the execution and delivery of this Agreement or the
consummation by the Seller of the Transactions.  This Agreement has been, and
the certificates, instruments and other documents delivered in connection with
this Agreement at Closing will be duly executed and delivered by the Seller,
and, assuming the due authorization, execution and delivery hereof by the
Purchaser, constitute a valid and legally binding agreement of the Seller,
enforceable against the Seller in accordance with its terms.
 
(b) The execution and delivery of this Agreement and the other documents
delivered by the Seller at Closing, and the consummation by the Seller of the
transactions contemplated hereby and thereby, do not and will not violate or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of the properties or assets of the Seller
or its Subsidiaries under any of the terms, conditions or provisions of (i) the
Organizational Documents of the Seller or its Subsidiaries, (ii) any Legal
Requirement applicable to the Seller, its Subsidiaries, any of their respective
property or assets or any of the Acquisition Assets, or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which the Seller or its Subsidiaries is now a party or by which the Seller, its
Subsidiaries or any of Acquisition Assets may be bound or affected.
 
(c) No declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by the Seller or the consummation by
the Seller of the Transactions.
 
Section 5.4 Affiliates.
 
(a) Except as set forth in Schedule 5.2(b), the Seller does not have any
Subsidiaries, nor does the Seller hold any equity interest in or control
(directly or indirectly, through the ownership of securities, by contract, by
proxy, alone or in combination with others, or otherwise) any corporation,
limited liability company, partnership, business organization or other Person.
 
(b) Except as set forth on Schedule 5.4(b), no Affiliate or employee of the
Seller or its Subsidiaries has, directly or indirectly, engaged in any business
dealings or transactions with the Seller or its Subsidiaries except business
dealings or transactions inherent in the capacities of director, officer,
employee or stockholder during the past three years.
 
Section 5.5 SEC Reports; Financial Statements; Undisclosed Liabilities.
 
(a) The Seller has filed with the SEC all forms, reports, statements, schedules
and other documents required to be filed by it since January 1, 2006 (as amended
to date, the “SEC Reports”).  The Seller has delivered or made available to the
Purchaser copies of all such SEC Reports.  As of their respective dates, or, if
amended, as of the date of the last such amendment, the SEC Reports complied as
to form in all material respects in accordance with the then-applicable
requirements of the Securities Act or the Exchange Act, as the case may be, in
each case, the rules and regulations promulgated thereunder.  None of the SEC
Reports, at the time they were filed, or, if amended, as of the date of such
amendment, contained any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.  No Subsidiary is required to file any form, report or
other document with the SEC.  As of the date hereof, there are no material
unresolved comments issued by the staff of the SEC with respect to any of the
SEC Reports.
 
(b) Each of the consolidated financial statements (collectively, and including,
in each case, any notes and schedules thereto, the “Seller Financial
Statements”) contained in the SEC Reports, fairly presents in all material
respects the consolidated financial position of the Seller and its consolidated
Subsidiaries as at the respective dates thereof and their consolidated results
of operations and consolidated cash flows for the respective periods then ended
(subject, in the case of the unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein including the notes
thereto, which are not expected to be significant) in conformity with GAAP
(except, in the case of the unaudited statements, as permitted by Form 10-Q or
Form 8-K or any successor forms under the Exchange Act) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto).
 
(c) Except as set forth on Schedule 5.5(c), neither the Seller nor any of its
Subsidiaries is indebted to any director or officer of the Seller or any of its
Subsidiaries (except for amounts due as normal salaries and bonuses or in
reimbursement of ordinary business expenses and directors’ fees), and no such
person is indebted to the Seller or any of its Subsidiaries, and there have been
no other transactions of the type required to be disclosed pursuant to Items 402
or 404 of Regulation S-K promulgated by the SEC.
 
Section 5.6 Absence of Undisclosed Liabilities.  Except as disclosed on Schedule
5.6, neither the Seller nor its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except liabilities, obligations or contingencies (i) which are accrued on or
reserved against the Seller Financial Statements or fully reflected in the notes
thereto, or (ii) which were incurred after February 28, 2009 (the “Balance Sheet
Date”) and were incurred in the ordinary course of business and consistent with
past practices.  Except as set forth on Schedule 5.6, the Seller and its
Subsidiaries have no Indebtedness.
 
Section 5.7 Absence of Certain Changes or Events.  Except as provided on
Schedule 5.7, since the Balance Sheet Date, there has not been any change, event
or development which, individually or together with other such changes, events
or developments, has had or could reasonably be expected to have a Material
Adverse Effect on the Seller, the Business or the Acquisition Assets.  Without
limiting the foregoing, except as set forth on Schedule 5.7, since the Balance
Sheet Date:
 
(a) neither the Seller nor any Subsidiary has declared or set aside or paid any
dividend or made any other distribution with respect to its outstanding
securities or the Acquisition Assets, or, directly or indirectly, purchased,
redeemed or otherwise acquired any of its securities;
 
(b) neither the Seller nor any Subsidiary has granted any increase in the
compensation of its officers, directors or employees (including any increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
paid any bonuses to any officers, directors or employees;
 
(c) the Seller and its Subsidiaries have not adopted, entered into or amended
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee benefit plan,
agreement, trust fund or arrangement for the benefit or welfare of any employee
or retiree, except as required to comply with changes in applicable law;
 
(d) the Seller and its Subsidiaries have not made any amendment to their
Organizational Documents or changed the character of their respective businesses
in any manner;
 
(e) the business of the Seller and its Subsidiaries has been conducted in the
ordinary course of business consistent with past practices;
 
(f) there has not been any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the Acquisition Assets in
an amount exceeding $10,000 individually or $25,000 in the aggregate;
 
(g) there has not been any entering into, or material amendment, modification,
termination (partial or complete) or granting of a waiver under or giving any
consent with respect to any Assigned Contract, Assigned Lease or Assigned
Permit;
 
(h) there has not been any event, occurrence, development or state of
circumstances or facts which has had, or could reasonably be anticipated to
have, individually or in the aggregate, a Material Adverse Effect;
 
(i) neither the Seller nor any Subsidiary has issued, reserved for issuance,
granted, sold or authorized the issuance of any shares of its capital stock or
subscriptions, options, warrants, calls, rights or commitments of any kind
relating to the issuance or sale of or conversion into shares of its capital
stock or authorized a stock split or otherwise changed its capitalization in any
manner;
 
(j) the Seller and its Subsidiaries have not permitted or allowed any of its
assets to be subjected to any Encumbrance;
 
(k) there has not been any other transaction involving or development affecting
the Acquisition Assets outside the ordinary course of business consistent with
past practice; and
 
(l) the Seller and its Subsidiaries have not entered into a contract or
commitment to do or engage in any of the foregoing.
 
Section 5.8 Litigation.  Except as described on Schedule 5.8, there are no
claims, suits, actions, Environmental Claims, inspections, investigations or
proceedings pending or, to the Knowledge of the Seller or any Subsidiary,
threatened against, relating to or affecting the Seller or any Subsidiary before
any Governmental Authority, or any mediator or arbitrator and there is no basis
for the same.  Except as described in Schedule 5.8, neither the Seller nor any
Subsidiary is subject to any Order.
 
Section 5.9 Accounts Receivable; Inventory.
 
(a) All accounts receivable reflected on the Seller Financial Statements
represent sales actually made in the ordinary course of business and are
collectible within 90 days after the applicable billing date.  The allowances
for doubtful accounts reflected in the Seller Financial Statements are adequate
and have been determined in accordance with GAAP.
 
(b) All inventory of the Seller, whether or not reflected in the Seller
Financial Statements, consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Seller Financial Statements or on the accounting
records of the Seller as of the Closing Date.  All inventories not written off
have been priced at the lower of cost or market value.  The quantities of each
item of inventory (whether raw materials, work-in-process or finished goods) are
not excessive, but are reasonable in the present circumstances of the Seller.
 
Section 5.10 No Violation of Law; Compliance with Agreements.
 
(a) The Seller and its Subsidiaries are not in violation of and have not been
given notice or been charged with any violation of, any Legal Requirement
(including, without limitation, any applicable Environmental Law).  No
investigation or review by any Governmental Authority is pending or threatened,
nor has any Governmental Authority indicated an intention to conduct the
same.  Set forth on Schedule 5.10 are all of the Governmental Authorizations
held by the Seller and its Subsidiaries on the date hereof, which constitute all
of the Governmental Authorizations necessary to permit the Seller and its
Subsidiaries to own, operate, use, and maintain the assets of the Seller and its
Subsidiaries in compliance with all applicable Legal Requirements.  All required
filings with respect to such Governmental Authorizations have been timely made
and all required applications for renewal thereof have been timely filed.  All
such Governmental Authorizations are in full force and effect and there are no
proceedings pending or threatened that seek the revocation, cancellation,
suspension, or adverse modification thereof.
 
(b) Neither the Seller nor any Subsidiary is in breach or violation of or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party, could
result in a default under, (a) the Organizational Documents of the Seller or its
Subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which the Seller or any Subsidiary is a party or by which such entity is bound
or to which any of its property is subject.
 
Section 5.11 Insurance.  Schedule 5.11 sets forth a list of all insurance
policies owned by the Seller and its Subsidiaries or by which the Seller, any
Subsidiary or any of their respective properties or assets is covered against
present losses, all of which are now in full force and effect.  All policies to
which the Seller and its Subsidiaries is a party (i) taken together, provide
adequate insurance coverage for the assets and the operations of the Seller and
its Subsidiaries for all risks normally insured against by a Person carrying on
the same business or businesses as the Seller and its Subsidiaries, (ii) are
sufficient for compliance with all Legal Requirements and Material Agreements
(as defined in Section 5.18), and (iii) will continue in full force and effect
following the consummation of the Transactions.  A summary of the loss
experience under each policy for the past three (3) years has been made
available to the Purchaser.  No insurance has been refused with respect to any
operations, properties or assets of the Seller or its Subsidiaries nor has
coverage of any insurance been limited by any insurance carrier that has
carried, or received any application for, any such insurance during the last
three(3) years.  No insurance carrier has denied any claims made against any of
the policies listed on Schedule 5.11.
 
Section 5.12 Taxes.
 
(a) Except as set forth on Schedule 5.12,
 
(i) the Seller and its Subsidiaries have (x) duly and timely filed (or there has
been filed on such entity’s behalf) with the appropriate taxing authorities all
Tax Returns (as hereinafter defined) required to be filed by such entity on or
prior to the date hereof, and (y) duly and timely paid in full or made adequate
provision therefor on the Seller Financial Statements in accordance with GAAP
(or there has been paid or adequate provision has been made on such entity’s
behalf) for the payment of all Taxes (as hereinafter defined) for all periods
ending through the date hereof (whether or not shown on any Tax Return);
 
(ii) all such Tax Returns filed by or on behalf of the Seller and its
Subsidiaries are true, correct and complete in all respects and were prepared in
substantial compliance with all applicable Legal Requirements;
 
(iii) the Seller and its Subsidiaries are not the beneficiary of any extension
of time within which to file any Tax Return;
 
(iv) no claim has ever been made by any authority in a jurisdiction where the
Seller or its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction;
 
(v) the Liabilities and reserves for Taxes reflected in the most recent balance
sheet included in the Seller Financial Statements to cover all Taxes for all
periods ending at or prior to the date of such balance sheet have been
determined in accordance with GAAP, and there is no Liability for Taxes for any
period beginning after such date other than Taxes arising in the ordinary course
of business;
 
(vi) there are no Encumbrances for Taxes upon any property or assets of the
Seller or its Subsidiaries, except for Encumbrances for Taxes not yet due and
payable;
 
(vii) the Seller and its Subsidiaries will not be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
(x) any change in accounting methods for a taxable period ending on or prior to
the Closing Date, (y) intercompany transactions or any excess loss account
described in Treasury Regulations promulgated under Section 1502 of the Code (or
any corresponding or similar provision of state, local or foreign income Tax
law), or (z) installment sale or open transaction disposition made on or prior
to the Closing Date;
 
(viii) the Seller and its Subsidiaries have not received a ruling from any
taxing authority or signed an agreement with any taxing authority;
 
(ix) the Seller and its Subsidiaries have complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes (including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code, as amended or similar provisions under any
foreign laws) and have, within the time and the manner prescribed by applicable
Legal Requirements, withheld and paid over to the appropriate taxing authority
all amounts required to be so withheld and paid over under all applicable laws
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party;
 
(x) no federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any Taxes
or Tax Returns of the Seller or its Subsidiaries, and as of the date of this
Agreement neither the Seller nor any Subsidiary has received a written notice of
any pending audits or proceedings;
 
(xi) no stockholder or director or officer (or employee responsible for Tax
matters) of the Seller or its Subsidiaries expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed;
 
(xii) the federal income Tax Returns of the Seller and its Subsidiaries have
been examined by the Internal Revenue Service ("IRS") (which examination has
been completed) or the statute of limitations for the assessment of federal
income Taxes of the Seller and its Subsidiaries has expired, for all periods
through and including December 31, 2008, and no deficiencies were asserted as a
result of such examinations which have not been resolved and fully paid;
 
(xiii) no adjustments or deficiencies relating to Tax Returns of the Seller and
its Subsidiaries have been proposed, asserted or assessed by any taxing
authority, except for such adjustments or deficiencies which have been fully
paid or finally settled; and
 
(xiv) the Seller and its Subsidiaries have delivered to the Purchaser true,
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Seller and its Subsidiaries since December 31, 2007.
 
(b) Except as set forth on Schedule 5.12, (i) there are no outstanding requests,
agreements, consents or waivers to extend the statute of limitations applicable
to the assessment of any Taxes or deficiencies against the Seller or its
Subsidiaries, and no power of attorney granted by the Seller or its Subsidiaries
with respect to any Taxes is currently in force, (ii) to the best of the
Seller’s Knowledge, the Seller and its Subsidiaries have disclosed on their
respective federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code, and (iii) the Seller and its Subsidiaries
are not a party to any Tax allocation or sharing agreement.
 
(c) Except as set forth on Schedule 5.12, (i) each affiliated group has filed
all income Tax Returns that it was required to file for each taxable period
during which the Seller or any Subsidiary was a member of the group, (ii) all
such Tax Returns were true, correct and complete in all respects, (iii) all
income Taxes owed by any affiliated group (whether or not shown on any Tax
Return) have been paid for each taxable period during which the Seller or any
Subsidiary was a member of the group, (iv) there is no dispute or claim
concerning any income Tax Liability of any affiliated group for any taxable
period during which the Seller or any Subsidiary was a member of any group
either (a) claimed or raised by any authority in writing or (b) as to which the
directors and officers (and employees responsible for Tax matters) of the Seller
and its Subsidiaries has Knowledge based upon personal contact with any agent of
such authority, and (v) no affiliated group has waived any statute of
limitations in respect of any income Taxes or agreed to any extension of time
with respect to an income Tax assessment or deficiency for any taxable period
during which the Seller or any Subsidiary was a member of the group.
 
(d) Except as set forth on Schedule 5.12, neither the Seller nor any of its
Subsidiaries has any Liability for the Taxes of any Person other than the Seller
and its Subsidiaries (i) under Treasury Regulation §1.1502-6 (or any similar
provision of state, local or non-U.S. laws), (ii) as a transferer or successor,
(iii) by contract or (iv) otherwise.
 
(e) Neither the Seller nor any of its Subsidiaries is or has been a party to any
“reportable transaction,” as defined in Section 6707A(c)(1) of the Code and
Treasury Regulation §1.6011-4(b).
 
Section 5.13 Employee Benefit Plans.
 
(a) Each Plan and each Benefit Program (as such terms are defined herein) is
listed on Schedule 5.13 hereto.  No Plan or Benefit Program is or has ever been
(i) covered by Title IV of ERISA, (ii) subject to the minimum funding
requirements of Section 412 of the Code or (iii) a “multiemployer plan” as
defined in Section 3(37) of ERISA, nor has the Seller, its Subsidiaries, or any
entity which together with the Seller or its Subsidiaries is under common
control as described in Section 414 of the Code contributed to, or ever had any
obligation to contribute to, any multi-employer plan.  Each Plan and Benefit
Program intended to be qualified under Section 401(a) of the Code is designated
as a tax qualified plan on Schedule 5.13 is so qualified.  No Plan or Benefit
Program provides for any retiree health benefits for any employees or dependents
of the Seller or any Subsidiary other than as required by COBRA (as hereinafter
defined).  There are no claims pending with respect to, or under, any Plan or
any Benefit Program, other than routine claims for benefits, and there are no
disputes or litigation pending or, to the Knowledge of the Seller or any
Subsidiary, threatened, with respect to any such Plans or Benefit Programs.
 
(b) The Seller has heretofore delivered to Purchaser true and correct copies of
the following, if any:
 
(i) each Plan and each Benefit Program listed on Schedule 5.13, all amendments
thereto as of the date hereof and all current summary plan descriptions provided
to employees regarding the Plans and Benefit Programs;
 
(ii) each trust agreement and annuity contract (or any other funding
instruments) pertaining to any of the Plans or Benefit Programs, including all
amendments to such documents to the date hereof;
 
(iii) each management or employment contract or contract for personal services
and a complete description of any understanding or commitment between the Seller
or any Subsidiary on one hand, and any officer, consultant, director, employee
or independent contractor of the Seller or any Subsidiary on the other hand.
 
(c) Each Plan and Benefit Program has been maintained and administered in
compliance with its terms and in accordance with all applicable Legal
Requirements. The Seller and its Subsidiaries have no commitment or obligation
to establish or adopt any new or additional Plans or Benefit Programs or to
increase the benefits under any existing Plan or Benefit Program.
 
(d) Except as set forth on Schedule 5.13, neither the execution and delivery of
this Agreement, nor the consummation of the Transactions will (i) result in any
payment to be made by the Seller or its Subsidiaries, including without
limitation, severance, unemployment compensation, golden parachute (defined in
Section 280G of the Code) or otherwise, becoming due to any employee of the
Seller or any Subsidiary, or (ii) increase any benefits otherwise payable under
any Plan or any Benefit Program.
 
Section 5.14 Employee and Labor Matters.
 
(a) Set forth on Schedule 5.14(a)(i) is a true and complete list dated as of
January 31, 2009 of all employees of the Seller and its Subsidiaries listing the
title or position held, base salary or wage rate and any bonuses, commissions,
profit sharing, the Seller’s and its Subsidiaries’ vehicles, club memberships or
other compensation or perquisites payable, all employee benefits received by
such employees and any other material terms of any written or oral agreement
with the Seller or its Subsidiaries.  Set forth on Schedule 5.14(a)(ii) is a
detailed description of all health, dental, life and disability insurance plans
of the Seller and its Subsidiaries and a description of the cost per employee
under each such plan for individual coverage as well as for coverage of such
employee’s dependents.
 
(b) Except as set forth on Schedule 5.14(b), neither the Seller nor its
Subsidiaries is a party to or bound by any written employment agreements or
commitments, other than on an at-will basis. The Seller and its Subsidiaries are
in compliance with all applicable Legal Requirements respecting the employment
and employment practices, terms and conditions of employment and wages and hours
of its employees and are not engaged in any unfair labor practice.  All
employees of the Seller and its Subsidiaries who work in the United States are
lawfully authorized to work in the United States according to federal
immigration laws. There is no labor strike or labor disturbance pending or, to
the Knowledge of the Seller or its Subsidiaries, threatened against the Seller
or its Subsidiaries with respect to the Business and, during the past three
years, neither the Seller nor any Subsidiary has experienced a work stoppage.
 
(c) Except as set forth on Schedule 5.14(c), (i) neither the Seller nor its
Subsidiaries is a party to or bound by the terms of any collective bargaining
agreement or other union contract applicable to any employee of the Seller or
its Subsidiaries and no such agreement or contract has been requested by any
employee or group of employees of the Seller or any Subsidiary, nor has there
been any discussion with respect thereto by management of the Seller or its
Subsidiaries with any employees of the Seller or its Subsidiaries, (ii) neither
the Seller nor any Subsidiary is aware of any union organizing activities or
proceedings involving, or any pending petitions for recognition of, a labor
union or association as the exclusive bargaining agent for, or where the purpose
is to organize, any group or groups of employees of the Seller or its
Subsidiaries, or (iii) there is not currently pending, with regard to any of its
facilities, any proceeding before the National Labor Relations Board, wherein
any labor organization is seeking representation of any employees of the Seller
or its Subsidiaries.
 
Section 5.15 Environmental Matters.  Without in any manner limiting any other
representations and warranties set forth in this Agreement:
 
(a) Neither the Seller, its Subsidiaries, nor any Business Facility is in
violation of, has violated, or has been or is in non-compliance with, any
Environmental Laws, including but not limited to the conduct of the business of
the Seller or its Subsidiaries or the ownership, use, maintenance or operation
of any Business Facilities.  There are no pending or currently proposed changes
to any Environmental Laws and regulations which, when implemented or effective
may affect the operations of the Business.  A list of all of the Business
Facilities is set forth on Schedule 5.15(a).
 
(b) Without in any manner limiting the generality of (a) above:
 
(i) Except in compliance with Environmental Laws (including, without limitation,
by obtaining necessary Environmental Permits), no Materials of Environmental
Concern have been used, generated, extracted, mined, beneficiated, manufactured,
stored, treated, or disposed of, or in any other way released (and no release is
threatened), on, under or about any Business Facility or transferred or
transported to or from any Business Facility, and no Materials of Environmental
Concern have been generated, manufactured, stored or treated or disposed of, or
in any other way released (and no release is threatened), on, under, about or
from any property adjacent to any current Business Facility;
 
(ii) The Seller and its Subsidiaries are not now, and will not be in the future,
as a result of the operation of the business of the Seller or its Subsidiaries
or the condition of the Acquisition Assets or the Business Facilities as of the
date of Closing, subject to any:  (a) contingent Liability in connection with
any release or threatened release of any Materials of Environmental Concern into
the environment whether on or off any Business Facility; (b) reclamation,
decontamination or Remediation (as defined in Exhibit A) requirements under
Environmental Laws, or any reporting requirements related thereto; or (c)
consent order, compliance order or administrative order relating to or issued
under any Environmental Law;
 
(iii) There are no Environmental Claims known, pending or threatened against the
Seller, its Subsidiaries or any Business Facilities, and there is no basis for
the same;
 
(iv) The Seller and its Subsidiaries have, and all Business Facilities have, all
Environmental Permits necessary to comply with all Environmental Laws applicable
to the operations of the business of the Seller and its Subsidiaries as
presently conducted, and the Seller, its Subsidiaries and the Business
Facilities are in compliance with all terms and conditions of such Environmental
Permits.  The Seller and its Subsidiaries have timely filed applications for
renewal of all Environmental Permits.  The Seller further represents and
warrants that it and all of the Business Facilities have all environmental and
pollution control equipment necessary to comply with all Environmental Laws
(including without limitation to comply with all applicable Environmental
Permits) applicable to the operation of the business of the Seller and its
Subsidiaries as presently conducted.  Schedule 5.15(b) lists each such permit,
license or other authorization in the possession of the Business.  There are no
other such permits, licenses or other authorizations which are required by any
Environmental Laws and regulations to be obtained after the Closing;
 
(v) Regarding all Environmental Permits for which renewal, amendment, or
modification is sought or pending, no material expenditures, capital
improvements, or changes in operation will be necessary as a condition or as a
result of such renewal, amendment, or modification;
 
(vi) The Seller and its Subsidiaries have received no notice and have no
Knowledge that any occupant or tenant of any current Business Facility (a) is in
violation of any Environmental Law; (b) is the subject of any Environmental
Claims; or (c) does not have or has not renewed any Environmental Permits
applicable to its assets or operations;
 
(vii) There are no, nor have there ever been any, storage tanks or solid waste
management units located on or under any Business Facility, and there are no
Materials of Environmental Concern on any Business Facility exceeding any
standard or limitation established, published or promulgated pursuant to
Environmental Laws, or which would require reporting to any Governmental
Authority or Remediation to comply with the Requirements of Environmental Laws;
 
(viii) None of the off-site locations where Materials of Environmental Concern
generated from any Business Facility or for which the Seller or its Subsidiaries
have arranged for their disposal, treatment or application has been nominated or
identified as a facility which is subject to an existing or potential claim
under Environmental Laws;
 
(ix) Neither the Seller nor any Subsidiary has been named as a potentially
responsible party under, and no Business Facility has been nominated or
identified as a facility which is subject to an existing or potential claim
under CERCLA or comparable Environmental Laws, and no Business Facility is
subject to any Encumbrance arising under Environmental Laws;
 
(x) Neither the Seller nor any Subsidiary has received any notice of any release
or threatened release of Materials of Environmental Concern, or of any violation
of, noncompliance with, or remedial obligation under, Environmental Laws or
Environmental Permits, relating to the ownership, use, maintenance, operation of
any Business Facility or in connection with the business of the Seller or its
Subsidiaries, nor is there any basis for any of the foregoing, nor have the
Seller or any Subsidiary voluntarily undertaken Remediation or other
decontamination or cleanup of any facility or site or entered into any agreement
for the payment of costs associated with such activity;
 
(xi) There are no Requirements of Environmental Laws that will require future
compliance costs on the part of the Seller or its Subsidiaries in excess of
$10,000 above costs currently expended in the ordinary course of business;
 
(xii) There are no present or past events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent continued compliance by the Seller or its Subsidiaries with
Environmental Laws or which may give rise to any common law or statutory
Liability under Environmental Laws or form the basis of an Environmental Claim
against the Seller or its Subsidiaries relating to the ownership, use,
maintenance or operation of any Business Facility by the Seller or its
Subsidiaries or in connection with the conduct of the business of the Seller or
its Subsidiaries;
 
(xiii) There are no obligations, undertakings or liabilities arising out of or
relating to Environmental Laws which the Seller or its Subsidiaries have agreed
to, assumed or retained, by contract or otherwise;
 
(xiv) The Seller and its Subsidiaries have filed all notices, notifications,
financial security, waste managements plans, or applications which are required
to be obtained or filed by the Seller or its Subsidiaries for the operation of
their respective businesses or the use or operation of any Business Facility;
 
(xv) The Seller, its Subsidiaries and all Business Facilities are in compliance
with all other applicable limitations, restrictions, conditions, schedules and
timetables contained in Environmental Laws or contained in any plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; and
 
(xvi) No current Business Facility (or equipment thereon) contains any asbestos
containing materials or polychlorinated biphenyls in any form nor any wetland
areas or other land subject to restricted development under Environmental Laws.
 
For purposes of this Section, the “Seller” shall include any entity which is, in
whole or in part, a predecessor of the Seller and all of its present and former
Subsidiaries and their predecessors.

Section 5.16 Non-Competition Agreements.  Neither the Seller nor its
Subsidiaries is a party to any agreement which purports to restrict or prohibit
any such entity from, directly or indirectly, engaging in any business.  None of
the Seller’s or its Subsidiaries’ stockholders, officers, directors, or key
employees is a party to any agreement which, by virtue of such person’s
relationship with the Seller or its Subsidiaries, restricts the Seller or any
Subsidiary of the Seller from, directly or indirectly, engaging in any business.
 
Section 5.17 Title to Assets.  The Seller and its Subsidiaries have good and
marketable title to all their respective assets and valid leasehold interests in
their respective leased assets and properties, as reflected in the most recent
balance sheet included in the Seller Financial Statements, except for properties
and assets that have been disposed of in the ordinary course of business since
the date of the latest balance sheet included therein, free and clear of all
Encumbrances, except (i) Encumbrances with respect to current taxes, payments of
which are not yet delinquent and (ii) any Encumbrance securing any debt or
obligation described on Schedule 5.17 which is expressly referenced as being
secured.  
 
Section 5.18 Contracts, Agreements, Plans and Commitments.
 
(a) Schedule 5.18 sets forth a complete list of all material written and oral
contracts, agreements, plans and commitments to which the Seller or any
Subsidiary is a party or by which the Seller, any Subsidiary or any of the
Acquisition Assets are bound, including without limitation the following
(collectively, the “Material Agreements”):
 
(i) each contract, agreement, or commitment, whether in the ordinary course of
business or not, and specifically including management agreements, which
involves performance of services by or for the delivery of goods by or to, or
capital expenditures by the Seller;
 
(ii) any indenture, loan agreement or note under which the Seller or any
Subsidiary has outstanding Indebtedness, obligations or liabilities for borrowed
money;
 
(iii) any lease or sublease for the use or occupancy of real property;
 
(iv) any agreement that restricts the right of the Seller or its Subsidiaries to
engage in any type of business or compete with any Person or prohibiting or
limiting the ability of any Person to compete with such Seller or Subsidiary;
 
(v) any guarantee, direct or indirect, by any person of any contract, lease or
agreement entered into by the Seller or any Subsidiary;
 
(vi) any partnership, joint venture or construction and operation agreement;
 
(vii) any agreement of surety, guarantee or indemnification with respect to
which the Seller or any Subsidiary is the obligor, outside of the ordinary
course of business;
 
(viii) any contract that requires the Seller or its Subsidiaries to pay for
goods or services substantially in excess of its estimated needs for such items
or the fair market value of such items;
 
(ix) any contract or agreement between the Seller or any Subsidiary, on one
hand, and any Affiliate of the Seller or any Subsidiary on the other hand;
 
(x) any contract, agreement, agreed order or consent agreement that requires the
Seller or any Subsidiary to take any actions or incur expenses to remedy
non-compliance with any Environmental Law; and
 
(xi) any other contract material to the Seller, its Subsidiaries or their
respective businesses.
 
(b) True, correct and complete copies of each of the Material Agreements have
been delivered to or made available for inspection by Purchaser. All such
Material Agreements (i) were duly and validly executed and delivered by the
Seller or its Subsidiaries, as the case may be, and the other parties thereto,
(ii) are valid and in full force and effect and (iii) are enforceable against
the Seller or Subsidiary that is a party thereto and the other parties to such
Material Agreements in accordance with their terms.  The Seller and its
Subsidiaries have fulfilled all material obligations required of such party
under each Material Agreement to have been performed by it prior to the date
hereof, including timely paying all interest on its debt as such interest has
become due and payable.  Except as set forth on Schedule 5.18, no event of
default or event that, but for the giving of notice or the lapse of time or
both, would constitute an event of default exists or, upon the consummation by
the Seller of the Transactions, will exist under any contract, indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which the Seller
or its Subsidiaries is a party or by which the Seller or its Subsidiaries is
bound or to which any of the properties, assets or operations of the Seller or
its Subsidiaries is subject.
 
(c) There are no renegotiations of, or attempts to renegotiate, or outstanding
rights to renegotiate, any material amounts paid or payable to the Seller or its
Subsidiaries under current or completed contracts, agreements, or commitments
with any person or entity having the contractual or statutory right to demand or
require such renegotiation.  No such person or entity has made written demand
for such renegotiation.
 
(d) The consummation of the Transactions and the assignment of the Assigned
Contracts will vest in the Purchaser all rights and benefits under the
contracts, commitments, plans and agreements and the right to operate the
Seller’s and its Subsidiaries’ businesses and assets under the terms of the
contracts, commitments, plans and agreements in the manner currently operated
and used by the Seller and its Subsidiaries.
 
Section 5.19 Leased Properties.
 
(a) Schedule 5.19 hereto sets forth a list and summary description (including
property location, parties and annual rental payments) of all leases, subleases,
management agreements and other agreements as part of or related to the Business
under which the Seller or any Subsidiary is a lessor or lessee of, or uses or
occupies or allows the use or occupancy of, any real property, including but not
limited to the Assigned Leases.  All such leases, subleases and other agreements
are valid and subsisting and in full force and effect, enforceable against each
Seller or Subsidiary that is a party thereto in accordance with their
terms.  True, correct and complete copies of all of the Assigned Leases, and all
amendments thereto and assignments thereof have been delivered to the Purchaser
and are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, amendments or
assignments, any existing default or event which with notice or lapse of time or
both would become a default by or on behalf of the Seller or any Subsidiary, or
by or on behalf of any third party.  Each of the Assigned Leases constitute the
entire agreement between Seller or its Subsidiary, as the case may be, and the
respective landlord thereunder with respect to the Leased Premises covered
thereby.  No deposits or prepayments have been made by the Seller or any
Subsidiary in connection with any Assigned Lease.
 
(b) The leased property listed on Schedule 5.19, including the leased property
under the Assigned Leases (i) has full and free access to and from highways,
streets and roads and there is no proceeding pending or, to the Knowledge of the
Seller or any Subsidiary, threatened that could result in the termination of or
material limitations on such access (ii) is connected to and serviced by
utilities and public services all of which are adequate for the use of the real
property listed thereon as the Business is currently, and proposed to be,
conducted and (iii) is zoned, platted and permitted for use in the manner in
which it is currently being and proposed to be used.  There are no pending or,
to the Knowledge of the Seller or any Subsidiary, threatened, condemnation
proceedings, lawsuits or administrative actions relating to the Leased Premises
covered by the Assigned Leases.  The buildings and improvements located on the
Leased Premises and any uses thereof are not in violation of applicable Legal
Requirements, setback requirements, zoning laws and ordinances or deed
restrictions, and do not encroach on any easement that may burden the Leased
Premises.  The Seller and its Subsidiaries have not experienced during the two
years preceding the date hereof any material interruption in the delivery of
adequate quantities of any utilities (including without limitation electricity,
natural gas, potable water, water for cooling or similar purposes and fuel oil)
or other public services (including without limitation sanitary and industrial
sewer service) required in the operation of the Business during such period and
no such material interruption is, to the Knowledge of the Seller or any
Subsidiary, threatened. All leases under which the Seller or its Subsidiaries
lease any real property have been delivered to Purchaser and are in good
standing, valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event which with
notice or lapse of time or both would become a default by or on behalf of the
Seller or its Subsidiaries, or by or on behalf of any third party.
 
Section 5.20 Supplies.  The Supplies of the Seller and its Subsidiaries are of a
quantity and quality that have been normal for the Seller and its Subsidiaries
in the ordinary course of business of the Seller and its Subsidiaries and are
owned by the Seller and its Subsidiaries free and clear of any Encumbrances.
 
Section 5.21 Brokers and Finders.  Neither the Seller nor its Subsidiaries have
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Seller or its Subsidiaries to pay any
finder’s fees, brokerage or agent commissions or other like payments in
connection with the Transactions.  There is no claim for payment by the Seller
or its Subsidiaries of any investment banking fees, finder’s fees, brokerage or
agent commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the Transactions.
 
Section 5.22 Intellectual Property.  Set forth on Schedule 5.22 is a complete
list of all registered patents, trademarks, service marks, trade names and
copyrights, and applications for and licenses (to or from the Seller or its
Subsidiaries) with respect to any of the foregoing (collectively, “Registered
Intellectual Property”), owned by the Seller or its Subsidiaries or with respect
to which the Seller or its Subsidiaries has any rights. The Seller or its
Subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all  Registered Intellectual Property and other Intellectual Property
used by the Seller or its Subsidiaries or necessary in connection with the
operation of the Seller’s or its Subsidiaries’ respective businesses, without
infringing on or otherwise acting adversely to the rights or claimed rights of
any Person, and neither the Seller nor any Subsidiary is obligated to pay any
royalty or other consideration to any Person in connection with the use of any
such Intellectual Property.  No other Person is infringing the rights of the
Seller or its Subsidiaries in any of its Intellectual Property.  Nether the
Seller nor its Subsidiaries have entered into any agreement to indemnify any
other party against any charge of infringement of the Intellectual
Property.  The Seller and its Subsidiaries have not and do not violate or
infringe any intellectual property rights of any other Person with respect to
the Intellectual Property or otherwise, and the Seller and its Subsidiaries have
not received any communication alleging that the Seller or any Subsidiary
violates or infringes and intellectual property rights of any other
Person.  Neither the Seller nor any Subsidiary have been sued for infringing any
intellectual property rights of any other Person.  There is no claim or demand
of any Person pertaining to, or any proceeding which is pending or, to the
Knowledge of the Seller or any Subsidiary, threatened, that challenges the
rights of the Seller or its Subsidiaries with respect to any Intellectual
Property, or that claims that any default exists with respect to any
Intellectual Property.  None of the Intellectual Property is subject to any
outstanding Order.
 
Section 5.23 Relationships.  Since June 30, 2008, neither the Seller nor its
Subsidiaries have received notice from any customer, supplier or any party to
any Contract (each a “Contract Party”) that such customer, supplier or Contract
Party intends to discontinue doing business with the Seller or any Subsidiary,
and, since such date, no customer, supplier or Contract Party has indicated any
intention (a) to terminate its existing business relationship with the Seller or
any Subsidiary, (b) not to continue its business relationship with the Seller or
any Subsidiary or (c) materially decrease the rate of business done with the
Seller or its Subsidiaries, whether as a result of the Transactions or
otherwise.   The Seller and its Subsidiaries have not entered into or
participated in any related party transaction during the past three years.
 
Section 5.24 Certain Payments.  Neither the Seller, its Subsidiaries nor any
stockholder, officer, director or employee of the Seller or any Subsidiary has
paid or received or caused to be paid or received, directly or indirectly, in
connection with the business of the Seller or its Subsidiaries (a) any bribe,
kickback or other similar payment to or from any domestic or foreign government
or agency thereof or any other person or (b) any contribution to any domestic or
foreign political party or candidate (other than from personal funds of such
stockholder, officer, director or employee not reimbursed by the Seller or its
Subsidiaries or as permitted by applicable Legal Requirements).
 
Section 5.25 Books and Records.  The Books and Records of the Seller and its
Subsidiaries are correct and complete in all material respects and the
signatures appearing on all documents contained therein are the true signatures
of the person purporting to have signed the same.  All actions reflected in said
Books and Records were duly and validly taken in compliance with the Legal
Requirements of the applicable jurisdiction and no meeting of the board of
directors or stockholders of the Seller, its Subsidiaries or any committee
thereof has been held for which minutes have not been prepared and are not
contained in the minute books. To the extent that they exist, all Books and
Records and all other records of every type and description that relate to the
Business have been prepared and maintained in accordance with good business
practices and, where applicable, in conformity with GAAP and applicable Legal
Requirements.  All such books and records are located in the offices of the
Seller or its Subsidiaries.
 
Section 5.26 Condition and Sufficiency of Assets.  All buildings, improvements,
equipment and Acquisition Assets owned or leased by the Seller or its
Subsidiaries are structurally sound, in good operating condition and repair
(subject to normal wear and tear) and adequate for the uses to which they are
being put, and none of the buildings, improvements, equipment or Acquisition
Assets owned or leased by the Seller or its Subsidiaries is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
consistent with past practice.  The Acquisition Assets, taken as a whole, are
sufficient to conduct the Business after the Closing Date in the same manner as
presently conducted and as reflected in the Seller Financial Statements.
 
Section 5.27 Board Approval; State; Vote Required.
 
(a) The Seller’s board of directors, by resolutions duly adopted at a meeting
duly called and held, has duly (i) approved this Agreement and the Transactions,
(ii) determined that the Purchase Price is fair to the Seller, (iii) recommended
that the stockholders of the Seller adopt this Agreement, and (iv) directed that
this Agreement be submitted for consideration by the Seller’s stockholders at
the Seller Stockholders’ Meeting (collectively, the “Seller Board
Recommendation”).
 
(b) The only vote of the holders of any class or series of capital stock or
other securities of the Seller necessary to approve this Agreement and the
Transactions is the affirmative vote of the holders of a majority of the
outstanding shares of Seller common stock in favor of the adoption of this
Agreement (the “Stockholder Approval”).  The holders of the Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock have approved this
Agreement and the Transactions.
 
Section 5.28 Opinion of Financial Advisor.  The board of directors of the Seller
shall receive a written opinion from Lehrer Financial and Economic Advisory
Services dated as of the date of this Agreement and addressed to the board of
directors of the Seller to the effect that, as of the date thereof and based
upon and subject to the limitations, qualifications and assumptions set forth
therein, that, from a financial point of view, the Purchase Price to be offered
to the Seller is fair to the Seller.  An executed copy of the opinion has been
delivered to the Purchaser for informational purposes only.
 
Section 5.29 Information Supplied.
 
(a) Each document required to be filed by the Seller with the SEC in connection
with the Transactions, including without limitation, the proxy or information
statement of the Seller containing information required by Regulation 14A under
the Exchange Act, and, if applicable, Rule 13e-3 and Schedule 13E-3 under the
Exchange Act (together with all amendments and supplements thereto, the “Proxy
Statement”), to be filed with the SEC in connection with the Transactions, will,
when filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
 
(b) None of the information included or incorporated by reference in the Proxy
Statement will, at the date it is first mailed to the Seller’s stockholders or
at the time of the Seller Stockholders’ Meeting or at the time of any amendment
or supplement thereof, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
 
Section 5.30 Disclosure.  There is no fact known to the Seller or its
Subsidiaries (other than general economic conditions) that would have a Material
Adverse Effect that has not been set forth in this Agreement or in the schedules
attached hereto or to be delivered in connection with this Agreement.
 
 
ARTICLE VI
 
 
[Intentionally Deleted]
 
ARTICLE VII
 
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
 
Section 7.1 Confidentiality.  Each Party agrees to maintain in confidence and
not disclose to any other Person the terms of the Transactions and the
information obtained in confidence from the other Party in connection with the
Transactions, other than (i) disclosures required to obtain the approvals for
the Transactions; (ii) disclosures to those professionals and advisors who have
a need to know; (iii) disclosures of information already available to the public
or (iv) any other disclosures required by an applicable Legal Requirement.  In
the event that a Party is at any time requested or required (by oral questions,
interrogatories, request for information or documents, subpoena or other similar
process) to disclose any information supplied to it in connection with the
Transactions, such Party agrees to provide the other Party prompt notice of such
request so that an appropriate protective order may be sought and/or such other
party may waive the first Party’s compliance with the terms of this Section 7.1.
 
Section 7.2 Further Assurances.  The Parties shall execute and deliver to the
other, at the Closing Date or thereafter, any other instrument which may be
reasonably requested by the other and which is reasonably appropriate to perfect
or evidence any of the sales, assignments, transfers or conveyances contemplated
by this Agreement, or to transfer any Acquisition Assets identified after the
Closing, or to obtain any consents, licenses or permits necessary for Purchaser
to operate the Business in the manner operated by the Seller prior to the
Closing Date and to do all such further acts and things as may be reasonably
necessary to effect completely the intent of this Agreement.
 
Section 7.3 Agreement to Cooperate.  Subject to the terms and conditions herein
provided, the Parties hereto shall use all reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Transactions, including using all reasonable efforts to obtain (i)
all necessary, proper or advisable waivers, consents and approvals under
applicable laws and regulations to consummate and make effective the
Transactions, and (ii) all necessary or appropriate waivers, consents or
approvals of third parties required in order to preserve material contractual
relationships of the Seller.
 
Section 7.4 Public Statements.  Except as required by law, no Party shall issue
any press release or written public statement with respect to this Agreement or
the Transactions without the prior written consent of the other Party, which
will not be unreasonably withheld.
 
Section 7.5 Notification of Certain Matters.  Each Party agrees to give prompt
notice to the other Party of, and to use reasonable best efforts to prevent or
promptly remedy, any material failure (or any failure in the case of any
covenant, condition or agreement containing any materiality qualification) on
its part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section shall not limit or otherwise affect the
remedies available hereunder to the Party receiving such notice.
 
Section 7.6 Employees.
 
(a) The Purchaser may, but shall not be obligated to, offer employment to any of
the employees of the Seller.  The Seller and its Subsidiaries will not solicit,
or endeavor to solicit, after the Closing Date any employee or discourage any
such person from accepting such employment with the Purchaser.  Neither the
Seller nor its Subsidiaries have made any representations or promises, oral or
written, to employees of the Seller or its Subsidiaries concerning employment by
the Purchaser.
 
(b) The Purchaser shall not be responsible for any costs, obligations or
liabilities which may result from the termination of employment by the Seller of
any employee of the Business not hired by the Purchaser as of the first payroll
date after the Closing; provided, however, the Purchaser shall be responsible
for and shall assume any and all costs, obligations or liabilities directly
related to the termination by Purchaser of any employee of the Business who is
hired by the Purchaser on or after the Closing Date solely to the extent that
such costs, obligations or liabilities relate directly to the period beginning
with the hiring of such employee by the Purchaser and ending with such
termination by the Purchaser.  The Purchaser makes no representation with
respect to the comparability of the Purchaser’s employee benefits to those
offered by the Seller.  The Purchaser specifically disclaims any obligation to
remunerate employees of the Seller who, following the Closing Date, will be
employed by the Purchaser, at levels comparable to the aggregate remuneration
provided to such employees while employed by the Seller.  Prior to the Closing
Date, the Seller shall have taken all necessary actions to comply with the
Worker Adjustment and Retraining Notification Act (the “WARN Act”) to the extent
it is subject to the WARN Act, and the Purchaser shall not have any disclosure
or announcement obligations or any other responsibilities under the WARN Act as
a result of the Transactions.
 
(c) The Seller shall take such actions as it deems appropriate to terminate,
modify, alter or amend the existing Plans or Benefit Programs with respect to
employees of the Business due to the Transactions.  The Purchaser does not and
shall not assume any of such Plans or Benefit Programs, including, without
limitation, any severance plans of the Seller.
 
(d) The Seller shall be solely responsible for and shall pay in full to all of
the Seller’s employees all compensation, bonuses and other payments, and all
sick pay, vacation pay, and any other benefits otherwise payable under the
Benefit Programs, accrued to the Closing for which the Seller is obligated
thereunder, and the Seller shall satisfy all such obligations to such employees.
 
(e) The Seller will retain responsibility for, and continue to pay, all
hospital, medical, life insurance, disability, supplemental unemployment and all
other welfare plan expenses and benefits for each Seller employee hired by the
Purchaser (and covered dependents) with respect to claims incurred by such
employee or their covered dependents prior to the Closing.  The Seller will
retain responsibility for, and continue to pay, any life, health or other
welfare benefits payable to each former employee of the Seller who terminated
employment with the Seller (and their dependents) on or prior to the Closing in
respect of claims incurred on their behalf prior to the Closing.  For purposes
of this paragraph, a claim is deemed incurred when the event that first gave
rise to the claim occurred, notwithstanding the fact that such benefits may be
paid at a subsequent date.
 
(f) The Seller is responsible for any liabilities that may arise with respect to
application of Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA (“COBRA”) with respect to any of its employees or covered dependents as a
result of the Transactions, as well as for any prior COBRA violations which
occurred prior to Closing.  The Purchaser is not a successor employer for COBRA
purposes.
 
(g) The Purchaser is not, and shall not be deemed to be, a successor employer to
the Seller with respect to any Plans or Benefit Programs; and no plan or other
program adopted or maintained by the Purchaser after the Closing is or shall be
deemed to be a “successor plan”, as such term is defined in ERISA or the Code,
of any such Plan or Benefit Program.
 
Section 7.7 Taxes.
 
(a) Liability for Taxes.  The Seller shall be liable for, and shall indemnify
and hold its Subsidiaries, the Purchaser and its Affiliates harmless from and
against, (i) all Taxes (or the nonpayment thereof) that are imposed on or
incurred by the Seller, (ii) all Taxes (or the nonpayment thereof) that are
imposed on or incurred with respect to the Acquisition Assets or the Business
for any taxable period ending on or before the Closing Date, (iii) a portion,
determined as described below, of any Taxes that are imposed on or incurred with
respect to the Acquisition Assets or the Business for any taxable period
beginning prior to and ending after the Closing Date (“Straddle Period”) which
is allocable to the period ending on or before the Closing Date, (iv) all Taxes
of any member of an affiliated, consolidated, combined or unitary group of which
the Seller or any of its Subsidiaries is or was a member on or prior to the
Closing Date, (v) any Taxes payable as a result of a breach by the Seller of any
of the representations set forth in Section 5.11 hereof, and (vi) any attorneys’
fees or other costs incurred by the Purchaser or its Affiliates in connection
with any payment from the Seller under this Section 7.8(a).  The determination
of the portion of any Taxes imposed on or incurred with respect to the
Acquisition Assets or the Business for a Straddle Period which is allocable to
the period ending on or before the Closing Date shall be made, in the case of ad
valorem, property or similar Taxes, if any, which are not measured by or based
upon production, or franchise or capital Taxes which are not measured by or
based upon net income, by allocating such Taxes on a per diem basis, and, in the
case of all other Taxes, by assuming that the period ending on or before the
Closing Date constitutes a separate taxable period and by taking into account
the actual taxable events occurring during such period.
 
(b) Responsibility for Filing Tax Returns for Periods through Closing Date.  The
Seller shall include the income of  its Subsidiaries (including any deferred
items triggered into income by Treasury Regulation §1.1502-13 and any excess
loss account taken into income under Treasury Regulation §1.1502-19) on the
Seller’s consolidated federal income Tax Returns for all periods through the
Closing Date and pay any federal income Taxes attributable to such income.  For
all taxable periods ending on or before the Closing Date, the Seller shall cause
its Subsidiaries to join in the Seller’s consolidated federal income Tax Return
and, in jurisdictions requiring separate reporting from the Seller, to file
separate company state and local income Tax Returns.  All such Tax Returns shall
be prepared and filed in a manner consistent with prior practice, except as
required by a change in applicable Legal Requirements.  The Purchaser shall have
the right to review and comment on any such Tax Returns prepared by the
Seller.  The Purchaser shall cause the Seller's Subsidiaries to furnish
information to the Seller as reasonably requested by the Seller to allow the
Seller to satisfy its obligations under this section in accordance with past
custom and practice.  The Seller’s Subsidiaries and the Purchaser shall consult
and cooperate with the Seller as to any elections to be made on returns of the
Seller's Subsidiaries for periods ending on or before the Closing Date.  The
Purchaser shall cause the Seller's  Subsidiaries to file income Tax Returns or
shall include the Seller's Subsidiaries in its combined or consolidated income
Tax Returns for all periods other than periods ending on or before the Closing
Date.
 
(c) Audits.   The Seller shall allow the Purchaser and its counsel to
participate at Purchaser's expense in any audit of the Seller’s consolidated
federal income Tax Returns to the extent that such returns relate to the
Seller's Subsidiaries.  The Seller shall not settle any such audit in a manner
that would adversely affect the Seller's Subsidiaries after the Closing Date
unless such settlement would be reasonable in the case of a Person that owned
the Seller and its Subsidiaries both before and after the Closing Date.
 
(d) Carrybacks. The Seller shall immediately pay to the Purchaser any Tax refund
(or reduction in Tax liability) resulting from a carryback of a post-acquisition
Tax attribute of any of the Seller's Subsidiaries into the Seller consolidated
Tax Return, when such refund (or reduction) is realized by the Seller’s
group.  At the Purchaser’s request, the Seller will cooperate with the Purchaser
and the Seller's Subsidiaries in obtaining such refund (or reduction), including
through the filing of amended Tax Returns or refund claims.  The Purchaser
agrees to indemnify the Seller for any Taxes resulting from the disallowance of
such post-acquisition Tax attribute on audit or otherwise.
 
(e) Retention of Carryovers.  The Seller shall not elect to retain any net
operating loss carryovers or capital loss carryovers of the Seller's
Subsidiaries.
 
(f) Post-Closing Elections.   At the Seller’s request, the Purchaser will cause
any of the Seller's Subsidiaries to make or join with the Seller in making any
other election if the making of such election does not have an adverse impact on
the Purchaser (or any of the Seller's Subsidiaries) for any post-acquisition Tax
period.
 
(g) §338(h)(10) Election.    At the Purchaser's option, the Seller and the
Purchaser shall join in making an election under Code §338(h)(10) (and any
corresponding elections under state, local, or non-U.S. tax law) (collectively a
‘‘§338(h)(10) Election’’) with respect to the purchase and sale of the stock of
the Seller’s Subsidiaries hereunder.  The Seller will pay any Tax attributable
to the making of the §338(h)(10) Election and will indemnify the Purchaser and
the Seller's Subsidiaries against any adverse consequences arising out of any
failure to pay such Tax.  The Purchaser will also pay any state, local, or
foreign Tax (and indemnify the Purchaser and the Seller's Subsidiaries against
any adverse consequences arising out of any failure to pay such Tax)
attributable to an election under state, local, or foreign law similar to the
election available under Code §338(g) (or that results from the making of an
election under Code §338(g)) with respect to the purchase and sale of the stock
of the Seller's Subsidiaries hereunder.
 
(h) Allocation of Purchase Price. The Parties agree that the Purchase Price and
the Liabilities of the Seller's Subsidiaries (plus other relevant items) will be
allocated to the assets of the Seller and the Seller's Subsidiaries for all
purposes (including Tax and financial accounting purposes) as shown on the
allocation schedule attached as Schedule 2.4 hereto, and the Seller shall file
all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
 
(i) Other Taxes.  The Seller shall be liable for and pay, and shall indemnify
and hold the Purchaser harmless from all transfer, sales, use, gross receipts,
stamp, value added, excise, or similar Taxes imposed on or relating to the sale
or transfer of the Acquisition Assets or the Business.
 
Section 7.8 Consents.  The Seller shall use its best efforts to procure all
consents, novations, approvals or waivers in a form reasonably satisfactory to
the Purchaser which must be obtained by the Seller pursuant to this Agreement or
which are necessary to assign the Assigned Leases, Assigned Contracts and
Assigned Permits and transfer any other Acquisition Assets to the Purchaser.  To
the extent such consents cannot be obtained, the Seller will use its best
efforts to take such actions as may be possible without violation or breach of
any such nonassignable Assigned Leases, Assigned Contracts or Assigned Permits
to effectively provide the Purchaser with the economic benefits of such
nonassignable Assigned Leases, Assigned Contracts and Assigned Permits.  At the
Closing, the Purchaser may, but shall not be obligated to, elect to close the
Transactions, notwithstanding the fact that the Seller may have failed to obtain
consents to the transfer.
 
Section 7.9 Change of Name.  Within fifteen (15) days after the Closing Date,
the Seller will cause its name to be changed to a name not containing “Hammonds”
or any name or mark confusingly similar to “Hammonds”.
 
ARTICLE VIII
 
[Intentionally Deleted]
 

ARTICLE IX
 
[Intentionally Deleted]
 
ARTICLE X
 
INDEMNIFICATION
 
Section 10.1 The Seller’s Indemnity Obligations.  The Seller shall indemnify,
hold harmless and defend the Purchaser, and the Purchaser’s officers,
partners, employees, agents, representatives and Affiliates (each a “Purchaser
Indemnified Party”) from and against, and shall reimburse the Purchase
Indemnified Parties for, any and all claims (including without limitation,
Environmental Claims), actions, causes of action, arbitrations, proceedings,
losses, damages, remediations, liabilities, strict liabilities, judgments,
fines, penalties and expenses (including, without limitation, reasonable
attorneys’ fees) (collectively, the “Indemnified Amounts”) paid, imposed on or
incurred by a Purchaser Indemnified Party or for which a Purchaser Indemnified
Party bears responsibility directly or indirectly, resulting from, caused by,
arising out of, or in any way relating to and with respect to any of, or any
allegation by any third party of, the following:
 
(a) any breach or misrepresentation in any of the representations and warranties
made by or on behalf of the Seller in this Agreement, including without
limitation with respect to environmental matters, or in any certificate,
instrument or agreement delivered in connection with this Agreement;
 
(b) any violation or breach by the Seller or any Subsidiary of, or default by
the Seller or any Subsidiary under, the terms of this Agreement or of any
certificate, instrument or agreement delivered in connection with this
Agreement;
 
(c) any act or omission by the Seller, its Subsidiaries, or any officer,
director, partner, employee, agent or representative of the Seller or its
Subsidiaries occurring or commencing on or prior to the Closing Date (including
any claim by a third party, employee or customer, arising out of or relating to
any act or omission by the Seller, its Subsidiaries or any officer,
director, partner, employee, agent or representative of the Seller or its
Subsidiaries occurring on or prior to the Closing Date);
 
(d) any Environmental Claim and/or any violation of any Requirements of
Environmental Law if such Environmental Claim or violation relates, directly or
indirectly, to events, conditions, operations, facts or circumstances which
occurred or commenced on or prior to the Closing Date;
 
(e) any Taxes incurred by the Parties as a result of the consummation of the
Transactions; or
 
(f) the Excluded Liabilities.
 
For purposes of this Section 10.1, Indemnified Amounts shall include without
limitation those Indemnified Amounts ARISING OUT OF THE STRICT LIABILITY
(INCLUDING BUT NOT LIMITED TO STRICT LIABILITY ARISING PURSUANT TO ENVIRONMENTAL
LAWS) OR NEGLIGENCE OF ANY PARTY, INCLUDING ANY PURCHASER INDEMNIFIED PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE.
 
Section 10.2 Purchaser’s Indemnity Obligations.  Purchaser shall indemnify, hold
harmless and defend the Seller and the Seller’s agents, representatives and
Affiliates (each a “Seller Indemnified Party”) from and against, and shall
reimburse the Seller Indemnified Parties for, any and all Indemnified Amounts
paid, imposed on or incurred by a Seller Indemnified Party, or for which a
Seller Indemnified Party bears responsibility directly or indirectly, resulting
from, caused by, arising out of, or in any way relating to and with respect to
any of, or any allegation by any third party of, the following:
 
(a) any breach or misrepresentation in any of the representations and warranties
made by or on behalf of Purchaser in this Agreement or in any certificate or
instrument delivered in connection with this Agreement;
 
(b) any violation or breach by Purchaser of or default by Purchaser under the
terms of this Agreement or of any certificate or instrument delivered in
connection with this Agreement; or
 
(c) the Assumed Liabilities.
 
Section 10.3 Indemnification Procedures.  All claims for indemnification under
this Agreement shall be asserted and resolved as follows:
 
(a) (i)  Any Party claiming indemnification under this Agreement (an
“Indemnified Party”) shall promptly give written notice (a “Claim Notice”) to
the Party from whom indemnification is sought (the “Indemnifying Party”) of any
third party claim(s) asserted against the Indemnified Party (a “Third Party
Claim”), which Claim Notice shall include a copy of all papers served with
respect to such Third Party Claim, a description in reasonable detail of the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis of the
Indemnified Party’s request for indemnification under this Agreement.  Failure
to deliver a Claim Notice will not relieve the Indemnifying Party of any
Liability that it may have to the Indemnified Party, except to the extent the
defense of such action is materially and irrevocably prejudiced by the
Indemnified Party’s failure to give such Claim Notice.
 
(ii)  The Indemnifying Party will have the right to defend against a Third Party
Claim with counsel of its choice reasonably satisfactory to the Indemnified
Party if (A) within 15 days following receipt of the Claim Notice the
Indemnifying Party notifies the Indemnified Party in writing that the
Indemnifying Party will indemnify the Indemnified Party from and against the
Third Party Claim, (B) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and pay, in cash, all damages the Indemnified Party may suffer
resulting from, relating to, arising out of, or attributable to the Third Party
Claim, (C) the Third Party Claim involves only money damages and does not seek
an injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not in the good faith
judgment of the Indemnified Party likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party continuously conducts the
defense of the Third Party Claim actively and diligently.
 
(iii) So long as the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with Section 10.3(a)(ii), (A) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (B) the Indemnified Party will not consent
to the entry of any Order with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be unreasonably
withheld), and (C) the Indemnifying Party will not consent to the entry of any
Order with respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be unreasonably withheld, provided that it will
not be deemed to be unreasonable for an Indemnified Party to withhold its
consent (1) with respect to any finding of or admission (x) of any violation of
any law, order or permit, (y) of any violation of the rights of any Person, or
(z) which Indemnified Party believes could have a material adverse effect on any
other actions to which the Indemnified Party or its Affiliates are party or to
which the Indemnified Party has a good faith belief they may become party, or
(2) if any portion of such order would not remain sealed).
 
(iv)           If any condition in Section 10.3(a)(ii) is or becomes
unsatisfied, (A) the Indemnified Party may defend against, and consent to the
entry of any order with respect to, a Third Party Claim in any manner it may
deem appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, the Indemnifying Party in connection therewith), (B) the
Indemnifying Party will be obligated to reimburse the Indemnified Party promptly
and periodically for the costs, expenses and damages relating to defending
against the Third Party Claim, and (C) the Indemnifying Party will remain liable
for any damages the Indemnified Party may suffer relating to the Indemnification
Claim to the fullest extent provided in this Section 10.3(a).
 
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third-Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (an
“Indemnity Notice”) describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party’s request for indemnification
under this Agreement.
 
(c) Notwithstanding anything to the contrary within this Section or Agreement,
both the Indemnifying Party and the Indemnified Party agree to reasonably
cooperate in resolving any dispute or claim which triggers this Article X.
 
ARTICLE XI
 
GENERAL PROVISIONS
 
Section 11.1 Survival.  The representations and warranties set forth in this
Agreement and in any certificate or instrument delivered in connection herewith
shall be continuing and shall survive the Closing for a period of two (2) years
following the Closing Date; provided, however, that there shall be no such
termination with respect to any such representation or warranty as to which a
bona fide claim has been asserted by written notice of such claim delivered to
the Party making such representation or warranty prior to the expiration of the
survival period; provided, further, that the representations and warranties (i)
set forth in Sections 5.1, 5.2, 5.3, 5.10, 5.12, 5.13, and 5.21 hereof shall
survive the Closing indefinitely, (ii) Sections 5.14, and 5.15 shall survive the
Closing for the greater of two (2) years or the statutory survival period of the
underlying claim.  The covenants and agreements, including but not limited to
indemnification obligations, set forth in this Agreement and in any certificate
or instrument delivered in connection herewith shall be continuing and shall
survive the Closing; provided, however, that the indemnification obligations of
the Seller set forth in Section 10.1(a) shall survive the Closing until
termination of the applicable representations and warranties.  The
indemnification obligations of the Seller set forth in Sections 10.1(b), (c),
(d), (e) and (f) shall survive the Closing without limitation.
 
Section 11.2 Notices.  All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):
 
(a) If to Purchaser, to:
 
Hammonds Technologies, LLC
6951 W. Little York
Houston, Texas 77040
Attention: Allan Hohman
Telecopy: (713) 466-3470

with a copy to:

Locke Lord Bissell & Liddell LLP
600 Travis Street, Suite 3400
Houston, Texas  77002
Attention: Joe Perillo
Telephone: (713) 226-1284
Telecopy: (713) 229-2610

(b) If to Seller, to:
 
Hammonds Industries, Inc.
910 Rankin Road
Houston, Texas 77073

with a copy to:
__________________________________
__________________________________
__________________________________

Section 11.3 Interpretation.  The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the interpretation of
this Agreement.  In this Agreement, unless a contrary intention is specifically
set forth, (i) the words “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) the words “including”, “including
without limitation”, and “including but not limited to” and other words of
similar import do not imply any limitation on (but may expand) the antecedent
reference and (iii) reference to any Article or Section means such Article or
Section hereof.  No provision of this Agreement shall be interpreted or
construed against any Party solely because such Party or its legal
representative drafted such provision.  The parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.  If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
 
Section 11.4 Miscellaneous.  This Agreement (including the documents and
instruments referred to herein and the Schedules and Exhibits attached hereto)
(a) constitutes the entire agreement and supersedes all other prior agreements
and understandings, both written and oral, among the Parties, or any of them,
with respect to the subject matter hereof, and (b) shall not be assigned by
operation of law or otherwise except that Purchaser may assign this Agreement to
one or more of its Affiliates, but no such assignment shall relieve the
Purchaser of its obligations hereunder.  The rights and remedies provided in
this Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law.
 
Section 11.5 Governing Law; Venue.  THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE.  Each of the Parties hereto agrees that any action or
proceeding brought to enforce the rights or obligations of any party hereto
under this Agreement shall be commenced and maintained in any court of competent
jurisdiction located in Harris County, Texas, and that any Texas state court or
federal court sitting in Harris County, Texas shall have exclusive jurisdiction
over any such action or proceeding brought by any of the parties hereto.  Each
of the Parties hereto further agrees that process may be served upon it by
certified mail, return receipt requested, addressed as more generally provided
in Section 11.2 hereof, and consents to the exercise of jurisdiction over it and
its properties with respect to any action or proceeding arising out of or in
connection with this Agreement or the Transactions or the enforcement of any
rights under this Agreement.
 
Section 11.6 Amendment.  This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the Parties.
 
Section 11.7 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
 
Section 11.8 Parties in Interest.  This Agreement shall be binding upon and
inure solely to the benefit of each Party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
 
Section 11.9 Validity.  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
 

[Signature Page Follows]

 
 

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

 

IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement
effective as of the date first written above.

PURCHASER:

 
HAMMONDS TECHNOLOGIES, LLC

By:  Fabcorp, Inc., Sole Member

By:                                                    
Name:                                                    
Title:                                                              

SELLER:

HAMMONDS INDUSTRIES, INC.

By:                                                                      
Name:                                                                      
Title:                                                                      

 
 

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

 

EXHIBIT A

Glossary

For purposes of this Agreement, the following terms shall have the meaning
specified or referred to below when capitalized (or if not capitalized, unless
the context clearly requires otherwise) when used in this Agreement.

“Affiliate(s)” with respect to any Person, means any Person directly or
indirectly controlling, controlled by or under common control with such Person,
and any natural Person who is an officer, director or partner of such Person and
any members of their immediate families living within the same household. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.

“Benefit Program” means any plan, policy, contract, program, commitment or
arrangement providing for bonuses, deferred compensation, retirement payments,
profit sharing, incentive pay, commissions, hospitalization or medical expenses
or insurance or any other benefits for any officer, consultant, director,
annuitant, employee or independent contractor of the Seller or any Subsidiary as
such or members of their families (other than directors’ and officers’ liability
policies), whether or not insured.

“Books and Records” means all books, records, papers, documents, instruments,
books of account, files and data, catalogs, brochures, sales literature,
promotional material, personnel files, reports, strategic planning documents,
financial forecasts, certificates and other documents of whatever nature and
wherever located that are in the possession or control of the Seller or its
Subsidiaries, that relate to the Business or the Acquisition Assets or which are
required or necessary in order for the Purchaser to conduct the Business from
and after the Closing Date in the manner in which it is presently being
conducted, including, without limitation, accounting and financial records
relating to the Assigned Contracts, maintenance records, environmental records,
analytical data and reports, correspondence with Governmental Authorities
relating to the Business, customer and supplier lists and other customer and
supplier data relating to the purchase of supplies or sales of goods or
services, notices of claims or demands by third parties, copies of Material
Agreements and confidential information relating to the Business;

“Business” means the manufacture, engineering, fabrication and distribution of
engineered products and chemicals in the fuel distribution, water treatment and
utility vehicle industries and any other business engaged in by the Seller and
the Acquired Entities.

“Business Facility” or “Business Facilities” includes any property (whether real
or personal) which the Seller or its Subsidiaries currently leases, operates, or
owns or manages in any manner or which the Seller, its Subsidiaries or any of
their organizational predecessors formerly leased, operated, owned or managed in
any manner.

“Code” means the Internal Revenue Code of 1986, as amended, or any amending or
superseding tax laws of the United States of America.

“Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, deed of
trust, security interest, encumbrance, equity, trust, equitable interest, claim,
easement, right-of-way, servitude, right of possession, lease tenancy, license,
encroachment, burden, intrusion, covenant, infringement, interference, proxy,
option, right of first refusal, community property interest, defect, exception,
condition, restriction, reservation, limitation, impairment, imperfection of
title, restriction on or condition to the voting of any security, restriction on
the transfer of any security or other asset, restriction on the receipt of any
income derived from any security or other asset, and restriction on the
possession, use, exercise or transfer of any other attribute of ownership,
whether based on or arising from common law, constitutional provision, statute
or contract.

“Environmental Claim(s)” means any claim; litigation; demand; action; cause of
action; suit; loss; cost, including, but not limited to, attorneys’ fees,
diminution in value, and expert’s fees; damage; punitive damage; fine, penalty,
expense, Liability, criminal liability, strict liability, judgment, governmental
or private investigation and testing; notification of status of being
potentially responsible for clean-up of any facility or for being in violation
or in potential violation of any Environmental Law; proceeding; consent or
administrative orders, agreements or decrees; lien; personal injury or death of
any person; or property damage, whether threatened, sought, brought or imposed,
that is related to or that seeks to recover losses, damages, costs, expenses
and/or liabilities related to, or seeks to impose liability for: (i) improper
use or treatment of wetlands, pinelands or other protected land or wildlife;
(ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials); (iv) explosives; (v) pollution, contamination,
preservation, protection, decontamination, remediation or clean-up of the air,
surface water, groundwater, soil or protected lands; (vi) solid, gaseous or
liquid waste generation, handling, discharge, release, threatened release,
treatment, storage, disposal or transportation; (vii) exposure of persons or
property to Materials or Environmental Concern and the effects thereof; (viii)
the release or threatened release (into the indoor or outdoor environment),
generation, extraction, mining, beneficiating, manufacture, processing,
distribution in commerce, use, transfer, transportation, treatment, storage or
disposal of Remediation of Materials of Environmental Concern; (ix) injury to,
death of or threat to the health or safety of any person or persons caused
directly or indirectly by Materials of Environmental Concern; (x) destruction
caused directly or indirectly by Materials of Environmental Concern or the
release or threatened release of any Materials of Environmental Concern of any
property (whether real or personal); (xi) the implementation of spill prevention
and/or disaster plans relating to Material of Environmental Concern; (xii)
community right-to-know and other disclosure laws; or (xiii) maintaining,
disclosing or reporting information to Governmental Authorities of any other
third person under any Environmental Law.  The term, “Environmental Claim,” also
includes, without limitation, any losses, damages, costs, expenses and/or
liabilities incurred in testing, if such testing confirms the presence of
Materials of Environmental Concern.

“Environmental Law(s)” means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, guidance document, order, consent agreement, order or
consent judgment, decree, injunction, requirement or agreement with any
governmental entity or any judicial or administrative decision relating to (x)
the protection, preservation or restoration of the environment (including,
without limitation, air, water, vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, application, production, release or disposal of Materials of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker protection or community’s right to know.  The term “Environmental Law”
includes, without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal Act and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Safe Drinking Water Act and the Federal Occupational Safety and
Health Act of 1970, each as amended from time to time, and (ii) any common law
or equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Materials of
Environmental Concern.

“Environmental Permit(s)” means all permits, licenses, certificates,
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent, and exemptions necessary for the ownership, use
and/or operation of any current Business Facility or to conduct the Seller’s or
its Subsidiaries’ businesses as currently conducted in compliance with
Requirements of Environmental Laws.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means generally accepted accounting principles applied on a consistent
basis.

“Governmental Authority” or “Governmental Authorities” means any nation or
government, any state or political subdivision thereof and any agency or entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.

“Governmental Authorization” means any permit, license, franchise, approval,
certificate, consent, ratification, permission, confirmation, endorsement,
waiver, certification, registration, qualification or other authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any Legal Requirement.

“Indebtedness” means the aggregate indebtedness and Liabilities of the Seller.

“Intellectual Property” includes all fictitious business names, trade names,
brand names, registered and unregistered trademarks, service marks and
applications, all patents and patent applications, all copyrights in both
published and unpublished works, software, licenses, all processes, shop rights,
formulas, trade secrets, proprietary information, material and manufacturing
specifications, drawings, designs and any similar items and related rights owned
by or licensed to the applicable party.

“Knowledge” means: (i) in the case of an individual, the actual knowledge of
such individual after reasonable inquiry, and (ii) in the case of a Person other
than an individual, Knowledge of a particular fact or other matter by such
Person’s directors, officers and  management.

“Legal Requirement” means any law, statute, ordinance, decree, requirement,
Order, treaty, proclamation, convention, rule or regulation (or interpretation
of any of the foregoing) of, and the terms of any Governmental Authorization
issued by, any Governmental Authority.

“Liability” or “Liabilities” means any debt, obligation, duty or liability of
any nature (including any unknown, undisclosed, unfixed, unliquidated,
unsecured, unmatured, unaccrued, unasserted, contingent, conditional, inchoate,
implied, vicarious, joint, several or secondary liability), regardless of
whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP.

“Material Adverse Effect” means any event, occurrence, fact, condition, change,
development or effect that, individually or in the aggregate, could reasonably
be anticipated to be materially adverse to the business, assets (including
intangible assets), liabilities, financial condition, results of operations,
properties (including intangible properties) or business prospects of the
Seller, its Subsidiaries or the Purchaser and its Subsidiaries (if any), as
applicable, taken as a whole.

“Materials of Environmental Concern” means:  (i) those substances included
within the statutory and/or regulatory definitions or listings of “hazardous
substance,” “medical waste,” “special waste,” “hazardous waste,” “sludges,”
“sewage sludge,” “extremely hazardous substance,” “regulated substance,” “solid
waste,” “hazardous materials,” or “toxic substances,” under any Environmental
Law; (ii) any material, waste or substance which is or contains:  (A) petroleum,
oil or a fraction thereof, (B) explosives, or (C) radioactive materials
(including naturally occurring radioactive materials); and (iii) such other
substances, materials, or wastes that are or become classified or regulated as
hazardous or toxic under any applicable federal, state or local law or
regulation.  To the extent that the laws or regulations of any applicable state
or local jurisdiction establish a meaning for any term defined herein through
reference to federal Environmental Laws which is broader than the meaning under
such federal Environmental Laws, such broader meaning shall apply.

“Organizational Documents” means (a) articles or certificate of incorporation
and bylaws of a corporation; (b) the limited partnership agreement and a
certificate of limited partnership of a limited partnership; (c) any charter or
similar document adopted or filed in connection with the creation, formation, or
organization of any Person; and (d) any amendment to any of the foregoing.

“Order” means any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, writ or
award issued, made, entered or rendered by any court, administrative agency or
other Governmental Authority or by any arbitrator.

“Person” means any individual, partnership, joint venture, corporation, limited
liability company, association, trust, unincorporated organization, government
or agency or subdivision thereof or any other entity.

“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA)
which is or has been established or maintained, or to which contributions are or
have been made, by the Seller, its Subsidiaries, or by any trade or business,
whether or not incorporated, which, together with the Seller, is under common
control, as described in Section 414(b) or (c) of the Code.

“Remediation” means any action necessary to:  (i) comply with and ensure
compliance with the Requirements of Environmental Laws and (ii) the taking of
all reasonably necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened release of Materials of
Environmental Concern at, on, in, about, under, within or near the air, soil,
surface water, groundwater or soil vapor at any Business Facility of the Seller,
its Subsidiaries or of any property affected by the business, operations, acts
omissions, or Materials of Environmental Concern of the Seller or its
Subsidiaries.

“Requirement(s) of Environmental Law(s)” means all requirements, conditions,
restrictions or stipulations of Environmental Laws imposed upon or related to
the Seller, its Subsidiaries or the assets, Business Facilities and/or the
business of the Seller or its Subsidiaries.

"SEC" means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Subsidiary” or “Subsidiaries” shall mean, when used with reference to an
entity, any other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions, or a majority of the outstanding voting
securities of which, are owned directly or indirectly by such entity.

“Taxes” shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
severance, environmental, license, net worth, payroll, employment, franchise,
transfer and recording taxes, fees and charges, imposed by the IRS or any other
taxing authority (whether domestic or foreign including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis and whether disputed or not
and including any obligations to indemnify or otherwise assume or succeed to the
Tax Liability of any other Person; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such taxes, charges, fees, levies
or other assessments.

“Tax Return(s)” shall mean any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns and documents (i) with respect to or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information, including any schedule or attachment
thereto and any amendment thereof.

“Transactions” means any of the transactions contemplated by this Agreement,
including without limitation: (i) the sale of the Acquisition Assets by the
Seller and the Purchaser’s delivery of the Purchase Price therefor; (ii) the
execution, delivery and performance of all the documents, instruments and
agreements to be executed, delivered, and performed in connection herewith; and
(iii) the performance by the Parties of their respective covenants and
obligations (pre- and post-closing) under this Agreement.