Exhibit 10.1

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT.  THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY [***].  THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

ASSET PURCHASE AGREEMENT

 

 

BY AND AMONG

 

 

STEWART & STEVENSON SERVICES, INC.,

 

STEWART & STEVENSON PETROLEUM SERVICES, INC.,

 

STEWART & STEVENSON INTERNATIONAL, INC.,

 

SIERRA DETROIT DIESEL ALLISON, INC.,

 

S&S TRUST

 

AND

 

HUSHANG ANSARY

 

 

DATED SEPTEMBER 27, 2005

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

Definitions and Usage

1

 

 

 

 

1.1

DEFINITIONS

1

 

 

 

 

 

1.2

USAGE

11

 

 

 

 

2.

Sale and Transfer of Assets; Closing

13

 

 

 

 

2.1

ASSETS TO BE SOLD

13

 

 

 

 

 

2.2

EXCLUDED ASSETS

14

 

 

 

 

 

2.3

CONSIDERATION

16

 

 

 

 

 

2.4

LIABILITIES

16

 

 

 

 

 

2.5

PRORATIONS OF CERTAIN PROPERTY TAXES

17

 

 

 

 

 

2.6

SALES AND TRANSFER TAXES; RECORDING FEES

18

 

 

 

 

 

2.7

ALLOCATION

19

 

 

 

 

 

2.8

CLOSING

19

 

 

 

 

 

2.9

CLOSING OBLIGATIONS

19

 

 

 

 

 

2.10

ADJUSTMENT AMOUNT AND PAYMENT

22

 

 

 

 

 

2.11

ADJUSTMENT PROCEDURE

22

 

 

 

 

 

[***]

 

 

 

 

 

 

3.

Representations and Warranties of Sellers

25

 

 

 

 

3.1

ORGANIZATION AND GOOD STANDING

25

 

 

 

 

 

3.2

ENFORCEABILITY; AUTHORITY; NO CONFLICT

25

 

 

 

 

 

3.3

FINANCIAL STATEMENTS

26

 

 

 

 

 

3.4

BOOKS AND RECORDS

27

 

 

 

 

 

3.5

CONDITION AND SUFFICIENCY OF ASSETS

27

 

 

 

 

 

3.6

DESCRIPTION OF REAL PROPERTY

27

 

 

 

 

 

3.7

TITLE TO ASSETS; ENCUMBRANCES

28

 

 

 

 

 

3.8

ACCOUNTS RECEIVABLE

28

 

 

 

 

 

3.9

INVENTORIES

28

 

 

 

 

 

3.10

[INTENTIONALLY DELETED]

29

 

 

 

 

 

3.11

TAXES

29

 

 

 

 

 

3.12

LABOR MATTERS; COMPLIANCE

29

 

 

 

 

 

3.13

EMPLOYEE BENEFITS

30

 

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

 

 

 

Page

 

 

 

 

3.14

COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

31

 

 

 

 

 

3.15

LEGAL PROCEEDINGS; ORDERS

32

 

 

 

 

 

3.16

ABSENCE OF CERTAIN CHANGES AND EVENTS

33

 

 

 

 

 

3.17

CONTRACTS; NO DEFAULTS

34

 

 

 

 

 

3.18

INSURANCE

36

 

 

 

 

 

3.19

ENVIRONMENTAL MATTERS

37

 

 

 

 

 

3.20

INTELLECTUAL PROPERTY

38

 

 

 

 

 

3.21

RELATED PARTY TRANSACTIONS

39

 

 

 

 

 

3.22

BROKERS OR FINDERS

39

 

 

 

 

 

3.23

LETTERS OF CREDIT

39

 

 

 

 

4.

Representations and Warranties of Buyer and Buyer Entity

39

 

 

 

 

4.1

ORGANIZATION AND GOOD STANDING

39

 

 

 

 

 

4.2

ENFORCEABILITY; AUTHORITY; NO CONFLICT

39

 

 

 

 

 

4.3

CERTAIN PROCEEDINGS

41

 

 

 

 

 

4.4

INVESTIGATION

41

 

 

 

 

 

4.5

BROKERS OR FINDERS

41

 

 

 

 

5.

Covenants of Buyer and Sellers Prior to Closing

42

 

 

 

 

5.1

REQUIRED APPROVALS

42

 

 

 

 

 

5.2

NOTIFICATION

42

 

 

 

 

 

5.3

COMMERCIALLY REASONABLE EFFORTS

42

 

 

 

 

 

5.4

BULK SALES LAWS

43

 

 

 

 

 

5.5

LETTERS OF CREDIT

43

 

 

 

 

 

5.6

UPDATING

43

 

 

 

 

6.

Covenants of Sellers Prior to Closing

43

 

 

 

 

6.1

ACCESS AND INVESTIGATION

43

 

 

 

 

 

6.2

OPERATION OF THE BUSINESS

44

 

 

 

 

 

6.3

NEGATIVE COVENANT

45

 

 

 

 

 

6.4

TAX CLEARANCE CERTIFICATES

45

 

 

 

 

7.

Conditions Precedent to Buyer’s Obligation to Close

45

 

 

 

 

7.1

ACCURACY OF REPRESENTATIONS; SELLERS’ PERFORMANCE

45

 

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

 

 

 

Page

 

 

 

 

7.2

HSR ACT

46

 

 

 

 

 

7.3

ADDITIONAL DOCUMENTS

46

 

 

 

 

 

7.4

NO PROCEEDINGS

46

 

 

 

 

 

7.5

NO CONFLICT

47

 

 

 

 

8.

Conditions Precedent to each Seller’s Obligation to Close

47

 

 

 

 

8.1

ACCURACY OF REPRESENTATIONS; BUYER’S PERFORMANCE

47

 

 

 

 

 

8.2

HSR ACT

47

 

 

 

 

 

8.3

ADDITIONAL DOCUMENTS

47

 

 

 

 

 

8.4

NO PROCEEDINGS

48

 

 

 

 

 

8.5

NO CONFLICT

48

 

 

 

 

9.

Termination

48

 

 

 

 

9.1

TERMINATION EVENTS

48

 

 

 

 

 

9.2

EFFECT OF TERMINATION

49

 

 

 

 

10.

Additional Covenants

49

 

 

 

 

10.1

EMPLOYEES AND EMPLOYEE BENEFITS

49

 

 

 

 

 

10.2

NONSOLICITATION

51

 

 

 

 

 

10.3

CUSTOMER AND OTHER BUSINESS RELATIONSHIPS

51

 

 

 

 

 

10.4

RETENTION OF AND ACCESS TO RECORDS

51

 

 

 

 

 

10.5

FURTHER ASSURANCES

52

 

 

 

 

 

10.6

PROVISIONS RELATING TO CERTAIN ASSETS

52

 

 

 

 

 

10.7

SUPPORT

53

 

 

 

 

 

10.8

BUYER ACKNOWLEDGMENT

54

 

 

 

 

11.

Indemnification; Remedies

54

 

 

 

 

11.1

SURVIVAL

54

 

 

 

 

 

11.2

INDEMNIFICATION AND REIMBURSEMENT BY SELLERS

54

 

 

 

 

 

11.3

INDEMNIFICATION AND REIMBURSEMENT BY BUYER

55

 

 

 

 

 

11.4

LIMITATIONS ON AMOUNT — SELLERS

56

 

 

 

 

 

11.5

LIMITATIONS ON AMOUNT — BUYER

56

 

 

 

 

 

11.6

TIME LIMITATIONS

56

 

 

 

 

 

11.7

PROCEDURE

57

 

 

 

 

 

11.8

PAYMENT

59

 

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

 

 

 

Page

 

 

 

 

11.9

NO SET-OFF

59

 

 

 

 

 

11.10

INSURANCE

59

 

 

 

 

 

11.11

NO DUPLICATION

59

 

 

 

 

 

11.12

REMEDIES

59

 

 

 

 

 

11.13

NO SPECIAL DAMAGES

60

 

 

 

 

12.

Confidentiality

60

 

 

 

 

12.1

DEFINITION OF CONFIDENTIAL INFORMATION

60

 

 

 

 

 

12.2

RESTRICTED USE OF CONFIDENTIAL INFORMATION

61

 

 

 

 

 

12.3

EXCEPTIONS

62

 

 

 

 

 

12.4

LEGAL PROCEEDINGS

62

 

 

 

 

 

12.5

RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION

63

 

 

 

 

 

12.6

ATTORNEY-CLIENT PRIVILEGE

63

 

 

 

 

13.

General Provisions

63

 

 

 

 

13.1

EXPENSES

63

 

 

 

 

 

13.2

PUBLIC ANNOUNCEMENTS

64

 

 

 

 

 

13.3

NOTICES

64

 

 

 

 

 

13.4

DISPUTE RESOLUTION

65

 

 

 

 

 

13.5

ENFORCEMENT OF AGREEMENT

65

 

 

 

 

 

13.6

WAIVER; REMEDIES CUMULATIVE

66

 

 

 

 

 

13.7

ENTIRE AGREEMENT AND MODIFICATION

66

 

 

 

 

 

13.8

ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS

67

 

 

 

 

 

13.9

SEVERABILITY

67

 

 

 

 

 

13.10

CONSTRUCTION

67

 

 

 

 

 

13.11

TIME OF ESSENCE

67

 

 

 

 

 

13.12

GOVERNING LAW

67

 

 

 

 

 

13.13

EXECUTION OF AGREEMENT

67

 

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

 

Exhibits

Exhibit 2.9(a)(i)

 

Form of Bill of Sale, Assignment and Assumption Agreement

Exhibit 2.9(a)(ii)

 

Form of Supply Agreement

Exhibit 2.9(a)(iii)

 

Form of Assignment of Registered Intellectual Property

Exhibit 2.9(a)(vi)

 

Form of Lease Agreement

Exhibit 2.9(a)(vii)

 

Form of Transition Services Agreement

Exhibit 2.9(a)(xi)

 

Form of Confirmation of Closing

Exhibit 2.9(a)(xvi)

 

[***]

Exhibit 2.9(a)(xvii)

 

[***]

 

Sections of Seller Disclosure Letter

Section 1.1

 

Knowledge

Section 2.1(j)

 

Domain Names

Section 2.1(k)

 

Cash In Bank Accounts

Section 2.2(c)

 

Excluded Deposits, Prepaid Expenses, Claims for Refunds and Rights to Offset

Section 2.2(e)

 

Excluded Seller Contracts

Section 2.2(o)

 

Excluded Claims Against Third Parties

Section 2.2(p)

 

Excluded Business Property

Section 2.2(q)

 

Other Excluded Property and Assets

Section 2.4(a)(v)

 

Other Assumed Liabilities

Section 3.2(b)

 

Conflict

Section 3.2(c)

 

Notices or Consents

Section 3.3

 

Financial Statements

Section 3.5(a)

 

Assets With an Original Cost in Excess of $10,000

Section 3.5(b)

 

Leased Assets with Monthly Payments in Excess of $2,500

Section 3.5(c)

 

Sufficiency of Assets

Section 3.6

 

Description of Real Property

Section 3.7(b)(i)

 

Non-Real Estate Encumbrances

Section 3.7(b)(ii)

 

Real Estate Encumbrances

Section 3.8

 

Accounts Receivable as of September 7, 2005

Section 3.9

 

Inventories

Section 3.12(a)

 

Labor Disputes; Compliance

Section 3.12(b)

 

Compensation of Affected Employees

Section 3.13(a)

 

Seller Benefit Plans

Section 3.13(b)

 

ERISA Matters

Section 3.14(a)

 

Compliance with Legal Requirements

Section 3.14(b)

 

Governmental Authorizations

Section 3.15(a)

 

Legal Proceedings

Section 3.15(b)

 

Orders

Section 3.15(c)

 

Compliance with Orders

Section 3.16

 

Certain Changes and Events

Section 3.17(a)

 

List of Certain Seller Contracts

Section 3.17(b)

 

Enforceability of Certain Seller Contracts

 

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

 

Section 3.17(c)

 

Compliance of Certain Seller Contracts

Section 3.17(d)

 

Warranty Claims

Section 3.18(a)

 

List of Insurance Policies

Section 3.18(c)

 

Self Insurance; Third Party Insurance Arrangements

Section 3.18(d)

 

Loss Experience

Section 3.19

 

Environmental Matters

Section 3.20(a)(i)

 

Owned Intellectual Property

Section 3.20(a)(ii)

 

Intellectual Property Encumbrances

Section 3.20(b)(i)

 

Licenses

Section 3.21

 

Related Party Transactions

Section 3.23

 

Letters of Credit

 

Sections of Buyer Disclosure Letter

 

Section 1.1

 

Knowledge

Section 4.2(c)

 

Conflicts

Section 4.2(d)

 

Consent

 

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

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (“Agreement”) is dated September       , 2005, by
and among Hushang Ansary (the “Buyer”), and Stewart & Stevenson Services, Inc.,
a Texas corporation (“Parent”), Stewart & Stevenson Petroleum Services, Inc., a
Delaware corporation (“SSPS”), Stewart & Stevenson International, Inc., a
Delaware corporation (“SSI”), Sierra Detroit Diesel Allison, Inc., a Nevada
corporation (“SDDA”), and S&S Trust, a Pennsylvania business trust (“S&S Trust,”
and together with Parent, SSPS, SSI and SDDA, the “Sellers” and each, a
“Seller”).

 

RECITALS

 

Sellers desire to sell, and Buyer desires to purchase, substantially all of the
assets constituting the Business (as defined below), and Buyer is willing to
assume certain obligations of Sellers relating to the Business, for the
consideration and on the terms set forth in this Agreement.

 

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

 

1.                                       DEFINITIONS AND USAGE

 

1.1                                 DEFINITIONS

 

For purposes of this Agreement, the following terms and variations thereof have
the meanings specified or referred to in this Section 1.1:

 

“Accounts Receivable” — (a) all trade accounts receivable and other rights to
payment (including progress payments) from customers of Sellers related to the
Business and the full benefit of all security for such accounts or rights to
payment, including all trade accounts receivable representing amounts receivable
in respect of goods shipped or products sold or services rendered to customers
of each Seller, (b) all other accounts or notes receivable of each Seller
related to the Business and the full benefit of all security for such accounts
or notes and (c) any claim, remedy or other right related to any of the
foregoing.

 

“Adjustment Amount” — as defined in Section 2.10.

 

“Affected Employees” —  all employees of Sellers employed principally in
connection with the Business, including persons on vacation, approved leave of
absence, sick leave, family medical leave under the Family and Medical Leave
Act, or short-term disability leave; and excluding persons on long-term
disability leave under a long-term disability plan maintained by any Seller.

 

“Affidavit of Occasional Sale” — as defined in Section 2.6(b).

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person,
and in the case of any natural Person shall include all relatives and immediate
family members of such first Person.

 

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

 

For purposes of this definition, a Person shall be deemed to control another
Person if such first Person directly or indirectly owns or holds fifty percent
(50%) or more of the ownership interests in such other Person.

 

“Agreed Accounting Principles” — GAAP, applying the policies and procedures on a
consistent basis, and as modified by the exceptions to GAAP, as set forth on
Section 3.3 of the Seller Disclosure Letter.

 

“Agreement” — as defined in the first paragraph of this Agreement.

 

“Armored Cab Business” — the business of manufacturing and assembling Low
Signature Armored Cabs, a special troop protection cab that fits on top of an
army truck chassis built and manufactured by Stewart & Stevenson Tactical
Vehicle Systems, L.P., a Subsidiary of Parent.

 

“Assets” — as defined in Section 2.1.

 

“Assignment and Sublicense (Varco)” — as defined in Section 2.9(a)(xvii).

 

“Assumed Liabilities” — as defined in Section 2.4(a).

 

“Bids”  — as defined in Section 2.1(e).

 

“Bill of Sale, Assignment and Assumption Agreement” — as defined in Section
2.9(a)(i).

 

“Bulk Sales Laws” — as defined in Section 5.4.

 

“Business” — as defined in Section 2.1.

 

“Business Day” — any day other than Saturday, Sunday or any other day on which
banks in Houston, Texas are authorized or required to be closed.

 

“Business Intellectual Property”  — as defined in Section 3.20(a).

 

“Business Property” — as defined in Section 3.6.

 

“Business Records” — as defined in Section 2.1(g).

 

“Buyer” — as defined in the first paragraph of this Agreement.

 

“Buyer Contact” — as defined in Section 12.2(a).

 

“Buyer Disclosure Letter” — the disclosure letter delivered by Buyer to Sellers
concurrently with the execution and delivery of this Agreement, as amended
pursuant to the terms of this Agreement.

 

“Buyer Entity” — the Person directly or indirectly controlled by Buyer that
assumes this Agreement pursuant to Section 13.8.

 

2

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

 

“Buyer Group” — as defined in Section 6.1.

 

“Buyer Indemnitees” — as defined in Section 11.2.

 

“Closing” — as defined in Section 2.8.

 

“Closing Balance Sheet” — as defined in Section 2.11(a).

 

“Closing Date” — the date on which the Closing actually takes place.

 

“Closing Net Asset Value” — as defined in Section 2.11(a).

 

“Closing Payment” —nine million dollars ($9,000,000), plus a cash amount equal
to the Estimated Closing Net Asset Value of the Business on the Closing Date.

 

“COBRA”  —  the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

 

“Code” — the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” — as defined in Section 12.1(a).

 

“Confirmation of Closing” — as defined in Section 2.9(a)(xi).

 

“Consent” — any approval, consent, ratification, waiver or other authorization.

 

“Contemplated Transactions” — all of the transactions contemplated by this
Agreement.

 

“Contract” — any agreement, contract, Lease, commitment or other undertaking or
arrangement.

 

“Customer Performance Assurance” — any guaranty, cash, letter of credit or other
property of any kind or nature deposited as or otherwise constituting collateral
security for the performance by any party (other than a Seller) to any Seller
Contract.

 

“Damages” — as defined in Section 11.2.

 

“DES Business” — all of any Seller’s and its Affiliates’ right, title, and
interest in and to all of such Seller’s or its Affiliate’s property and assets
belonging to such Seller or any of its Affiliates and all Liabilities of any
Seller and its Affiliates that in each case relate to the business conducted by
the former Distributed Energy Solutions segment of Parent that has been
classified as a discontinued operation in Parent’s publicly disclosed
consolidated financial statements.

 

“Disclosing Party” — as defined in Section 12.1(a).

 

“Dispute” — as defined in Section 13.4.

 

3

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

 

“Effective Time” —  the time on the Closing Date specified in the Confirmation
of Closing.

 

“Election Period” — as defined in Section 11.7(c).

 

“Encumbrance” — any charge, claim, condition, equitable interest, lien, option,
pledge, security interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar restriction,
including any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income or exercise of any other attribute of
ownership.

 

“Environmental Condition” — any pollution, contamination, degradation, damage or
injury caused by, related to, arising from, or in connection with the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, Release, or emission of any “Hazardous Materials.”

 

“Environmental Laws” — all applicable laws, regulations, enforceable
requirements that have the effect of law, orders, decrees, judgments,
injunctions, permits, licenses, approvals, consents or authorizations issued,
promulgated or entered into by any Governmental Body pertaining to the
protection of human health or the environment, including the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601 et seq.
(“CERCLA”), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”), the Federal
Water Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. § 1251
et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Toxic Substances
Control Act, 15 U.S.C. § 2601 et seq., and any similar state or local statutes,
in each case where such laws are in effect on or prior to the Closing Date.

 

“Environmental Liabilities” — any and all liabilities, responsibilities, claims,
suits, losses, costs (including remedial, removal, response, abatement,
clean-up, investigative, or monitoring costs and any other related costs and
expenses), other causes of action, damages, settlements, expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
attorneys’ fees and other legal fees: (i) pursuant to any agreement, order,
notice (including notices of violation or noncompliance), or responsibility,
directive (including directives embodied in Environmental Laws), injunction,
judgment, or similar documents (including settlements), arising out of or in
connection with any Environmental Laws, or (ii) pursuant to any claim by a
Governmental Body or other Person for personal injury, property damage, damage
to natural resources, remediation, or payment or reimbursement of response costs
incurred or expended by the Governmental Body or other Person pursuant to
Environmental Laws.

 

“Environmental Material Adverse Effect” shall mean any Environmental Liabilities
that are reasonably expected to exceed $25,000 per occurrence or series of
related occurrences, or $100,000 in the aggregate.

 

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

 

4

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

 

“ERISA Affiliate”  — any other entity that, together with any Seller, would be
treated as a single employer under Section 414 of the Code or Section 4001(a) or
(b) of ERISA.

 

“Estimated Closing Balance Sheet” — an estimated balance sheet of the Business
as of the Closing Date prepared in good faith by Sellers applying the Agreed
Accounting Principles, in form and substance as mutually and reasonably agreed
to by Sellers and Buyer.

 

“Estimated Closing Net Asset Value” — the Net Asset Value calculated from the
Estimated Closing Balance Sheet.

 

“Exchange Act” — the Securities Exchange Act of 1934.

 

“Excluded Assets” — as defined in Section 2.2.

 

“Financial Statements” — as defined in Section 3.3.

 

“GAAP” — generally accepted accounting principles for financial reporting in the
United States.

 

“Governmental Authorization” — any Consent, license, registration or permit
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement, which consent,
license, registration or permit is used in the operation of the Business or
necessary for the consummation of the Contemplated Transactions.

 

“Governmental Body” — any:

 

(A)                                  NATION, STATE, COUNTY, CITY, TOWN, BOROUGH,
VILLAGE, DISTRICT OR OTHER JURISDICTION;

 

(B)                                 FEDERAL, STATE, LOCAL, MUNICIPAL, FOREIGN OR
OTHER GOVERNMENT;

 

(C)                                  GOVERNMENTAL, QUASI-GOVERNMENTAL OR
REGULATORY AUTHORITY OF ANY NATURE (INCLUDING ANY AGENCY, BRANCH, DEPARTMENT,
BOARD, COMMISSION, COURT, TRIBUNAL OR OTHER ENTITY EXERCISING GOVERNMENTAL,
QUASI-GOVERNMENTAL OR REGULATORY POWERS); OR

 

(D)                                 BODY EXERCISING, OR ENTITLED OR PURPORTING
TO EXERCISE, ANY ADMINISTRATIVE, EXECUTIVE, JUDICIAL, LEGISLATIVE, POLICE,
REGULATORY OR TAXING AUTHORITY OR POWER.

 

“happening or manifested” — refers to the actual time at which the circumstance,
condition, occurrence, event, physical accident or injury giving rise to a
Liability occurs (regardless of when the product design, manufacture,
distribution or sale or related service occurs).

 

“Hazardous Material” — any substance, material or waste that is regulated by any
Governmental Body, including any material, substance or waste which is defined
as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely
hazardous waste,”

 

5

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

 

“restricted hazardous waste” or “toxic substance” under any provision of
Environmental Law, and including petroleum, petroleum products, asbestos,
friable asbestos-containing material or asbestos-containing material, urea
formaldehyde and polychlorinated biphenyls.

 

“HSR Act” — the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Hybrid Bus Business” —  that business of Parent and any of its Subsidiaries
arising out of, relating to or associated with hybrid electro motivation for
wheeled vehicles.

 

“Indemnitee” — as defined in Section 11.7(a).

 

“Indemnitor” — as defined in Section 11.7(a).

 

“Independent Accountants” — KPMG LLP, or if KPMG LLP is not independent in the
reasonable determination of Buyer or Parent, then an independent auditing firm
of nationally or regionally recognized standing selected by the mutual agreement
of Buyer and Parent within 15 days of the date on which the Independent
Accountants are proposed to begin serving or, if Buyer and Parent are unable to
agree within such period, an independent auditing firm of nationally or
regionally recognized standing selected jointly by two other such firms, one of
which shall be specified by Buyer and one of which shall be specified by Parent,
within 15 days after the expiration of such period.

 

“Initial Balance Sheet” — as defined in Section 3.3.

 

“Initial Net Asset Value” — $51,897,000, which is the excess of total assets
over total current liabilities of the Business, as reflected on the Initial
Balance Sheet.

 

“Intellectual Property” — (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereto, and all
patents, patent applications, and patent and invention disclosures, together
with all reissuances, continuations, continuations-in-part, divisionals,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, slogans, trade dress, logos, icons, designs, trade designation, trade
names, and corporate names all registered or unregistered, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations and renewals in connection therewith, (d)
all mask works and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all Software (including data
and related documentation), (g) all other proprietary rights, including internet
web sites and internet domain names and (h) all copies and tangible embodiments
thereof (in whatever form or medium).

 

“Intellectual Property Licenses” — as defined in Section 3.20(b).

 

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“Inventories” — all inventories of Sellers related to or used in the operation
of the Business, wherever located, including all finished goods, work in
process, raw materials, spare parts and all other materials and supplies to be
used or consumed by Sellers in the production of finished goods for the
Business.

 

“IRS” — the United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.

 

“Knowledge” — with respect to Sellers, Sellers will be deemed to have Knowledge
of a particular fact or other matter if any individual named in Section 1.1 of
the Seller Disclosure Letter is actually aware of that fact or matter; and with
respect to Buyer, Buyer will be deemed to have Knowledge of a particular fact or
other matter if any individual named in Section 1.1 of the Buyer Disclosure
Letter is actually aware of that fact or matter.

 

“Lease” — any Real Property Lease or any lease or rental agreement, license,
right to use or installment and conditional sale agreement to which any Seller
is a party used in the operation of the Business and any other Seller Contract
pertaining to the leasing or use of any Tangible Personal Property.

 

“Lease Agreement” — as defined in Section 2.9(a)(vi).

 

“Legal Requirement” — any federal, state or municipal law, ordinance,
regulation, statute or treaty.

 

“Liability” — with respect to any Person, any liability or obligation of such
Person of any kind, character or description, whether known or unknown, absolute
or contingent, reserved or unreserved, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required to be accrued on the
financial statements of such Person.

 

“Net Asset Value” — the excess of total assets over total current liabilities of
the Business, as reflected on the Initial Balance Sheet or on the Closing
Balance Sheet, as required by the context.

 

“Non-Real Estate Encumbrances” — as defined in Section 3.7(b).

 

“Notice of Dispute” — as defined in Section 13.4.

 

“Order” — any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.

 

“Owned Intellectual Property” — as defined in Section 3.20(a).

 

“Owned Property” — as defined in Section 3.6.

 

“Parent” — as defined in the first paragraph of this Agreement.

 

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“Permitted Encumbrances” — as defined in Section 3.7(b).

 

“Permitted Non-Real Estate Encumbrances” — as defined in Section 3.7(b).

 

“Person” — an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.

 

“Pre-Closing Property Taxes” — as defined in Section 2.5.

 

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

 

“Purchase Price” — as defined in Section 2.3.

 

“Real Property Lease” — as defined in Section 3.6.

 

“Receiving Party” — as defined in Section 12.1(a).

 

“Record” — information that is inscribed on a tangible medium or that is stored
in an electronic or other medium and is retrievable in perceivable form.

 

“Registered Intellectual Property”  — all Business Intellectual Property,
whether owned by a Seller or owned by a Third Party who has granted a right of
any sort with respect to such Intellectual Property to a Seller, that is: (i) a
patent or patent application, (ii) an application or a registration for a
trademark, service mark, trade dress, trade name, logo, icon, design, trade
designation, slogan, corporate name or internet web site or internet domain
name, or (iii) a copyright registration or application.

 

“Related Person” — with respect to a specified Person:

 

(a)                                  any Person that directly or indirectly
controls, is directly or indirectly controlled by or is directly or indirectly
under common control with such specified Person;

 

(b)                                 any Person that holds a Material Interest in
such specified Person;

 

(c)                                  each Person that serves as a director,
officer, partner, executor or trustee of such specified Person (or in a similar
capacity);

 

(d)                                 any Person in which such specified Person
holds a Material Interest; and

 

(e)                                  any Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity).

 

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For purposes of this Agreement, (a) “control” (including “controlling,”
“controlled by,” and “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; and (b) “Material Interest” means direct
or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of voting securities or other voting interests representing at least ten
percent (10%) of the outstanding voting power of a Person or equity securities
or other equity interests representing at least ten percent (10%) of the
outstanding equity securities or equity interests in a Person.

 

“Release” — any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching or
migration on or into the environment.

 

“Representative” — with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, accountant, financial advisor,
legal counsel or other representative of that Person.

 

“Representative Party” — as defined in Section 9.1(a).

 

“Restrictive Covenants” — as defined in Section 11.12(a).

 

“Retained Liabilities” — as defined in Section 2.4(b).

 

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

 

“Seller” or “Sellers” — as defined in the first paragraph of this Agreement.

 

“Seller Benefit Plans” — all (i) employee welfare benefit plans or employee
pension benefit plans as defined in sections 3(1) and 3(2) of ERISA, including
plans, programs or arrangements that provide retirement income or result in
deferrals of income by employees for periods extending to their terminations of
employment or beyond, and plans that provide medical, surgical or hospital care
benefits or benefits in the event of sickness, accident, disability, death or
unemployment and (ii) other employee benefit agreements or arrangements that are
not ERISA plans, including any deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans, stock
award plans, golden parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs, scholarship programs,
retention incentive agreements, vacation policies and, or other similar plans,
agreement or arrangements that (a) are maintained by any Seller, any ERISA
Affiliate or any of its Related Persons for the benefit of Affected Employees,
(b) have been approved by any Seller, any ERISA Affiliate or any of its Related
Persons but are not yet effective for the benefit of Affected Employees or their
beneficiaries, or (c) were previously maintained by any Seller, any ERISA
Affiliate or any of its Related Persons for the benefit of the Affected
Employees or their beneficiaries and with respect to which, in each case, any
Seller, any ERISA Affiliate or any of its Related Persons may have any
liability, contingent or otherwise.  However, “Seller Benefit Plans” shall not
include any agreements between any Seller

 

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and any Affected Employees pursuant to which such Seller has agreed to pay
Affected Employees any compensation in consideration of their services rendered
in connection with the sale of the Assets or the Business (“Transaction
Bonuses”).

 

“Seller Contact” — as defined in Section 12.2(a).

 

“Seller Contract” — any Contract related primarily to or used in the operation
of the Business (a) under which any Seller has or may acquire any rights or
benefits; (b) under which any Seller has or may become subject to any obligation
or liability; or (c) by which any Seller or any of the Assets may become bound. 
The term Seller Contract includes any Customer Performance Assurance.

 

“Seller Disclosure Letter” — the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement, as amended
pursuant to the terms of this Agreement.

 

“Seller Indemnitees” — as defined in Section 11.3.

 

“Snow Blower Business” —  that business of Parent or any of its Subsidiaries
arising out of, relating to or associated with snow removal equipment.

 

“Software” — all computer software and subsequent versions thereof, including
source code, object, executable or binary code, objects, comments, screens, user
interfaces, report formats, templates, menus, buttons and icons and all files,
data, materials, manuals, design notes and other items and documentation related
thereto or associated therewith.

 

“Subcontract” — as defined in Section 2.9(a)(viii).

 

“Subsidiary” — with respect to any Person (the “Owner”), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.

 

“Supply Agreement” — as defined in Section 2.9(a)(ii).

 

“Survival Period” — as defined in Section 11.6.

 

“Tangible Personal Property” — all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property (other than Inventories) of every kind owned
or leased by any Seller and used in the operation of the Business, together with
any express or implied warranty by the manufacturers or sellers or lessors of
any item or component part thereof and all maintenance records and other
documents relating thereto.

 

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“Tax” — any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental, windfall profit, customs, vehicle, airplane, boat, vessel or
other title or registration, capital stock, franchise, employees’ income
withholding, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, value added, alternative,
add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of
any kind whatsoever, whether computed on a separate or consolidated, unitary or
combined basis or in any other manner and including any interest, penalty,
addition or additional amount thereon imposed, assessed or collected by or under
the authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract.

 

“Tax Return” — any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

 

“Termination Date” — as defined in Section 9.1(e).

 

“Third Party” — a Person that is not a party to this Agreement.

 

“Third Party Claim” — any claim against any Indemnitee by a Third Party that
could give rise to a right of indemnification under this Agreement.

 

“Transaction Agreements” — as defined in Section 11.12(a).

 

“Transaction Bonuses” — as defined in the last sentence of the definition of
Seller Benefit Plans.

 

“Transferred Employee” — as defined in Section 10.1(a).

 

“Transition Services Agreement” — as defined in Section 2.9(a)(vii).

 

[***]

 

1.2                                 USAGE

 

(A)           INTERPRETATION. IN THIS AGREEMENT, UNLESS A CLEAR CONTRARY
INTENTION APPEARS:

 

(I)                                           THE SINGULAR NUMBER INCLUDES THE
PLURAL NUMBER AND VICE VERSA;

 

(II)                                        REFERENCE TO ANY PERSON INCLUDES
SUCH PERSON’S SUCCESSORS AND ASSIGNS BUT, IF APPLICABLE, ONLY IF SUCH SUCCESSORS
AND ASSIGNS ARE NOT PROHIBITED BY THIS AGREEMENT, AND REFERENCE TO A PERSON IN A
PARTICULAR CAPACITY EXCLUDES SUCH PERSON IN ANY OTHER CAPACITY OR INDIVIDUALLY;

 

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(III)                                     REFERENCE TO ANY GENDER INCLUDES EACH
OTHER GENDER;

 

(IV)                                    REFERENCE TO ANY AGREEMENT, DOCUMENT OR
INSTRUMENT MEANS SUCH AGREEMENT, DOCUMENT OR INSTRUMENT AS AMENDED OR MODIFIED
AND IN EFFECT FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF;

 

(V)                                       REFERENCE TO ANY LEGAL REQUIREMENT
MEANS, UNLESS EXPRESSLY INDICATED OTHERWISE, SUCH LEGAL REQUIREMENT AS AMENDED,
MODIFIED, CODIFIED, REPLACED OR REENACTED, IN WHOLE OR IN PART, AND IN EFFECT
FROM TIME TO TIME, INCLUDING RULES AND REGULATIONS PROMULGATED THEREUNDER, AND
REFERENCE TO ANY SECTION OR OTHER PROVISION OF ANY LEGAL REQUIREMENT MEANS,
UNLESS EXPRESSLY INDICATED OTHERWISE, THAT PROVISION OF SUCH LEGAL REQUIREMENT
FROM TIME TO TIME IN EFFECT AND CONSTITUTING THE SUBSTANTIVE AMENDMENT,
MODIFICATION, CODIFICATION, REPLACEMENT OR REENACTMENT OF SUCH SECTION OR OTHER
PROVISION;

 

(VI)                                    “HEREUNDER,” “HEREOF,” “HERETO,”  AND
WORDS OF SIMILAR IMPORT SHALL BE DEEMED REFERENCES TO THIS AGREEMENT AS A WHOLE
AND NOT TO ANY PARTICULAR ARTICLE, SECTION OR OTHER PROVISION HEREOF;

 

(VII)                                 “INCLUDING” (AND WITH CORRELATIVE MEANING
“INCLUDE”) MEANS INCLUDING WITHOUT LIMITING THE GENERALITY OF ANY DESCRIPTION
PRECEDING SUCH TERM;

 

(VIII)                              “OR” IS USED IN THE INCLUSIVE SENSE OF
“AND/OR”;

 

(IX)                                      WITH RESPECT TO THE DETERMINATION OF
ANY PERIOD OF TIME, “FROM” MEANS “FROM AND INCLUDING” AND “TO” MEANS “TO BUT
EXCLUDING”; AND

 

(X)                                         REFERENCES TO DOCUMENTS, INSTRUMENTS
OR AGREEMENTS SHALL BE DEEMED TO REFER AS WELL TO ALL ADDENDA, EXHIBITS,
SCHEDULES OR AMENDMENTS THERETO.

 

(B)           ACCOUNTING TERMS AND DETERMINATIONS. UNLESS OTHERWISE SPECIFIED
HEREIN, ALL ACCOUNTING TERMS USED HEREIN SHALL BE INTERPRETED AND ALL ACCOUNTING
DETERMINATIONS HEREUNDER SHALL BE MADE IN ACCORDANCE WITH GAAP.

 

(C)           LEGAL REPRESENTATION OF THE PARTIES. THIS AGREEMENT WAS NEGOTIATED
BY THE PARTIES WITH THE BENEFIT OF LEGAL REPRESENTATION, AND ANY RULE OF
CONSTRUCTION OR INTERPRETATION OTHERWISE REQUIRING THIS AGREEMENT TO BE
CONSTRUED OR INTERPRETED AGAINST ANY PARTY SHALL NOT APPLY TO ANY CONSTRUCTION
OR INTERPRETATION HEREOF.

 

2.                                       SALE AND TRANSFER OF ASSETS; CLOSING

 

2.1                                 ASSETS TO BE SOLD

 

Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing and effective as of the Effective Time, each Seller shall sell, convey,
assign, transfer, and deliver to Buyer, and Buyer shall purchase and acquire
from such Seller, free and clear of any

 

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Encumbrances other than Permitted Encumbrances, all of such Seller’s right,
title, and interest in and to all of the following:

 

(A)                                  ALL REAL PROPERTY LEASES DESCRIBED IN
SECTION 3.6 OF THE SELLER DISCLOSURE LETTER;

 

(B)                                 ALL TANGIBLE PERSONAL PROPERTY, INCLUDING
THOSE ITEMS DESCRIBED IN SECTION 3.5(A) OF THE SELLER DISCLOSURE LETTER;

 

(C)                                  ALL INVENTORIES;

 

(D)                                 ALL ACCOUNTS RECEIVABLE;

 

(E)                                  ALL SELLER CONTRACTS, INCLUDING THOSE
LISTED IN SECTION 3.17(A) OF THE SELLER DISCLOSURE LETTER, AND ALL OUTSTANDING
OFFERS OR SOLICITATIONS MADE BY OR TO ANY SELLER TO ENTER INTO ANY SELLER
CONTRACT (“BIDS”), OTHER THAN SELLER CONTRACTS OR BIDS DESCRIBED IN SECTION
2.2(E);

 

(F)                                    ALL GOVERNMENTAL AUTHORIZATIONS RELATED
TO OR USED IN THE OPERATION OF THE BUSINESS AND ALL PENDING APPLICATIONS
THEREFOR OR RENEWALS THEREOF, INCLUDING THOSE LISTED IN SECTION 3.14(B) OF THE
SELLER DISCLOSURE LETTER, IN EACH CASE TO THE EXTENT PERMITTED BY APPLICABLE
LEGAL REQUIREMENT AND OTHERWISE TRANSFERABLE TO BUYER;

 

(G)                                 THE DATA AND RECORDS OF EACH SELLER RELATED
PRIMARILY TO OR USED IN THE OPERATION OF THE BUSINESS AND LOCATED AT A BUSINESS
PROPERTY INCLUDING CLIENT AND CUSTOMER LISTS AND RECORDS, REFERRAL SOURCES,
RESEARCH AND DEVELOPMENT REPORTS AND RECORDS, PRODUCTION REPORTS AND RECORDS,
SERVICE AND WARRANTY RECORDS, EQUIPMENT LOGS, OPERATING GUIDES AND MANUALS,
ENGINEERING DESIGN DRAWINGS USED IN THE OPERATION OF THE BUSINESS, FINANCIAL AND
ACCOUNTING RECORDS, CREATIVE MATERIALS, ADVERTISING MATERIALS, PROMOTIONAL
MATERIALS, STUDIES, REPORTS, CORRESPONDENCE, FILES RELATING TO THE PREPARATION,
PROSECUTION, REGISTRATION, ENFORCEMENT OR DEFENSE OF ANY BUSINESS INTELLECTUAL
PROPERTY AND OTHER SIMILAR DOCUMENTS AND RECORDS (“BUSINESS RECORDS”).  IN
ADDITION, TO THE EXTENT ANY SUCH DATA OR RECORDS ARE NOT LOCATED AT A BUSINESS
PROPERTY, COPIES OF ANY PARTICULAR DATA OR RECORDS FOLLOWING REASONABLE REQUEST
THEREFOR, AND, SUBJECT TO LEGAL REQUIREMENTS, COPIES OF ALL PERSONNEL RECORDS;

 

(H)                                 ALL OF THE INTANGIBLE RIGHTS AND PROPERTY OF
SELLERS THAT RELATE EXCLUSIVELY TO THE OPERATION OF THE BUSINESS, INCLUDING ANY
SUCH GOODWILL AND BUSINESS INTELLECTUAL PROPERTY, AS WELL AS THE RIGHT TO SUE,
AT LAW OR IN EQUITY, OR OTHERWISE RECOVER DAMAGES FOR ANY AND ALL INFRINGEMENTS,
MISAPPROPRIATIONS OR DILUTIONS OF ANY BUSINESS INTELLECTUAL PROPERTY;

 

(I)                                     ALL RIGHTS OF SELLERS RELATING TO
DEPOSITS AND PREPAID EXPENSES, CLAIMS FOR REFUNDS AND RIGHTS TO OFFSET IN
RESPECT THEREOF, IN EACH CASE RELATED TO OR USED IN THE OPERATION OF THE
BUSINESS, THAT ARE NOT LISTED IN SECTION 2.2(C) OF THE SELLER DISCLOSURE LETTER
AND THAT ARE NOT EXCLUDED UNDER SECTION 2.2(H);

 

(J)                                     ALL RIGHTS IN INTERNET DOMAIN NAMES
USED, RESERVED OR OWNED BY ANY SELLER OR ITS AFFILIATES THAT ARE EXPRESSLY SET
FORTH IN SECTION 2.1(J) OF THE SELLER DISCLOSURE LETTER;

 

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(K)                                  ALL CASH IN THE BANK ACCOUNTS LISTED IN
SECTION 2.1(K) OF THE SELLER DISCLOSURE LETTER; AND

 

(L)                                     ALL OF SUCH SELLER’S OTHER PROPERTY AND
ASSETS, REAL, PERSONAL, OR MIXED, TANGIBLE AND INTANGIBLE, OF EVERY KIND AND
DESCRIPTION, WHEREVER LOCATED, BELONGING TO SUCH SELLER AND WHICH RELATE
PRIMARILY TO OR ARE USED PRIMARILY IN THE OPERATION OF THE BUSINESS CURRENTLY
CONDUCTED BY THE ENGINEERED PRODUCTS SEGMENT OF SELLERS THAT IS REPORTED IN
PARENT’S PUBLICLY DISCLOSED CONSOLIDATED FINANCIAL STATEMENTS AS THE ENGINEERED
PRODUCTS SEGMENT, INCLUDING THE DESIGN, MANUFACTURING, SERVICE AND SALE OF
EQUIPMENT FOR COILED TUBING, ACIDIZING, FRACTURING, PUMPING (INCLUDING NITROGEN
PUMPING EQUIPMENT), RAILCAR MOVERS, SEISMIC EQUIPMENT SYSTEMS, SILICON
CONTROLLED RECTIFIERS AND SWITCHGEAR EQUIPMENT AS WELL AS ANY GOODWILL
ASSOCIATED THEREWITH (BUT EXCLUDING THE EXCLUDED ASSETS) (COLLECTIVELY, THE
“BUSINESS”).

 

All of the property and assets to be transferred to Buyer hereunder are herein
referred to collectively as the “Assets.”

 

2.2                                 EXCLUDED ASSETS

 

Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere
in this Agreement, the following assets of Sellers (collectively, the “Excluded
Assets”) are not part of the sale and purchase contemplated hereunder, are
excluded from the Assets and shall remain the property of Sellers after the
Closing:

 

(A)                                  ALL CASH, CASH EQUIVALENTS, SECURITIES,
MONEY ON DEPOSIT WITH BANKS, CERTIFICATES OF DEPOSIT AND SIMILAR INSTRUMENTS AND
SHORT-TERM INVESTMENTS, OTHER THAN AS PROVIDED FOR IN SECTION 2.1(K);

 

(B)                                 ALL MINUTE BOOKS, STOCK RECORDS AND
CORPORATE SEALS;

 

(C)                                  THOSE RIGHTS RELATING TO DEPOSITS AND
PREPAID EXPENSES AND CLAIMS FOR REFUNDS AND RIGHTS TO OFFSET IN RESPECT THEREOF
LISTED IN SECTION 2.2(C) OF THE SELLER DISCLOSURE LETTER;

 

(D)                                 ALL INSURANCE POLICIES AND RIGHTS THEREUNDER
AND ALL INSURANCE BENEFITS, INCLUDING RIGHTS AND PROCEEDS, ARISING FROM OR
RELATING TO THE ASSETS AND THE ASSUMED LIABILITIES PRIOR TO THE EFFECTIVE TIME;

 

(E)                                  ALL SELLER CONTRACTS LISTED IN SECTION
2.2(E) OF THE SELLER DISCLOSURE LETTER;

 

(F)                                    ALL PERSONNEL RECORDS AND OTHER RECORDS
THAT ANY SELLER IS REQUIRED BY LEGAL REQUIREMENT TO RETAIN IN ITS POSSESSION;

 

(G)                                 ALL DATA AND RECORDS THAT DO NOT CONSTITUTE
BUSINESS RECORDS;

 

(H)                                 ALL DEPOSITS OR CLAIMS FOR REFUND OR CREDIT
OF TAXES AND OTHER GOVERNMENTAL CHARGES OF WHATEVER NATURE TO THE EXTENT
RELATING TO PERIODS PRIOR TO THE EFFECTIVE TIME;

 

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(I)                                     ALL RIGHTS IN CONNECTION WITH AND ASSETS
OF THE SELLER BENEFIT PLANS;

 

(J)                                     ALL GOVERNMENT AUTHORIZATIONS THAT ARE
NOT TRANSFERABLE;

 

(K)                                  ALL RIGHTS OF SELLERS UNDER THIS AGREEMENT,
THE BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT AND THE OTHER TRANSACTION
AGREEMENTS;

 

(L)                                     EXCEPT TO THE EXTENT SET FORTH IN
SECTION 3.20(A)(I) OF THE SELLER DISCLOSURE LETTER AND EXCEPT FOR [***] EACH
SELLER’S RIGHT, TITLE AND INTEREST IN OR TO ANY PATENT, PATENT APPLICATIONS,
CORPORATE NAMES, ASSUMED FICTIONAL BUSINESS NAMES, TRADE NAMES, REGISTERED AND
UNREGISTERED TRADEMARKS, SERVICE MARKS, APPLICATIONS, LOGOS, ICONS OR DESIGNS,
INCLUDING ANY TRADE DESIGNATION THAT COMPRISE OR ARE SIMILAR TO “STEWART &
STEVENSON,” THE STEWART & STEVENSON LOGO OR ANY DERIVATIVE OR ABBREVIATION
THEREOF;

 

(M)                               EACH RIGHT IN INTERNET WEB SITES AND INTERNET
DOMAIN NAMES OTHER THAN THE INTERNET DOMAIN NAMES EXPRESSLY SET FORTH IN SECTION
2.1(J) OF THE SELLER DISCLOSURE LETTER;

 

(N)                                 ACCOUNTS, NOTES OR DEBTS OWED TO THE
BUSINESS FROM, OR BY THE BUSINESS TO, A RELATED PERSON OF ANY SELLER PRIOR TO
THE EFFECTIVE TIME;

 

(O)                                 ALL CLAIMS OF ANY SELLER AGAINST THIRD
PARTIES RELATING TO THE BUSINESS OR THE ASSETS, WHETHER CHOATE OR INCHOATE,
KNOWN OR UNKNOWN, CONTINGENT OR NONCONTINGENT, LISTED IN SECTION 2.2(O) OF THE
SELLER DISCLOSURE LETTER, EXCEPT TO THE EXTENT SUCH CLAIMS RELATE TO ASSUMED
LIABILITIES;

 

(P)                                 ALL REAL PROPERTY AND INTERESTS IN REAL
PROPERTY OTHER THAN THE BUSINESS PROPERTY, INCLUDING, WITHOUT LIMITATION, THE
REAL PROPERTY AND INTERESTS IN REAL PROPERTY IDENTIFIED ON SECTION 2.2(P) OF THE
SELLER DISCLOSURE LETTER AND ALL OTHER TANGIBLE PERSONAL PROPERTY LOCATED ON
SUCH PREMISES; PROVIDED THAT THIS SECTION 2.2(P) SHALL NOT LIMIT BUYER’S RIGHT
TO RECEIVE COPIES OF CERTAIN DATA OR RECORDS PURSUANT TO SECTION 2.1(G); AND

 

(Q)                                 ALL OTHER ASSETS NOT USED IN THE BUSINESS,
INCLUDING, FOR THE AVOIDANCE OF DOUBT, THE ARMORED CAB BUSINESS AND THE SNOW
BLOWER BUSINESS, AS WELL AS THE DES BUSINESS AND ANY OTHER BUSINESS REPORTED AS
DISCONTINUED OPERATIONS IN THE PARENT’S PUBLICLY DISCLOSED CONSOLIDATED
FINANCIAL STATEMENTS DATED JANUARY 31, 2005 AND ANY OTHER PROPERTY, ASSETS AND
RIGHTS DESIGNATED IN SECTION 2.2(Q) OF THE SELLER DISCLOSURE LETTER.

 

2.3                                 CONSIDERATION

 

The consideration for the Assets (the “Purchase Price”) will be (i) the Closing
Payment, (ii) plus or minus the Adjustment Amount, (iii) plus the assumption of
the Assumed Liabilities. In accordance with Section 2.9(b), at the Closing, the
cash portion of the Purchase Price, prior to adjustment on account of the
Adjustment shall be delivered by Buyer to Sellers by wire transfer of
immediately available funds.  The balance of the Purchase Price shall be
satisfied by the execution and delivery of the Bill of Sale, Assignment and
Assumption Agreement.  The Adjustment Amount shall be paid in accordance with
Section 2.10.

 

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2.4                                 LIABILITIES

 

(A)           ASSUMED LIABILITIES. ON THE CLOSING DATE, BUT EFFECTIVE AS OF THE
EFFECTIVE TIME, BUYER SHALL ASSUME AND AGREE TO DISCHARGE THE LIABILITIES
REFLECTED ON THE CLOSING BALANCE SHEET THAT ARE UNPAID AS OF THE EFFECTIVE TIME
AND THE FOLLOWING LIABILITIES OF SELLERS (THE “ASSUMED LIABILITIES”):

 

(I)                                           ANY LIABILITY (OTHER THAN A
LIABILITY TO A RELATED PERSON OF ANY SELLER) TO ANY OF SELLERS’ CUSTOMERS
INCURRED BY SUCH SELLER IN THE ORDINARY COURSE OF THE BUSINESS FOR BIDS
OUTSTANDING AS OF THE EFFECTIVE TIME;

 

(II)                                        ANY LIABILITY TO ANY SELLER’S
CUSTOMERS UNDER WARRANTIES IMPLIED BY LAW AND ANY WARRANTY AGREEMENTS AND
INDEMNITIES GIVEN BY ANY SELLER TO ITS CUSTOMERS PRIOR TO THE EFFECTIVE TIME IN
CONNECTION WITH THE BUSINESS;

 

(III)                                     ANY LIABILITY ARISING OUT OF OR
RELATING TO ANY CIRCUMSTANCE, CONDITION, OCCURRENCE OR EVENT FIRST HAPPENING OR
MANIFESTED AT OR AFTER THE EFFECTIVE TIME AND ARISING OUT OF OR RELATING TO (A)
PRODUCTS OF THE BUSINESS DESIGNED, MANUFACTURED, DISTRIBUTED OR SOLD OR SERVICES
PROVIDED PRIOR TO THE EFFECTIVE TIME OR (B) THE BUSINESS OR ANY ACTION OR
INACTION THEREOF OR RELATED THERETO OR TO THE ASSETS AFTER THE CLOSING DATE,
EXCEPT IN THE CASE OF CLAUSE (B), TO THE EXTENT SUCH LIABILITY IS A RETAINED
LIABILITY;

 

(IV)                                    EXCEPT FOR THE LIABILITIES COVERED BY
SUBPARAGRAPHS (II) AND (III) ABOVE, ANY LIABILITY TO BE PERFORMED OR DISCHARGED
AT OR AFTER THE EFFECTIVE TIME UNDER CONTRACT OR LAW AS TO ANY SELLER CONTRACT
ENTERED INTO (A) PRIOR TO THE DATE OF THIS AGREEMENT, AND ASSIGNED PURSUANT TO
SECTION 2.1(E), OR (B) AFTER THE DATE HEREOF IN ACCORDANCE WITH SECTION 6.2; AND

 

(V)                                       ANY LIABILITY OF ANY SELLER EXPRESSLY
DESCRIBED IN SECTION 2.4(A)(V) OF THE SELLER DISCLOSURE LETTER.

 

(B)           RETAINED LIABILITIES. THE RETAINED LIABILITIES SHALL REMAIN THE
SOLE RESPONSIBILITY OF AND SHALL BE RETAINED, PAID, PERFORMED AND DISCHARGED
SOLELY BY SELLERS. “RETAINED LIABILITIES” SHALL MEAN EVERY LIABILITY OF SELLERS,
DISCLOSED OR UNDISCLOSED, OTHER THAN THE ASSUMED LIABILITIES, INCLUDING:

 

(I)                                           ANY LIABILITY FOR TAXES ARISING AS
A RESULT OF ANY SELLER’S (A) OPERATION OF THE BUSINESS, (B) OWNERSHIP OF THE
ASSETS OR (C) INCLUSION IN A CONSOLIDATED, AFFILIATED, COMBINED OR UNITARY GROUP
(EXCEPT AS PROVIDED IN SECTION 2.5) PRIOR TO THE EFFECTIVE TIME;

 

(II)                                        ANY LIABILITY UNDER ANY CONTRACT OR
BID NOT ASSUMED BY BUYER UNDER SECTION 2.4(A);

 

(III)                                     ANY LIABILITY ARISING OUT OF OR
RELATING TO ANY CIRCUMSTANCE, CONDITION, OCCURRENCE OR EVENT FIRST HAPPENING OR
MANIFESTED PRIOR TO THE EFFECTIVE TIME AND ARISING OUT OF OR RELATING TO THE
PRODUCTS OF THE BUSINESS DESIGNED, MANUFACTURED,

 

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DISTRIBUTED OR SOLD OR SERVICES RENDERED PRIOR TO THE EFFECTIVE TIME, INCLUDING
ANY LIABILITY ARISING OUT OF ANY PROCEEDING (INCLUDING THE OBLIGATION TO HANDLE
SUCH PROCEEDING) RELATING THERETO, BUT EXCLUDING ANY PROCEEDING DESCRIBED IN
SECTION 2.4(A)(V) OF THE SELLER DISCLOSURE LETTER;

 

(IV)                                    ANY LIABILITY OF ANY SELLER UNDER THE
SELLER BENEFIT PLANS OR RELATING TO PAYROLL, SICK LEAVE, WORKERS’ COMPENSATION
OR UNEMPLOYMENT BENEFITS FOR ANY OF SELLER’S EMPLOYEES;

 

(V)                                       ANY ENVIRONMENTAL LIABILITIES OF THE
BUSINESS ARISING OUT OF OR RELATING TO ANY CIRCUMSTANCE, CONDITION, OCCURRENCE
OR EVENT HAPPENING OR MANIFESTED PRIOR TO THE EFFECTIVE TIME;

 

(VI)                                    ANY LIABILITY UNDER ANY TRANSACTION
BONUSES OR ANY EMPLOYMENT, SEVERANCE, RETENTION OR TERMINATION AGREEMENT WITH
ANY EMPLOYEE OF ANY SELLER OR ANY OF ITS RELATED PERSONS, INCLUDING, BUT NOT
LIMITED TO, SPONSORSHIP OF ANY SELLER BENEFIT PLAN;

 

(VII)                                 ANY LIABILITY OF ANY SELLER TO ANY RELATED
PERSON OF SUCH SELLER;

 

(VIII)                              ANY LIABILITY TO INDEMNIFY, REIMBURSE OR
ADVANCE AMOUNTS TO ANY OFFICER, DIRECTOR OR EMPLOYEE OF ANY SELLER TO THE EXTENT
NOT REFLECTED AS A LIABILITY ON THE CLOSING BALANCE SHEET;

 

(IX)                                      ANY LIABILITY OF ANY SELLER UNDER THIS
AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION WITH THE CONTEMPLATED
TRANSACTIONS; AND

 

(X)                                         ANY LIABILITY OF ANY SELLER CAUSED
BY SUCH SELLER’S OWNERSHIP OF THE ASSETS OR OPERATION OF BUSINESS, OR SUCH
SELLER’S ACTS OR OMISSIONS OCCURRING PRIOR TO OR AFTER THE EFFECTIVE TIME,
INCLUDING WITHOUT LIMITATION ANY LIABILITY RELATED TO OR ARISING OUT OF THE
MATTERS DESCRIBED IN ITEM 2 ON SECTION 3.14(A) OF THE SELLER DISCLOSURE LETTER.

 

2.5                                 PRORATIONS OF CERTAIN PROPERTY TAXES

 

Any general real or personal property Tax assessed against or pertaining to the
Assets for the Tax period that includes the Closing Date shall be prorated
between Buyer and Sellers as of the Closing Date in accordance with this Section
2.5.  To determine Sellers’ liability for any real and personal property Taxes
for the period ending as of the Closing Date (the “Pre-Closing Property Taxes”),
the total amount of such Taxes allocable to Sellers shall be the product of (i)
such Tax for the entirety of the Tax period including the Closing Date,
multiplied by (ii) a fraction, the numerator of which is the number of days in
such Tax period prior to the Closing Date, and the denominator of which is the
total number of days in the Tax period, and the balance of such Taxes shall be
allocable to Buyer.  For purposes of the Initial Balance Sheet, the Estimated
Closing Balance Sheet and, if necessary, the Closing Balance Sheet, an estimate
of the Pre-Closing Property Taxes shall be based on the immediately preceding
Tax period assessment.  When the actual amount of real or personal property
Taxes estimated under this Section 2.5 is known, Buyer shall promptly advise
Sellers of the proportionate share of actual real or personal property Taxes
which constitute Pre-Closing Property Taxes and furnish Sellers with reasonably

 

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supporting documents evidencing the actual amount of such Taxes.  If the
estimate of Pre-Closing Property Taxes made pursuant to this Section 2.5 was
less than the actual Pre-Closing Property Taxes and such deficiency is not taken
into account in the Adjustment Amount, Sellers shall pay in cash to Buyer such
deficiency within thirty (30) days of receipt of such notice and reasonably
supporting documents, and if such estimate was more than the actual Pre-Closing
Property Taxes and such increase is not taken into account in the Adjustment
Amount, Buyer shall, at the time such notice is given (which shall be no later
than thirty (30) days from Buyer’s receipt of documentation evidencing the
actual amount of real and personal property Taxes for the Tax period including
the Closing Date), refund such excess in cash to Sellers.  Any disputes related
to the allocation of real and personal property Taxes under this Section 2.5
shall be resolved by the Independent Accountants, in accordance with the
procedure prescribed for disputes relating to the calculation of Closing Net
Asset Value under Section 2.11.

 

2.6                                 SALES AND TRANSFER TAXES; RECORDING FEES

 

(A)                                  ALL SALES AND USE, MOTOR VEHICLE SALES AND
USE, TRANSFER AND DOCUMENTARY TAXES, IF ANY, PAYABLE IN CONNECTION WITH THE
SALE, CONVEYANCES, ASSIGNMENTS, TRANSFERS AND DELIVERIES TO BE MADE TO BUYER
HEREUNDER SHALL BE BORNE FIFTY PERCENT (50%) BY BUYER AND FIFTY PERCENT (50%) BY
SELLERS, UNLESS SUCH TAXES ARE IMPOSED AS A RESULT OF A PARTY’S FAILURE TO
PROVIDE THE DOCUMENTATION DESCRIBED IN SECTION 2.6(B) OR SECTION 2.6(C), IN
WHICH CASE SUCH TAXES SHALL BE BORNE ONE HUNDRED PERCENT (100%) BY THE PARTY
FAILING TO PROVIDE THE APPROPRIATE DOCUMENTATION AT CLOSING.  BUYER AND SELLERS
SHALL EACH PROMPTLY PAY ANY SUCH TAXES DIRECTLY TO THE GOVERNMENTAL BODY
ASSESSING THEM AND SHALL JOIN IN THE EXECUTION OF ANY NECESSARY TAX RETURNS.  IN
THE EVENT THAT EITHER BUYER OR ANY SELLER IS AUDITED IN CONNECTION WITH SUCH
TAXES, THE PARTY BEING AUDITED WILL NOTIFY THE OTHER PARTIES OF SUCH AUDIT AND
WILL NOT OBJECT TO THE OTHER PARTIES’ APPEARANCE IN THE AUDIT.

 

(B)                                 SELLERS REPRESENT AND WARRANT TO BUYER THAT
THE EXCHANGE OF THE ASSETS AND THE BUSINESS TO THE EXTENT LOCATED IN TEXAS
QUALIFIES FOR THE OCCASIONAL SALE EXEMPTION PROVIDED UNDER SECTION 151.304(A)
AND (B)(2) OF THE TEXAS TAX CODE AND 34 TEXAS ADMINISTRATIVE CODE SECTION
3.316(D), AND SELLERS SHALL DELIVER TO BUYER AT THE CLOSING AN AFFIDAVIT OF
OCCASIONAL SALE IN THE FORM PROMULGATED BY THE TEXAS COMPTROLLER OF PUBLIC
ACCOUNTS (THE “AFFIDAVIT OF OCCASIONAL SALE”) FOR PURPOSES OF ESTABLISHING SUCH
EXEMPTION.  UPON THE RECEIPT OF, AND IN RELIANCE ON, SUCH AFFIDAVIT OF
OCCASIONAL SALE, BUYER SHALL DELIVER TO SELLERS A VALID TEXAS EXEMPTION
CERTIFICATE CORRESPONDING TO THE TEXAS OCCASIONAL SALE EXEMPTION AT CLOSING.

 

(C)                                  SELLERS HAVE DISCLOSED IN SECTION 3.5(A) OF
THE SELLER DISCLOSURE LETTER THE UNITED STATES LOCATIONS OF ANY ASSETS LOCATED
OUTSIDE OF TEXAS.  IN RELIANCE OF SUCH DISCLOSURE, BUYER SHALL DELIVER TO
SELLERS ALL STATE OR LOCAL RESALE OR EXEMPTION CERTIFICATES REQUIRED TO CLAIM
VALID EXEMPTIONS, IF ANY, FROM SALE AND USE, MOTOR VEHICLE SALES AND USE,
TRANSFER OR DOCUMENTARY TAXES OTHERWISE PAYABLE IN CONNECTION WITH THE SALE,
CONVEYANCES, ASSIGNMENTS, TRANSFERS AND DELIVERIES OF THE ASSETS TO THE BUYER. 
SUBJECT TO SECTION 2.6(A), APPLICABLE SALES TAXES SHALL BE COLLECTED AND DUE AT
CLOSING IF VALID EXEMPTION CERTIFICATES ARE NOT PROVIDED BY THE APPROPRIATE
PARTY.

 

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2.7                                 ALLOCATION

 

Buyer and Sellers shall agree upon the allocation of the Purchase Price among
the Assets in accordance with Section 1060 of the Code and the Treasury
Regulations promulgated thereunder (as well as any similar provision of state,
local or foreign law, as appropriate), and a draft of IRS Form 8594 shall be
delivered at Closing (the “Allocation Schedule”).  The Allocation Schedule shall
be binding upon Buyer and Sellers.  Buyer and Sellers and their Affiliates agree
to amend the Allocation Schedule as necessary to reflect the Adjustment Amount,
and a final Allocation Schedule (the “Final Allocation Schedule”) shall be
prepared by Buyer and Sellers on a basis consistent with the Allocation Schedule
within thirty (30) days following the final determination of the Adjustment
Amount under Section 2.11.  Buyer and Sellers and their Affiliates shall report,
act, and file all Tax Returns (including, but not limited to, IRS Form 8594) in
all respects and for all purposes consistent with the Final Allocation
Schedule.  Buyer and Sellers shall each timely and properly prepare, execute,
file and deliver all such documents, forms, and other information as either
Buyer or Sellers may reasonably request in preparing the Allocation Schedule or
the Final Allocation Schedule.  Neither Buyer nor Sellers shall take any
position (whether in audits, Tax Returns or otherwise) that is inconsistent with
the Final Allocation Schedule unless required to do so by any applicable Legal
Requirement.

 

2.8                                 CLOSING

 

Unless this Agreement shall have been terminated pursuant to Section 9.1, the
purchase and sale provided for in this Agreement (the “Closing”) shall take
place as promptly as practical following the satisfaction or waiver (subject to
applicable Legal Requirement) of all conditions (other than those conditions
which by their nature are to be satisfied at Closing, but subject to the
fulfillment or waiver of those conditions) set forth in Articles 7 and 8 (and,
in any event not more than ten Business Days following the satisfaction or
waiver of all such conditions), at the offices of Sellers’ counsel at 1301
McKinney, Suite 5100, Houston, Texas, unless Buyer and Sellers otherwise agree.

 

2.9                                 CLOSING OBLIGATIONS

 

In addition to any other documents to be delivered under other provisions of
this Agreement, at the Closing:

 

(A)           SELLERS SHALL DELIVER TO BUYER:

 

(I)                                           A BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT WITH RESPECT TO THE ASSIGNMENT OF THE ASSETS TO BUYER AND
THE ASSUMPTION OF THE ASSUMED LIABILITIES BY BUYER IN THE FORM OF EXHIBIT
2.9(A)(I) (THE “BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT”) EXECUTED BY
SELLERS;

 

(II)                                        A SUPPLY AGREEMENT IN THE FORM OF
EXHIBIT 2.9(A)(II) EXECUTED BY PARENT (THE “SUPPLY AGREEMENT”);

 

(III)                                     ASSIGNMENTS OF ALL REGISTERED
INTELLECTUAL PROPERTY THAT IS PART OF THE ASSETS IN THE FORM OF EXHIBIT
2.9(A)(III) EXECUTED BY THE APPLICABLE SELLER;

 

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(IV)                                    SUCH OTHER BILLS OF SALE, ASSIGNMENTS,
DOCUMENTS (INCLUDING THE ESTIMATES OF TRANSFER TAX OBLIGATIONS OF BUYER BASED ON
THE ALLOCATION SCHEDULE) AND OTHER INSTRUMENTS OF TRANSFER AND CONVEYANCE OF THE
ASSETS AS MAY REASONABLY BE REQUESTED BY BUYER, EACH IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO BUYER AND ITS LEGAL COUNSEL AND EXECUTED BY THE
APPLICABLE SELLER;

 

(V)                                       THE ESTIMATED CLOSING BALANCE SHEET;

 

(VI)                                    THE INDUSTRIAL LEASE AGREEMENT IN THE
FORM OF EXHIBIT 2.9(A)(VI) (THE “LEASE AGREEMENT”), EXECUTED BY PARENT OR ONE OF
ITS AFFILIATES, AS LESSOR;

 

(VII)                                 THE TRANSITION SERVICES AGREEMENT IN THE
FORM OF EXHIBIT 2.9(A)(VII) EXECUTED BY PARENT (THE “TRANSITION SERVICES
AGREEMENT”);

 

(VIII)                              ONE OR MORE SUBCONTRACTS IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO SELLERS AND BUYER COVERING EACH OF THE
SELLER CONTRACTS THAT IS SUBJECT TO THE PROVISIONS OF SECTION 10.6(C), EXECUTED
BY EACH APPLICABLE SELLER AND, IF NECESSARY, ONE OR MORE OF ITS AFFILIATES
(EACH, A “SUBCONTRACT”);

 

(IX)                                      THE CERTIFICATE REQUIRED BY SECTION
7.1;

 

(X)                                         A CERTIFICATE OF THE SECRETARY OF
EACH SELLER CERTIFYING, AS COMPLETE AND ACCURATE AS OF THE CLOSING, ATTACHED
COPIES OF THE ARTICLES OF INCORPORATION IN THE CASE OF THE PARENT, CERTIFICATES
OF INCORPORATION IN THE CASE OF SDDA, SSPI AND SSI, DEED OF TRUST IN THE CASE OF
S&S TRUST, AND BYLAWS OF SUCH SELLER AS IN EFFECT ON THE DATE THEREOF,
CERTIFYING AND ATTACHING ALL REQUISITE RESOLUTIONS OR ACTIONS OF SUCH SELLER’S
BOARD OF DIRECTORS (OR ITS EQUIVALENT) APPROVING THE EXECUTION AND DELIVERY OF
THIS AGREEMENT AND THE CONSUMMATION OF THE CONTEMPLATED TRANSACTIONS AND
CERTIFYING TO THE INCUMBENCY AND SIGNATURES OF THE OFFICERS OF SUCH SELLER
EXECUTING THIS AGREEMENT AND ANY OTHER DOCUMENT RELATING TO THE CONTEMPLATED
TRANSACTIONS;

 

(XI)                                      THE CONFIRMATION OF CLOSING IN THE
FORM OF EXHIBIT 2.9(A)(XI) EXECUTED BY PARENT (THE “CONFIRMATION OF CLOSING”);

 

(XII)                                   COPIES OF ALL CONSENTS WHICH HAVE BEEN
OBTAINED BY SELLERS IN CONNECTION WITH THE CONTEMPLATED TRANSACTIONS;

 

(XIII)                                THE AFFIDAVIT OF OCCASIONAL SALE;

 

(XIV)                               A CERTIFICATE SIGNED BY EACH SELLER STATING
THAT SUCH SELLER IS NOT A “FOREIGN PERSON” AS DEFINED IN SECTION 1445 OF THE
CODE;

 

[***]

 

(B)           BUYER SHALL DELIVER TO SELLERS:

 

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(I)                                           THE CLOSING PAYMENT BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT SPECIFIED BY SELLERS IN A
WRITING DELIVERED TO BUYER AT LEAST THREE (3) BUSINESS DAYS PRIOR TO THE CLOSING
DATE;

 

(II)                                        THE BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT EXECUTED BY BUYER;

 

(III)                                     THE SALES TAX EXEMPTION CERTIFICATES
DESCRIBED IN SECTION 2.6(B), EACH IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO SELLERS AND THEIR LEGAL COUNSEL AND EXECUTED BY BUYER;

 

(IV)                                    THE LEASE AGREEMENT EXECUTED BY BUYER,
AS TENANT;

 

(V)                                       THE TRANSITION SERVICES AGREEMENT
EXECUTED BY BUYER;

 

(VI)                                    EACH SUBCONTRACT EXECUTED BY BUYER;

 

(VII)                                 THE CERTIFICATE REQUIRED BY SECTION 8.1;

 

(VIII)                              A CERTIFICATE OF THE SECRETARY OF BUYER
CERTIFYING, AS COMPLETE AND ACCURATE AS OF THE CLOSING, ATTACHED COPIES OF THE
CERTIFICATE OF INCORPORATION AND BYLAWS OF BUYER AS IN EFFECT ON THE DATE
THEREOF AND CERTIFYING AND ATTACHING ALL REQUISITE RESOLUTIONS OR ACTIONS OF
BUYER’S BOARD OF DIRECTORS APPROVING THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE CONSUMMATION OF THE CONTEMPLATED TRANSACTIONS AND CERTIFYING
TO THE INCUMBENCY AND SIGNATURES OF THE OFFICERS OF BUYER EXECUTING THIS
AGREEMENT AND ANY OTHER DOCUMENT RELATING TO THE CONTEMPLATED TRANSACTIONS;

 

(IX)                                      THE SUPPLY AGREEMENT EXECUTED BY
BUYER; AND

 

(X)                                         THE CONFIRMATION OF CLOSING EXECUTED
BY BUYER.

 

2.10                           ADJUSTMENT AMOUNT AND PAYMENT

 

The “Adjustment Amount” will be equal to the amount determined by subtracting
the Closing Net Asset Value from the Estimated Closing Net Asset Value. If the
Estimated Closing Net Asset Value exceeds the Closing Net Asset Value, the
Adjustment Amount shall be paid by wire transfer of immediately available funds
by Sellers to an account specified by Buyer. If the Closing Net Asset Value
exceeds the Estimated Closing Net Asset Value, the Adjustment Amount shall be
paid by wire transfer of immediately available funds by Buyer to an account
specified by Sellers. Within five (5) business days after the calculation of the
Closing Net Asset Value becomes binding and conclusive on the parties pursuant
to Section 2.11, Sellers or Buyer, as the case may be, shall make the wire
transfer payment provided for in this Section 2.10.  For the purposes of this
Section 2.10, the “Estimated Closing Net Asset Value” will equal the amount of
the Estimated Closing Net Asset Value that was paid at Closing.

 

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2.11                           ADJUSTMENT PROCEDURE

 

(A)                                  BUYER SHALL PREPARE A CLOSING BALANCE SHEET
(“CLOSING BALANCE SHEET”) OF THE BUSINESS AS OF THE CLOSING DATE APPLYING THE
AGREED ACCOUNTING PRINCIPLES.  BUYER SHALL THEN DETERMINE THE NET ASSET VALUE AS
OF THE EFFECTIVE TIME (THE “CLOSING NET ASSET VALUE”) BASED UPON THE CLOSING
BALANCE SHEET.  BUYER SHALL DELIVER THE CLOSING BALANCE SHEET AND ITS
DETERMINATION OF THE CLOSING NET ASSET VALUE TO SELLERS WITHIN FORTY-FIVE (45)
DAYS FOLLOWING THE CLOSING DATE.  THE CLOSING BALANCE SHEET (I) WILL NOT ACCOUNT
FOR OR REFLECT IN ANY MANNER ANY ASSETS THAT DO NOT CONSTITUTE ASSETS AND (II)
WILL ACCOUNT FOR AND REFLECT ALL ASSUMED LIABILITIES THAT ARE REQUIRED TO BE
ACCOUNTED FOR OR REFLECTED ON SUCH CLOSING BALANCE SHEET APPLYING THE AGREED
ACCOUNTING PRINCIPLES.  SELLERS AND THEIR INDEPENDENT AUDITORS AND OTHER
REPRESENTATIVES SHALL HAVE THE RIGHT TO REVIEW AND VERIFY THE CLOSING BALANCE
SHEET AND DETERMINATION OF THE CLOSING NET ASSET VALUE WHEN RECEIVED AND BUYER
SHALL PROVIDE SELLERS WITH ACCESS TO ALL (I) WORK PAPERS AND WRITTEN PROCEDURES
USED TO PREPARE THE CLOSING BALANCE SHEET AND THE DETERMINATION OF CLOSING NET
ASSET VALUE AND (II) BOOKS AND RECORDS AND PERSONNEL TO THE EXTENT NECESSARY TO
ENABLE SELLERS AND THEIR INDEPENDENT AUDITORS AND OTHER REPRESENTATIVES TO
CONDUCT A FULL REVIEW OF THE CLOSING BALANCE SHEET AND FOR THEM TO FULLY
EVALUATE BUYER’S CALCULATION OF THE CLOSING NET ASSET VALUE.  BY WAY OF
CLARIFICATION AND AMPLIFICATION WITH RESPECT TO BUYER’S PREPARATION OF THE
CLOSING BALANCE SHEET (AND TO ENSURE THAT IT IS PREPARED ON THE SAME BASIS AND
APPLYING THE AGREED ACCOUNTING PRINCIPLES AS WAS DONE BY SELLERS IN PREPARING
THE INITIAL BALANCE SHEET), SPECIAL MENTION IS MADE OF, AND BUYER (A)
UNDERSTANDS AND ACCEPTS AS BINDING WITH RESPECT TO ITS PREPARATION OF THE
CLOSING BALANCE SHEET THE SELLERS’ JUDGMENTS AS TO VALUATION AND RESERVE MATTERS
PERTAINING TO SUCH ACCOUNTS IN THE INITIAL BALANCE SHEET, (B) ACCEPTS AND AGREES
WITH SELLERS’ APPLICATION OF THE AGREED ACCOUNTING PRINCIPLES INCLUDING THE
VALUATIONS OF CURRENT ASSETS IN RESPECT THEREOF, AND (C) WILL NOT CONTEST OR
OTHERWISE PROPOSE ANY CHANGE TO THE RESERVES ESTABLISHED IN CONNECTION WITH ANY
ASSET AND VALUATION THEREOF IN THE INITIAL BALANCE SHEET EXCEPT TO THE EXTENT
THAT ANY FURTHER RESERVES AS TO SUCH ASSET AND VALUATION THEREOF ARE CLEARLY
REQUIRED BY APPLICATION OF THE AGREED ACCOUNTING PRINCIPLES AS A RESULT OF THE
PASSAGE OF TIME OR CHANGES IN CONDITIONS, FACTS OR CIRCUMSTANCES SINCE THE DATE
OF THE INITIAL BALANCE SHEET.

 

(B)                                 IF WITHIN THIRTY (30) DAYS FOLLOWING
DELIVERY OF THE CLOSING BALANCE SHEET AND THE CLOSING NET ASSET VALUE
CALCULATION SELLERS HAVE NOT GIVEN BUYER WRITTEN NOTICE OF THEIR OBJECTION AS TO
THE CLOSING NET ASSET VALUE CALCULATION (WHICH NOTICE SHALL STATE THE BASIS OF
SELLERS’ OBJECTION), THEN THE CLOSING NET ASSET VALUE CALCULATED BY BUYER SHALL
BE BINDING AND CONCLUSIVE ON THE PARTIES AND BE USED IN COMPUTING THE ADJUSTMENT
AMOUNT.

 

(C)                                  IF SELLERS DULY GIVE BUYER SUCH NOTICE OF
OBJECTION, AND IF SELLERS AND BUYER FAIL TO RESOLVE THE ISSUES OUTSTANDING WITH
RESPECT TO THE CLOSING BALANCE SHEET AND THE CALCULATION OF THE CLOSING NET
ASSET VALUE WITHIN THIRTY (30) DAYS OF BUYER’S RECEIPT OF SELLERS’ OBJECTION
NOTICE, SELLERS AND BUYER SHALL SUBMIT THE ISSUES REMAINING IN DISPUTE TO THE
INDEPENDENT ACCOUNTANTS, FOR RESOLUTION APPLYING THE AGREED ACCOUNTING
PRINCIPLES.  IF ISSUES ARE SUBMITTED TO THE INDEPENDENT ACCOUNTANTS FOR
RESOLUTION, (I) SELLERS AND BUYER SHALL FURNISH OR CAUSE TO BE FURNISHED TO THE
INDEPENDENT ACCOUNTANTS SUCH WORK PAPERS AND OTHER DOCUMENTS AND INFORMATION
RELATING TO THE DISPUTED ISSUES AS THE INDEPENDENT ACCOUNTANTS MAY REQUEST AND
ARE AVAILABLE TO THAT PARTY OR ITS AGENTS AND SHALL BE AFFORDED THE OPPORTUNITY
TO PRESENT TO THE

 

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INDEPENDENT ACCOUNTANTS ANY MATERIAL RELATING TO THE DISPUTED ISSUES AND TO
DISCUSS THE ISSUES WITH THE INDEPENDENT ACCOUNTANTS; (II) THE DETERMINATION BY
THE INDEPENDENT ACCOUNTANTS, AS SET FORTH IN A REASONABLY DETAILED NOTICE TO BE
DELIVERED TO BOTH PARENT AND BUYER WITHIN FORTY-FIVE (45) DAYS OF THE SUBMISSION
TO THE INDEPENDENT ACCOUNTANTS OF THE ISSUES REMAINING IN DISPUTE, SHALL BE
FINAL, BINDING AND CONCLUSIVE ON THE PARTIES AND SHALL BE USED IN THE
CALCULATION OF THE CLOSING NET ASSET VALUE; AND (III) SELLERS AND BUYER WILL
EACH BEAR FIFTY PERCENT (50%) OF THE FEES AND COSTS OF THE INDEPENDENT
ACCOUNTANTS FOR SUCH DETERMINATION.  IN CONNECTION WITH THE RETENTION OF THE
INDEPENDENT ACCOUNTANTS, SELLERS AND BUYER AGREE THAT THEY WILL ENTER INTO A
CUSTOMARY ENGAGEMENT AGREEMENT THEREWITH, INCLUDING APPROPRIATE PROVISION FOR
JOINT AND SEVERAL INDEMNITY OF SUCH INDEPENDENT ACCOUNTANTS AS TO THEIR SERVICES
AND CONCLUSIONS.

 

[***]

 

3.                                       REPRESENTATIONS AND WARRANTIES OF
SELLERS

 

As of the date hereof, except with respect to the representations and warranties
in Sections 3.2(c) and 3.17(a), as of August 5, 2005, Sellers, jointly and
severally, represent and warrant to Buyer as follows:

 

3.1                                 ORGANIZATION AND GOOD STANDING

 

Parent is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Texas, SSPS and SSI are corporations duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, each with full corporate power and authority to own, operate and
lease their respective properties and assets and to carry on their respective
businesses in the places and in the manner currently conducted.  S&S Trust is a
business trust duly formed, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania, with full trust power and authority to own,
operate and lease its properties and assets and to carry on its business in the
places and in the manner currently conducted.  Each Seller, other than S&S
Trust, is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to do so would not have a material adverse effect on such Seller or the
Business.

 

3.2                                 ENFORCEABILITY; AUTHORITY; NO CONFLICT

 

(A)                                  EACH SELLER HAS ALL REQUISITE CORPORATE OR
TRUST POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THE DOCUMENTS TO BE
DELIVERED BY SUCH SELLER AT THE CLOSING AND TO PERFORM ITS OBLIGATIONS HEREUNDER
AND THEREUNDER, INCLUDING THE CONTEMPLATED TRANSACTIONS.  THIS AGREEMENT HAS
BEEN DULY EXECUTED AND DELIVERED BY EACH SELLER AND CONSTITUTES A LEGAL, VALID
AND BINDING OBLIGATION OF EACH SELLER, ENFORCEABLE AGAINST EACH SUCH SELLER IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS FROM TIME TO
TIME IN EFFECT THAT AFFECT CREDITORS’ RIGHTS GENERALLY AND BY LEGAL AND
EQUITABLE LIMITATIONS ON THE AVAILABILITY OF SPECIFIC REMEDIES. THIS AGREEMENT
AND THE CONTEMPLATED TRANSACTIONS HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
ACTION

 

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BY EACH SELLER’S BOARD OF DIRECTORS OR TRUSTEES, AS APPLICABLE.  NO FURTHER
CORPORATE, TRUSTEE OR SHAREHOLDER ACTION IS NECESSARY ON THE PART OF SELLERS TO
EXECUTE AND DELIVER THIS AGREEMENT OR TO CONSUMMATE THE CONTEMPLATED
TRANSACTIONS.

 

(B)           EXCEPT AS SET FORTH IN SECTION 3.2(B) OF THE SELLER DISCLOSURE
LETTER, NEITHER THE EXECUTION AND DELIVERY OF THIS AGREEMENT NOR THE
CONSUMMATION OR PERFORMANCE OF ANY OF THE CONTEMPLATED TRANSACTIONS WILL,
DIRECTLY OR INDIRECTLY (WITH OR WITHOUT NOTICE OR LAPSE OF TIME):

 

(I)                                           CONFLICT WITH OR VIOLATE THE
ARTICLES OF INCORPORATION OF PARENT OR CERTIFICATE OF INCORPORATION OF SSPS OR
SSI OR DEED OF TRUST OF S&S TRUST OR BYLAWS OF ANY SELLER;

 

(II)                                        CONFLICT WITH, RESULT IN A BREACH,
VIOLATION OR TERMINATION OF ANY PROVISION OF, CONSTITUTE A DEFAULT UNDER OR GIVE
RISE TO ANY RIGHT OF TERMINATION, CANCELLATION OR ACCELERATION, OR LOSS OF ANY
RIGHT OR BENEFIT OR BOTH, UNDER ANY SELLER CONTRACT;

 

(III)                                     RESULT IN AN ACCELERATION OR INCREASE
OF ANY INDEBTEDNESS OR OTHER AMOUNTS DUE WITH RESPECT TO THE BUSINESS OR THE
ASSETS;

 

(IV)                                    RESULT IN THE IMPOSITION OR CREATION OF
ANY ENCUMBRANCE (OTHER THAN A PERMITTED ENCUMBRANCE) UPON OR WITH RESPECT TO ANY
OF THE ASSETS; OR

 

(V)                                       TO THE KNOWLEDGE OF SELLERS,
CONTRAVENE, CONFLICT WITH OR RESULT IN A VIOLATION OR BREACH OF ANY GOVERNMENTAL
AUTHORIZATION, LEGAL REQUIREMENT OR ORDER APPLICABLE TO SELLERS, THE BUSINESS OR
THE ASSETS OR TO WHICH SELLERS, THE BUSINESS OR ANY OF THE ASSETS MAY BE
SUBJECT.

 

(C)           EXCEPT AS SET FORTH IN SECTION 3.2(C) OF THE SELLER DISCLOSURE
LETTER, NO SELLER IS REQUIRED TO GIVE ANY NOTICE TO OR OBTAIN ANY CONSENT OR
GOVERNMENTAL AUTHORIZATION FROM ANY PERSON IN CONNECTION WITH THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE CONSUMMATION OR PERFORMANCE OF ANY OF THE
CONTEMPLATED TRANSACTIONS, OTHER THAN (I) THOSE NOTICES AND CONSENTS AND
GOVERNMENTAL AUTHORIZATIONS THAT HAVE BEEN OBTAINED AND ARE IN FULL FORCE AND
EFFECT AT THE EFFECTIVE TIME, (II) THOSE NOTICES AND CONSENTS REQUIRED UNDER THE
SELLER CONTRACTS NOT REQUIRED TO BE DISCLOSED IN SECTION 3.17(A) OF THE SELLER
DISCLOSURE LETTER, AND (III) SUCH NOTICES AND CONSENTS AS MAY BE REQUIRED UNDER
FOREIGN LAWS.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIST OF
CONSENTS SET FORTH IN SECTION 3.2(C) OF THE SELLER DISCLOSURE LETTER THAT RELATE
TO SELLER CONTRACTS ONLY RELATE TO THOSE SELLER CONTRACTS SET FORTH IN SECTION
3.17(A) OF THE SELLER DISCLOSURE LETTER.

 

3.3                                 FINANCIAL STATEMENTS

 

Set forth in Section 3.3 of the Seller Disclosure Letter is an unaudited balance
sheet of the Business as of September 3, 2005 (the “Initial Balance Sheet”) and
a related unaudited statement of income of the Business for the seven month
period then ended (collectively, the “Financial Statements”).  The Financial
Statements fairly present in all material respects the financial condition and
results of operations of the Business as of and for the seven month period

 

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ended on the balance sheet date, in accordance with the Agreed Accounting
Principles.  The Financial Statements do not account for or reflect in any
manner any assets that do not constitute Assets.  The Financial Statements
account for and reflect all Assumed Liabilities that are required to be
accounted for or reflected on such Financial Statements applying the Agreed
Accounting Principles.  The Financial Statements reflect the consistent
application of the accounting principles applied in the financial statements of
the Business as included in the consolidated financial statements of Parent,
except as disclosed in the notes to the Financial Statements and except as set
forth in Section 3.3 of the Seller Disclosure Letter.  The Financial Statements
have been prepared from and are in accordance with the accounting Records of
Sellers.

 

3.4                                 BOOKS AND RECORDS

 

The Business Records of Sellers, all of which have been made available to Buyer,
are complete and correct and represent actual, bona fide transactions and have
been maintained in accordance with sound business practices.

 

3.5                                 CONDITION AND SUFFICIENCY OF ASSETS

 

(A)                                  SECTION 3.5(A) OF THE SELLER DISCLOSURE
LETTER LISTS ALL ASSETS CONSISTING OF MACHINERY, EQUIPMENT, VEHICLES, FURNITURE
OR OTHER TANGIBLE PERSONAL PROPERTY OWNED BY ANY SELLER HAVING AN ORIGINAL COST
IN EXCESS OF $10,000 AND THE LOCATION THEREOF AS WELL AS ALL LOCATIONS IN THE
UNITED STATES (OTHER THAN TEXAS) WHERE ANY ASSETS (INCLUDING ANY INVENTORY AND
INVENTORY ON CONSIGNMENT) ARE LOCATED, REGARDLESS OF THEIR ORIGINAL COST.

 

(B)                                 SECTION 3.5(B) OF THE SELLER DISCLOSURE
LETTER LISTS ALL ASSETS CONSISTING OF PROPERTY AND ASSETS (OTHER THAN THE
BUSINESS PROPERTY) USED IN THE BUSINESS THAT ARE LEASED BY ANY SELLER AND THAT
INVOLVE PAYMENTS BY SUCH SELLER IN EXCESS OF $2,500 PER MONTH.

 

(C)                                  EXCEPT AS SPECIFICALLY ENUMERATED IN
SECTION 3.5(C) OF THE SELLER DISCLOSURE LETTER, THE ASSETS CONSTITUTE ALL OF THE
ASSETS, TANGIBLE AND INTANGIBLE, OF ANY NATURE WHATSOEVER, NECESSARY TO OPERATE
THE BUSINESS IMMEDIATELY AFTER THE CLOSING IN SUBSTANTIALLY THE SAME MANNER IN
WHICH IT IS PRESENTLY OPERATED BY SELLERS.

 

(D)                                 ALL EQUIPMENT, VEHICLES, FURNITURE AND OTHER
TANGIBLE PERSONAL PROPERTY OWNED OR LEASED BY SELLERS COMPRISING PART OF THE
ASSETS AND CURRENTLY USED IN THE OPERATION OF THE BUSINESS ARE IN GOOD OPERATING
CONDITION AND REPAIR (SUBJECT TO NORMAL WEAR AND TEAR) AND WHEN TRANSFERRED WILL
BE ADEQUATE FOR THE OPERATION OF THE BUSINESS, AND NONE OF SUCH ASSETS ARE IN
NEED OF MAINTENANCE OR REPAIRS EXCEPT FOR ORDINARY, ROUTINE MAINTENANCE AND
REPAIRS CONSISTENT WITH PAST PRACTICE.

 

3.6                                 DESCRIPTION OF REAL PROPERTY

 

Section 3.6 of the Seller Disclosure Letter sets forth a complete list of (i)
all real property and interests in real property owned in fee by any Seller and
that are used in the operation of the Business (individually, an “Owned
Property” and collectively, the “Owned Properties”), (ii) all real property and
interests in real property leased by any Seller and that are used in the
operation

 

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of the Business (individually, a “Real Property Lease” and the real properties
specified in such leases, together with the Owned Properties, being referred to
herein individually as a “Business Property” and collectively as the “Business
Properties”) as lessee or lessor.  The Business Properties constitute all
interests in real property currently used or currently held for use in the
operation of the Business.  Sellers have delivered or otherwise made available
to Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications or supplements, if any, thereto.

 

3.7                                 TITLE TO ASSETS; ENCUMBRANCES

 

(A)                                  THE APPLICABLE SELLER HAS A VALID AND
SUBSISTING LEASEHOLD INTEREST IN THE REAL ESTATE IN THE REAL PROPERTY LEASES
DESCRIBED IN SECTION 3.6 OF THE SELLER DISCLOSURE LETTER.  NO SELLER IS IN
DEFAULT OF ANY MATERIAL COVENANT TO BE PERFORMED BY SUCH SELLER UNDER THE REAL
PROPERTY LEASES.

 

(B)                                 SELLERS OWN GOOD AND TRANSFERABLE TITLE TO
ALL OF THE TANGIBLE PERSONAL PROPERTY FREE AND CLEAR OF ANY ENCUMBRANCES OTHER
THAN THOSE DESCRIBED IN SECTION 3.7(B)(I) OF THE SELLER DISCLOSURE LETTER
(“NON-REAL ESTATE ENCUMBRANCES”).  AT CLOSING, ALL SUCH TANGIBLE PERSONAL
PROPERTY SHALL BE FREE AND CLEAR OF ALL NON-REAL ESTATE ENCUMBRANCES OTHER THAN
(I) THOSE IDENTIFIED IN SECTION 3.7(B)(I) OF THE SELLER DISCLOSURE LETTER, AND
(II) ENCUMBRANCES OR OTHER RIGHTS OF GOVERNMENTAL BODIES OR OTHER PERSONS IN
RESPECT OF PROPERTY OR ASSETS DELIVERED BY ANY SELLER FOR REPAIR, MAINTENANCE,
OR OTHER IMPROVEMENTS (“PERMITTED NON-REAL ESTATE ENCUMBRANCES” AND, TOGETHER
WITH THOSE DESCRIBED ENCUMBRANCES ON BUSINESS PROPERTY SET FORTH IN SECTION
3.7(B)(II) OF THE SELLER DISCLOSURE LETTER (NONE OF WHICH, INDIVIDUALLY OR IN
THE AGGREGATE, MATERIALLY AND ADVERSELY EFFECT THE OPERATION OF THE BUSINESS AS
CURRENTLY OPERATED), “PERMITTED ENCUMBRANCES”).

 

3.8                                 ACCOUNTS RECEIVABLE

 

All Accounts Receivable that are reflected on the Initial Balance Sheet or that
will be reflected on the Closing Balance Sheet represent or will represent valid
obligations arising from sales actually made or services actually performed by
Sellers in the ordinary course of the Business consistent with past practices,
and Section 3.8 of the Seller Disclosure Letter contains a complete and accurate
list thereof as of September 7, 2005, which list sets forth the aging of each
such Account Receivable.  To Sellers’ Knowledge, there is no contest, claim,
defense or right of setoff, other than those in the ordinary course of the
Business consistent with past practices, under any Seller Contract with any
account debtor of an Account Receivable relating to the amount or validity of
such Account Receivable.  All Accounts Receivable relate solely to the sale of
goods or services to customers of Sellers, none of which are Related Persons of
any Seller.

 

3.9                                 INVENTORIES

 

Except as set forth in Section 3.9 of the Seller Disclosure Letter, all items
included in the Inventories consist of a quality and quantity consistent in all
material respects with past practices or reasonable future expectations, except
for obsolete items, slow-moving items and items of

 

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below-standard quality, all of which have been written off or written down to
net realizable value in the Initial Balance Sheet in accordance with the Agreed
Accounting Principles.  Inventories on hand that were purchased after the date
of the Initial Balance Sheet were purchased in the ordinary course of the
Business consistent with past practices or reasonable future expectations at a
cost generally not exceeding market prices prevailing at the time of purchase.

 

3.10                           [INTENTIONALLY DELETED]

 

3.11                           TAXES

 

(A)                                  EXCEPT AS SET FORTH IN SECTION 3.11(A) OF
THE SELLER DISCLOSURE LETTER, EACH OF THE SELLERS HAS FILED OR WILL FILE WHEN
DUE ALL TAX RETURNS REQUIRED TO BE FILED WITH RESPECT TO THE BUSINESS OR THE
ASSETS.  ALL SUCH TAX RETURNS WERE, OR WILL BE, CORRECT AND COMPLETE IN ALL
MATERIAL RESPECTS.  ALL TAXES OWED BY EACH OF THE SELLERS (WHETHER OR NOT SHOWN
ON ANY TAX RETURN) WITH RESPECT TO THE BUSINESS AND THE ASSETS HAVE BEEN, OR
WILL BE WHEN DUE, FULLY PAID.  THERE ARE NO ENCUMBRANCES ON ANY OF THE ASSETS
THAT AROSE IN CONNECTION WITH ANY FAILURE (OR ALLEGED FAILURE) TO PAY ANY TAX. 
NO DEFICIENCY OR ADJUSTMENT IN RESPECT OF ANY TAX THAT MIGHT RESULT IN AN
ENCUMBRANCE ON ANY OF THE ASSETS REMAINS UNPAID AND NO PROCEEDING IS PENDING OR,
TO ANY OF THE SELLERS’ KNOWLEDGE, THREATENED WITH RESPECT TO ANY TAXES WHOSE
ASSESSMENT MIGHT RESULT IN AN ENCUMBRANCE ON ANY OF THE ASSETS.

 

(B)                                 THERE IS NO TAX SHARING AGREEMENT, TAX
ALLOCATION AGREEMENT, TAX INDEMNITY OBLIGATION OR SIMILAR WRITTEN OR UNWRITTEN
AGREEMENT, ARRANGEMENT, UNDERSTANDING OR PRACTICE WITH RESPECT TO TAXES
(INCLUDING ANY ADVANCE PRICING AGREEMENT, CLOSING AGREEMENT OR OTHER ARRANGEMENT
RELATING TO TAXES) THAT WILL REQUIRE ANY PAYMENT BY ANY SELLER AS A RESULT OF
THE SALE OF THE BUSINESS.

 

3.12                           LABOR MATTERS; COMPLIANCE

 

(A)           EXCEPT AS SET FORTH IN SECTION 3.12(A) OF THE SELLER DISCLOSURE
LETTER,

 

(I)                                           NO SELLER IS A PARTY TO OR BOUND
BY ANY COLLECTIVE BARGAINING AGREEMENT WITH REGARD TO THE AFFECTED EMPLOYEES;

 

(II)                                        EACH SELLER AND ITS RELATED PERSONS
ARE IN SUBSTANTIAL COMPLIANCE WITH ALL LEGAL REQUIREMENTS APPLICABLE TO THE
AFFECTED EMPLOYEES WITH REGARD TO EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND
CONDITIONS OF EMPLOYMENT, WAGES, AND OCCUPATIONAL SAFETY AND HEALTH; AND ARE NOT
ENGAGED IN ANY UNFAIR LABOR OR UNFAIR EMPLOYMENT PRACTICES;

 

(III)                                     THERE IS NO UNFAIR LABOR PRACTICE
CHARGE OR COMPLAINT AGAINST ANY SELLER OR ANY OF ITS RELATED PERSONS INVOLVING
OR RELATED TO AFFECTED EMPLOYEES PENDING (WITH SERVICE OF PROCESS HAVING BEEN
MADE, OR WRITTEN NOTICE OF INVESTIGATION OR INQUIRY HAVING BEEN SERVED, ON SUCH
SELLER OR ANY OF ITS RELATED PERSONS), OR TO SELLERS’ KNOWLEDGE, THREATENED
BEFORE THE NATIONAL LABOR RELATIONS BOARD OR ANY ANALOGOUS STATE OR LOCAL AGENCY
OR ANY COURT AND NO CHARGE, COMPLAINT OR GRIEVANCE IS PENDING OR, TO SELLERS’
KNOWLEDGE, THREATENED TO BE FILED;

 

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(IV)                                    FOR THE PAST FIVE YEARS, NO SELLER HAS
EXPERIENCED ANY LABOR STRIKE OR OTHER MATERIAL LABOR DISPUTE, SLOWDOWN, STOPPAGE
OR LOCK-OUT WITH REGARD TO THE BUSINESS;

 

(V)                                       THERE IS NO LABOR STRIKE OR OTHER
MATERIAL LABOR DISPUTE, SLOWDOWN, STOPPAGE OR LOCK-OUT PENDING, OR TO SELLERS’
KNOWLEDGE, THREATENED AGAINST ANY SELLER INVOLVING THE AFFECTED EMPLOYEES; AND

 

(VI)                                    NO UNION CERTIFICATION OR
DECERTIFICATION PETITION HAS BEEN FILED (WITH SERVICE OF PROCESS HAVING BEEN
MADE ON ANY SELLER OR ANY OF ITS RELATED PERSONS), OR TO SELLERS’ KNOWLEDGE,
THREATENED, THAT RELATES TO AFFECTED EMPLOYEES AND NO UNION AUTHORIZATION
CAMPAIGN HAS BEEN CONDUCTED, IN EACH CASE, WITHIN THE PAST 18 MONTHS.

 

(B)           SELLERS HAVE DELIVERED TO BUYER A LIST OF ALL AFFECTED EMPLOYEES,
THE RATE OF ALL COMPENSATION PAYABLE TO EACH SUCH EMPLOYEE IN ANY AND ALL
CAPACITIES, INCLUDING ANY COMPENSATION THAT WILL BE PAYABLE TO EACH SUCH
EMPLOYEE IN ANY AND ALL CAPACITIES OTHER THAN THE THEN CURRENT ACCRUAL OF
REGULAR PAYROLL COMPENSATION, EXCEPT IN EACH CASE FOR ANY TRANSACTION BONUSES. 
ANY OF THE AFFECTED EMPLOYEES CAN BE DISMISSED IMMEDIATELY FOR ANY REASON OR NO
REASON WITHOUT NOTICE AND WITHOUT FURTHER LIABILITY, SUBJECT TO APPLICABLE LAWS,
RULES AND REGULATIONS RELATING TO EMPLOYMENT DISCRIMINATION.  TO SELLERS’
KNOWLEDGE, NONE OF THE AFFECTED EMPLOYEES INTEND TO TERMINATE THEIR EMPLOYMENT
RELATIONSHIP WITH THE BUSINESS.

 

3.13                           EMPLOYEE BENEFITS

 

(A)                                  SECTION 3.13(A) OF THE SELLER DISCLOSURE
LETTER CONTAINS A LIST OF ALL SELLER BENEFIT PLANS.  SELLERS HAVE MADE AVAILABLE
FOR REVIEW BY BUYER COPIES OF ALL SELLER BENEFIT PLANS (INCLUDING ALL RELATED
TRUSTS, FUNDING ARRANGEMENTS, MOST RECENT VALUATION REPORTS AND MOST RECENT
ANNUAL REPORTS).

 

(B)                                 NO “PENSION PLAN” AS DEFINED IN SECTION 3(2)
OF ERISA THAT IS MAINTAINED OR CONTRIBUTED TO BY ANY SELLER OR ANY ERISA
AFFILIATE OR WITH RESPECT TO WHICH ANY SELLER OR AN ERISA AFFILIATE MAY HAVE ANY
LIABILITY (I) HAS AN ACCUMULATED FUNDING DEFICIENCY AS DEFINED IN SECTION 302 OF
ERISA AND SECTION 412 OF THE CODE, WHETHER OR NOT WAIVED; (II) NO WAIVER OF
MINIMUM FUNDING STANDARDS HAS BEEN REQUESTED OR GRANTED BY THE IRS; AND (III) NO
ENCUMBRANCE IN FAVOR OF ANY SELLER BENEFIT PLAN, THE IRS OR THE PENSION BENEFIT
GUARANTY CORPORATION EXISTS OR HAS BEEN THREATENED.  EXCEPT AS SET FORTH IN
SECTION 3.13(B) OF THE SELLER DISCLOSURE LETTER, NEITHER SELLERS NOR ANY ERISA
AFFILIATE CONTRIBUTES TO, HAS ANY OBLIGATION TO CONTRIBUTE TO, OR HAS ANY
LIABILITY UNDER OR WITH RESPECT TO ANY “MULTIEMPLOYER PLAN,” AS DEFINED IN
SECTION 3(37) OF ERISA.  NO MATERIAL “REPORTABLE EVENT,” WITHIN THE MEANING OF
SECTION 4043 OF ERISA, FOR WHICH THE THIRTY-DAY REPORTING REQUIREMENT HAS NOT
BEEN WAIVED, AND NO EVENT DESCRIBED IN SECTIONS 4062 OR 4063 OF ERISA, HAS
OCCURRED IN CONNECTION WITH ANY SELLER BENEFIT PLAN OF THE SELLERS OR ANY ERISA
AFFILIATE.  NEITHER SELLERS NOR ANY ERISA AFFILIATE HAVE (1) ENGAGED IN, OR IS A
SUCCESSOR OR PARENT CORPORATION TO AN ENTITY THAT HAS ENGAGED IN, A TRANSACTION
DESCRIBED IN SECTIONS 4069 OR 4212(C) OF ERISA OR (2) EXCEPT AS SET FORTH IN
SECTION 3.13(B) OF THE SELLER DISCLOSURE LETTER, INCURRED ANY LIABILITY OR
POTENTIAL LIABILITY UNDER TITLE IV OF ERISA ARISING IN CONNECTION WITH THE
TERMINATION OF, OR A COMPLETE OR PARTIAL WITHDRAWAL FROM, ANY PLAN COVERED OR
PREVIOUSLY COVERED BY TITLE IV OF ERISA.

 

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(C)                                  NO SELLER OR ANY ERISA AFFILIATE HAS
INCURRED ANY WITHDRAWAL LIABILITY UNDER SECTION 4201 OF ERISA THAT COULD RESULT
IN ANY LIABILITY TO BUYER OR ENCUMBRANCE ON ANY OF THE ASSETS.  THE REQUIREMENTS
OF COBRA HAVE BEEN MET WITH RESPECT TO EACH SUCH SELLER BENEFIT PLAN WHICH IS AN
“EMPLOYEE WELFARE BENEFIT PLAN,” AS DEFINED IN SECTION 3(1) OF ERISA, SUBJECT TO
COBRA.

 

3.14                           COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS

 

(A)           EXCEPT AS SET FORTH IN SECTION 3.14(A) OF THE SELLER DISCLOSURE
LETTER:

 

(I)                                           SELLERS HAVE COMPLIED WITH ALL
LEGAL REQUIREMENTS APPLICABLE TO THE CONDUCT AND OPERATION OF THE BUSINESS AND
THE OWNERSHIP OR USE OF ANY OF THE ASSETS;

 

(II)                                        WITH REGARD TO THE BUSINESS AND THE
ASSETS, TO SELLERS’ KNOWLEDGE, NO EVENT HAS OCCURRED OR CIRCUMSTANCE EXISTS THAT
(WITH OR WITHOUT NOTICE OR LAPSE OF TIME) WOULD BE REASONABLY EXPECTED TO
CONSTITUTE OR RESULT IN A VIOLATION BY ANY SELLER OF, OR A FAILURE ON THE PART
OF ANY SELLER TO COMPLY WITH, ANY LEGAL REQUIREMENT RELATING TO THE BUSINESS OR
THE ASSETS; AND

 

(III)                                     NO SELLER HAS RECEIVED, AT ANY TIME
SINCE JANUARY 31, 2002, ANY NOTICE FROM ANY GOVERNMENTAL BODY REGARDING ANY
ACTUAL, ALLEGED OR POTENTIAL VIOLATION OF, OR FAILURE TO COMPLY WITH, ANY LEGAL
REQUIREMENT WITH RESPECT TO THE BUSINESS OR ANY OF THE ASSETS.

 

(B)           SECTION 3.14(B) OF THE SELLER DISCLOSURE LETTER CONTAINS A LIST OF
EACH MATERIAL GOVERNMENTAL AUTHORIZATION THAT IS HELD BY ANY SELLER RELATING TO
OR USED IN THE OPERATION OF THE BUSINESS OR THE ASSETS.  EACH GOVERNMENTAL
AUTHORIZATION LISTED IN SECTION 3.14(B) OF THE SELLER DISCLOSURE LETTER IS IN
FULL FORCE AND EFFECT. EXCEPT AS SET FORTH IN SECTION 3.14(B) OF THE SELLER
DISCLOSURE LETTER:

 

(I)                                           EACH SELLER IS IN COMPLIANCE IN
ALL MATERIAL RESPECTS WITH ALL OF THE TERMS AND REQUIREMENTS OF EACH
GOVERNMENTAL AUTHORIZATION IDENTIFIED IN SECTION 3.14(B) OF THE SELLER
DISCLOSURE LETTER;

 

(II)                                        TO SELLERS’ KNOWLEDGE, NO EVENT HAS
OCCURRED OR CIRCUMSTANCE EXISTS THAT WILL (WITH OR WITHOUT NOTICE OR LAPSE OF
TIME) (A) CONSTITUTE OR RESULT DIRECTLY OR INDIRECTLY IN A VIOLATION OF OR A
FAILURE TO COMPLY WITH ANY TERM OR REQUIREMENT OF ANY GOVERNMENTAL AUTHORIZATION
LISTED OR REQUIRED TO BE LISTED IN SECTION 3.14(B) OF THE SELLER DISCLOSURE
LETTER OR (B) RESULT DIRECTLY OR INDIRECTLY IN THE REVOCATION, WITHDRAWAL,
SUSPENSION, CANCELLATION OR TERMINATION OF, OR ANY MODIFICATION TO, ANY
GOVERNMENTAL AUTHORIZATION LISTED OR REQUIRED TO BE LISTED IN SECTION 3.14(B) OF
THE SELLER DISCLOSURE LETTER;

 

(III)                                     NO SELLER HAS RECEIVED, AT ANY TIME
SINCE JANUARY 31, 2002, ANY NOTICE FROM ANY GOVERNMENTAL BODY REGARDING (A) ANY
ACTUAL, ALLEGED, POSSIBLE OR POTENTIAL VIOLATION OF OR FAILURE TO COMPLY WITH
ANY TERM OR REQUIREMENT OF ANY

 

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GOVERNMENTAL AUTHORIZATION OR (B) ANY ACTUAL, PROPOSED, POSSIBLE OR POTENTIAL
REVOCATION, WITHDRAWAL, SUSPENSION, CANCELLATION, TERMINATION OF OR MODIFICATION
TO ANY GOVERNMENTAL AUTHORIZATION; AND

 

(IV)                                    ALL APPLICATIONS REQUIRED TO HAVE BEEN
FILED FOR THE RENEWAL OF THE GOVERNMENTAL AUTHORIZATIONS LISTED IN SECTION
3.14(B) OF THE SELLER DISCLOSURE LETTER HAVE BEEN DULY FILED ON A TIMELY BASIS
WITH THE APPROPRIATE GOVERNMENTAL BODIES, AND ALL OTHER FILINGS REQUIRED TO HAVE
BEEN MADE WITH RESPECT TO SUCH GOVERNMENTAL AUTHORIZATIONS HAVE BEEN DULY MADE
ON A TIMELY BASIS WITH THE APPROPRIATE GOVERNMENTAL BODIES.

 

(C)           THE GOVERNMENTAL AUTHORIZATIONS LISTED IN SECTION 3.14(B) OF THE
SELLER DISCLOSURE LETTER COLLECTIVELY CONSTITUTE ALL OF THE GOVERNMENTAL
AUTHORIZATIONS NECESSARY TO PERMIT EACH SELLER TO LAWFULLY CONDUCT AND OPERATE
THE BUSINESS IN THE MANNER IN WHICH IT CURRENTLY CONDUCTS AND OPERATES SUCH
BUSINESS AND TO PERMIT EACH SELLER TO OWN AND USE THE ASSETS IN THE MANNER IN
WHICH IT CURRENTLY OWNS AND USES SUCH ASSETS.

 

3.15                           LEGAL PROCEEDINGS; ORDERS

 

(A)           EXCEPT AS SET FORTH IN SECTION 3.15(A) OF THE SELLER DISCLOSURE
LETTER, THERE IS NO PENDING OR, TO SELLERS’ KNOWLEDGE, THREATENED PROCEEDING:

 

(I)                                           BY OR AGAINST ANY SELLER THAT
RELATES TO OR WOULD REASONABLY BE EXPECTED TO AFFECT THE BUSINESS OR THE ASSETS
IN A MATERIALLY ADVERSE MANNER; OR

 

(II)                                        THAT CHALLENGES, OR THAT MAY HAVE
THE EFFECT OF PREVENTING, DELAYING, MAKING ILLEGAL OR OTHERWISE INTERFERING
WITH, ANY OF THE CONTEMPLATED TRANSACTIONS.

 

Except as set forth in Section 3.15(a) of the Seller Disclosure Letter, to
Sellers’ Knowledge, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding.

 

(B)           EXCEPT AS SET FORTH IN SECTION 3.15(B) OF THE SELLER DISCLOSURE
LETTER, SINCE JANUARY 31, 2003:

 

(I)                                           THERE HAS BEEN NO ORDER TO WHICH
THE BUSINESS OR ANY OF THE ASSETS IS SUBJECT; AND

 

(II)                                        TO SELLERS’ KNOWLEDGE, NO AGENT OR
EMPLOYEE OF ANY SELLER HAS BEEN SUBJECT TO ANY ORDER THAT PROHIBITS SUCH AGENT
OR EMPLOYEE FROM ENGAGING IN OR CONTINUING ANY CONDUCT, ACTIVITY OR PRACTICE
RELATING TO THE BUSINESS.

 

(C)           EXCEPT AS SET FORTH IN SECTION 3.15(C) OF THE SELLER DISCLOSURE
LETTER:

 

(I)                                           EACH SELLER IS IN COMPLIANCE WITH
ALL OF THE TERMS AND REQUIREMENTS OF EACH ORDER TO WHICH IT OR ANY OF THE ASSETS
IS OR HAS BEEN SUBJECT;

 

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(II)                                        NO EVENT HAS OCCURRED OR
CIRCUMSTANCE EXISTS THAT IS REASONABLY LIKELY TO CONSTITUTE OR RESULT IN (WITH
OR WITHOUT NOTICE OR LAPSE OF TIME) A VIOLATION OF OR FAILURE TO COMPLY WITH ANY
TERM OR REQUIREMENT OF ANY ORDER TO WHICH ANY SELLER (WITH RESPECT TO THE
BUSINESS) OR ANY OF THE ASSETS IS SUBJECT; AND

 

(III)                                     NO SELLER HAS RECEIVED, AT ANY TIME
SINCE JANUARY 31, 2003, ANY NOTICE FROM ANY GOVERNMENTAL BODY REGARDING ANY
ACTUAL, ALLEGED OR POTENTIAL VIOLATION OF, OR FAILURE TO COMPLY WITH, ANY TERM
OR REQUIREMENT OF ANY ORDER TO WHICH SUCH SELLER (WITH RESPECT TO THE BUSINESS)
OR ANY OF THE ASSETS IS OR HAS BEEN SUBJECT.

 

3.16                           ABSENCE OF CERTAIN CHANGES AND EVENTS

 

Except as set forth in Section 3.16 of the Seller Disclosure Letter or as
otherwise permitted by this Agreement, since January 31, 2005, each Seller has
conducted the Business only in the ordinary course of the Business consistent
with past practices or reasonable future expectations and there has not been
any:

 

(A)                                  PAYMENT (EXCEPT IN THE ORDINARY COURSE OF
THE BUSINESS CONSISTENT WITH PAST PRACTICES) OR INCREASE BY ANY SELLER OF ANY
BONUSES, SALARIES OR OTHER COMPENSATION TO ANY EMPLOYEE OF THE BUSINESS OR ENTRY
INTO ANY EMPLOYMENT, SEVERANCE OR SIMILAR SELLER CONTRACT WITH ANY EMPLOYEE OF
THE BUSINESS;

 

(B)                                 MATERIAL DAMAGE, DESTRUCTION, THEFT OR LOSS
AFFECTING THE ASSETS, EXCEPT TO THE EXTENT THAT ANY ASSET DAMAGED, DESTROYED,
STOLEN OR LOST HAS BEEN REPLACED OR REPAIRED;

 

(C)                                  ENTRY INTO, TERMINATION OF OR RECEIPT OF
NOTICE OF TERMINATION OF (I) ANY LICENSE, DISTRIBUTORSHIP, DEALER, SALES
REPRESENTATIVE, JOINT VENTURE, CREDIT OR SIMILAR SELLER CONTRACT TO WHICH ANY
SELLER IS A PARTY USED IN THE OPERATION OF THE BUSINESS OR ASSETS OTHER THAN IN
THE ORDINARY COURSE OF BUSINESS, OR (II) ANY SELLER CONTRACT DESCRIBED IN
SECTION 3.17(A) OTHER THAN IN THE ORDINARY COURSE OF BUSINESS;

 

(D)                                 SALE, LEASE OR OTHER DISPOSITION OF ANY
ASSET OR PROPERTY OF ANY SELLER (INCLUDING THE BUSINESS INTELLECTUAL PROPERTY
ASSETS) OR THE CREATION OF ANY ENCUMBRANCE (OTHER THAN A PERMITTED ENCUMBRANCE)
ON ANY ASSET, IN EACH CASE OTHER THAN IN THE ORDINARY COURSE OF BUSINESS;

 

(E)                                  CANCELLATION OR WAIVER OF ANY CLAIMS OR
RIGHTS RELATING TO THE BUSINESS OR THE ASSETS HAVING AN AGGREGATE VALUE IN
EXCESS OF $100,000;

 

(F)                                    NOTIFICATION BY ANY SIGNIFICANT CUSTOMER
OR SUPPLIER OF THE BUSINESS OF AN INTENTION TO DISCONTINUE OR MATERIALLY CHANGE
THE TERMS OF ITS RELATIONSHIP WITH THE BUSINESS;

 

(G)                                 MATERIAL CHANGE IN THE ACCOUNTING METHODS
USED BY ANY SELLER, WHICH RELATES TO THE BUSINESS OR THE ASSETS; OR

 

(H)                                 CONTRACT ENTERED INTO BY ANY SELLER TO DO
ANY OF THE FOREGOING.

 

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3.17                           CONTRACTS; NO DEFAULTS

 

(A)           OTHER THAN THE SELLER CONTRACTS SET FORTH IN SECTION 2.2(E) OF THE
SELLER DISCLOSURE LETTER, SECTION 3.17(A) OF THE SELLER DISCLOSURE LETTER
CONTAINS AN ACCURATE AND COMPLETE LIST, AND SELLERS HAVE MADE AVAILABLE TO BUYER
ACCURATE AND COMPLETE COPIES, OF:

 

(I)                                           EACH SELLER CONTRACT (A) THAT
INVOLVES PERFORMANCE OF SERVICES OR DELIVERY OF GOODS OR MATERIALS BY ANY SELLER
OF AN AMOUNT OF VALUE IN EXCESS OF $100,000; OR (B) THAT HAS A REMAINING TERM OF
MORE THAN ONE (1) YEAR AND THAT INVOLVES PERFORMANCE OF SERVICES OR DELIVERY OF
GOODS OR MATERIALS BY ANY SELLER OF AN AMOUNT OF VALUE IN EXCESS OF $50,000;

 

(II)                                        EACH SELLER CONTRACT (A) THAT
INVOLVES PERFORMANCE OF SERVICES OR DELIVERY OF GOODS OR MATERIALS TO ANY SELLER
OF AN AMOUNT OF VALUE IN EXCESS OF $100,000, OR (B) THAT HAS A REMAINING TERM OF
MORE THAN ONE (1) YEAR AND THAT INVOLVES PERFORMANCE OF SERVICES OR DELIVERY OF
GOODS OR MATERIALS TO ANY SELLER OF AN AMOUNT OF VALUE IN EXCESS OF $50,000;

 

(III)                                     EACH SELLER CONTRACT THAT WAS NOT
ENTERED INTO IN THE ORDINARY COURSE OF THE BUSINESS CONSISTENT WITH PAST
PRACTICES AND THAT (A) INVOLVES AN AMOUNT OF VALUE OR EXPENDITURES OR RECEIPTS
OF ANY SELLER IN EXCESS OF $100,000, OR (B) HAS A REMAINING TERM OF MORE THAN
ONE (1) YEAR, AND IS NOT SUBJECT TO TERMINATION WITHOUT PENALTY;

 

(IV)                                    EACH SELLER CONTRACT AFFECTING THE
OWNERSHIP OF, LEASING OF, TITLE TO, USE OF OR ANY LEASEHOLD OR OTHER INTEREST IN
ANY REAL OR PERSONAL PROPERTY (EXCEPT PERSONAL PROPERTY LEASES AND INSTALLMENT
AND CONDITIONAL SALES AGREEMENTS HAVING A VALUE PER ITEM OR AGGREGATE PAYMENTS
OF LESS THAN $75,000 AND WITH A TERM OF LESS THAN ONE YEAR);

 

(V)                                       EACH SELLER CONTRACT WITH ANY LABOR
UNION OR OTHER EMPLOYEE REPRESENTATIVE OF A GROUP OF EMPLOYEES RELATING TO
WAGES, HOURS AND OTHER CONDITIONS OF EMPLOYMENT;

 

(VI)                                    EACH SELLER CONTRACT (HOWEVER NAMED)
INVOLVING A SHARING OF PROFITS, LOSSES, COSTS OR LIABILITIES BY ANY SELLER WITH
ANY OTHER PERSON;

 

(VII)                                 EACH SELLER CONTRACT CONTAINING COVENANTS
THAT RESTRICT ANY SELLER’S BUSINESS ACTIVITY OR LIMIT THE FREEDOM OF SUCH SELLER
TO ENGAGE IN ANY LINE OF BUSINESS OR TO COMPETE WITH ANY PERSON;

 

(VIII)                              EACH SELLER CONTRACT PROVIDING FOR PAYMENTS
TO OR BY ANY PERSON BASED ON SALES, PURCHASES OR PROFITS, OTHER THAN DIRECT
PAYMENTS FOR GOODS;

 

(IX)                                      EACH POWER OF ATTORNEY OF ANY SELLER
RELATING TO THE BUSINESS OR THE ASSETS THAT IS CURRENTLY EFFECTIVE AND
OUTSTANDING;

 

(X)                                         EACH SELLER CONTRACT FOR CAPITAL
EXPENDITURES IN EXCESS OF $100,000;

 

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(XI)                                      EACH SELLER CONTRACT NOT DENOMINATED
IN U.S. DOLLARS;

 

(XII)                                   EACH WRITTEN WARRANTY, GUARANTY AND/OR
OTHER SIMILAR UNDERTAKING WITH RESPECT TO CONTRACTUAL PERFORMANCE EXTENDED BY
ANY SELLER WITH RESPECT TO THE BUSINESS OTHER THAN IN THE ORDINARY COURSE OF THE
BUSINESS CONSISTENT WITH PAST PRACTICES;

 

(XIII)                                EACH BID THAT INVOLVES THE PERFORMANCE OF
SERVICES OR DELIVERY OF GOODS OR MATERIALS BY ANY SELLER OF AN AMOUNT OF VALUE
IN EXCESS OF $100,000, OR THAT HAS A REMAINING TERM OF MORE THAN ONE (1) YEAR
AND THAT INVOLVES PERFORMANCE OF SERVICES OR DELIVERY OF GOODS OR MATERIALS BY
ANY SELLER OF AN AMOUNT OF VALUE IN EXCESS OF $50,000; AND

 

(XIV)                               EACH AMENDMENT, SUPPLEMENT AND MODIFICATION
(WHETHER ORAL OR WRITTEN) IN RESPECT OF ANY OF THE FOREGOING.

 

(B)           EXCEPT AS SET FORTH IN SECTION 3.17(B) OF THE SELLER DISCLOSURE
LETTER:

 

(I)                                           EACH SELLER CONTRACT OR BID
IDENTIFIED OR REQUIRED TO BE IDENTIFIED IN SECTION 3.17(A) OF THE SELLER
DISCLOSURE LETTER OR WHICH IS TO BE ASSUMED BY BUYER UNDER THIS AGREEMENT IS IN
FULL FORCE AND EFFECT AND IS VALID, BINDING AND ENFORCEABLE IN ACCORDANCE WITH
ITS TERMS; AND

 

(II)                                        EACH SELLER CONTRACT OR BID
IDENTIFIED OR REQUIRED TO BE IDENTIFIED IN SECTION 3.17(A) OF THE SELLER
DISCLOSURE LETTER OR WHICH IS BEING ASSUMED BY BUYER UNDER THIS AGREEMENT IS
ASSIGNABLE BY THE APPLICABLE SELLER TO BUYER WITHOUT THE CONSENT OF ANY OTHER
PERSON EXCEPT AS DISCLOSED IN OR PURSUANT TO SECTION 3.2(C).

 

(C)           EXCEPT AS SET FORTH IN SECTION 3.17(C) OF THE SELLER DISCLOSURE
LETTER:

 

(I)                                           EACH SELLER IS IN COMPLIANCE WITH
ALL APPLICABLE TERMS AND REQUIREMENTS OF EACH SELLER CONTRACT WHICH IS BEING
ASSUMED BY BUYER;

 

(II)                                        NO SELLER HAS RELEASED ANY OF ITS
RIGHTS UNDER A SELLER CONTRACT WHICH IS ASSUMED BY BUYER UNDER THIS AGREEMENT;

 

(III)                                     TO SELLERS’ KNOWLEDGE, EACH OTHER
PERSON THAT HAS OR HAD ANY OBLIGATION OR LIABILITY UNDER ANY SELLER CONTRACT
WHICH IS BEING ASSUMED BY BUYER IS IN COMPLIANCE WITH ALL APPLICABLE TERMS AND
REQUIREMENTS OF SUCH SELLER CONTRACT;

 

(IV)                                    TO SELLERS’ KNOWLEDGE, NO EVENT HAS
OCCURRED OR CIRCUMSTANCE EXISTS THAT (WITH OR WITHOUT NOTICE OR LAPSE OF TIME)
WOULD REASONABLY BE EXPECTED TO CONTRAVENE, CONFLICT WITH OR RESULT IN A BREACH
OF, OR GIVE ANY SELLER OR OTHER PERSON THE RIGHT TO DECLARE A DEFAULT OR
EXERCISE ANY REMEDY UNDER, OR TO ACCELERATE THE MATURITY OR PERFORMANCE OF, OR
PAYMENT UNDER, OR TO CANCEL, TERMINATE OR MODIFY, ANY SELLER CONTRACT THAT IS
BEING ASSUMED BY BUYER UNDER THIS AGREEMENT;

 

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(V)                                       TO SELLERS’ KNOWLEDGE, NO EVENT HAS
OCCURRED OR CIRCUMSTANCE EXISTS UNDER OR BY VIRTUE OF ANY CONTRACT THAT (WITH OR
WITHOUT NOTICE OR LAPSE OF TIME) WOULD CAUSE THE CREATION OF ANY ENCUMBRANCE
(OTHER THAN A PERMITTED ENCUMBRANCE) AFFECTING ANY OF THE ASSETS; AND

 

(VI)                                    TO SELLERS’ KNOWLEDGE, THERE IS NO
SELLER CONTRACT LISTED IN SECTION 3.17(A) OF THE SELLER DISCLOSURE LETTER TO BE
ASSUMED BY BUYER ON WHICH SELLERS ARE BEHIND SCHEDULE WITH RESPECT TO THE TIMELY
DELIVERY OF ANY PRODUCTS OR SERVICES.

 

(D)                                 SECTION 3.17(D) OF THE SELLER DISCLOSURE
LETTER SETS FORTH A LIST OF THE SELLER CONTRACTS DESCRIBED IN SECTION
3.17(A)(I)(A) IN RESPECT OF WHICH ANY SELLER HAS CURRENT OR FUTURE WARRANTY
OBLIGATIONS AND, TO SELLERS’ KNOWLEDGE, A LIST OF ALL WARRANTY CLAIMS OF
CUSTOMERS OF THE BUSINESS ASSERTED IN WRITING (INCLUDING BY FACSIMILE OR
ELECTRONIC MAIL) AGAINST SELLERS IN RESPECT OF WHICH THE NECESSARY REPAIRS OR
REPLACEMENT HAVE NOT BEEN COMPLETED.

 

(E)                                  EACH OF THE SELLER CONTRACTS OR BIDS
ENTERED INTO SINCE AUGUST 5, 2005 THROUGH THE DATE HEREOF HAVE BEEN ENTERED INTO
OR ISSUED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE.

 

3.18                           INSURANCE

 

(A)                                  SECTION 3.18(A) OF THE SELLER DISCLOSURE
LETTER SETS FORTH A LIST OF ALL POLICIES OF FIRE, CASUALTY, LIABILITY, BURGLARY,
FIDELITY, WORKERS’ COMPENSATION AND OTHER FORMS OF INSURANCE HELD BY EACH SELLER
THAT ARE MATERIAL TO THE BUSINESS AND MATERIAL DETAILS REGARDING EACH, INCLUDING
LIMITS OF LIABILITY, DEDUCTIBLES AND SELF INSURANCE RETENTIONS.

 

(B)                                 ALL PREMIUMS DUE AND PAYABLE FOR THE
INSURANCE LISTED IN SECTION 3.18(A) OF THE SELLER DISCLOSURE LETTER HAVE BEEN
DULY PAID, AND SUCH POLICIES OR EXTENSIONS OR RENEWALS THEREOF IN SUCH AMOUNTS
WILL BE OUTSTANDING AND DULY IN FULL FORCE WITHOUT INTERRUPTION UNTIL THE
CLOSING DATE.

 

(C)                                  SECTION 3.18(C) OF THE SELLER DISCLOSURE
LETTER DESCRIBES, WITH RESPECT TO THE BUSINESS OR ASSETS AS OF THE DATE OF THIS
AGREEMENT, BY YEAR, FOR THE CURRENT POLICY YEAR AND EACH OF THE TWO (2)
PRECEDING POLICY YEARS (I) ANY SELF-INSURANCE ARRANGEMENT BY OR AFFECTING ANY
SELLER, INCLUDING ANY RESERVES ESTABLISHED THEREUNDER, AND (II) ALL OBLIGATIONS
OF ANY SELLER TO PROVIDE INSURANCE COVERAGE TO THIRD PARTIES (FOR EXAMPLE, UNDER
LEASES OR SERVICE AGREEMENTS) AND IDENTIFIES THE POLICY UNDER WHICH SUCH
COVERAGE IS PROVIDED.

 

(D)                                 SECTION 3.18(D) OF THE SELLER DISCLOSURE
LETTER SETS FORTH AS OF THE DATE OF THIS AGREEMENT, BY YEAR, FOR THE CURRENT
POLICY YEAR AND EACH OF THE TWO (2) PRECEDING POLICY YEARS WITH RESPECT TO THE
BUSINESS OR ASSETS:

 

(I)                                           A SUMMARY OF THE LOSS EXPERIENCE
UNDER EACH POLICY OF INSURANCE;

 

(II)                                        A STATEMENT DESCRIBING EACH CLAIM
UNDER A POLICY OF INSURANCE FOR AN AMOUNT IN EXCESS OF $100,000, WHICH SETS
FORTH:

 

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(A)                              THE NAME OF THE CLAIMANT;

 

(B)                                A DESCRIPTION OF THE POLICY BY INSURER, TYPE
OF INSURANCE AND PERIOD OF COVERAGE; AND

 

(C)                                THE AMOUNT AND A BRIEF DESCRIPTION OF THE
CLAIM; AND

 

(III)                                     A STATEMENT DESCRIBING THE LOSS
EXPERIENCE FOR ALL CLAIMS THAT WERE SELF-INSURED, INCLUDING THE NUMBER AND
AGGREGATE COST OF SUCH CLAIMS.

 

3.19                           ENVIRONMENTAL MATTERS

 

(A)                                  EXCEPT AS SET FORTH IN SECTION 3.19 OF THE
SELLER DISCLOSURE LETTER OR EXCEPT AS WOULD NOT HAVE AN ENVIRONMENTAL MATERIAL
ADVERSE EFFECT, EACH SELLER IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE LIMITATIONS, RESTRICTIONS, CONDITIONS, STANDARDS, PROHIBITIONS,
REQUIREMENTS AND OBLIGATIONS OF ENVIRONMENTAL LAWS;

 

(B)                                 EXCEPT AS SET FORTH IN SECTION 3.19 OF THE
SELLER DISCLOSURE LETTER OR EXCEPT AS WOULD NOT HAVE AN ENVIRONMENTAL MATERIAL
ADVERSE EFFECT, THERE ARE NO ENVIRONMENTAL LIABILITIES PENDING OR, TO SELLERS’
KNOWLEDGE, THREATENED BY OR BEFORE ANY COURT OR ANY OTHER GOVERNMENTAL BODY
DIRECTED AGAINST ANY SELLER RELATING TO THE OPERATION OF THE BUSINESS THAT
PERTAIN OR RELATE TO (I) ANY OBLIGATIONS OF ANY SELLER UNDER ANY APPLICABLE
ENVIRONMENTAL LAW, (II) VIOLATIONS BY ANY SELLER OF ANY ENVIRONMENTAL LAW, (III)
PERSONAL INJURY, PROPERTY DAMAGE, OR NATURAL RESOURCES DAMAGE CLAIMS RELATING TO
A RELEASE OF HAZARDOUS MATERIALS, OR (IV) RESPONSE, REMOVAL, OR REMEDIAL COSTS
UNDER CERCLA, RCRA OR ANY SIMILAR STATE LAWS;

 

(C)                                  EXCEPT AS SET FORTH IN SECTION 3.19 OF THE
SELLER DISCLOSURE LETTER OR EXCEPT AS WOULD NOT HAVE AN ENVIRONMENTAL MATERIAL
ADVERSE EFFECT, ALL PERMITS REQUIRED UNDER ENVIRONMENTAL LAWS THAT ARE NECESSARY
FOR THE LAWFUL OPERATION OF THE BUSINESS BY ANY SELLER HAVE BEEN OBTAINED AND
ARE IN FULL FORCE AND EFFECT AND NO SELLER HAS KNOWLEDGE OF ANY BASIS FOR
REVOCATION OR SUSPENSION OF ANY SUCH PERMITS;

 

(D)                                 EXCEPT AS SET FORTH IN SECTION 3.19 OF THE
SELLER DISCLOSURE LETTER, NO PORTION OF ANY OF THE OWNED PROPERTY IS LISTED ON
THE NATIONAL PRIORITIES LIST OR THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION, AND LIABILITY INFORMATION SYSTEM LIST UNDER CERCLA, OR ANY SIMILAR
RANKING OR LISTING UNDER ANY STATE LAW;

 

(E)                                  EXCEPT AS SET FORTH IN SECTION 3.19 OF THE
SELLER DISCLOSURE LETTER OR EXCEPT AS WOULD NOT HAVE AN ENVIRONMENTAL MATERIAL
ADVERSE EFFECT, NO SELLER HAS DISPOSED OR RELEASED ANY HAZARDOUS MATERIALS ON,
AT, OR UNDER THE OWNED PROPERTY, OTHER THAN IN COMPLIANCE WITH ENVIRONMENTAL
LAWS, AND NO SELLER HAS KNOWLEDGE OF ANY ENVIRONMENTAL CONDITIONS ON, AT, OR
UNDERLYING SUCH OWNED PROPERTY OTHER THAN SUCH ENVIRONMENTAL CONDITIONS THAT DO
NOT REQUIRE REMEDIATION UNDER ENVIRONMENTAL LAWS; AND

 

(F)                                    EXCEPT AS SET FORTH IN SECTION 3.19 OF
THE SELLER DISCLOSURE LETTER, THERE ARE NO WRITTEN NOTICES OF VIOLATION,
NON-COMPLIANCE, OR SIMILAR NOTIFICATIONS RELATING TO ENVIRONMENTAL LIABILITIES
CURRENTLY PENDING OR, TO SELLERS’ KNOWLEDGE, THREATENED, RELATING OR

 

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pertaining to the Business or the Owned Property that would reasonably be
expected to have an Environmental Material Adverse Effect.

 

3.20                           INTELLECTUAL PROPERTY

 

(A)                                  ALL INTELLECTUAL PROPERTY, INCLUDING THE
INTELLECTUAL PROPERTY LICENSES, THAT RELATES EXCLUSIVELY TO THE BUSINESS (THE
“BUSINESS INTELLECTUAL PROPERTY”) AND THAT CONSTITUTES REGISTERED INTELLECTUAL
PROPERTY IS SET FORTH IN SECTION 3.20(A)(I) OF THE SELLER DISCLOSURE LETTER (THE
“OWNED INTELLECTUAL PROPERTY”).  EXCEPT AS SET FORTH IN SECTION 3.20(A)(II) OF
THE SELLER DISCLOSURE LETTER, SELLERS OWN, FREE AND CLEAR FROM ALL ENCUMBRANCES
(OTHER THAN IMMATERIAL ENCUMBRANCES) OR OTHERWISE POSSESSES LEGALLY ENFORCEABLE
RIGHTS TO ALL OF THE BUSINESS INTELLECTUAL PROPERTY.

 

(B)                                 SECTION 3.20(B)(I) OF THE SELLER DISCLOSURE
LETTER SETS FORTH, WITH RESPECT TO THE BUSINESS, A COMPLETE LIST OF ALL LICENSES
(I) PURSUANT TO WHICH THE USE BY ANY PERSON OF INTELLECTUAL PROPERTY IS
PERMITTED BY ANY SELLER, OR (II) PURSUANT TO WHICH THE USE BY ANY SELLER OF THE
INTELLECTUAL PROPERTY OF A THIRD PARTY IS PERMITTED BY ANY PERSON (OTHER THAN
COMMERCIAL SOFTWARE) (COLLECTIVELY, THE “INTELLECTUAL PROPERTY LICENSES”).  THE
INTELLECTUAL PROPERTY LICENSES ARE IN FULL FORCE AND EFFECT.

 

(C)                                  EXCEPT AS SET FORTH IN SECTION 3.20(A)(II)
OF THE SELLER DISCLOSURE LETTER, THERE ARE NO CLAIMS OF INFRINGEMENT,
MISAPPROPRIATION OR OTHER VIOLATION OF THE INTELLECTUAL PROPERTY RIGHTS OF A
THIRD PARTY THAT ARE PENDING OR, TO SELLER’ KNOWLEDGE, WILL OCCUR AS A RESULT OF
THE CONTINUED OPERATION OF THE BUSINESS AS PRESENTLY CONDUCTED.

 

(D)                                 TO SELLERS’ KNOWLEDGE, NO BUSINESS
INTELLECTUAL PROPERTY IS BEING INFRINGED OR MISAPPROPRIATED BY A THIRD PARTY. 
THERE IS NO MATERIAL CLAIM OR DEMAND OF ANY THIRD PARTY, OR ANY PROCEEDING WHICH
IS PENDING (WITH SERVICE OF PROCESS HAVING BEEN SERVED ON ANY SELLER) OR, TO
SELLERS’ KNOWLEDGE, ANY BASIS FOR OR THREAT OF ANY MATERIAL CLAIM OR DEMAND THAT
(I) CHALLENGES THE OWNERSHIP RIGHTS IN RESPECT OF ANY OWNED INTELLECTUAL
PROPERTY, (II) CHALLENGES THE VALIDITY, ENFORCEABILITY OR INVENTORSHIP OF THE
BUSINESS INTELLECTUAL PROPERTY OR (III) CLAIMS THAT ANY DEFAULT EXISTS UNDER ANY
INTELLECTUAL PROPERTY LICENSE.

 

(E)                                  TO SELLERS’ KNOWLEDGE, ALL OF THE OWNED
INTELLECTUAL PROPERTY (I) IS ENFORCEABLE AND VALID; (II) HAS NOT BEEN CANCELLED,
EXPIRED OR ABANDONED; AND (III) HAS BEEN DULY PREPARED, FILED, PROSECUTED,
REGISTERED AND, AS APPLICABLE, MAINTAINED, INCLUDING WITHOUT LIMITATION WITH
RESPECT TO ALL DUTIES OF CANDOR OWED TO THE UNITED STATES PATENT AND TRADEMARK
OFFICE AND ANY FOREIGN PATENT OFFICE.  TO SELLERS’ KNOWLEDGE, NONE OF THE
BUSINESS INTELLECTUAL PROPERTY THAT CONSTITUTES REGISTERED INTELLECTUAL PROPERTY
IS THE SUBJECT OF ANY REISSUE, REEXAMINATION, INTERFERENCE, OPPOSITION,
CANCELLATION, OR SIMILAR PROCEEDING.

 

(F)                                    THE ASSETS INCLUDE ALL OF THE
INTELLECTUAL PROPERTY USED IN THE BUSINESS OTHER THAN ANY INTELLECTUAL PROPERTY
WHICH IS USED ONLY INCIDENTALLY IN THE BUSINESS AND OTHER THAN ANY INTELLECTUAL
PROPERTY INCLUDED IN THE EXCLUDED ASSETS.

 

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3.21                           RELATED PARTY TRANSACTIONS

 

Except as set forth in Section 3.21 of the Seller Disclosure Letter, no Seller
or any of their respective Related Persons, nor, to Sellers’ Knowledge, any
current director, officer or employee of any Seller or any their Related
Persons, (a) has any direct or indirect interest (other than owning two percent
(2%) or less of the equity interests of a publicly traded entity without any
control of management) (i) in, or is a director, officer or employee of, any
Person that is a client, customer, supplier, lessor, lessee, debtor, creditor or
competitor of the Business, or (ii) in any material property, asset or right
which is owned or used by any Seller in the conduct of the Business, or (b) is a
party to any agreement or transaction with any Seller relating to the Business.

 

3.22                           BROKERS OR FINDERS

 

Except for PPHB, L.P., no Seller has used any broker or finder in connection
with the transactions described in this Agreement, and neither Buyer nor any of
its Related Persons shall have any liability or otherwise suffer or incur any
loss or expense as a result of or in connection with any brokerage or finder’s
fee or other commission of any Person retained by any Seller or any of its
Related Persons in connection with the Contemplated Transactions.

 

3.23                           LETTERS OF CREDIT

 

Section 3.23 of the Seller Disclosure Letter contains all guaranties, letters of
credit or other similar performance assurances of the Business that benefit the
customers or suppliers of the Business.

 

4.                                       REPRESENTATIONS AND WARRANTIES OF BUYER
AND BUYER ENTITY

 

Buyer (with respect to himself) and Buyer Entity (with respect to itself)
represent and warrant to Sellers as follows:

 

4.1                                 ORGANIZATION AND GOOD STANDING

 

As of the Closing Date, Buyer Entity is an entity duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
power and authority to own, operate and lease its properties and assets and to
carry on its business in the places and in the manner currently conducted.

 

4.2                                 ENFORCEABILITY; AUTHORITY; NO CONFLICT

 

(A)                                  AS OF THE DATE HEREOF, BUYER HAS ALL
REQUISITE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THE DOCUMENTS, TO
THE EXTENT REQUIRED BY THIS AGREEMENT, TO BE DELIVERED BY BUYER AT THE CLOSING
AND TO PERFORM HIS OBLIGATIONS HEREUNDER AND THEREUNDER, INCLUDING THE
CONTEMPLATED TRANSACTIONS.  THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED
BY BUYER AND CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF BUYER,
ENFORCEABLE AGAINST BUYER IN ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY
MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM
OR SIMILAR LAWS FROM TIME TO TIME IN EFFECT THAT AFFECT

 

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creditors’ rights generally and by legal and equitable limitations on the
availability of specific remedies. No further action is necessary on the part of
Buyer to execute and deliver this Agreement or to consummate the Contemplated
Transactions.

 

(B)                                 AS OF THE CLOSING DATE, BUYER ENTITY HAS ALL
REQUISITE POWER AND AUTHORITY TO ASSUME BUYER’S OBLIGATIONS UNDER THIS AGREEMENT
AND TO ENTER INTO THE DOCUMENTS TO BE DELIVERED BY IT AT THE CLOSING AND TO
PERFORM ITS OBLIGATIONS HEREUNDER AND THEREUNDER, INCLUDING THE CONTEMPLATED
TRANSACTIONS.  THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY BUYER
ENTITY AND CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF BUYER ENTITY,
ENFORCEABLE AGAINST BUYER ENTITY IN ACCORDANCE WITH ITS TERMS, EXCEPT AS
ENFORCEABILITY MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR LAWS FROM TIME TO TIME IN EFFECT THAT
AFFECT CREDITORS’ RIGHTS GENERALLY AND BY LEGAL AND EQUITABLE LIMITATIONS ON THE
AVAILABILITY OF SPECIFIC REMEDIES. AS OF THE CLOSING DATE, THIS AGREEMENT AND
THE CONTEMPLATED TRANSACTIONS HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION
BY BUYER ENTITY’S BOARD OF DIRECTORS OR COMPARABLE GOVERNING BODY.  NO FURTHER
CORPORATE, SHAREHOLDER OR SIMILAR ACTION IS NECESSARY ON THE PART OF BUYER
ENTITY TO EXECUTE AND DELIVER THIS AGREEMENT OR TO CONSUMMATE THE CONTEMPLATED
TRANSACTIONS.

 

(C)                                  EXCEPT AS SET FORTH IN SECTION 4.2(C) OF
THE BUYER DISCLOSURE LETTER, NEITHER THE EXECUTION AND DELIVERY OF THIS
AGREEMENT NOR THE CONSUMMATION OR PERFORMANCE OF ANY OF THE CONTEMPLATED
TRANSACTIONS WILL, DIRECTLY OR INDIRECTLY (WITH OR WITHOUT NOTICE OR LAPSE OF
TIME):

 

(I)                                           CONFLICT WITH OR VIOLATE THE
CONSTITUENT DOCUMENTS OF BUYER ENTITY AS OF THE CLOSING DATE;

 

(II)                                        CONFLICT WITH, CONSTITUTE A BREACH,
VIOLATION OR TERMINATION OF ANY PROVISION OF, OR GIVE RISE TO ANY RIGHT OF
TERMINATION, CANCELLATION OR ACCELERATION, OR LOSS OF ANY RIGHT OR BENEFIT OR
BOTH, UNDER ANY MATERIAL CONTRACT TO WHICH BUYER, BUYER ENTITY OR ANY OF THEIR
RESPECTIVE AFFILIATES IS A PARTY OR TO WHICH ANY OF THEM IS BOUND; OR

 

(III)                                     TO BUYER’S KNOWLEDGE, CONTRAVENE,
CONFLICT WITH OR RESULT IN A VIOLATION OR BREACH OF ANY GOVERNMENTAL
AUTHORIZATION, LEGAL REQUIREMENT OR ORDER APPLICABLE TO BUYER OR, AS OF THE
CLOSING DATE, BUYER ENTITY OR TO WHICH BUYER OR, AS OF THE CLOSING DATE, BUYER
ENTITY MAY BE SUBJECT.

 

(D)                                 EXCEPT AS SET FORTH IN SECTION 4.2(D) OF THE
BUYER DISCLOSURE LETTER, NEITHER BUYER NOR BUYER ENTITY IS REQUIRED TO GIVE ANY
NOTICE TO OR OBTAIN ANY CONSENT FROM ANY PERSON IN CONNECTION WITH THE EXECUTION
AND DELIVERY OF THIS AGREEMENT OR THE CONSUMMATION OR PERFORMANCE OF ANY OF THE
CONTEMPLATED TRANSACTIONS.

 

(E)                                  AS OF THE CLOSING DATE, BUYER ENTITY HAS
ASSUMED ALL OF THE OBLIGATIONS OF BUYER UNDER THIS AGREEMENT, SUBJECT TO THE
TERMS OF SECTION 13.8.  BUYER ENTITY IS CONTROLLED DIRECTLY OR INDIRECTLY BY
BUYER.

 

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4.3                                 CERTAIN PROCEEDINGS

 

There is no pending or, to Buyer’s Knowledge, threatened Proceeding that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions.  To Buyer’s
Knowledge, no event has occurred or circumstance exists that is reasonably
likely to give rise to or serve as a basis for the commencement of any such
Proceeding.

 

4.4                                 INVESTIGATION

 

Buyer and, as of the Closing Date, Buyer Entity have conducted their own
independent review and analysis of the Business, operations, assets (including
inventories), liabilities, results of operations, financial condition, software,
technology, Business Intellectual Property and prospects of the Business and
acknowledges that it has been provided access to the personnel, properties,
premises and records of the Business for such purpose.  In connection with
Buyer’s and Buyer Entity’s respective investigation of the Business, Buyer and
Buyer Entity have received certain projections, forecasts, plans and other
forward-looking information with respect to the Business and acknowledges that
there are uncertainties inherent in attempting to make such projections,
forecasts and plans, that Buyer and Buyer Entity are familiar with such
uncertainties and that Buyer and Buyer Entity are taking full responsibility for
making their own evaluation of the adequacy and accuracy of all projections,
forecasts, plans and other forward-looking information so furnished to it
(including the reasonableness of the assumptions underlying such projections,
forecasts, plans and other forward-looking information).  In entering into or,
in the case of Buyer Entity, assuming Buyer’s obligations under, this Agreement,
each of Buyer and, as of the Closing Date, Buyer Entity acknowledges that each
such Person has received offering and other marketing materials, but that each
such Person is a sophisticated and experienced buyer in transactions similar to
the Contemplated Transactions and has relied solely upon its own investigation
and analysis and the specific representations and warranties of Sellers set
forth in this Agreement.

 

4.5                                 BROKERS OR FINDERS

 

Neither Buyer nor, as of the Closing Date, Buyer Entity has used any broker or
finder in connection with the transactions described in this Agreement, and
neither Seller nor any of its Related Persons shall have any liability or
otherwise suffer or incur any loss or expense as a result of or in connection
with any brokerage or finder’s fee or other commission of any Person retained by
Buyer, Buyer Entity or any of their respective Related Persons in connection
with the Contemplated Transactions.

 

5.                                       COVENANTS OF BUYER AND SELLERS PRIOR TO
CLOSING

 

5.1                                 REQUIRED APPROVALS

 

(A)                                  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, THE PARTIES HERETO AGREE TO 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 LEGAL REQUIREMENTS TO CONSUMMATE AND

 

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MAKE EFFECTIVE THE CONTEMPLATED TRANSACTIONS, INCLUDING COOPERATING FULLY WITH
THE OTHER PARTIES, INCLUDING BY PROVISION OF INFORMATION AND MAKING OF ALL
NECESSARY FILINGS IN CONNECTION WITH, AMONG OTHER THINGS, THE HSR ACT.  THE
PARTIES HERETO SHALL COOPERATE TO CAUSE TO BE FILED AS PROMPTLY AS PRACTICABLE,
BUT NO LATER THAN TEN CALENDAR DAYS, FOLLOWING THE EXECUTION OF THIS AGREEMENT,
WITH THE FEDERAL TRADE COMMISSION AND THE DEPARTMENT OF JUSTICE THE NOTIFICATION
AND REPORT FORM REQUIRED UNDER THE HSR ACT FOR THE CONTEMPLATED TRANSACTIONS AND
TO SEEK EARLY TERMINATION OF THE WAITING PERIOD THEREUNDER, AND SHALL USE
REASONABLE EFFORTS TO PROVIDE ANY SUPPLEMENTAL INFORMATION THAT MAY BE
REASONABLY REQUESTED IN CONNECTION WITH THOSE FILINGS (IT BEING UNDERSTOOD THAT
THE FILING FEE SHALL BE BORNE BY BUYER).

 

(B)                                 BUYER AND SELLERS SHALL MAKE AS PROMPTLY AS
PRACTICABLE FOLLOWING THE DATE OF THIS AGREEMENT THE OTHER NOTIFICATIONS
REQUIRED IN CONNECTION WITH THIS AGREEMENT AND THE CONTEMPLATED TRANSACTIONS,
AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN THE CONSENTS OF ALL
THIRD PARTIES REQUIRED IN CONNECTION WITH THE CONSUMMATION OF THE CONTEMPLATED
TRANSACTIONS.  SUBJECT TO LEGAL REQUIREMENTS, BUYER AND SELLERS SHALL COORDINATE
AND COOPERATE IN EXCHANGING INFORMATION AND ASSISTANCE IN CONNECTION WITH
OBTAINING CONSENTS OF THIRD PARTIES AND MAKING ALL FILINGS OR NOTIFICATIONS
NECESSARY TO TRANSFER ANY GOVERNMENTAL AUTHORIZATIONS TO BUYER, OR IN CONNECTION
WITH ANY APPLICATIONS FOR NEW GOVERNMENTAL AUTHORIZATIONS RELATING TO OR USED IN
THE OPERATION OF THE BUSINESS.

 

5.2                                 NOTIFICATION

 

Between the date of this Agreement and the Closing, Buyer shall give prompt
notice to Sellers, and Sellers shall give prompt notice to Buyer, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be reasonably likely to cause (x) any representation or warranty
of such party contained in this Agreement to be untrue or inaccurate or (y) any
covenant, condition or agreement of such party contained in this Agreement not
to be complied with or satisfied; or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.

 

5.3                                 COMMERCIALLY REASONABLE EFFORTS

 

Buyer and Sellers shall use their commercially reasonable efforts to cause the
conditions in Articles 7 and 8 to be satisfied.

 

5.4                                 BULK SALES LAWS

 

Buyer and Sellers hereby waive compliance with the bulk-transfer provisions of
the Uniform Commercial Code (or any similar law) (“Bulk Sales Laws”) in
connection with the Contemplated Transactions.

 

5.5                                 LETTERS OF CREDIT

 

From and after the Closing, to the extent that any guaranty, letter of credit or
other performance assurance set forth in Section 3.23 of the Seller Disclosure
Letter is drawn upon or otherwise results in any Liability to Sellers, Buyer
shall promptly reimburse Sellers following the

 

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receipt of an invoice therefor; provided, that Buyer shall make such
reimbursement no later than ten (10) Business Days following receipt of such
invoice.  All amounts due under this Section 5.5 that are not paid on or before
the due date shall bear interest at the rate of ten percent (10%) per annum. 
Buyer shall not have any right to setoff any amounts due and payable to Sellers
under this Section 5.5 against any other payments to be made pursuant to this
Agreement or otherwise.  Nothing in this Section 5.5 shall be deemed to affect
Buyer’s rights under Article 11.

 

5.6                                 UPDATING

 

Sellers may from time to time notify Buyer of any changes or additions to the
Seller Disclosure Letter and Buyer may from time to time notify Sellers of any
changes or additions to the Buyer Disclosure Letter by the delivery of
amendments or supplements thereto, if any, as of a reasonably current date prior
to the Closing, but each party shall in any event at least once not earlier than
ten (10) Business Days or later than three (3) Business Days prior thereto so
notify the other party; provided, however, that such delivery shall not affect
any rights of Buyer under this Agreement, unless the updated disclosure would
cause Buyer to have the right of termination under Section 9.1(b) and Buyer does
not exercise such right of termination under Section 9.1(b) and the Closing
occurs, in which case any such supplement or supplements shall be deemed to
become a part of the Seller Disclosure Letter as of the date of this Agreement.

 

6.                                       COVENANTS OF SELLERS PRIOR TO CLOSING

 

6.1                                 ACCESS AND INVESTIGATION

 

Between the date of this Agreement and the Closing Date, and upon reasonable
advance notice received from Buyer, each Seller shall (a) afford Buyer and its
Representatives (collectively, “Buyer Group”) access, during regular business
hours, to Sellers’ personnel, properties, Seller Contracts, Governmental
Authorizations, books and Records and other documents and data related to the
Business and Assets, such rights of access to be exercised in a manner that does
not unreasonably interfere with the operations of Sellers; (b) furnish Buyer
Group with copies of all such Seller Contracts, Governmental Authorizations,
books and Records and other existing documents and data related to the Business
and Assets as Buyer may reasonably request; (c) furnish Buyer Group with such
additional financial, operating and other relevant data and information
regarding the Business and Assets as Buyer may reasonably request; and (d)
otherwise cooperate and assist, to the extent reasonably requested by Buyer,
with Buyer’s investigation of the properties, assets and financial condition
related to the Business and Assets. In addition, Buyer shall have the right to
have the Business Property and Tangible Personal Property inspected by Buyer
Group, at Buyer’s sole cost and expense, for purposes of determining the
physical condition and legal characteristics of the Business Property and
Tangible Personal Property.  Upon notice to Sellers, Buyer shall have the right
to conduct an environmental assessment of the Assets; provided that such
environmental assessment shall not unreasonably interfere with normal operation
of the Assets.  Buyer shall not, however, be permitted to conduct any sampling,
boring, drilling or other invasive investigative activity with respect to the
Assets.  Each Seller shall have the right to be present during any environmental
assessment of the Assets.  Buyer shall maintain, and shall cause its officers,
employees, Representatives, consultants and advisors to maintain, all
information obtained by Buyer

 

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pursuant to any environmental assessment or other due diligence activity as
strictly confidential, unless disclosure of any facts discovered through such
environmental assessment is required under any Environmental Laws.  In the event
that any necessary disclosures under applicable Environmental Laws are required
with respect to matters discovered by any environmental assessment conducted by,
for or on behalf of Buyer, Buyer agrees that Sellers shall be the responsible
parties for disclosing such matters to the appropriate Governmental Bodies,
unless Buyer is required by Legal Requirement to make such disclosure, in which
case Buyer shall so notify Sellers and allow Sellers a reasonable time to
prepare such disclosure.

 

6.2                                 OPERATION OF THE BUSINESS

 

Between the date of this Agreement and the Closing, with respect to the Business
and Assets, unless Buyer otherwise consents in writing, each Seller shall:

 

(A)                                  CONDUCT THE BUSINESS ONLY IN THE ORDINARY
COURSE OF THE BUSINESS CONSISTENT WITH PAST PRACTICES OR REASONABLE FUTURE
EXPECTATIONS;

 

(B)                                 WITHOUT MAKING ANY COMMITMENT ON BUYER’S
BEHALF, USE ITS COMMERCIALLY REASONABLE EFFORTS TO, IN ALL MATERIAL RESPECTS,
PRESERVE INTACT THE CURRENT BUSINESS ORGANIZATION, KEEP AVAILABLE THE SERVICES
OF ITS EMPLOYEES AND AGENTS AND MAINTAIN ITS RELATIONS AND GOODWILL WITH
SUPPLIERS, CUSTOMERS, LANDLORDS, CREDITORS, EMPLOYEES, AGENTS AND OTHERS HAVING
BUSINESS RELATIONSHIPS WITH IT;

 

(C)                                  EXCEPT FOR CAUSE, MAKE NO MATERIAL CHANGES
IN MANAGEMENT PERSONNEL OF THE BUSINESS;

 

(D)                                 NOT HIRE ANY MANAGEMENT PERSONNEL OF THE
BUSINESS, MAKE ANY CHANGES TO ANY SELLER BENEFIT PLAN AFFECTING THE AFFECTED
EMPLOYEES, OR INCREASE THE WAGES, SALARIES OR BENEFITS OF ANY AFFECTED EMPLOYEE,
OTHER THAN IN THE ORDINARY COURSE OF BUSINESS;

 

(E)                                  MAINTAIN THE ASSETS IN A STATE OF REPAIR
AND CONDITION THAT COMPLIES WITH LEGAL REQUIREMENTS, IS CONSISTENT WITH THE
REQUIREMENTS AND NORMAL CONDUCT OF THE BUSINESS AND CONSISTENT WITH THE RECENT
NORMAL AND ROUTINE MAINTENANCE SCHEDULE PERFORMED BY SELLERS;

 

(F)                                    USE ITS COMMERCIALLY REASONABLE EFFORTS
TO KEEP IN FULL FORCE AND EFFECT, WITHOUT AMENDMENT, ALL MATERIAL RIGHTS
RELATING TO THE BUSINESS;

 

(G)                                 COMPLY WITH ALL LEGAL REQUIREMENTS AND USE
ITS COMMERCIALLY REASONABLE EFFORTS TO COMPLY WITH ALL CONTRACTUAL OBLIGATIONS
APPLICABLE TO THE OPERATIONS OF THE BUSINESS;

 

(H)                                 CONTINUE IN FULL FORCE AND EFFECT THE
INSURANCE COVERAGE UNDER THE POLICIES SET FORTH IN SECTION 3.18(A) OF THE SELLER
DISCLOSURE LETTER OR SUBSTANTIALLY EQUIVALENT POLICIES;

 

(I)                                     NOT ENTER INTO A SELLER CONTRACT OR BID
DESCRIBED IN SECTION 3.17(A) OR RELATING TO BUSINESS INTELLECTUAL PROPERTY OTHER
THAN IN THE ORDINARY COURSE OF BUSINESS;

 

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(J)                                     NOT DISPOSE OF OR PERMIT TO LAPSE ANY
RIGHTS TO THE USE OF ANY BUSINESS INTELLECTUAL PROPERTY OR PERMIT ANY
GOVERNMENTAL AUTHORIZATION TO EXPIRE; AND

 

(K)                                  MAINTAIN ALL BOOKS AND RECORDS OF SELLERS
RELATING TO THE BUSINESS IN THE ORDINARY COURSE OF THE BUSINESS CONSISTENT WITH
PAST PRACTICES.

 

6.3                                 NEGATIVE COVENANT

 

Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, each Seller shall not, without the prior written
Consent of Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events listed in Section 3.16 would occur or be reasonably likely to occur; or
(b) make any modification to any material Seller Contract or Governmental
Authorization.

 

6.4                                 TAX CLEARANCE CERTIFICATES

 

Promptly after the date hereof, Sellers shall apply for tax clearance
certificates from the State of Texas related to the state or local sales or use
Taxes with respect to the Business.

 

7.                                       CONDITIONS PRECEDENT TO BUYER’S
OBLIGATION TO CLOSE

 

Buyer’s obligation to purchase the Assets and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer, in whole or in part):

 

7.1                                 ACCURACY OF REPRESENTATIONS; SELLERS’
PERFORMANCE

 

The representations and warranties of each Seller set forth in this Agreement
will be, if qualified by materiality, true and correct in all respects, and if
not so qualified, shall be true and correct in all material respects (without
giving effect to any supplement to the Seller Disclosure Letter not approved in
writing by Buyer), as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties speak as
of an earlier date).  Each of the agreements and covenants of Sellers to be
performed and complied with by Sellers pursuant to this Agreement prior to or as
of the Closing Date will have been duly performed and complied with in all
material respects.  Each Seller shall have delivered to Buyer a certificate
signed by one of its duly authorized officers, dated the Closing Date,
certifying, as of such date, (i) that all representations and warranties
(individually and collectively) of Sellers in Article 3 are, if qualified by
materiality, true and correct in all respects, and if not so qualified, true and
correct in all material respects and (ii) that Sellers have performed and
complied in all material respects with all covenants and agreements
(individually and collectively) contained in this Agreement required to be
performed and complied with by them at or prior to the Closing Date.

 

7.2                                 HSR ACT

 

The waiting period under the HSR Act shall have expired or been terminated.

 

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7.3                                 ADDITIONAL DOCUMENTS

 

Each Seller shall have caused the documents and instruments required by Section
2.9(a) and the following documents to be delivered (or tendered subject only to
Closing) to Buyer:

 

(A)           THE ARTICLES OF INCORPORATION, AS AMENDED (IN THE CASE OF THE
PARENT), OR CERTIFICATE OF INCORPORATION, AS AMENDED (IN THE CASE OF SSPS, SDDA
AND SPI), OR DEED OF TRUST (IN THE CASE OF S&S TRUST), DULY CERTIFIED AS OF A
RECENT DATE BY THE SECRETARY OF STATE OF THE STATE OF TEXAS OR DELAWARE, AS
APPLICABLE, OR THE SECRETARY OF THE COMMONWEALTH OF THE COMMONWEALTH OF
PENNSYLVANIA;

 

(B)           RELEASES OF ALL ENCUMBRANCES ON THE ASSETS, OTHER THAN PERMITTED
ENCUMBRANCES;

 

(C)           SUCH OTHER DOCUMENTS AS BUYER MAY REASONABLY REQUEST FOR THE
PURPOSE OF:

 

(I)                                           EVIDENCING THE ACCURACY OF ANY OF
SELLER’S REPRESENTATIONS AND WARRANTIES;

 

(II)                                        EVIDENCING THE PERFORMANCE BY ANY
SELLER OF, OR THE COMPLIANCE BY ANY SELLER WITH, ANY COVENANT OR OBLIGATION
REQUIRED TO BE PERFORMED OR COMPLIED WITH BY SUCH SELLER; OR

 

(III)                                     EVIDENCING THE SATISFACTION OF ANY
CONDITION REFERRED TO IN THIS ARTICLE 7.

 

7.4                                 NO PROCEEDINGS

 

There shall not be any Proceeding pending or threatened against any Seller
(other than by or at the direction of Buyer or any of its Affiliates) or Buyer
or against any Related Person of any such party (a) involving any challenge to,
or seeking Damages or other relief in connection with, any of the Contemplated
Transactions or (b) that may have the effect of preventing, delaying, making
illegal, imposing limitations or conditions on or otherwise interfering with any
of the Contemplated Transactions.

 

7.5                                 NO CONFLICT

 

Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any material adverse consequence under (a)
any applicable Legal Requirement or Order or (b) any Legal Requirement or Order
that has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.

 

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8.                                       CONDITIONS PRECEDENT TO EACH SELLER’S
OBLIGATION TO CLOSE

 

Each Seller’s obligation to sell the Assets and to take the other actions
required to be taken by such Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by such Seller in whole or in part):

 

8.1                                 ACCURACY OF REPRESENTATIONS; BUYER’S
PERFORMANCE

 

The representations and warranties of Buyer set forth in this Agreement will be,
if qualified by materiality, true and correct in all respects, and if not so
qualified, shall be true and correct in all material respects (without giving
effect to any supplement to the Buyer Disclosure Letter not approved in writing
by Seller), as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties speak as of an earlier
date).  Each of the agreements and covenants of Buyer to be performed and
complied with by Buyer pursuant to this Agreement prior to or as of the Closing
Date will have been duly performed and complied with in all material respects. 
Buyer shall have delivered to Sellers a certificate signed by one of its duly
authorized officers, dated the Closing Date, certifying, as of such date (i)
that all representations and warranties (individually and collectively) of Buyer
are, if qualified by materiality, true and correct in all respects, and if not
so qualified, true and correct in all material respects and (ii) Buyer has
performed and complied in all material respects with all covenants and
agreements (individually and collectively) contained in this Agreement required
to be performed and complied with by it at or prior to the Closing Date.

 

8.2                                 HSR ACT

 

The waiting period under the HSR Act shall have expired or been terminated.

 

8.3                                 ADDITIONAL DOCUMENTS

 

Buyer shall have caused the documents and instruments required by Section 2.9(b)
and the following documents to be delivered (or tendered subject only to
Closing) to each Seller:

 

(A)           THE CERTIFICATE OF INCORPORATION AND ALL AMENDMENTS THERETO OF
BUYER, DULY CERTIFIED AS OF A RECENT DATE BY THE SECRETARY OF STATE OF THE STATE
OF DELAWARE;

 

(B)           SUCH OTHER DOCUMENTS AS ANY SELLER MAY REASONABLY REQUEST FOR THE
PURPOSE OF:

 

(I)                                           EVIDENCING THE ACCURACY OF ANY OF
BUYER’S REPRESENTATIONS AND WARRANTIES;

 

(II)                                        EVIDENCING THE PERFORMANCE BY BUYER
OF, OR THE COMPLIANCE BY BUYER WITH, ANY COVENANT OR OBLIGATION REQUIRED TO BE
PERFORMED OR COMPLIED WITH BY BUYER; OR

 

(III)                                     EVIDENCING THE SATISFACTION OF ANY
CONDITION REFERRED TO IN THIS ARTICLE 8.

 

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8.4                                 NO PROCEEDINGS

 

There shall not be any Proceeding pending or threatened against any Seller or
Buyer (other than by or at the direction of Sellers and their Affiliates) or
against any Related Person of such Seller (a) involving any challenge to, or
seeking Damages or other relief in connection with, any of the Contemplated
Transactions or (b) that may have the effect of preventing, delaying, making
illegal, imposing limitations or conditions on or otherwise interfering with any
of the Contemplated Transactions.

 

8.5                                 NO CONFLICT

 

Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause any
Seller or any Related Person of such Seller to suffer any material adverse
consequence under (a) any applicable Legal Requirement or Order or (b) any Legal
Requirement or Order that has been published, introduced or otherwise proposed
by or before any Governmental Body, excluding Bulk Sales Laws.

 

9.             TERMINATION

 

9.1                                 TERMINATION EVENTS

 

By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:

 

(A)                                  BY MUTUAL WRITTEN AGREEMENT OF BUYER AND
PARENT (EACH, A “REPRESENTATIVE PARTY”);

 

(B)                                 BY EITHER REPRESENTATIVE PARTY (PROVIDED
THAT NEITHER THE TERMINATING REPRESENTATIVE PARTY NOR ANY OF ITS AFFILIATES IS
THEN IN MATERIAL BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER
AGREEMENT CONTAINED IN THIS AGREEMENT) IN THE EVENT OF A MATERIAL BREACH BY THE
OTHER REPRESENTATIVE PARTY OR A PARTY AFFILIATED WITH THE OTHER REPRESENTATIVE
PARTY OF ANY REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT WHICH CANNOT
BE OR HAS NOT BEEN CURED WITHIN THIRTY (30) DAYS AFTER THE GIVING OF WRITTEN
NOTICE TO OTHER REPRESENTATIVE PARTY OF SUCH BREACH AND WHICH BREACH IS
REASONABLY LIKELY, IN THE OPINION OF THE TERMINATING REPRESENTATIVE PARTY, TO
PERMIT SUCH REPRESENTATIVE PARTY TO REFUSE TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF;

 

(C)                                  BY EITHER REPRESENTATIVE PARTY (PROVIDED
THAT NEITHER THE TERMINATING REPRESENTATIVE PARTY NOR ANY OF ITS AFFILIATES IS
THEN IN MATERIAL BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER
AGREEMENT CONTAINED IN THIS AGREEMENT) IN THE EVENT OF A MATERIAL BREACH BY THE
OTHER REPRESENTATIVE PARTY OR A PARTY AFFILIATED WITH THE OTHER REPRESENTATIVE
PARTY OF ANY COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT WHICH CANNOT BE
OR HAS NOT BEEN CURED WITHIN TEN (10) DAYS AFTER THE GIVING OF WRITTEN NOTICE TO
OTHER REPRESENTATIVE PARTY OF SUCH BREACH AND WHICH BREACH IS REASONABLY LIKELY,
IN THE OPINION OF THE TERMINATING REPRESENTATIVE PARTY, TO PERMIT SUCH
REPRESENTATIVE PARTY TO REFUSE TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF;

 

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(D)                                 BY EITHER REPRESENTATIVE PARTY IN THE EVENT
(I) ANY CONSENT OF ANY GOVERNMENTAL BODY REQUIRED FOR CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL HAVE BEEN DENIED BY FINAL NONAPPEALABLE
ACTION OF SUCH AUTHORITY OR IF ANY ACTION TAKEN BY SUCH AUTHORITY IS NOT
APPEALED WITHIN THE TIME LIMIT FOR APPEAL OR (II) THE CONSUMMATION OF SUCH
TRANSACTIONS SHALL HAVE BEEN PERMANENTLY AND RESTRAINED, ENJOINED OR OTHERWISE
PROHIBITED BY FORCE OF LAW; OR

 

(E)                                  BY EITHER REPRESENTATIVE PARTY IN THE EVENT
THAT THE CLOSING SHALL NOT HAVE BEEN CONSUMMATED BY DECEMBER 31, 2005 (THE
“TERMINATION DATE”); PROVIDED THAT THE FAILURE TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY ON OR BEFORE SUCH DATE SHALL NOT HAVE BEEN CAUSED BY ANY
BREACH OF THIS AGREEMENT BY THE REPRESENTATIVE PARTY ELECTING TO TERMINATE
PURSUANT TO THIS SECTION 9.1(E) OR AN AFFILIATE OF SUCH REPRESENTATIVE PARTY.

 

9.2                                 EFFECT OF TERMINATION

 

Each party’s right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2, Sections 13.1 (Expenses), 13.2 (Public Announcements), 13.3
(Notices), 13.4 (Dispute Resolution), and Articles 11 (Indemnification;
Remedies) and 12 (Confidentiality) will survive, provided, however, that, if
this Agreement is terminated because of a breach of this Agreement by the
nonterminating party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
nonterminating party’s failure to comply with its obligations under this
Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired.

 

10.                                 ADDITIONAL COVENANTS

 

10.1                           EMPLOYEES AND EMPLOYEE BENEFITS

 

(A)                                  AS OF THE CLOSING DATE, SELLERS SHALL
TERMINATE THE EMPLOYMENT OF ALL OF THE AFFECTED EMPLOYEES (OTHER THAN THOSE WHO
ARE ON SHORT-TERM DISABILITY LEAVE).  AS SOON AS PRACTICABLE AFTER THE DATE OF
THIS AGREEMENT, BUYER SHALL OFFER EMPLOYMENT, EFFECTIVE AS OF THE EFFECTIVE
TIME, TO ALL PERSONS WHO ARE OR WILL BE AFFECTED EMPLOYEES ON THE DAY
IMMEDIATELY PRECEDING THE CLOSING DATE (OTHER THAN THOSE ON SHORT-TERM
DISABILITY LEAVE).  EACH AFFECTED EMPLOYEE WHO ACCEPTS ANY SUCH OFFER OF
EMPLOYMENT SHALL BE REFERRED TO IN THIS AGREEMENT AS A “TRANSFERRED EMPLOYEE.” 
THE OFFER OF EMPLOYMENT, INCLUDING WAGES, SALARIES AND BENEFITS, SHALL BE, IN
THE AGGREGATE, SUBSTANTIALLY COMPARABLE, BUT EXCLUDING FOR THIS PURPOSE
TRANSACTION BONUSES, WITH THE TERMS AND CONDITIONS UNDER WHICH THE TRANSFERRED
EMPLOYEES WERE EMPLOYED IMMEDIATELY BEFORE THE CLOSING DATE.  ANY AFFECTED
EMPLOYEE WHO IS ON SHORT-TERM DISABILITY LEAVE AS OF THE CLOSING DATE SHALL
REMAIN EMPLOYED BY SELLERS THROUGH THE AFFECTED EMPLOYEE’S SHORT-TERM DISABILITY
LEAVE; PROVIDED, HOWEVER, THAT IF HE OR SHE RECOVERS FROM HIS OR HER DISABILITY
WITHIN THE PERIOD OF HIS OR HER SHORT-TERM DISABILITY LEAVE OR THE SIX-MONTH
PERIOD FOLLOWING THE CLOSING DATE (WHICHEVER IS SHORTER), BUYER SHALL AT THAT
TIME MAKE AN OFFER OF

 

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employment to him or her on the same employment terms and conditions as are
applicable to similarly situated Transferred Employees, subject to the proviso
above.

 

(B)                                 SELLERS SHALL BE RESPONSIBLE FOR THE PAYMENT
OF ALL WAGES AND OTHER REMUNERATION ACCRUING TO ANY AFFECTED EMPLOYEE PRIOR TO
THE TIME ANY SUCH AFFECTED EMPLOYEE BECAME A TRANSFERRED EMPLOYEE, EXCEPT TO THE
EXTENT THE LIABILITY THEREFOR IS REFLECTED AS A LIABILITY ON THE CLOSING BALANCE
SHEET.

 

(C)                                  SELLERS SHALL BE LIABLE FOR ALL CLAIMS MADE
BY AFFECTED EMPLOYEES AND THEIR BENEFICIARIES UNDER AND ALL OTHER LIABILITIES OF
THE SELLER BENEFIT PLANS.

 

(D)                                 COVERAGE FOR TRANSFERRED EMPLOYEES UNDER ALL
“EMPLOYEE WELFARE BENEFIT PLANS,” AS DEFINED IN SECTION 3(1) OF ERISA,
MAINTAINED BY SELLERS SHALL CEASE AS OF THE EFFECTIVE TIME.  SELLERS SHALL BE
SOLELY RESPONSIBLE FOR ANY CONTINUATION COVERAGE REQUIRED BY COBRA FOR THOSE
AFFECTED EMPLOYEES OF SELLERS WHO ARE NOT TRANSFERRED EMPLOYEES.  BUYER SHALL
WAIVE ALL PRE-EXISTING CONDITIONS, LIMITATIONS OR EXCLUSIONS AND WAITING PERIODS
FOR THE TRANSFERRED EMPLOYEES UNDER ALL EMPLOYEE WELFARE BENEFIT PLANS AND
FRINGE BENEFIT PROGRAMS OF BUYER, INCLUDING VACATION, BONUS AND OTHER INCENTIVE
PROGRAMS MAINTAINED BY BUYER.

 

(E)                                  SELLERS SHALL RETAIN ALL ASSETS IN THE
PENSION AND RETIREMENT FUNDS OF SELLERS, AND SHALL DISTRIBUTE PENSION AND
RETIREMENT BENEFITS THAT THE TRANSFERRED EMPLOYEES SHALL BECOME ENTITLED TO
RECEIVE FROM SELLERS IN ACCORDANCE WITH THE APPLICABLE PLAN DOCUMENT AND THE
TRANSFERRED EMPLOYEES’ ELECTIONS, AS APPLICABLE; PROVIDED, HOWEVER, THAT
EFFECTIVE AS OF THE EFFECTIVE TIME, TO THE EXTENT REQUIRED BY LEGAL REQUIREMENT,
SELLERS SHALL AMEND THE STEWART & STEVENSON SERVICES, INC. DEFINED BENEFIT
PENSION PLAN AND ANY OTHER SELLER BENEFIT PLAN THAT IS A “PENSION PLAN,” AS
DEFINED IN SECTION 3(2) OF ERISA, TO PROVIDE THAT EACH TRANSFERRED EMPLOYEE’S
BENEFIT THAT HAS ACCRUED AS OF THE CLOSING DATE IS FULLY VESTED AND
NONFORFEITABLE AS OF THE CLOSING DATE.

 

(F)                                    EFFECTIVE AS OF THE CLOSING DATE (OR AS
TO EMPLOYEES ON SHORT-TERM DISABILITY LEAVE ON THE CLOSING DATE, AS OF THE DATE
OF EMPLOYMENT BY BUYER), BUYER SHALL TAKE SUCH ACTIONS AS ARE NECESSARY TO GRANT
PAST SERVICE CREDIT FOR ALL THE TRANSFERRED EMPLOYEES FOR PURPOSES OF
DETERMINING VESTING, ELIGIBILITY AND BENEFIT ACCRUALS UNDER ALL BUYER’S EMPLOYEE
BENEFIT PROGRAMS IN WHICH TRANSFERRED EMPLOYEES ARE ELIGIBLE TO PARTICIPATE,
INCLUDING EMPLOYEE RETIREMENT PLANS, SEVERANCE, VACATION, BONUS, INCENTIVE
COMPENSATION AND EMPLOYEE WELFARE BENEFIT PLANS OF BUYER EQUAL TO THAT WHICH
SUCH TRANSFERRED EMPLOYEES WERE CREDITED WITH BY SELLERS AS OF THE CLOSING DATE
FOR SERVICE WITH SELLERS AND THEIR CURRENT AND FORMER ERISA AFFILIATES, BUT
EXCLUDING BENEFIT ACCRUALS FOR BUYER’S DEFINED BENEFIT PENSION AND
POST-RETIREMENT MEDICAL BENEFIT PLANS.

 

(G)                                 WITH RESPECT TO EVENTS FOLLOWING THE
CLOSING, BUYER SHALL BE RESPONSIBLE FOR SENDING TIMELY AND APPROPRIATE NOTICES
TO ALL TRANSFERRED EMPLOYEES REQUIRED UNDER ALL APPLICABLE LEGAL REQUIREMENTS
RELATING TO PLANT OR FACILITY CLOSINGS OR OTHERWISE REGULATING THE TERMINATION
OF EMPLOYEES.  TO THE EXTENT THAT ANY LIABILITY IS INCURRED UNDER ANY SUCH LEGAL
REQUIREMENTS BASED ON BUYER’S FAILURE TO COMPLY WITH SECTION 10.1(A) OR BUYER’S
ACTIONS AFTER

 

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the Closing, Buyer will be solely and exclusively responsible for all
obligations and liabilities incurred under such Legal Requirements relating to
the Contemplated Transactions.

 

(H)                                 SELLERS SHALL MAKE AVAILABLE TO BUYER
RECORDS WHICH PROVIDE INFORMATION REGARDING EMPLOYEES’ NAMES, SOCIAL SECURITY
NUMBERS, DATES OF HIRE BY SELLERS, DATE OF BIRTH, NUMBER OF HOURS WORKED EACH
CALENDAR YEAR, ATTENDANCE AND SALARY HISTORIES FOR ALL TRANSFERRED EMPLOYEES. 
SELLERS SHALL NOT PROVIDE RECORDS TO THE EXTENT PROHIBITED BY ANY APPLICABLE
LEGAL REQUIREMENT, INCLUDING THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY
ACT OF 1996.

 

10.2                           NONSOLICITATION

 

(A)                                  UNTIL THE DATE THREE (3) YEARS AFTER THE
CLOSING DATE, NO SELLER SHALL (AND EACH SELLER SHALL CAUSE ITS AFFILIATES NOT
TO), WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER, DIRECTLY OR INDIRECTLY,
KNOWINGLY HIRE, RETAIN OR ATTEMPT TO HIRE OR RETAIN ANY EMPLOYEE OR CONTRACT
EMPLOYEE OF BUYER OR INTERFERE WITH THE RELATIONSHIP OR PROSPECTIVE EMPLOYMENT
RELATIONSHIP BETWEEN BUYER AND ANY AFFECTED EMPLOYEE, OR ANY OF BUYER’S
EMPLOYEES OR CONTRACT EMPLOYEES; PROVIDED, HOWEVER, THAT SUCH SELLER SHALL NOT
BE PROHIBITED FROM HIRING, RETAINING OR ATTEMPTING TO HIRE OR RETAIN ANY PERSON
WHO RESPONDS TO A GENERAL SOLICITATION OR ADVERTISEMENT.

 

(B)                                 UNTIL THE DATE THREE (3) YEARS AFTER THE
CLOSING DATE, BUYER SHALL NOT (AND BUYER SHALL CAUSE ITS AFFILIATES NOT TO),
WITHOUT THE PRIOR WRITTEN CONSENT OF SELLERS, DIRECTLY OR INDIRECTLY, KNOWINGLY
HIRE, RETAIN OR ATTEMPT TO HIRE OR RETAIN ANY EMPLOYEE OR CONTRACT EMPLOYEE OF
ANY SELLER OR INTERFERE WITH THE RELATIONSHIP BETWEEN ANY SELLER AND ANY OF ITS
EMPLOYEES OR CONTRACT EMPLOYEES; PROVIDED, HOWEVER, THAT BUYER SHALL NOT BE
PROHIBITED FROM HIRING, RETAINING OR ATTEMPTING TO HIRE OR RETAIN ANY PERSON WHO
RESPONDS TO A GENERAL SOLICITATION OR ADVERTISEMENT.

 

10.3                           CUSTOMER AND OTHER BUSINESS RELATIONSHIPS

 

For a period of ninety (90) days after the Closing, each Seller will cooperate
with Buyer on a commercially reasonable basis at Buyer’s sole cost in its
efforts to continue and maintain for the benefit of Buyer those business
relationships of such Seller existing prior to the Closing and relating to the
Business after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others.

 

10.4                           RETENTION OF AND ACCESS TO RECORDS

 

(A)                                  FOR THE GREATER OF FIVE YEARS FROM THE
CLOSING DATE AND ANY PERIOD AS MAY BE REQUIRED BY ANY STATUTE, REGULATION OR
GOVERNMENTAL BODY OR ANY THEN PENDING LITIGATION, BUYER SHALL MAINTAIN IN THE
SAME MANNER THAT IT CURRENTLY MAINTAINS ITS BUSINESS RECORDS AND FILES THE
BUSINESS RECORDS AND FILES OF SELLERS THAT ARE TRANSFERRED TO BUYER IN
CONNECTION HEREWITH, AND IN ANTICIPATION OF, OR PREPARATION FOR, EXISTING OR
FUTURE PROCEEDING OR ANY TAX AUDIT IN WHICH SELLERS OR ANY OF ITS AFFILIATES IS
INVOLVED AND WHICH IS RELATED TO THE BUSINESS OR THE ASSETS, PERMIT SELLERS AND
THEIR REPRESENTATIVES REASONABLE ACCESS TO SUCH RECORDS AND FILES DURING REGULAR
BUSINESS HOURS AND UPON REASONABLE NOTICE AT BUYER’S PRINCIPAL PLACES OF
BUSINESS OR AT ANY LOCATION WHERE THE RECORDS ARE STORED; PROVIDED, HOWEVER,
THAT (I) ANY ACCESS SHALL BE HAD OR DONE IN A MANNER SO AS NOT TO INTERFERE WITH
THE NORMAL CONDUCT OF THE BUSINESS AND (II) BUYER

 

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shall not be required to provide access to any confidential record or records,
the disclosure of which would violate any governmental statute or regulation or
applicable confidentiality agreement with any Person.  Buyer shall notify Parent
in writing at least ten days prior to any destruction of such transferred
records and files prior to the end of the period referenced in the preceding
sentence, and at Parent’s option, deliver such records and files to Parent.

 

(B)                                 UPON REASONABLE REQUEST THEREFOR BY BUYER,
SELLERS SHALL DELIVER TO BUYER COPIES OF ANY ORIGINAL BUSINESS RECORDS NOT
DELIVERED TO BUYER AT THE CLOSING AS PROMPTLY AS REASONABLY POSSIBLE AT SELLERS’
SOLE COST AND EXPENSE.  FURTHER, FOR A PERIOD OF FIVE (5) YEARS FROM THE
CLOSING, SELLERS (I) SHALL MAINTAIN, AND SHALL CAUSE THEIR AFFILIATES TO
MAINTAIN, AT SELLERS’ SOLE COST AND EXPENSE, THOSE BUSINESS RECORDS NOT
DELIVERED TO BUYER AT THE CLOSING AND (B) SHALL NOT (AND SHALL CAUSE EACH OF ITS
AFFILIATES NOT TO) DESTROY ANY SUCH BUSINESS RECORDS WITHOUT FIRST NOTIFYING
BUYER IN WRITING AT LEAST 30 DAYS IN ADVANCE OF SUCH DESTRUCTION AND GIVING
BUYER THE OPPORTUNITY TO TAKE POSSESSION OF SUCH BUSINESS RECORDS.

 

10.5                           FURTHER ASSURANCES

 

The parties shall cooperate reasonably with each other and with their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and deliver to each
other such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the Contemplated Transactions.

 

10.6                           PROVISIONS RELATING TO CERTAIN ASSETS

 

(A)                                  TO THE EXTENT THAT A SELLER CONTRACT OR
GOVERNMENTAL AUTHORIZATION IS NOT CAPABLE OF BEING SOLD, ASSIGNED, TRANSFERRED,
SUBCONTRACTED OR CONVEYED WITHOUT THE APPROVAL, CONSENT OR WAIVER OF THE ISSUER
THEREOF OR THE OTHER PARTY THERETO, OR ANY THIRD PARTY (INCLUDING A GOVERNMENTAL
BODY), AND SUCH APPROVAL, CONSENT OR WAIVER HAS NOT BEEN OBTAINED PRIOR TO THE
CLOSING, OR IF SUCH SALE, ASSIGNMENT, TRANSFER OR CONVEYANCE OR ATTEMPTED SALE,
ASSIGNMENT, TRANSFER OR CONVEYANCE WOULD CONSTITUTE A BREACH THEREOF OR A
VIOLATION OF ANY LEGAL REQUIREMENT, NEITHER THIS AGREEMENT NOR ANY OTHER
TRANSACTION AGREEMENT SHALL CONSTITUTE A SALE, ASSIGNMENT, TRANSFER OR
CONVEYANCE THEREOF, OR AN ATTEMPTED SALE, ASSIGNMENT, TRANSFER OR CONVEYANCE
THEREOF.

 

(B)                                 ANYTHING IN THIS AGREEMENT TO THE CONTRARY
NOTWITHSTANDING, A SELLER IS NOT OBLIGATED TO SELL, ASSIGN, TRANSFER OR CONVEY
TO BUYER ANY OF ITS RIGHTS OR OBLIGATIONS IN OR TO ANY OF THE SELLER CONTRACTS
OR GOVERNMENTAL AUTHORIZATIONS WITHOUT FIRST OBTAINING ALL NECESSARY APPROVALS,
CONSENTS OR WAIVERS; PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT LIMIT
SELLERS’ LIABILITY FOR A BREACH OF SECTION 3.14 OR SECTION 5.1.  BUYER AND
SELLERS SHALL COOPERATE WITH EACH OTHER TO OBTAIN ALL APPROVALS, CONSENTS OR
WAIVERS NECESSARY TO CONVEY TO BUYER EACH SUCH SELLER CONTRACT OR GOVERNMENTAL
AUTHORIZATION, AS SOON AS PRACTICABLE; PROVIDED, HOWEVER, THAT NEITHER SUCH
SELLER NOR BUYER SHALL BE OBLIGATED TO OFFER OR PAY ANY CONSIDERATION OR
CONCESSION THEREFOR TO THE THIRD PARTY FROM WHOM SUCH APPROVAL, CONSENT OR
WAIVER IS REQUESTED.  OTHER THAN THE CONSENTS SET FORTH ON EXHIBIT 7.2, THE
FAILURE BY ANY SELLER TO OBTAIN ANY SUCH APPROVAL, CONSENT

 

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or waiver necessary to convey any Seller Contract or Governmental Authorization
to Buyer shall not affect the obligations of the parties to close hereunder;
provided that such Seller uses commercially reasonable efforts to cause the
economic benefit of each Seller Contract to be furnished to Buyer.

 

(C)                                  TO THE EXTENT ANY OF THE APPROVALS,
CONSENTS OR WAIVERS NECESSARY TO CONVEY ANY SELLER CONTRACT OR GOVERNMENTAL
AUTHORIZATION TO BUYER HAVE NOT BEEN OBTAINED BY ANY SELLER AS OF THE CLOSING OR
TO THE EXTENT ANY SELLER CONTRACT OR GOVERNMENTAL AUTHORIZATION CANNOT BE
TRANSFERRED TO BUYER BY THE CLOSING, THEN BUYER AND SUCH SELLER SHALL ENTER INTO
A SUBCONTRACT WITH RESPECT TO ANY SUCH SELLER CONTRACT, AND SUCH SELLER SHALL,
DURING THE REMAINING TERM OF SUCH SELLER CONTRACT OR GOVERNMENTAL AUTHORIZATION,
USE COMMERCIALLY REASONABLE EFFORTS, TO (I) AT THE REQUEST OF BUYER, COOPERATE
WITH BUYER TO OBTAIN THE CONSENT OF ANY SUCH THIRD PARTY; PROVIDED, HOWEVER,
THAT NEITHER SUCH SELLER NOR BUYER SHALL BE OBLIGATED TO OFFER OR PAY ANY
CONSIDERATION TO ANY PERSON, (II) AT THE REQUEST OF BUYER, COOPERATE WITH BUYER
IN ANY REASONABLE AND LAWFUL ARRANGEMENTS DESIGNED TO PROVIDE THE BENEFITS OF
SUCH SELLER CONTRACT OR GOVERNMENTAL AUTHORIZATION TO BUYER, (III) AS IT
PERTAINS TO SELLER CONTRACTS, ENFORCE, AT THE REQUEST OF BUYER AND AT THE
EXPENSE AND FOR THE ACCOUNT OF BUYER, ANY RIGHTS OF SUCH SELLER ARISING FROM
SUCH SELLER CONTRACT AGAINST THE ISSUER THEREOF OR THE OTHER PARTY OR PARTIES
THERETO (INCLUDING THE RIGHTS TO ELECT TO TERMINATE ANY SUCH SELLER CONTRACT IN
ACCORDANCE WITH THE TERMS THEREOF UPON THE REQUEST OF BUYER); AND (IV) AS IT
PERTAINS TO GOVERNMENTAL AUTHORIZATION, AT THE REQUEST AND EXPENSE OF BUYER,
APPLY FOR ANY NECESSARY RENEWALS OR EXTENSIONS THEREOF.  TO THE EXTENT THAT ANY
SELLER ENTERS INTO LAWFUL ARRANGEMENTS SATISFACTORY TO BUYER IN ITS SOLE
DISCRETION DESIGNED TO PROVIDE THE BENEFITS OF ANY SUCH SELLER CONTRACT OR
GOVERNMENTAL AUTHORIZATION TO BUYER AS SET FORTH IN CLAUSES (I) THROUGH (IV)
ABOVE, SUCH SELLER CONTRACT OR GOVERNMENTAL AUTHORIZATION SHALL BE DEEMED TO
HAVE BEEN CONVEYED TO BUYER FOR THE PURPOSES OF THIS AGREEMENT.

 

10.7                           SUPPORT

 

(A)                                  FROM AND AFTER THE CLOSING, IN THE EVENT
AND FOR SO LONG AS ANY SELLER ACTIVELY IS CONTESTING OR DEFENDING AGAINST ANY
ACTION, SUIT, PROCEEDING, HEARING, INVESTIGATION, CHARGE, COMPLAINT, CLAIM, OR
DEMAND IN CONNECTION WITH (I) ANY TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT
OR (II) ANY FACT, SITUATION, CIRCUMSTANCES, STATUS, CONDITION, ACTIVITY,
PRACTICE, PLAN, OCCURRENCE, EVENT, INCIDENT, ACTION, FAILURE TO ACT, OR
TRANSACTION RELATING TO THE BUSINESS (INCLUDING DURING SUCH PERIOD PRIOR TO
CLOSING), BUYER WILL COOPERATE REASONABLY WITH SELLERS AND SELLERS’ COUNSEL IN
THE CONTEST OR DEFENSE, MAKE AVAILABLE THEIR PERSONNEL, AND PROVIDE SUCH
TESTIMONY AND ACCESS TO THEIR BOOKS AND RECORDS AS SHALL BE REASONABLY REQUESTED
IN CONNECTION WITH THE CONTEST OR DEFENSE, ALL AT THE REASONABLE OUT-OF-POCKET
EXPENSE OF SELLERS (UNLESS SELLERS ARE ENTITLED TO INDEMNIFICATION THEREFOR
HEREUNDER).  THIS SECTION 10.7 IS NOT INTENDED TO ALTER APPLICABLE DISCOVERY
PROCEDURES IN CONNECTION WITH ANY LITIGATION BETWEEN OR AMONG THE PARTIES
HERETO.

 

(B)                                 FROM AND AFTER CLOSING, BUYER WILL COOPERATE
REASONABLY WITH SELLERS AND SELLERS’ COUNSEL, MAKE AVAILABLE THEIR PERSONNEL,
ASSIST IN PREPARING AND MAKING FILINGS, AND PROVIDE SUCH ACCESS TO THEIR BOOKS
AND RECORDS AS SHALL BE REASONABLY REQUESTED IN CONNECTION WITH THE CLOSING,
TERMINATION, DE-REGISTRATION OR OTHER ACTIVITIES ASSOCIATED WITH SELLERS’
CLOSING OF

 

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the foreign branches or offices of the Business that are registered or otherwise
held in the name of or on behalf of any Seller or its Affiliates.

 

10.8                           BUYER ACKNOWLEDGMENT

 

Buyer acknowledges and understands that, except to the extent expressly set
forth in the Transition Services Agreement and the Supply Agreement, benefits
that the Business realizes as a result of arrangements that Parent and its
Subsidiaries have with third parties will not be available to Buyer after the
Closing Date.

 

11.                                 INDEMNIFICATION; REMEDIES

 

11.1                           SURVIVAL

 

All representations, warranties, covenants and obligations in this Agreement,
the Seller Disclosure Letter, the amendment(s) or supplement(s) to the Seller
Disclosure Letter, the Buyer Disclosure Letter, the certificates delivered
pursuant to Section 2.9 and any other certificate or document delivered pursuant
to this Agreement shall survive the Closing and the consummation of the
Contemplated Transactions, subject to Section 11.6. The waiver of any condition
based upon the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations.

 

11.2                           INDEMNIFICATION AND REIMBURSEMENT BY SELLERS

 

Sellers will jointly and severally indemnify, defend and hold harmless Buyer,
and its Representatives, shareholders, subsidiaries and Related Persons
(collectively, the “Buyer Indemnitees”), and will reimburse Buyer Indemnitees
for any loss, Liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys’ fees and expenses), whether
or not involving a Third Party Claim (collectively, “Damages”), arising from or
in connection with:

 

(A)                                  ANY BREACH OF ANY REPRESENTATION OR
WARRANTY MADE BY SUCH SELLER IN (I) THIS AGREEMENT, (II) THE SELLER DISCLOSURE
LETTER, (III) THE AMENDMENT(S) OR SUPPLEMENT(S) TO THE SELLER DISCLOSURE LETTER,
(IV) THE CERTIFICATE DELIVERED PURSUANT TO SECTION 2.9(A)(IX), (V) ANY TRANSFER
INSTRUMENT OR (VI) ANY OTHER CERTIFICATE, DOCUMENT, WRITING OR INSTRUMENT
DELIVERED BY SUCH SELLER PURSUANT TO THIS AGREEMENT;

 

(B)                                 ANY BREACH OF ANY COVENANT OR OBLIGATION OF
SUCH SELLER IN THIS AGREEMENT OR IN ANY OTHER CERTIFICATE, DOCUMENT, WRITING OR
INSTRUMENT DELIVERED BY SUCH SELLER PURSUANT TO THIS AGREEMENT;

 

(C)                                  IF THE CLOSING OCCURS, ANY LIABILITY
ARISING OUT OF THE OWNERSHIP OR OPERATION OF THE ASSETS PRIOR TO THE EFFECTIVE
TIME, EXCEPT TO THE EXTENT SUCH LIABILITY ARISES OUT OF OR RELATES TO AN ASSUMED
LIABILITY;

 

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(D)                                 IF THE CLOSING OCCURS, ANY BROKERAGE OR
FINDER’S FEES OR COMMISSIONS OR SIMILAR PAYMENTS BASED UPON ANY AGREEMENT OR
UNDERSTANDING MADE, OR ALLEGED TO HAVE BEEN MADE, BY ANY PERSON WITH SUCH SELLER
(OR ANY PERSON ACTING ON SUCH SELLER’S BEHALF) IN CONNECTION WITH ANY OF THE
CONTEMPLATED TRANSACTIONS;

 

(E)                                  IF THE CLOSING OCCURS, ANY SELLER BENEFIT
PLAN; OR

 

(F)                                    IF THE CLOSING OCCURS, ANY RETAINED
LIABILITIES.

 

11.3                           INDEMNIFICATION AND REIMBURSEMENT BY BUYER

 

Buyer will indemnify, defend and hold harmless Sellers, and their
Representatives, shareholders, subsidiaries and Related Persons (collectively,
the “Seller Indemnitees”), and will reimburse Seller Indemnitees for any Damages
arising from or in connection with:

 

(A)                                  ANY BREACH OF ANY REPRESENTATION OR
WARRANTY MADE BY BUYER OR BUYER ENTITY IN (I) THIS AGREEMENT, (II) BUYER
DISCLOSURE LETTER, (III) THE AMENDMENT(S) OR SUPPLEMENT(S) TO THE BUYER
DISCLOSURE LETTER, (IV) THE CERTIFICATE DELIVERED PURSUANT TO SECTION
2.9(B)(VIII), (V) ANY TRANSFER INSTRUMENT OR (VI) ANY OTHER CERTIFICATE,
DOCUMENT, WRITING OR INSTRUMENT DELIVERED BY BUYER PURSUANT TO THIS AGREEMENT;

 

(B)                                 ANY BREACH OF ANY COVENANT OR OBLIGATION OF
BUYER IN THIS AGREEMENT OR IN ANY OTHER CERTIFICATE, DOCUMENT, WRITING OR
INSTRUMENT DELIVERED BY BUYER PURSUANT TO THIS AGREEMENT;

 

(C)                                  IF THE CLOSING OCCURS, ANY LIABILITY
ARISING OUT OF THE OWNERSHIP OR OPERATION OF THE BUSINESS OR ASSETS FOLLOWING
THE EFFECTIVE TIME EXCEPT TO THE EXTENT SUCH LIABILITY CONSTITUTES A RETAINED
LIABILITY;

 

(D)                                 IF THE CLOSING OCCURS, ANY BROKERAGE OR
FINDER’S FEES OR COMMISSIONS OR SIMILAR PAYMENTS BASED UPON ANY AGREEMENT OR
UNDERSTANDING MADE, OR ALLEGED TO HAVE BEEN MADE, BY ANY PERSON WITH BUYER (OR
ANY PERSON ACTING ON BUYER’S BEHALF) IN CONNECTION WITH ANY OF THE CONTEMPLATED
TRANSACTIONS;

 

(E)                                  IF THE CLOSING OCCURS, ANY ASSUMED
LIABILITIES; OR

 

(F)                                    IF THE CLOSING OCCURS, EXCEPT WITH
RESPECT TO ANY PROCEEDING ARISING OUT OF OR RELATING TO THE LIABILITIES RETAINED
PURSUANT TO SECTION 2.4(B)(III), ANY LIABILITY ARISING OUT OF ANY PROCEEDING
(INCLUDING THE OBLIGATION TO HANDLE SUCH PROCEEDING) COMMENCED AFTER THE
EFFECTIVE TIME AND ARISING OUT OF OR RELATING TO ANY OCCURRENCE OR EVENT
HAPPENING AT OR AFTER THE EFFECTIVE TIME.

 

11.4                           LIMITATIONS ON AMOUNT — SELLERS

 

From and after the Closing, Sellers shall have no liability (for indemnification
or otherwise) with respect to claims under Section 11.2(a) until the total of
all Damages with respect to such matters exceeds [***] in the aggregate and then
only for the amount by which

 

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such Damages exceed [***]; provided, however, that in no event shall Sellers’
aggregate liability (for indemnification or otherwise) with respect to claims
under Section 11.2(a) exceed [***].  Notwithstanding anything to the contrary
herein, the limitations set forth in this Section 11.4 will not apply if the
Closing does not occur or to a breach of any representation or warranty set
forth in Section 3.1, 3.2, 3.7, 3.11(a) or 3.22.

 

11.5                           LIMITATIONS ON AMOUNT — BUYER

 

From and after Closing, Buyer shall have no liability (for indemnification or
otherwise) with respect to claims under Section 11.3(a) until the total of all
Damages with respect to such matters exceeds [***] in the aggregate and then
only for the amount by which such Damages exceed [***]; provided, however, that
in no event shall Buyer’s aggregate liability (for indemnification or otherwise)
with respect to claims under Section 11.3(a) exceed [***].  Notwithstanding
anything to the contrary herein, the limitations set forth in this Section 11.5
will not apply if the Closing does not occur or to a breach of any
representation or warranty set forth in Section 4.1, 4.2 or 4.5.

 

11.6                           TIME LIMITATIONS

 

The several representations and warranties of the parties to this Agreement
shall survive the Closing Date for a period of eighteen (18) months from the
Closing Date; provided, that the (a) the representations and warranties set
forth in (a) Sections 3.1, 3.2, 3.22, 4.1, 4.2 and 4.5 shall survive the Closing
Date without limitation, (b) Section 3.11 and Section 3.13 shall survive for 180
days following the expiration of any statutes of limitation under applicable law
and (c) Section 3.19 shall survive for five years from the Closing Date (the
period during which the representations and warranties shall survive being
referred to herein with respect to such representations and warranties as the
“Survival Period”), and shall be effective with respect to any inaccuracy
therein or breach thereof (and a claim for indemnification under Article 11
hereof may be made thereon) if a written notice asserting the claim and
specifying the factual basis of the claim in reasonable detail to the extent
then known by the notifying party shall have been given within the Survival
Period with respect to such matter.  Any claim for indemnification made during
the Survival Period shall be valid and the representations and warranties
relating thereto shall remain in effect for purposes of such indemnification
notwithstanding such claim may not be resolved within the Survival Period.  The
agreements and covenants set forth herein shall survive without limitation.

 

11.7                           PROCEDURE

 

All claims for indemnification under this Article 11 shall be asserted and
resolved as follows:

 

(A)                                  A PERSON ENTITLED TO INDEMNIFICATION UNDER
SECTION 11.2 OR 11.3 (AN “INDEMNITEE”), PROMPTLY AFTER IT BECOMES AWARE OF FACTS
GIVING RISE TO A RIGHT OF INDEMNIFICATION UNDER THIS AGREEMENT, SHALL GIVE
WRITTEN NOTICE THEREOF TO THE PERSON OBLIGATED TO INDEMNIFY UNDER SUCH SECTION
(AN “INDEMNITOR”), STATING THE AMOUNT OF THE DAMAGES, IF KNOWN, AND METHOD OF
COMPUTATION THEREOF, ALL WITH REASONABLE PARTICULARITY, AND STATING WITH
PARTICULARITY THE NATURE

 

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of the matter and basis of the claim for indemnity under this Agreement.  For
purposes of this Section 11.7(a), receipt by a party of written notice of any
demand, assertion, claim, action or proceeding (judicial, administrative or
otherwise) by or from any Person other than a party to this Agreement that gives
rise to Damages on behalf of the party shall constitute the awareness of facts
giving rise to a right of indemnification by it under this Agreement and shall
require prompt notice of the receipt of such matter as provided in the first
sentence of this Section 11.7(a).  Failure to provide the notice shall not
affect the right of the Indemnitee to indemnification except to the extent the
Indemnitor is materially prejudiced by the Indemnitee’s failure to give such
notice.

 

(B)                                 IF AN INDEMNITEE SHOULD HAVE DAMAGES AGAINST
ANY INDEMNITOR HEREUNDER THAT DOES NOT INVOLVE A THIRD PARTY CLAIM, THE
INDEMNITEE SHALL PROVIDE THE INDEMNITOR A WRITTEN NOTICE WITH RESPECT TO THE
DAMAGES.  IF THE INDEMNITOR DOES NOT NOTIFY THE INDEMNITEE WITHIN 30 CALENDAR
DAYS FROM ITS RECEIPT OF THE WRITTEN NOTICE OF DAMAGES THAT THE INDEMNITOR
DISPUTES THE DAMAGES, THE DAMAGES SPECIFIED BY THE INDEMNITEE IN THE CLAIM
NOTICE SHALL BE DEEMED A LIABILITY OF THE INDEMNITOR HEREUNDER.  IF THE
INDEMNITOR HAS TIMELY DISPUTED THE DAMAGES AS PROVIDED ABOVE, SUCH DISPUTE SHALL
BE RESOLVED SUBJECT TO THE PROVISIONS OF THIS AGREEMENT.

 

(C)                                  IF AN INDEMNITEE SHALL HAVE A THIRD PARTY
CLAIM ASSERTED AGAINST IT, THE INDEMNITEE SHALL PROVIDE THE INDEMNITOR WRITTEN
NOTICE OF THE DAMAGES RELATING TO THE THIRD PARTY CLAIM (A “THIRD PARTY CLAIM
NOTICE”).  WITHIN 15 BUSINESS DAYS FOLLOWING RECEIPT BY AN INDEMNITOR OF A THIRD
PARTY CLAIM NOTICE (THE “ELECTION PERIOD”), THE INDEMNITOR SHALL ADVISE THE
INDEMNITEE IN WRITING (I) WHETHER THE INDEMNITOR DISPUTES ITS POTENTIAL
LIABILITY TO THE INDEMNITEE UNDER THIS ARTICLE 11 WITH RESPECT TO THE THIRD
PARTY CLAIM AND (II) WHETHER THE INDEMNITOR ELECTS, AT ITS SOLE COST AND
EXPENSE, TO DEFEND THE INDEMNITEE AGAINST SUCH THIRD PARTY CLAIM.

 

(D)                                 IF THE INDEMNITOR NOTIFIES THE INDEMNITEE
WITHIN THE ELECTION PERIOD OF ITS ELECTION TO ASSUME THE DEFENSE OF THE THIRD
PARTY CLAIM IN ACCORDANCE WITH SECTION 11.7(C) ABOVE, THE INDEMNITOR SHALL HAVE
THE OBLIGATION TO DEFEND, AT ITS SOLE COST AND EXPENSE, THE THIRD PARTY CLAIM BY
ALL APPROPRIATE PROCEEDINGS, WHICH PROCEEDINGS SHALL BE PROSECUTED DILIGENTLY BY
THE INDEMNITOR TO A FINAL CONCLUSION OR SETTLED AT THE DISCRETION OF THE
INDEMNITOR IN ACCORDANCE WITH THIS SECTION 11.7(D); PROVIDED, THAT THE
INDEMNITOR SHALL NOT SETTLE OR COMPROMISE ANY SUCH THIRD PARTY CLAIM WITHOUT THE
PRIOR CONSENT OF THE INDEMNITEE (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD CONDITIONED OR DELAYED) UNLESS (I) THE TERMS OF SUCH COMPROMISE OR
SETTLEMENT REQUIRE NO MORE THAN THE PAYMENT OF MONEY (I.E. SUCH SETTLEMENT OR
COMPROMISE SHALL NOT REQUIRE THE ADMISSION OF WRONGDOING BY THE INDEMNITEE,
IMPOSE ANY OBLIGATIONS UPON THE INDEMNITEE OR DEPRIVE THE INDEMNITEE OF ANY
RIGHTS), (II) THE FULL AMOUNT OF SUCH MONETARY SETTLEMENT OR COMPROMISE WILL BE
PAID BY THE INDEMNITOR, AND (III) THE INDEMNITEE RECEIVES AS PART OF SUCH
SETTLEMENT OR COMPROMISE A LEGAL, BINDING AND ENFORCEABLE UNCONDITIONAL
SATISFACTION AND/OR RELEASE FROM ANY AND ALL FURTHER ACTIONS OR LIABILITIES
RELATING TO THE SUBJECT MATTER OF THE THIRD PARTY CLAIM.  THE INDEMNITOR SHALL
HAVE FULL CONTROL OF SUCH DEFENSE AND PROCEEDINGS, INCLUDING, SUBJECT TO THE
PRECEDING SENTENCE, ANY COMPROMISE OR SETTLEMENT THEREOF.  THE INDEMNITEE IS
HEREBY AUTHORIZED TO FILE, DURING THE ELECTION PERIOD, ANY MOTION, ANSWER OR
OTHER PLEADINGS THAT THE INDEMNITEE SHALL, IN GOOD FAITH, DEEM NECESSARY OR
APPROPRIATE TO PROTECT ITS INTEREST OR THOSE OF THE INDEMNITOR AND NOT
PREJUDICIAL TO THE INDEMNITOR (IT BEING UNDERSTOOD AND AGREED THAT IF THE
INDEMNITEE TAKES ANY SUCH ACTION THAT IS PREJUDICIAL AND CONCLUSIVELY CAUSES A

 

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final adjudication adverse to the Indemnitor, the Indemnitor shall be relieved
of its obligations hereunder with respect to the Third Party Claim to the extent
so adjudicated).  If requested by the Indemnitor, the Indemnitee agrees, at the
sole cost and expense of the Indemnitor, to cooperate with the Indemnitor and
its counsel in contesting any Third Party Claims, including by making of any
related counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person.  The Indemnitee shall have the right to
participate in, but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnitor pursuant to this Section 11.7(d), and shall
bear its own costs and expenses with respect to any such participation.

 

(E)                                  IF AN INDEMNITOR FAILS TO NOTIFY AN
INDEMNITEE WITHIN THE ELECTION PERIOD THAT THE INDEMNITOR ELECTS TO DEFEND THE
INDEMNITEE PURSUANT TO SECTION 11.7(C) OR IF THE INDEMNITOR FAILS TO DILIGENTLY
DEFEND OR SETTLE THE THIRD PARTY CLAIM OR TO PROSECUTE ANY APPROPRIATE
COUNTERCLAIM AGAINST THE PERSON MAKING THE THIRD PARTY CLAIM OR ANY
CROSS-COMPLAINT AGAINST ANY PERSON, OR IF THE INDEMNITEE REASONABLY OBJECTS TO
SUCH ELECTION ON THE GROUNDS THAT COUNSEL FOR SUCH INDEMNITEE CANNOT REPRESENT
BOTH THE INDEMNITOR AND THE INDEMNITEE BECAUSE SUCH REPRESENTATION WOULD BE
REASONABLY LIKELY TO RESULT IN A CONFLICT OF INTEREST, THEN THE INDEMNITEE SHALL
HAVE THE RIGHT BUT NOT THE OBLIGATION TO DEFEND, AT THE SOLE COST AND EXPENSE OF
THE INDEMNITOR (BUT ONLY IF THE INDEMNITEE ACTUALLY IS ENTITLED TO
INDEMNIFICATION HEREUNDER), THE THIRD PARTY CLAIM BY SUCH PROCEEDINGS DEEMED
REASONABLY APPROPRIATE BY THE INDEMNITEE AND ITS COUNSEL.  THE INDEMNITEE SHALL
HAVE FULL CONTROL OF SUCH DEFENSE AND PROCEEDINGS, INCLUDING ANY COMPROMISE OR
SETTLEMENT OF THE THIRD PARTY CLAIM; PROVIDED, THAT THE INDEMNITEE SHALL NOT
ENTER INTO ANY COMPROMISE OR SETTLEMENT OF SUCH THIRD PARTY CLAIM WITHOUT THE
INDEMNITOR’S CONSENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  IF
REQUESTED BY THE INDEMNITEE, THE INDEMNITOR SHALL, AT THE SOLE COST AND EXPENSE
OF THE INDEMNITOR, COOPERATE WITH THE INDEMNITEE AND ITS COUNSEL IN CONTESTING
ANY THIRD PARTY CLAIM THAT THE INDEMNITEE IS CONTESTING, OR, IF APPROPRIATE AND
RELATED TO THE THIRD PARTY CLAIM IN QUESTION, IN MAKING ANY COUNTERCLAIM AGAINST
THE PERSON ASSERTING THE THIRD PARTY CLAIM OR ANY CROSS-COMPLAINT AGAINST ANY
PERSON.  NOTWITHSTANDING THE FOREGOING IN THIS SECTION 11.7(E), IF THE
INDEMNITOR HAS DELIVERED A WRITTEN NOTICE TO THE INDEMNITEE TO THE EFFECT THAT
THE INDEMNITOR DISPUTES ITS POTENTIAL LIABILITY TO THE INDEMNITEE UNDER THIS
ARTICLE 11 AND IF SUCH DISPUTE IS RESOLVED IN FAVOR OF THE INDEMNITOR, THE
INDEMNITOR SHALL NOT BE REQUIRED TO BEAR THE COSTS AND EXPENSES OF THE
INDEMNITEE’S DEFENSE PURSUANT TO THIS ARTICLE 11 OR OF THE INDEMNITOR’S
PARTICIPATION THEREIN AT THE INDEMNITEE’S REQUEST, AND THE INDEMNITEE SHALL
REIMBURSE THE INDEMNITOR IN FULL FOR ALL REASONABLE COSTS AND EXPENSES OF THE
INDEMNITOR IN CONNECTION WITH THE THIRD PARTY CLAIM, EXCLUDING, HOWEVER, ANY
LITIGATION WITH RESPECT TO ITS INDEMNITY OBLIGATION HEREUNDER.  THE INDEMNITOR
SHALL HAVE THE RIGHT TO PARTICIPATE IN, BUT NOT CONTROL, ANY DEFENSE OR
SETTLEMENT CONTROLLED BY THE INDEMNITEE PURSUANT TO THIS SECTION 11.7(E), AND
THE INDEMNITOR SHALL BEAR ITS OWN COSTS AND EXPENSES WITH RESPECT TO ANY SUCH
PARTICIPATION.

 

11.8                           PAYMENT

 

(A)                                  PAYMENTS OF ALL AMOUNTS OWING BY AN
INDEMNITOR AS A RESULT OF A THIRD PARTY CLAIM SHALL BE MADE WITHIN FIVE BUSINESS
DAYS AFTER THE EARLIER OF (I) THE SETTLEMENT OF THE THIRD PARTY CLAIM AND (II)
THE EXPIRATION OF THE PERIOD OF APPEAL OF A FINAL ADJUDICATION OF THE THIRD
PARTY CLAIM.  PAYMENTS OF ALL AMOUNTS OWING BY AN INDEMNITOR OTHER THAN AS A
RESULT OF A

 

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Third Party Claim shall be made within five Business Days after the later of (i)
30 days after the expiration of the Election Period or (ii) if contested through
dispute resolution proceedings, the expiration of the period for appeal of a
final adjudication of the Indemnitor’s liability to the Indemnitee under this
Agreement.  Notwithstanding the foregoing, if the Indemnitor has not contested
its indemnity obligations hereunder and has not elected to assume the defense of
a Third Party Claim, the Indemnitor shall reimburse (promptly after the receipt
of each invoice therefor) the Indemnitee for the reasonable and documented
out-of-pocket costs and expenses incurred by the Indemnitee in contesting the
Third Party Claim.

 

11.9                           NO SET-OFF

 

Neither Buyer nor any Seller shall have any right to setoff any Damages against
any payments to be made by either of them pursuant to this Agreement, any other
Transaction Agreement or otherwise.

 

11.10                     INSURANCE

 

The Indemnitor shall be subrogated to the rights of the Indemnitee in respect of
any insurance relating to Damages to the extent of any indemnification payments
made hereunder for such Damages.

 

11.11                     NO DUPLICATION

 

Any Liability for indemnification hereunder shall be determined without
duplication of recovery by reason of the state of facts giving rise to such
Liability constituting a breach of more than one representation, warranty,
covenant or agreement.

 

11.12                     REMEDIES

 

(A)                                  THE PARTIES AGREE THAT, EXCEPT AS PROVIDED
IN SECTION 13.5, THE SOLE AND EXCLUSIVE REMEDY OF ANY PARTY HERETO OR THEIR
RESPECTIVE AFFILIATES WITH RESPECT TO THIS AGREEMENT AND IN ANY OTHER AGREEMENT
DELIVERED BY ANY SELLER OR BUYER IN CONNECTION WITH THE CONTEMPLATED
TRANSACTIONS (COLLECTIVELY, THE “TRANSACTION AGREEMENTS”) OR ANY OTHER CLAIMS
RELATING TO THE BUSINESS, THE EVENTS GIVING RISE TO THIS AGREEMENT AND THE OTHER
TRANSACTION AGREEMENTS AND THE CONTEMPLATED TRANSACTIONS SHALL BE LIMITED TO THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS ARTICLE 11; PROVIDED THAT THIS
LIMITATION SHALL NOT APPLY IN THE EVENT OF FRAUD; AND PROVIDED FURTHER THAT IF
AN INDEMNITOR SHALL BREACH OR THREATEN TO COMMIT A BREACH OF ANY OF ITS
RESTRICTIVE COVENANTS SET FORTH IN THIS AGREEMENT OR ANY OTHER TRANSACTION
AGREEMENT (THE “RESTRICTIVE COVENANTS”), ANY INDEMNITEE SHALL HAVE THE RIGHT IN
ADDITION TO, AND NOT IN LIEU OF, ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO SUCH
INDEMNITEE, UNDER LAW OR IN EQUITY, TO HAVE THE RESTRICTIVE COVENANTS
SPECIFICALLY ENFORCED BY ANY COURT, INCLUDING THE RIGHT TO SEEK ENTRY AGAINST
SUCH INDEMNITOR, ANY OF ITS AFFILIATES AND ANY SHAREHOLDER, OFFICER, DIRECTOR,
EMPLOYEE OF EACH OF THE FOREGOING OF RESTRAINING ORDERS AND INJUNCTIONS
(PRELIMINARY, MANDATORY, TEMPORARY AND PERMANENT) AGAINST VIOLATIONS, THREATENED
OR ACTUAL, AND WHETHER OR NOT THEN CONTINUING, OF THE RESTRICTIVE COVENANTS, IT
BEING ACKNOWLEDGED AND AGREED THAT MONEY DAMAGES WILL NOT PROVIDE SUCH
INDEMNITEE AN ADEQUATE REMEDY.

 

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(B)                                 THE PARTIES HERETO INTEND THAT, EVEN THOUGH
INDEMNIFICATION AND OTHER OBLIGATIONS APPEAR IN VARIOUS SECTIONS AND ARTICLES OF
THIS AGREEMENT, THE INDEMNIFICATION PROCEDURES AND LIMITATIONS CONTAINED IN THIS
ARTICLE 11 SHALL APPLY TO ALL INDEMNITY AND OTHER OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT EXPRESSLY EXCLUDED IN THIS ARTICLE
11.

 

11.13                     NO SPECIAL DAMAGES

 

IN NO EVENT SHALL ANY PARTY BE LIABLE UNDER THIS ARTICLE 11 OR OTHERWISE IN
RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL, PUNITIVE, INDIRECT, REMOTE,
SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS
SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY IN CONNECTION WITH A THIRD PARTY
CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE RECOVERABLE.

 

12.                                 CONFIDENTIALITY

 

12.1                           DEFINITION OF CONFIDENTIAL INFORMATION

 

(A)                                  AS USED IN THIS ARTICLE 12, THE TERM
“CONFIDENTIAL INFORMATION” INCLUDES ANY AND ALL OF THE FOLLOWING INFORMATION OF
ANY SELLER OR BUYER THAT HAS BEEN OR MAY HEREAFTER BE DISCLOSED IN ANY FORM,
WHETHER IN WRITING, ORALLY, ELECTRONICALLY OR OTHERWISE, OR OTHERWISE MADE
AVAILABLE BY OBSERVATION, INSPECTION OR OTHERWISE BY EITHER PARTY (BUYER ON THE
ONE HAND OR SELLERS ON THE OTHER HAND) OR ITS REPRESENTATIVES (COLLECTIVELY, A
“DISCLOSING PARTY”) TO THE OTHER PARTY OR ITS REPRESENTATIVES (COLLECTIVELY, A
“RECEIVING PARTY”):

 

(I)                                           ALL INFORMATION THAT IS A TRADE
SECRET UNDER APPLICABLE TRADE SECRET OR OTHER LAW;

 

(II)                                        ALL INFORMATION CONCERNING PRODUCT
SPECIFICATIONS, DATA, KNOW-HOW, FORMULAE, COMPOSITIONS, PROCESSES, DESIGNS,
SKETCHES, PHOTOGRAPHS, GRAPHS, DRAWINGS, SAMPLES, INVENTIONS AND IDEAS, PAST,
CURRENT AND PLANNED RESEARCH AND DEVELOPMENT, CURRENT AND PLANNED MANUFACTURING
OR DISTRIBUTION METHODS AND PROCESSES, CUSTOMER LISTS, CURRENT AND ANTICIPATED
CUSTOMER REQUIREMENTS, PRICE LISTS, MARKET STUDIES, BUSINESS PLANS, COMPUTER
HARDWARE, SOFTWARE AND DATABASE TECHNOLOGIES, SYSTEMS, STRUCTURES AND
ARCHITECTURES;

 

(III)                                     ALL INFORMATION CONCERNING THE
BUSINESS AND AFFAIRS OF THE DISCLOSING PARTY (WHICH INCLUDES HISTORICAL AND
CURRENT FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS AND BUDGETS, TAX RETURNS AND
ACCOUNTANTS’ MATERIALS, HISTORICAL, CURRENT AND PROJECTED SALES, CAPITAL
SPENDING BUDGETS AND PLANS, BUSINESS PLANS, STRATEGIC PLANS, MARKETING AND
ADVERTISING PLANS, PUBLICATIONS, CLIENT AND CUSTOMER LISTS AND FILES, CONTRACTS,
THE NAMES AND BACKGROUNDS OF KEY PERSONNEL AND PERSONNEL TRAINING TECHNIQUES AND
MATERIALS, HOWEVER DOCUMENTED), AND ALL INFORMATION OBTAINED FROM REVIEW OF THE
DISCLOSING PARTY’S DOCUMENTS OR PROPERTY OR DISCUSSIONS WITH THE DISCLOSING
PARTY REGARDLESS OF THE FORM OF THE COMMUNICATION; AND

 

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(IV)                                    ALL NOTES, ANALYSES, COMPILATIONS,
STUDIES, SUMMARIES AND OTHER MATERIAL PREPARED BY THE RECEIVING PARTY TO THE
EXTENT CONTAINING OR BASED, IN WHOLE OR IN PART, UPON ANY INFORMATION INCLUDED
IN THE FOREGOING.

 

(B)                                 ANY TRADE SECRETS OF A DISCLOSING PARTY
SHALL ALSO BE ENTITLED TO ALL OF THE PROTECTIONS AND BENEFITS UNDER APPLICABLE
TRADE SECRET LAW AND ANY OTHER APPLICABLE LAW. IF ANY INFORMATION THAT A
DISCLOSING PARTY DEEMS TO BE A TRADE SECRET IS FOUND BY A COURT OF COMPETENT
JURISDICTION NOT TO BE A TRADE SECRET FOR PURPOSES OF THIS ARTICLE 12, SUCH
INFORMATION SHALL STILL BE CONSIDERED CONFIDENTIAL INFORMATION OF THAT
DISCLOSING PARTY FOR PURPOSES OF THIS ARTICLE 12 TO THE EXTENT INCLUDED WITHIN
THE DEFINITION.  IN THE CASE OF TRADE SECRETS, EACH DISCLOSING PARTY, HEREBY
WAIVES ANY REQUIREMENT THAT THE OTHER PARTY SUBMIT PROOF OF THE ECONOMIC VALUE
OF ANY TRADE SECRET OR POST A BOND OR OTHER SECURITY.

 

12.2                           RESTRICTED USE OF CONFIDENTIAL INFORMATION

 

(A)                                  EACH RECEIVING PARTY ACKNOWLEDGES THE
CONFIDENTIAL AND PROPRIETARY NATURE OF THE CONFIDENTIAL INFORMATION OF THE
DISCLOSING PARTY AND AGREES THAT SUCH CONFIDENTIAL INFORMATION (I) SHALL BE KEPT
CONFIDENTIAL BY THE RECEIVING PARTY; (II) SHALL NOT BE USED FOR ANY REASON OR
PURPOSE OTHER THAN TO EVALUATE AND CONSUMMATE THE CONTEMPLATED TRANSACTIONS; AND
(III) WITHOUT LIMITING THE FOREGOING, SHALL NOT BE DISCLOSED BY THE RECEIVING
PARTY TO ANY PERSON, EXCEPT IN EACH CASE AS OTHERWISE EXPRESSLY PERMITTED BY THE
TERMS OF THIS AGREEMENT OR WITH THE PRIOR WRITTEN CONSENT OF AN AUTHORIZED
REPRESENTATIVE OF SELLERS WITH RESPECT TO CONFIDENTIAL INFORMATION OF SELLERS
(EACH, A “SELLER CONTACT”) OR AN AUTHORIZED REPRESENTATIVE OF BUYER WITH RESPECT
TO CONFIDENTIAL INFORMATION OF BUYER (EACH, A “BUYER CONTACT”). EACH OF BUYER
AND SELLERS SHALL DISCLOSE THE CONFIDENTIAL INFORMATION OF THE OTHER PARTY ONLY
TO ITS REPRESENTATIVES WHO REQUIRE SUCH MATERIAL FOR THE PURPOSE OF EVALUATING
THE CONTEMPLATED TRANSACTIONS AND ARE INFORMED BY BUYER OR SELLERS, AS THE CASE
MAY BE, OF THE OBLIGATIONS OF THIS ARTICLE 12 WITH RESPECT TO SUCH INFORMATION. 
EACH OF BUYER AND SELLERS SHALL (A) ENFORCE THE TERMS OF THIS ARTICLE 12 AS TO
ITS RESPECTIVE REPRESENTATIVES; (B) TAKE SUCH ACTION TO THE EXTENT NECESSARY TO
CAUSE ITS REPRESENTATIVES TO COMPLY WITH THE TERMS AND CONDITIONS OF THIS
ARTICLE 12; AND (C) BE RESPONSIBLE AND LIABLE FOR ANY BREACH OF THE PROVISIONS
OF THIS ARTICLE 12 BY IT OR ITS REPRESENTATIVES.

 

(B)                                 UNLESS AND UNTIL THIS AGREEMENT IS
TERMINATED, SELLERS SHALL MAINTAIN AS CONFIDENTIAL ANY CONFIDENTIAL INFORMATION
(INCLUDING FOR THIS PURPOSE ANY INFORMATION OF SELLERS OF THE TYPE REFERRED TO
IN SECTIONS 12.1(A)(I), (II) AND (III), WHETHER OR NOT DISCLOSED TO BUYER) OF
SELLERS RELATING TO ANY OF THE ASSETS OR THE ASSUMED LIABILITIES.
NOTWITHSTANDING THE PRECEDING SENTENCE, SELLERS MAY USE ANY CONFIDENTIAL
INFORMATION OF SELLERS BEFORE THE CLOSING IN THE ORDINARY COURSE OF THE BUSINESS
CONSISTENT WITH PAST PRACTICES IN CONNECTION WITH THE TRANSACTIONS PERMITTED BY
SECTION 6.2.

 

(C)                                  FROM AND AFTER THE CLOSING, THE PROVISIONS
OF SECTION 12.2(A) ABOVE SHALL NOT APPLY TO OR RESTRICT IN ANY MANNER BUYER’S
USE OF ANY CONFIDENTIAL INFORMATION OF SELLERS RELATING SOLELY TO ANY OF THE
ASSETS OR THE ASSUMED LIABILITIES.

 

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12.3                           EXCEPTIONS

 

Sections 12.2(a) and (b) do not apply to that part of the Confidential
Information of a Disclosing Party that a Receiving Party demonstrates (a) was,
is or becomes generally available to the public other than as a result of a
breach of this Article 12 or the Confidentiality Agreement by the Receiving
Party or its Representatives; (b) was or is developed by the Receiving Party
independently of and without reference to any Confidential Information of the
Disclosing Party; or (c) was, is or becomes available to the Receiving Party on
a nonconfidential basis from a Third Party not bound by a confidentiality
agreement or any legal, fiduciary or other obligation restricting disclosure.
Sellers shall not disclose any Confidential Information of Sellers relating to
any of the Assets or the Assumed Liabilities in reliance on the exceptions in
clauses (b) or (c) above.

 

12.4                           LEGAL PROCEEDINGS

 

If a Receiving Party becomes compelled in any Proceeding or is requested by a
Governmental Body having regulatory jurisdiction over the Contemplated
Transactions to make any disclosure that is prohibited or otherwise constrained
by this Article 12, that Receiving Party shall provide the Disclosing Party with
prompt notice of such compulsion or request so that it may seek an appropriate
protective order or other appropriate remedy or waive compliance with the
provisions of this Article 12. In the absence of a protective order or other
remedy, the Receiving Party may disclose that portion (and only that portion) of
the Confidential Information of the Disclosing Party that, based upon advice of
the Receiving Party’s counsel, the Receiving Party is legally compelled to
disclose or that has been requested by such Governmental Body, provided,
however, that the Receiving Party shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded by any Person to
whom any Confidential Information is so disclosed. The provisions of this
Section 12.4 do not apply to any Proceedings between the parties to this
Agreement.  Notwithstanding anything to the contrary in this Article 12 or
elsewhere in this Agreement, any Seller may disclose any Confidential
Information to the extent it reasonably believes such disclosure is required to
comply with the requirements of any applicable Legal Requirement, including the
rules and regulations of the New York Stock Exchange.

 

12.5                           RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION

 

If this Agreement is terminated, each Receiving Party shall (a) destroy all
Confidential Information of the Disclosing Party prepared or generated by the
Receiving Party without retaining a copy of any such material; (b) promptly
deliver to the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the possession, custody
or control of the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all such destruction
in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party’s Confidential Information is returned.

 

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12.6                           ATTORNEY-CLIENT PRIVILEGE

 

The Disclosing Party is not waiving, and will not be deemed to have waived or
diminished, any of its attorney work product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing its
Confidential Information (including Confidential Information related to pending
or threatened litigation) to the Receiving Party, regardless of whether the
Disclosing Party has asserted, or is or may be entitled to assert, such
privileges and protections. The parties (a) share a common legal and commercial
interest in all of the Disclosing Party’s Confidential Information that is
subject to such privileges and protections; (b) are or may become joint
defendants in Proceedings to which the Disclosing Party’s Confidential
Information covered by such protections and privileges relates; (c) intend that
such privileges and protections remain intact should either party become subject
to any actual or threatened Proceeding to which the Disclosing Party’s
Confidential Information covered by such protections and privileges relates; and
(d) intend that after the Closing the Receiving Party shall have the right to
assert such protections and privileges. No Receiving Party shall admit, claim or
contend, in Proceedings involving either party or otherwise, that any Disclosing
Party waived any of its attorney work-product protections, attorney-client
privileges or similar protections and privileges with respect to any
information, documents or other material not disclosed to a Receiving Party due
to the Disclosing Party disclosing its Confidential Information (including
Confidential Information related to pending or threatened litigation) to the
Receiving Party.

 

13.                                 GENERAL PROVISIONS

 

13.1                           EXPENSES

 

Except as otherwise provided in this Agreement, each party to this Agreement
will bear its respective fees and expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of its
Representatives.  Buyer will pay all HSR Act filing fees. If this Agreement is
terminated, the obligation of each party to pay its own fees and expenses will
be subject to any rights of such party arising from a breach of this Agreement
by another party.

 

13.2                           PUBLIC ANNOUNCEMENTS

 

Except as may be required to comply with the requirements of any applicable
Legal Requirement or the rules and regulations of any stock exchange or national
market system upon which the securities of any Seller or Buyer are listed, no
party will issue any press release or other public announcement relating to the
subject matter of this Agreement or the Contemplated Transactions without the
prior approval (which approval will not be unreasonably withheld or delayed) of
the other party; provided, however, that, after the Closing, any Seller or Buyer
will be entitled to issue any such press release or make any such other public
announcement without obtaining such prior approval if it has previously provided
a copy of the press release or other public announcement to the other party for
a reasonable period of time for review and comment.

 

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13.3                           NOTICES

 

All notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address or facsimile number or person as a party may designate by notice to the
other parties):

 

Sellers:

Stewart & Stevenson Services, Inc.

 

2707 North Loop West, Suite 800

 

Houston, Texas 77008

 

Attention: General Counsel

 

Facsimile: (713) 868-2130

 

Confirm:  (713) 868-7700

 

 

with a mandatory copy to:

Fulbright & Jaworski L.L.P.

 

1301 McKinney, Suite 5100

 

Houston, Texas 77010-3095

 

Attention: Charles H. Still

 

Facsimile: (713) 651-5246

 

Confirm:  (713) 651-5151

 

 

Buyer:

c/o Parman Capital Group, LLC

 

Attention: Hushang Ansary

 

1000 Louisiana, Suite 5900

 

Houston, Texas 77002

 

Facsimile:  713-659-3137

 

Confirm:  713-650-0071

 

 

with a mandatory copy to:

Jones Day

 

Attention: William F. Henze II

 

222 East 41st Street

 

New York, NY 10017

 

Facsimile: 212-755-7306

 

Confirm: 212-326-3939

 

 

 

13.4                           DISPUTE RESOLUTION

 

In the event of any dispute or controversy (except for any dispute or
controversy arising out of (i) the allocation of related and personal property
Taxes that is to be resolved in accordance with Section 2.5 or (ii) the
calculation of Closing Net Asset Value that is to be resolved in accordance with
Section 2.11) arising out of or relating to this Agreement, or any matter
relating hereto or the Contemplated Transactions (the “Dispute”), the parties
shall first try

 

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to resolve the dispute by mutual agreement.  If the parties are unable to
resolve the Dispute by entering into a written settlement agreement within 30
days following a party’s delivery of a written notice of a Dispute, setting
forth in reasonable detail the circumstances and basis for the Dispute (“Notice
of Dispute”), the Dispute shall be determined by binding arbitration in
accordance with the rules for commercial arbitration of the American Arbitration
Association then in effect (subject to any contrary provision in this
Agreement).  Judgment upon the award shall be final and may be entered in any
court having jurisdiction thereof.  The place of arbitration shall be Houston,
Texas.  The arbitrators shall determine the arbitrability of any and all
Disputes arising out of or related to this Agreement, including the existence,
validity, and scope of this agreement to arbitrate.  The arbitrator(s) shall be
qualified by education, experience, or training to decide the matters in the
Dispute.  The arbitrator(s) shall apply any statutes of limitations applicable
under Texas law to the claims and defenses asserted in the Dispute Delivery of
the Notice of Dispute shall toll the running of any applicable statutes of
limitations.  Notwithstanding the foregoing, in the event that a Dispute
requires emergency relief before the matter may be resolved pursuant to the
arbitration provisions provided herein, the provisions of this Section 13.4
shall not prohibit an action for injunctive or other forms of ancillary relief
or a writ of mandamus filed in connection with such Dispute; provided, however,
the arbitration provisions provided herein shall still govern the resolution of
the Dispute.

 

All negotiations and any arbitration relating to a Dispute, including any Notice
of Dispute, settlement, arbitral award, decision, or order, documents exchanged
or produced, and any briefs or other documents prepared for the arbitration, are
confidential and may not be disclosed by any party, their employees, officers,
directors, counsel, consultants, and expert witnesses, except to the extent
necessary to enforce any settlement agreement or arbitration award, to enforce
rights of a party, as required by law or regulation, or for a bona fide business
purpose, such as disclosure to accountants, shareholders, or third-party
purchasers; provided, however, that breach of this confidentiality provision
shall not void any settlement or award.

 

13.5                           ENFORCEMENT OF AGREEMENT

 

(A)                                  EACH SELLER ACKNOWLEDGES AND AGREES THAT
BUYER WOULD BE IRREPARABLY DAMAGED IF ANY OF THE PROVISIONS OF THIS AGREEMENT
ARE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS AND THAT ANY BREACH OF
THIS AGREEMENT BY SUCH SELLER COULD NOT BE ADEQUATELY COMPENSATED IN ALL CASES
BY MONETARY DAMAGES ALONE. ACCORDINGLY, IN ADDITION TO ANY OTHER RIGHT OR REMEDY
TO WHICH BUYER MAY BE ENTITLED, AT LAW OR IN EQUITY, IT SHALL BE ENTITLED TO
ENFORCE ANY PROVISION OF THIS AGREEMENT BY A DECREE OF SPECIFIC PERFORMANCE AND
TO TEMPORARY, PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF TO PREVENT BREACHES OR
THREATENED BREACHES OF ANY OF THE PROVISIONS OF THIS AGREEMENT, WITHOUT POSTING
ANY BOND OR OTHER UNDERTAKING.

 

(B)                                 BUYER ACKNOWLEDGES AND AGREES THAT SELLERS
WOULD BE IRREPARABLY DAMAGED IF ANY OF THE PROVISIONS OF THIS AGREEMENT ARE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS AND THAT ANY BREACH OF THIS
AGREEMENT BY BUYER COULD NOT BE ADEQUATELY COMPENSATED IN ALL CASES BY MONETARY
DAMAGES ALONE. ACCORDINGLY, IN ADDITION TO ANY OTHER RIGHT OR REMEDY TO WHICH
ANY SELLER MAY BE ENTITLED, AT LAW OR IN EQUITY, IT SHALL BE ENTITLED TO ENFORCE
ANY PROVISION OF THIS AGREEMENT BY A DECREE OF SPECIFIC PERFORMANCE AND TO
TEMPORARY,

 

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preliminary and permanent injunctive relief to prevent breaches or threatened
breaches of any of the provisions of this Agreement, without posting any bond or
other undertaking.

 

13.6                           WAIVER; REMEDIES CUMULATIVE

 

The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither any failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

 

13.7                           ENTIRE AGREEMENT AND MODIFICATION

 

This Agreement supersedes all prior agreements, whether written or oral, between
the parties with respect to its subject matter (including any letter of intent,
exclusivity agreement and any confidentiality agreement between Buyer and any
one or more of the Sellers) and constitutes (along with the Seller Disclosure
Letter, the Buyer Disclosure Letter, the Exhibits and other documents delivered
pursuant to this Agreement) a complete and exclusive statement of the terms of
the agreement between the parties with respect to its subject matter.  None of
this Agreement, the Seller Disclosure Letter or the Buyer Disclosure Letter may
be amended, supplemented, or otherwise modified except by a written agreement
executed by the party to be charged with the amendment.

 

13.8                           ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS

 

No party may assign any of its rights or delegate any of its obligations under
this Agreement without the prior written consent of the other parties; provided,
however that Buyer may assign its rights or delegate its obligations hereunder
to any Person that is directly or indirectly controlled by him, and upon the
later of any such Assignment or the payment of the Purchase Price (including the
Adjustment Amount) be released from all obligations under this Agreement. 
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon and inure to the benefit of the successors and permitted
assigns of the parties.  Except such rights as shall inure to a successor or
permitted assignee pursuant to this Section 13.8, nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement, including, with
respect to any Transferred Employee or legal representative thereof, any right
to employment for any specified period or of any nature or kind whatsoever.

 

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13.9                           SEVERABILITY

 

If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

 

13.10                     CONSTRUCTION

 

The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to “Articles,” and “Sections” refer to the corresponding Articles and
Sections of this Agreement, the Seller Disclosure Letter and the Buyer
Disclosure Letter.

 

13.11                     TIME OF ESSENCE

 

With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.

 

13.12                     GOVERNING LAW

 

Except as set forth in the next sentence, this Agreement will be governed by and
construed under, and any Dispute determined in accordance with, the laws of the
State of Texas without regard to conflicts-of-laws principles that would require
the application of any other law.

 

13.13                     EXECUTION OF AGREEMENT

 

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile shall be deemed to be their
original signatures for all purposes.

 

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

 

 

 

 /s/ Hushang Ansary

 

 

Hushang Ansary

 

 

 

Stewart & Stevenson Services, Inc.

 

 

 

 

 

By:

 /s/ John B. Simmons

 

 

Name: John B. Simmons

 

Title: Senior Vice President, Chief Financial Officer and

 

 Treasurer

 

 

 

Stewart & Stevenson Petroleum Services, Inc.

 

 

 

 

 

By:

 /s/ John B. Simmons

 

 

Name: John B. Simmons

 

Title: Vice President and Treasurer

 

 

 

Stewart & Stevenson International, Inc.

 

 

 

 

 

By:

 /s/ John B. Simmons

 

 

Name: John B. Simmons

 

Title: President and Treasurer

 

 

 

Sierra Detroit Diesel Allison, Inc.

 

 

 

 

 

By:

 /s/ John B. Simmons

 

 

Name: John B. Simmons

 

Title: Vice President

 

 

 

S&S Trust

 

 

 

 

 

By:

 /s/ Don Mueller

 

 

Name: Don Mueller

 

Title: President

 

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Schedules are omitted in accordance with Item 601(b)(2) of Regulation S-K.
Schedules will be provided by the Company to the Securities and Exchange
Commission upon request.

 

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