Exhibit 10.15

 

ASSET PURCHASE AGREEMENT

among

KMG CHEMICALS, INC.

KMG INDUSTRIAL LUBRICANTS CANADA, INC.

KMG ELECTRONIC CHEMICALS LUXEMBOURG HOLDINGS S.A.R.L

as Purchasers,

SEALWELD CORPORATION

CHISHOLM ASSET CORPORATION,

SEALWELD CORPORATION FZE.

as Sellers,

and

DEAN CHISHOLM,

as Shareholder

Dated as of January 31, 2017

 

 

 

 

 

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

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

 

2

 

 

 

 

 

1.1

 

Certain Definitions.

 

2

 

 

 

 

 

1.2

 

Terms Defined Elsewhere in this Agreement.

 

10

 

 

 

 

 

1.3

 

Other Definitional and Interpretive Matters.

 

12

 

 

 

 

 

ARTICLE II SALE OF ASSETS

 

13

 

 

 

 

 

2.1

 

Sale of Canadian Assets.

 

13

 

 

 

 

 

2.2

 

Sale of FZE Assets.

 

15

 

 

 

 

 

2.3

 

Sale of 2003 Stock.

 

16

 

 

 

 

 

2.4

 

Sale of New Jebel Ali and Sealweld Abu Dhabi.

 

16

 

 

 

 

 

2.5

 

Excluded Assets.

 

16

 

 

 

 

 

2.6

 

Assumption of Canadian Liabilities.

 

17

 

 

 

 

 

2.7

 

Assumption of FZE Liabilities.

 

17

 

 

 

 

 

2.8

 

Excluded Liabilities.

 

18

 

 

 

 

 

2.9

 

Further Conveyances and Assumptions: Consent of Third Parties.

 

19

 

 

 

 

 

2.10

 

Closing Date.

 

20

 

 

 

 

 

2.11

 

Deliveries Prior to the Closing Date.

 

20

 

 

 

 

 

2.12

 

Seller and Shareholder Deliveries on the Closing Date.

 

20

 

 

 

 

 

2.13

 

Purchasers Deliveries on the Closing Date.

 

22

 

 

 

 

 

ARTICLE III PURCHASE PRICE

 

23

 

 

 

 

 

3.1

 

Purchase Price.

 

23

 

 

 

 

 

3.2

 

Payment of Purchase Price.

 

23

 

 

 

 

 

3.3

 

Purchase Price Adjustment.

 

23

 

 

 

 

 

3.4

 

Purchase Price Allocation.

 

25

 

 

 

 

 

3.5

 

Proration of Certain Expenses.

 

26

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO SHAREHOLDER

 

26

 

 

 

 

 

4.1

 

Authorization of Agreement.

 

26

 

 

 

 

 

4.2

 

Conflicts; Consents of Third Parties.

 

27

 

 

 

 

 

i

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

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

ARTICLE V REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS

 

27

 

 

 

 

 

5.1

 

Organization and Good Standing.

 

27

 

 

 

 

 

5.2

 

Authorization of Agreement.

 

27

 

 

 

 

 

5.3

 

Conflicts; Consents of Third Parties.

 

28

 

 

 

 

 

5.4

 

Capitalization.

 

28

 

 

 

 

 

5.5

 

Acquired Subsidiaries.

 

28

 

 

 

 

 

5.6

 

Corporate Records.

 

29

 

 

 

 

 

5.7

 

Financial Statements.

 

30

 

 

 

 

 

5.8

 

No Undisclosed Liabilities.

 

30

 

 

 

 

 

5.9

 

Absence of Certain Developments.

 

30

 

 

 

 

 

5.10

 

Taxes.

 

31

 

 

 

 

 

5.11

 

Title To and Sufficiency of Assets.

 

33

 

 

 

 

 

5.12

 

Real Property.

 

33

 

 

 

 

 

5.13

 

Tangible Personal Property.

 

34

 

 

 

 

 

5.14

 

Intellectual Property.

 

34

 

 

 

 

 

5.15

 

Material Contracts.

 

36

 

 

 

 

 

5.16

 

Employee Benefits Plans.

 

37

 

 

 

 

 

5.17

 

Labor.

 

39

 

 

 

 

 

5.18

 

Litigation.

 

41

 

 

 

 

 

5.19

 

Compliance with Laws; Permits.

 

41

 

 

 

 

 

5.20

 

Environmental Matters.

 

42

 

 

 

 

 

5.21

 

Insurance.

 

43

 

 

 

 

 

5.22

 

Accounts and Notes Receivable and Payable

 

44

 

 

 

 

 

5.23

 

Related Party Transactions.

 

44

 

 

 

 

 

5.24

 

Banks; Power of Attorney.

 

44

 

 

 

 

 

5.25

 

Certain Payments.

 

44

 

 

 

 

 

5.26

 

Customers and Suppliers.

 

45

 

 

 

 

 

5.27

 

Product Liability and Warranty Claims

 

45

 

 

 

 

 

5.28

 

Financial Advisors.

 

45

 

 

 

 

 

5.29

 

Inventory.

 

46

ii

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

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

 

 

 

 

5.30

 

Investment Canada Act and Competition Act

 

46

 

 

 

 

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

46

 

 

 

 

 

6.1

 

Organization and Good Standing.

 

46

 

 

 

 

 

6.2

 

Authorization of Agreement.

 

46

 

 

 

 

 

6.3

 

Conflicts; Consents of Third Parties.

 

47

 

 

 

 

 

6.4

 

Litigation.

 

47

 

 

 

 

 

6.5

 

Financial Advisors.

 

47

 

 

 

 

 

6.6

 

Financial Resources.

 

47

 

 

 

 

 

6.7

 

No Other Representations and Warranties.

 

47

 

 

 

 

 

ARTICLE VII COVENANTS

 

47

 

 

 

 

 

7.1

 

Access to Information; Confidentiality.

 

47

 

 

 

 

 

7.2

 

Conduct of the Business Pending the Closing.

 

48

 

 

 

 

 

7.3

 

Third Party Consents.

 

52

 

 

 

 

 

7.4

 

Governmental Consents and Approvals.

 

52

 

 

 

 

 

7.5

 

Further Assurances.

 

52

 

 

 

 

 

7.6

 

Preservation of Records.

 

52

 

 

 

 

 

7.7

 

Publicity.

 

53

 

 

 

 

 

7.8

 

Use of Name.

 

53

 

 

 

 

 

7.9

 

Environmental Matters.

 

53

 

 

 

 

 

7.10

 

Related-Party Transactions.

 

54

 

 

 

 

 

7.11

 

Notification of Certain Matters.

 

54

 

 

 

 

 

7.12

 

Debt.

 

54

 

 

 

 

 

7.13

 

Resignation of directors and officers.

 

55

 

 

 

 

 

7.14

 

Privacy and Transfer of Personal Information.

 

55

 

 

 

 

 

7.15

 

Employment.

 

56

 

 

 

 

 

ARTICLE VIII CONDITIONS TO CLOSING

 

57

 

 

 

 

 

8.1

 

Conditions Precedent to Obligations of Purchasers.

 

57

 

 

 

 

 

8.2

 

Conditions Precedent to Obligations of Sellers.

 

59

 

 

 

 

 

ARTICLE IX INDEMNIFICATION

 

59

 

 

 

 

 

9.1

 

Survival of Representations and Warranties.

 

59

 

 

 

 

 

iii

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

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

9.2

 

Indemnification.

 

60

 

 

 

 

 

9.3

 

Indemnification Procedures.

 

61

 

 

 

 

 

9.4

 

Limitations on Indemnification for Breaches or Inaccuracies of Representations
and Warranties.

 

62

 

 

 

 

 

9.5

 

Indemnity Escrow.

 

63

 

 

 

 

 

9.6

 

Tax Matters.

 

63

 

 

 

 

 

9.7

 

Tax Treatment of Indemnity Payments.

 

65

 

 

 

 

 

9.8

 

Canadian Tax Elections .

 

66

 

 

 

 

 

ARTICLE X TERMINATION

 

66

 

 

 

 

 

10.1

 

Termination of Agreement.

 

66

 

 

 

 

 

10.2

 

Procedure Upon Termination.

 

67

 

 

 

 

 

10.3

 

Effect of Termination.

 

67

 

 

 

 

 

ARTICLE XI REAL PROPERTY MATTERS

 

67

 

 

 

 

 

11.1

 

Title.

 

67

 

 

 

 

 

11.2

 

Casualty or Condemnation.

 

69

 

 

 

 

 

ARTICLE XII MISCELLANEOUS

 

70

 

 

 

 

 

12.1

 

Expenses.

 

70

 

 

 

 

 

12.2

 

Specific Performance.

 

70

 

 

 

 

 

12.3

 

Submission to Jurisdiction; Consent to Service of Process.

 

70

 

 

 

 

 

12.4

 

Entire Agreement; Amendments and Waivers.

 

70

 

 

 

 

 

12.5

 

Governing Law.

 

71

 

 

 

 

 

12.6

 

Notices.

 

71

 

 

 

 

 

12.7

 

Severability.

 

72

 

 

 

 

 

12.8

 

Binding Effect; Assignment.

 

72

 

 

 

 

 

12.9

 

Counterparts.

 

73

 

 

 

iv

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

 

Exhibits

 

Exhibit A—Noncompetition and Nonsolicitation Agreement

Exhibit B—General Conveyance

Exhibit C—FZE Asset Purchase Agreement

Exhibit D—Consulting Agreement

Exhibit E—Escrow Agreement

Exhibit F—Transition Services Agreement

Exhibit G—Terms Applicable to Sale of New Jebel Ali Stock and Abu Dhabi Stock

Exhibit H—Terms Applicable to Collection of Accounts Receivable

 

 

 

 

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

 

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the “Agreement”) dated as of January 31, 2017, is
being entered into by and among KMG Chemicals, Inc., a Texas corporation
(“KMG”), KMG Industrial Lubricants Canada, Inc., a corporation organized under
the laws of the Province of British Columbia, Canada (“KMG ILC”), KMG Electronic
Chemicals Luxembourg Holdings S.a.r.l, a société à responsabilité limitée
organized under the laws of Luxembourg (“KMG Luxembourg”, and together with KMG
and KMG ILC, the “Purchasers”), Sealweld Corporation, a corporation organized
under the laws of the Province of Alberta, Canada (“Sealweld Canada”), Chisholm
Asset Corporation, a corporation organized under the laws of the Province of
Alberta, Canada (“Chisholm” and collectively with Sealweld Canada, the
“Companies” and individually, a “Company”), and Sealweld Corporation FZE (“FZE”
and together with Sealweld Canada and Chisholm, the “Sellers”), and Dean
Chisholm in his individual capacity (“Shareholder”).

W I T N E S S E T H:

WHEREAS, Shareholder, together with Chisholm Holding Corporation and the
Chisholm Family Trust, owns all of the issued and outstanding capital stock of
the Companies;

WHEREAS, Sealweld Canada indirectly owns all of the issued and outstanding
capital stock of Sealweld Corporation (2003), Inc., a Nevada corporation
(“Sealweld 2003”), which, in turn owns all of the issued and outstanding capital
stock of Sealweld USA, Inc., a Texas corporation (“Sealweld Texas”);

WHEREAS, Sealweld Canada owns 49% of the issued and outstanding capital stock
and otherwise controls all of the issued and outstanding capital stock of
Sealweld Corporation Oil Field Equipment Trading LLC, a limited liability
company incorporated in Abu Dhabi (“Sealweld Abu Dhabi”) and all of the issued
and outstanding capital stock of FZE;

WHEREAS, Sealweld Corporation Jebel Ali (“Sealweld Jebel Ali”) is branch of
Sealweld Canada licensed to do business in the Jebel Ali Free Zone;

WHEREAS, Sellers desire to sell substantially all of their assets to Purchasers;

WHEREAS, following the Closing of the asset sales contemplated hereby, Sealweld
Canada intends to convert Sealweld Jebel Ali from a branch into a free zone
establishment incorporated in the Jebel Ali Free Zone “New Jebel Ali”); and

WHEREAS, following the formation of New Jebel Ali and the receipt of approvals
of all relevant Governmental Bodies, Sealweld Canada will sell all of its
outstanding ownership interests in New Jebel Ali to KMG Luxembourg; and

WHEREAS, following the receipt of approvals of all relevant Governmental Bodies,
Sealweld Canada will sell all of its outstanding ownership interests in Sealweld
Abu Dhabi to KMG Luxembourg; and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1;

 

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

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

Article I

DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 1.1:

“$” or “dollar” means a dollar in Canadian currency.

“Acquired Subsidiaries” means Sealweld 2003, Sealweld Texas, New Jebel Ali and
Sealweld Abu Dhabi.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

“Affiliated Group” means any affiliated group within the meaning of Section 1504
of the Code or any comparable or analogous group under applicable Law.

“Assumed Environmental Liabilities” means Liabilities of the Sellers and the
Acquired Subsidiaries relating to violations of Environmental Laws by the
Sellers or the Acquired Subsidiaries with respect to the Purchased Assets or the
Acquired Subsidiaries that are first discovered by the parties following the
expiration of the General Survival Period.

“Bank Account” means any deposit account or safe deposit box with a bank or
other institution.

“Business” means the valve cleaners, lubricants and sealants business of Sellers
and the Acquired Subsidiaries, with related services and training, as conducted
on the date hereof.

“Business Day” means any day of the year other than a Saturday or Sunday or any
day on which the Federal Reserve Bank of New York or major banks in Calgary,
Alberta are closed.

“Cash” means the amount of cash and bank deposits as reflected in bank
statements, and certificates of deposit less escrowed amounts or other
restricted cash balances and less the amounts of any unpaid checks, drafts and
wire transfers issued on or prior to the date of determination, calculated in
accordance with GAAP.

“COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.

2

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

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Competition Act” means the Competition Act (Canada), R.S.C. 1985, c. C-34.

“Confidential Information” means any information with respect to Sellers or any
of their Subsidiaries or Affiliates, including methods of operation, customer
lists, products, prices, fees, costs, Technology, inventions, formulas, trade
secrets, know-how, Software, marketing methods, plans, personnel, suppliers,
competitors, markets or other specialized information or proprietary matters.
“Confidential Information” does not include, and there shall be no obligation
hereunder with respect to, information that (i) is generally available to the
public on the date of this Agreement or (ii) becomes generally available to the
public other than as a result of a disclosure not otherwise permissible
hereunder.

“Consolidated Tax Return” means all Tax Returns relating to Taxes of a
consolidated, combined or unitary group which includes at least one Company or
any of the Acquired Subsidiaries.

“Contract” means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license, commitment or other explicit arrangement,
understanding, undertaking, commitment or obligation, whether written or oral.

“Employees” means all individuals (including common law employees) who are
currently employed or engaged by any Seller or any of the Acquired Subsidiaries,
together with individuals who are hired by any Seller or Acquired Subsidiary
after the date hereof.

“Environment” means all components of the earth, including air (and all layers
of the atmosphere), land (and all surface and subsurface soil, underground
spaces and cavities, sediment and all land submerged under water) and water (and
all surface and underground water), organic and inorganic matter and living
organisms and any sewer system. For greater certainty, the interacting natural
systems that include components referred to above are included in the definition
of “Environment”.

“Environmental Laws” means all applicable Laws relating to public health and
safety, pollution or the protection of the Environment, including laws with
respect to civil responsibility for acts or omissions with respect to the
Environment, and all authorizations issued or required to be issued pursuant to
such Laws.

“Environmental Permit” means any Permit required by Environmental Laws for the
operation of Sellers, the Acquired Subsidiaries or the Business.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or an analogous statute of any Canadian Governmental Body, as applicable.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
which is or at any time within the six (6) year period preceding the date of
this Agreement would have been treated as a “single employer” with any Seller
under Section of 414(b), (c), (m), or (o) of the Code.

3

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

 

“Excluded Accounts Receivable” means those accounts receivable which are listed
on Schedule 1.1.

“Former Employees” means all individuals (including common law employees,
independent contractors and individual consultants) who were employed or engaged
by any of Sellers or any of the Acquired Subsidiaries but who are no longer so
employed or engaged on the date hereof.

“GAAP” means generally accepted accounting principles in Canada as set out in
the CPA Canada Handbook – Accounting at the relevant time as applied by the
relevant party on a consistent basis.

“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, provincial,
municipal, local or foreign, or any agency, board, commission, instrumentality
or authority thereof, or any court, tribunal, judicial body or authorized
arbitrator (public or private), or any minister, governor-in-council, cabinet or
any self-regulated organization or other non-governmental regulatory authority
or quasi-governmental authority (to the extent that the rules, regulations or
orders of such organization or authority have the force of Law).

“Hazardous Material” means any waste or other substance or material that is
regulated, prohibited, listed, defined, designated or classified as, or
otherwise determined to be, dangerous, hazardous, radioactive, explosive or
toxic or a pollutant or a contaminant under or pursuant to any Environmental
Laws, including any mixture or solution thereof, and specifically including
petroleum and all derivatives thereof or synthetic substitutes therefor and
asbestos or asbestos-containing materials.

“Improvements” means Sellers’ interest in all buildings, improvements,
structures, streets, roads, bridges and fixtures located, placed, constructed,
or installed on the Owned Property premises, including entrance signage, fences,
walls and gates, sidewalks, parking lots, access roads, effluent systems,
irrigation lines, and all fixtures, machinery, apparatus or equipment affixed
thereto, all utilities, utility distribution lines, sewer, sewer lines, fire
protection, security, surveillance, telecommunications, computer, wiring, cable,
heat, exhaust, ventilation, air conditioning, electrical, mechanical, plumbing
and refrigeration systems, facilities, lines, installations and conduits.

“Indebtedness” of any Person means, without duplication, (i) the principal,
accreted value, accrued and unpaid interest, prepayment and redemption premiums
or penalties (if any), unpaid fees or expenses and other monetary obligations in
respect of (A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;
(ii) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such Person and all
obligations of such Person under any title retention agreement; (iii) all
obligations of such Person under leases required to be capitalized in accordance
with GAAP; (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker’s acceptance or similar credit
transaction; (v) all obligations of such Person under interest rate or currency
swap transactions (valued at the termination value

4

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

 

thereof); (vi) the liquidation value, accrued and unpaid dividends; prepayment
or redemption premiums and penalties (if any), unpaid fees or expenses and other
monetary obligations in respect of any redeemable preferred stock (or other
equity) of such Person; (vii) all obligations of the type referred to in
clauses (i) through (vi) of any Persons for the payment of which such Person is
responsible or liable, directly or indirectly, as obligor, guarantor, surety or
otherwise, including guarantees of such obligations; and (viii) all obligations
of the type referred to in clauses (i) through (vii) of other Persons secured by
(or for which the holder of such obligations has an existing right, contingent
or otherwise, to be secured by) any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person).

“Intellectual Property” means all right, title and interest in or relating to
intellectual property, whether protected, created or arising under the laws of
the United States or any other jurisdiction, including: (i) patents and
applications therefor, including continuations, divisionals, and
continuations-in-part thereof and patents issuing thereon, along with all
reissues, reexaminations and extensions thereof (collectively, “Patents”);
(ii) trademarks, service marks, trade names, business names, service names,
brand names, trade dress rights, corporate names, trade styles, logos and other
source or business identifiers and general intangibles of a like nature,
together with the goodwill associated with any of the foregoing, along with all
applications, registrations, renewals and extensions thereof (collectively,
“Marks”); (iii) Internet domain names; (iv) copyrights and mask work, database
and design rights, whether or not registered or published, all registrations and
recordations thereof and all applications in connection therewith, along with
all reversions, extensions and renewals thereof (collectively, “Copyrights”);
(v) trade secrets and other proprietary Confidential Information regarding the
Business (“Trade Secrets”); (vi) other intellectual property rights arising from
or relating to Technology; (vii) other intellectual property and proprietary
rights; and (viii) Contracts granting any right relating to or under the
foregoing.

“Intellectual Property Licenses” means (i) any grant by Sellers or any Acquired
Subsidiary to another Person of any right relating to or under Intellectual
Property and (ii) any grant by another Person to Sellers or any Acquired
Subsidiary of any right relating to or under any third Person’s Intellectual
Property.

“Inventory” means all inventory and supplies, including raw materials, work in
progress, finished goods, manufacturing supplies, spare parts, office supplies,
packaging and related materials.

“Investment Canada Act” means the Investment Canada Act, R.S.C., 1985, c. 28
(1st Supp.).

“IRS” means the United States Internal Revenue Service and, to the extent
relevant, the United States Department of Treasury, or the Canada Revenue
Agency, as applicable.

5

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

 

“Knowledge of Sellers” or any other similar knowledge qualification, means the
knowledge, after due inquiry (which shall not require inquiry outside of the
organization of Sellers or their Subsidiaries), of Dean Chisholm, Alanna
Doverspike, Lee Krywitsky, Joe Pirkl or Andrea Arient. When determining whether
to the Knowledge of Sellers there has been a threat, Sellers shall only be
deemed to have Knowledge of threats made in writing that have been received.

“Knowledge of Purchasers” or any other similar knowledge qualification, means
the knowledge, after due inquiry, of the directors and executive officers of
Purchasers.

“Law” means any foreign, federal, national, supra-national, state, provincial,
municipal, administrative or local law (including common law), statute, code,
ordinance, rule, regulation, Order and, to the extent that they have the force
of law, policies, guidelines, notices and protocols of any Governmental Body.

“Legal Proceeding” means any judicial, administrative or arbitral action, suit,
demand, audit, notice of violation, litigation, citation, mediation,
investigation, inquiry, proceeding or claim (including any counterclaim) by or
before a Governmental Body.

“Liability” means any Indebtedness, loss, damage, adverse claim, fine, penalty,
guarantee, liability or obligation (whether direct or indirect, known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
matured or unmatured, determined or determinable, disputed or undisputed,
liquidated or unliquidated, or due or to become due, and whether in contract,
tort, strict liability or otherwise), and including all costs and expenses
relating thereto (including all fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and costs of investigation).

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, assignment, claim, lease, charge, option, right of first refusal,
easement, servitude, proxy, voting trust or agreement, transfer restriction
under any equity holder or similar agreement, encumbrance or any other
restriction or limitation whatsoever, including any term of any Contract
granting any of the foregoing.

“Loan Facilities” means, collectively, all Indebtedness of Sellers and the
Subsidiaries under (i) that certain Loan Agreement dated as of March 29, 2013 by
and between Sealweld Canada and FWCU Capital Corp., as amended to date, (ii) the
loans from HSBC Bank Canada described in the letter to Sealweld Canada dated
April 27, 2010 and (iii) the loans from Business Development Bank of Canada to
Sealweld Canada pursuant to the Letter of Offer dated January 11, 2010, as
amended by letter dated September 1, 2016.

“Material Adverse Effect” means any result, occurrence, fact, change, event or
effect (whether or not constituting a breach of a representation, warranty or
covenant set forth in this Agreement) that, individually or in the aggregate
with any such other results, occurrences, facts, changes, events or effects, (i)
has had an adverse effect of $100,000 or more on the historical or near-term or
long-term projected business, operations, prospects, assets, liabilities,
condition (financial or otherwise) or results of operations (including EBITDA or
cash flow), in each case, of Sellers and the Subsidiaries taken as a whole, (ii)
has prevented, materially

6

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

 

impaired or delayed, or would or could reasonably be expected to prevent or
materially impair or delay, the ability of any of Sellers or the Shareholder to
consummate the Transactions or perform their duties under this Agreement or the
Shareholder Documents or Seller Documents, or (iii) has been or would or could
reasonably be expected to be materially adverse to the ability of Sellers or any
Acquired Subsidiary to operate its business immediately after the Closing
substantially in the manner as such business was operated immediately prior to
the Closing. For the avoidance of doubt, the parties agree that the terms
“material,” “materially” and “materiality” as used in this Agreement with an
initial lower case “m” shall have their respective customary and ordinary
meanings, without regard to the meaning ascribed to the term Material Adverse
Effect.

“Order” means any order, injunction, judgment, doctrine, decree, directives,
decision, settlement, ruling, writ, assessment or arbitration award of a
Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of the Business through the date hereof consistent with
past practice.

“Permits” means any approvals, authorizations, consents, licenses, product
registrations, variances, permits or certificates granted by or obtained from a
Governmental Body, and applications therefor and renewals thereof.

“Permitted Exceptions” means (i) statutory Liens for current Taxes, assessments
or other governmental charges not yet due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings, provided
an appropriate reserve has been established therefor in the Financial Statements
in accordance with GAAP; (ii) mechanics’, carriers’, workers’ and repairers’
Liens arising or incurred in the Ordinary Course of Business that are not
material to the business, operations and financial condition of the Seller
Property so encumbered and that are not resulting from a breach, default or
violation by Sellers or any of the Acquired Subsidiaries of any Contract or Law;
and (iii) zoning, entitlement and other land use and environmental regulations
by any Governmental Body, provided that such regulations have not been violated.

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

“Plans” shall mean (i) all “employee benefit plans” as defined by Section 3(3)
of ERISA, or any parallel Canadian legislation, if applicable, all specified
fringe benefit plans as defined in Section 6039D of the Code, or any parallel
Canadian legislation, if applicable, and all other bonus, incentive
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, dental, disability, accident, group
insurance, vacation, holiday, sick leave, fringe benefit or welfare plan, and
any other employee compensation or benefit plan, agreement, policy, arrangement,
practice, commitment, Contract, or understanding (whether qualified or
nonqualified, written or unwritten), and any trust, escrow or other agreement
related thereto, which currently is sponsored, established, maintained or
contributed to or required to be contributed by any Seller or any of their ERISA
Affiliates, or for which any Seller or any of their

7

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

 

ERISA Affiliates has any Liability, contingent or otherwise, and (ii) all
“multiemployer plans,” as that term is defined in Section 4001 of ERISA or
Section 3(37)(A) of ERISA, and all “employee benefit plans” (as defined in
Section 3(3) of ERISA) that are subject to Title IV of ERISA or Section 412 of
the Code which Sellers or any of their ERISA Affiliates have maintained or
contributed to, or been required to contribute to, at any time within six (6)
years prior to the start of the calendar year containing the Effective Time, or
with respect to which Sellers or any of their ERISA Affiliates has any
Liability.

“Release” means any release, spill, emission, leaking, pumping, pouring,
emitting, injection, deposit, dumping, abandonment, emptying, disposal,
discharge, dispersal, escaping, leaching or migration.

“Retained Environmental Liabilities” means Liabilities of the Sellers and the
Acquired Subsidiaries relating to violations of Environmental Laws by the
Sellers or the Acquired Subsidiaries with respect to the Purchased Assets or the
Acquired Subsidiaries that are first discovered by the parties prior to the
expiration of the General Survival Period.

“Segregated Accounts Receivable” shall mean those accounts receivable other than
Excluded Accounts Receivable that have been outstanding for a period of at least
90 days.

“Seller Intellectual Property” means all Intellectual Property owned by Sellers
or any of the Subsidiaries.

“Seller Technology” means all Technology owned by Sellers or any of the
Subsidiaries.

“Shareholder Documents” means this Agreement and each other agreement, document,
or instrument or certificate contemplated by this Agreement or to be executed by
Shareholder in connection with the consummation of the Transaction.

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code; (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise;
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, user interfaces, report
formats, firmware, development tools, templates, menus, buttons and icons; and
(iv) all documentation, including user manuals and other training documentation
related to any of the foregoing.

“Subsidiary” means any Person of which (i) a majority of the outstanding share
capital, voting securities or other equity interests are owned, directly or
indirectly, by any Seller; or (ii) Sellers are entitled, directly or indirectly,
to appoint a majority of the board of directors or managers or comparable
supervisory body of such Person. For all purposes of this Agreement, prior to
the closing of the sale of New Jebel Ali, Sealweld Jebel Ali shall be deemed to
be a Subsidiary of Sealweld Canada, unless the context requires otherwise.

“Tax” or “Taxes” means (i) any federal, provincial, state, local or foreign
taxes, charges, fees, imposts, levies or other assessments, including all
income, gross receipts, capital,

8

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

 

sales, use, ad valorem, value added, harmonized sales, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, health, employee health, payroll, workers’
compensation, education, excise, severance, stamp, occupation, property, escheat
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever; (ii) any interest, penalties, fines, additions to tax or additional
amounts imposed by any Taxing Authority in connection with any item described in
clause (i); and (iii) any Liability in respect of any items described in clauses
(i) and/or (ii) payable by reason of Contract, assumption, transferee liability,
operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or
successor thereof or any analogous or similar provision of Law) or otherwise.

“Taxing Authority” means the IRS, the Canada Revenue Agency, and any other
Governmental Body responsible for the administration of any Tax.

“Tax Act” means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1 and the
regulations thereunder, as amended from time to time.

“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, notices, form,
designations, schedules or attachments thereto, and any amendment thereof)
including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes Sellers, any of the Acquired Subsidiaries, or any of their Affiliates.

“Technology” means, collectively, Software, information, designs, source code,
formulae, algorithms, procedures, methods, techniques, ideas, know-how, research
and development, technical data, tools, specifications, processes, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other similar
materials, and all recordings, graphs, drawings, reports, analyses, and other
writings and registered domain names, website pages and other website
development, and other tangible embodiments of the foregoing, in any form
whether or not specifically listed herein, and all related technology.

“Transaction Expenses” means all of the costs and expenses of any of Sellers,
Acquired Subsidiaries or Shareholder payable in connection with the
Transactions, including fees and expenses of counsel, advisors, brokers,
investment banks, accountants, actuaries and experts engaged by or on behalf of
any Seller, Acquired Subsidiary or Shareholder.

“Transactions” means the acquisition of the Purchased Assets by Purchasers
pursuant to the Asset Transfers and the other transactions contemplated by this
Agreement, the FZE Asset Purchase Agreement, the Seller Documents, the
Shareholder Documents, the Purchaser Documents or any other agreement or
document contemplated to be delivered pursuant to this Agreement.

“Treasury Regulations” means the regulations promulgated under the Code.

9

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

 

1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have meanings set forth in the sections indicated:

 

Term

Section

 

 

2003 Stock

2.3

2003 Stock Transfer

2.3

Abu Dhabi Purchaser Price

2.4

Abu Dhabi Stock

2.3

Abu Dhabi Stock Transfer

2.3

Acquired Stock

2.3

Agreement

Introductory Paragraph

Arbiter

3.3(b)(iii)

Asset Transfer

2.3

Assumed Liabilities

2.7

Balance Sheet

5.7(a)

Balance Sheet Date

5.7(a)

Cap

9.4(b)

Canadian Asset Transfer

2.1

Canadian Assumed Liabilities

2.6

Canadian Purchased Assets

2.1

Canadian Purchased Contracts

2.1(g)

Casualty

11.2(b)

Casualty Proceeds

11.2(b)

Chisholm

Introductory Paragraph

Chisholm Shares

5.4(a)

Closing

2.10

Closing Balance Sheet

3.3(b)(ii)

Closing Date

2.10

Closing Working Capital

3.3(b)(i)

Closing Working Capital Statement

3.3(b)(ii)

Commitment

11.1(a)

Companies

Recitals

Condemnation

11.2(a)

Condemnation Proceeds

11.2(a)

Consulting Agreement

2.12(e)

Deductible

9.4(a)

Documents

2.1(h)

Effective Time

2.10

Estimated Closing Balance Sheet

3.3(a)(i)

Estimated Closing Working Capital

3.3(a)(i)

Estimated Closing Working Capital Excess

3.3(a)(ii)

Estimated Closing Working Capital Shortfall

3.3(a)(ii)

Escrow Agent

9.5

Escrow Agreement

9.5

Excluded Assets

2.3

Excluded Liabilities

2.8

10

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

 

Term

Section

 

 

Excluded Employee

7.15(b)

Existing Surveys

11.1(a)

Financial Statements

5.7(a)

Financing

7.1

FIRPTA Affidavit

2.12(i)

FZE

Recitals

FZE Asset Purchase Agreement

2.12(d)

FZE Asset Transfer

2.2

FZE Assumed Liabilities

2.7

FZE Purchased Assets

2.2

FZE Purchased Contracts

2.2(c)

General Conveyance

2.12(c)

General Survival Period

9.1

Included Current Assets

3.3(b)(i)

Included Current Liabilities

3.3(b)(i)

Indemnity Escrow Amount

9.5

Jebel Ali Stock

2.4

Jebel Ali Stock Transfer

2.4

KMG

Introductory Paragraph

KMG ILC

Introductory Paragraph

KMG Luxembourg

Introductory Paragraph

Loss or Losses

9.2(a)

Major Casualty Event

11.2(b)

Major Condemnation Event

11.2(a)

Material Contracts

5.15(a)

New Jebel Ali

Recitals

Nonassignable Assets

2.9(b)

Noncompetition and Nonsolicitation Agreements

2.12(j)

Notice of Cure

11.1(d)

Notice of Objection

11.1(c)

OHS

5.17(g)

Owned Property or Owned Properties

5.12(a)

Permitted Exceptions

11.1(b)

Personal Property Leases

5.13(b)

Purchase Price

3.1

Purchase Price Allocation Statement

3.4(a)

Purchased Assets

2.3

Purchased Contracts

2.2(c)

Purchasers

Introductory Paragraph

Purchaser Documents

6.2

Purchasers’ Environmental Assessment

7.10(a)

Purchaser Indemnified Parties

9.2(a)

Qualified Plan

5.16(b)

Real Property Lease or Real Property Leases

5.12(a)

Related Persons

5.23

11

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

 

Term

Section

 

 

Reply Period

11.1(d)

Sealweld 2003

Recitals

Sealweld Abu Dhabi

Recitals

Sealweld Canada

Introductory Paragraph

Sealweld Jebel Ali

Recitals

Sealweld Shares

5.4(a)

Sealweld Texas

Recitals

Seller or Sellers

Introductory Paragraph

Seller Documents

5.2

Seller Marks

7.9

Seller Permits

5.19(b)

Seller Property or Seller Properties

5.12(a)

Shareholder

Introductory Paragraph

Shareholder Indemnified Parties

9.2(b)

Shares

5.4(a)

Stock Transfer

2.3

Straddle Period

9.6(c)

Survey

11.1(a)

Survival Period

9.1

Target Working Capital

3.3(a)(ii)

Third Party Claim

9.3(b)

Title Company

11.1(a)

Title Documents

11.1(a)

Transferred Employee

7.15(a)

Transferred Information

7.14

Unresolved Claims

9.5

1.3 Other Definitional and Interpretive Matters.

(a) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

Exhibits/Schedules. All Exhibits and Schedules annexed hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

12

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

 

Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

(b) The parties hereto have participated jointly in the negotiation and drafting
of this Agreement and the other documents contemplated by the Transactions and,
in the event an ambiguity or question of intent or interpretation arises, this
Agreement and the other documents contemplated by the Transactions shall be
construed as jointly drafted by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement or any provision of any other
document contemplated by the Transactions.

Article II

SALE OF ASSETS

2.1 Sale of Canadian Assets. Subject to the terms and conditions of this
Agreement, including, the representations, warranties, covenants and agreements
contained herein, at the Closing, each Company shall transfer, assign, convey
and deliver to (the “Canadian Asset Transfer”) KMG ILC all of such Company’s
right, title and interest in, to and under the Canadian Purchased Assets, free
and clear of all Liens except for Permitted Exceptions (and KMG ILC shall assume
the Canadian Assumed Liabilities as provided in Section 2.6) in exchange for the
Purchase Price allocated to the Canadian Purchased Assets. The “Canadian
Purchased Assets” shall mean all of the business, assets, properties,
contractual rights, goodwill, going concern value, rights and claims of each
Company, wherever situated and of whatever kind and nature, real or personal,
tangible or intangible, whether or not reflected on the books and records of
such Company (other than the Excluded Assets, the Abu Dhabi Stock, and the 2003
Stock), insofar as they pertain to the foregoing, including each of the
following assets:

(a) all accounts receivable other than Excluded Accounts Receivable;

(b) all Inventory owned by the Companies;

(c) all tangible personal property, including furniture, fixtures, furnishings,
machinery, tools, equipment, vehicles, rolling stock, leasehold improvements,
and other tangible personal property of every kind owned or leased by such
Company in the conduct of the Business (wherever located, including customer
locations), including all artwork, desks, chairs, tables, computer and
computer-related hardware, file servers, facsimile servers, scanners, color

13

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

 

printers, laser printers and networks, copiers, telephone lines and numbers, fax
machines and other telecommunication equipment, cubicles and miscellaneous
office furnishings and supplies, together with any maintenance records and other
documents relating thereto;

(d) all deposits (including customer deposits and security for rent,
electricity, telephone or otherwise), claims for refunds, prepaid charges and
expenses, including any prepaid rent, rights of offset in respect thereof and
all retentions or holdbacks of such Company;

(e) all rights of such Company under each Personal Property Lease and Real
Property Lease, together with all improvements, fixtures and other appurtenances
thereto and rights in respect thereof;

(f) Intellectual Property and Intellectual Property Licenses;

(g) all rights under Contracts, including the employment agreement and all
claims or causes of action with respect to Contracts (the “Purchased
Contracts”);

(h) all files, documents, instruments, papers, books, reports, records, tapes,
microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title
policies, lists of past, present and/or prospective customers, supplier lists,
regulatory filings, operating data and plans, technical documentation (design
specifications, functional requirements, operating instructions, logic manuals,
flow charts, etc.), user documentation (installation guides, user manuals,
training materials, release notes, working papers, etc.), marketing
documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other
similar materials related to the Business, in each case whether or not in
electronic form (“Documents”), including Documents relating to products,
services, marketing, advertising, promotional materials, Intellectual Property,
personnel files for Transferred Employees and all files, customer files and
documents (including credit information) (to the extent permitted by applicable
Law), supplier lists, records, literature and correspondence, whether or not
physically located on any of the premises referred to in clause (e) above,
except for any personal communications from or to Shareholder that are unrelated
to the Business or that pertain to any Excluded Asset or Excluded Liability;

(i) all Permits used by such Company (which includes all Permits necessary to
conduct the Business as currently conducted) and all rights, and incidents of
interest therein;

(j) all rights of such Company under non-disclosure or confidentiality,
non-compete, non-solicitation agreements, assignment agreements or similar
agreements with Former Employees, Employees and agents of such Company or with
third parties;

(k) all rights of such Company under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
to the extent relating to products sold or services provided to such Company or
to the extent affecting any Canadian Purchased Assets;

(l) all third-party property and casualty insurance proceeds, and all rights to
third-party property and casualty insurance proceeds;

14

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

 

(m) all claims, counterclaims, causes of action, rights or recourse of such
Company against third parties relating to the Canadian Purchased Assets, whether
choate or inchoate, known or unknown, contingent or non-contingent;

(n) all Owned Property and Improvements; and

(o) all goodwill and other intangible assets, including the goodwill associated
with the Canadian Purchased Assets, which includes the exclusive right of the
Purchasers to (i) represent themselves as carrying on the Business in
continuation of and in succession to the Sellers, and (ii) use any words
indicating that the Business is so carried on, including all of the Sellers’
right, title and interest in and to the name “Sealweld”, or any variation of it,
together with the rights, if any, to telephone and facsimile numbers and
internet domain names used in connection with the Business.

2.2 Sale of FZE Assets. Subject to the terms and conditions of this Agreement,
including, without limitation, the representations, warranties, covenants and
agreements contained herein, at the Closing, FZE shall transfer, assign, convey
and deliver to (the “FZE Asset Transfer”) KMG ILC all of FZE’s right, title and
interest in, to and under the FZE Purchased Assets, free and clear of all Liens
except for Permitted Exceptions (and KMG ILC shall assume the FZE Assumed
Liabilities as provided in Section 2.7) in exchange for the Purchase Price
allocated to the FZE Purchased Assets. The “FZE Purchased Assets” shall mean
each of the following assets:

(a) all accounts receivable other than Excluded Accounts Receivable;

(b) all Inventory owned by FZE;

(c) all rights under Contracts, including all claims or causes of action with
respect to Contracts (the “FZE Purchased Contracts” and, together with the
Canadian Purchased Contracts, the “Purchased Contracts”);

(d) all tangible personal property, including furniture, fixtures, furnishings,
machinery, tools, equipment, vehicles, rolling stock, leasehold improvements,
and other tangible personal property of every kind owned or leased by FZE in the
conduct of the Business (wherever located, including customer locations),
including all artwork, desks, chairs, tables, computer and computer-related
hardware, file servers, facsimile servers, scanners, color printers, laser
printers and networks, copiers, telephone lines and numbers, fax machines and
other telecommunication equipment, cubicles and miscellaneous office furnishings
and supplies, together with any maintenance records and other documents relating
thereto;

(e) all Documents, including Documents relating to products, services,
marketing, advertising, promotional materials, Intellectual Property, personnel
files for Transferred Employees and all files, customer files and documents
(including credit information) (to the extent permitted by applicable Law),
supplier lists, records, literature and correspondence;

(f) Intellectual Property and Intellectual Property Licenses, including customer
lists.

15

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

 

(g) all goodwill and other intangible assets, including the goodwill associated
with the FZE Purchased Assets.

2.3 Sale of 2003 Stock. Subject to the terms and conditions of this Agreement,
including, the representations, warranties, covenants and agreements of
contained herein, at the Closing, Sealweld Canada shall transfer, assign, convey
and deliver to KMG all of the capital stock of Sealweld 2003 (the “2003 Stock”
and, together with the Jebel Ali Stock, the Abu Dhabi Stock, the FZE Purchased
Assets and the Canadian Purchased Assets, the “Purchased Assets”) in exchange
for that portion of the Purchase Price allocated to the 2003 Stock (such
transaction to be referred to as the “2003 Stock Transfer” and, together with
the New Jebel Ali Stock Transfer and the Abu Dhabi Stock Transfer, the Canadian
Asset Transfer and the FZE Asset Transfer, the “Asset Transfers”) in exchange
for that portion of the Purchase Price allocated to the 2003 Stock.

2.4 Sale of  New Jebel Ali and Sealweld Abu Dhabi. Subject to the terms and
conditions of this Agreement, including, the representations, warranties,
covenants and agreements of contained herein and the further terms and
conditions set forth on Exhibit G, at the times set forth in Exhibit G, Sealweld
Canada shall transfer, assign, convey and deliver to KMG Luxembourg (a) all of
the capital stock of Sealweld Abu Dhabi owned by Sealweld Canada along with
control over any stock of Sealweld Abu Dhabi not owned by Sealweld Canada (such
transaction to be referred to as the “Abu Dhabi Stock Transfer”) and (b) all of
the capital stock of New Jebel Ali (the “Jebel Ali Stock”) (such transaction to
be referred to as the “Jebel Ali Stock Transfer”).

2.5 Excluded Assets.Nothing herein contained shall be deemed to contribute,
transfer, assign or convey the Excluded Assets to Purchasers, and each Seller
shall retain all of its right, title and interest to, in and under the Excluded
Assets. The “Excluded Assets” shall mean each of the following assets:

(a) Sellers’ Bank Accounts and cash in any of any of Sellers’ Bank Accounts,
including any cash payable to such Seller as Purchase Price;

(b) all minute books, organizational documents, stock registers and such other
books and records of such Seller as they pertain to the ownership, organization
or existence of such Seller and duplicate copies of such records as are
necessary to enable such Seller to file tax returns and reports;

(c) any tax returns, financial statements and supporting documentation and
workpapers, any tax attributes including, without limitation, any net operating
loss carryovers and any tax refunds to which such Seller is or may be due;

(d) all rights of such Seller under this Agreement;

(e) the capital stock of Sealweld FZE;

(f) those items listed on Schedule 2.5; and

(g) all insurance contracts;

16

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

 

(h) the Excluded Accounts Receivable.

2.6 Assumption of Canadian Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, KMG ILC shall assume,
effective as of the Closing, only the following liabilities of the Companies
(collectively, the “Canadian Assumed Liabilities”):

(a) all duties and obligations of the Companies under the Canadian Purchased
Contracts (including capital leases) that arise out of or relate to the period
from and after the Effective Time (excluding any duties or obligations of the
Companies that relate to or arise from any breach or default that occurred prior
to the Effective Time);

(b) all trade accounts payable of the Companies incurred in the Ordinary Course
of Business and included in the calculation of Closing Working Capital;

(c) all Assumed Environmental Liabilities relating to the Canadian Purchased
Assets;

(d) all Liabilities with respect to the Companies’ Plans that arise after the
Effective Time;

(e) all Liabilities with respect to severance and vacation benefits of the
Transferred Employees employed by the Companies, as further described in Section
7.15; and

(f) other Liabilities listed on Schedule 2.6.

2.7 Assumption of FZE Liabilities. On the terms and subject to the conditions
set forth in this Agreement, at the Closing, KMG ILC shall assume, effective as
of the Closing, only the following liabilities of Sealweld FZE (collectively,
the “FZE Assumed Liabilities” and collectively with the Canadian Assumed
Liabilities, the “Assumed Liabilities”):

(a) all duties and obligations of FZE under the FZE Purchased Contracts
(including capital leases) that arise out of or relate to the period from and
after the Effective Time (excluding any duties or obligations of FZE that relate
to or arise from any breach or default that occurred prior to the Effective
Time);

(b) all trade accounts payable of Sealweld FZE incurred in the Ordinary Course
of Business and included in the calculation of Closing Working Capital; and

(c) other Liabilities listed on Schedule 2.7.

17

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

 

2.8 Excluded Liabilities. Notwithstanding any provision herein to the contrary,
Purchasers shall not assume, succeed to, be liable for, be subject to, or be
obligated for, nor shall the Purchased Assets be subject to, any Excluded
Liabilities. Sellers shall timely perform, satisfy and discharge in accordance
with their respective terms all Excluded Liabilities. “Excluded Liabilities”
shall mean all Liabilities of any Seller or Acquired Subsidiary arising out of,
relating to or otherwise in respect of the Business on or before the Effective
Time other than the Assumed Liabilities, including but not limited to, the
following:

(a) Any Liability for, arising from or relating to any and all Taxes (except
Taxes prorated in accordance with Section 9.6), including, without limitation,
(A) Taxes of such Seller or Acquired Subsidiary arising as a result of such
Seller’s or Acquired Subsidiary’s operation of the Business or use or ownership
of the Purchased Assets on or prior to the Effective Time, (B) Taxes arising as
a result of the sale or purchase of any goods or services on or prior to the
Effective Time, and (C) any deferred Taxes of any nature;

(b) Any Liability of such Seller or Acquired Subsidiary under, arising from or
relating to any Indebtedness of any Person, other than any capital leases to be
assumed as part of the Assumed Liabilities;

(c) Any Liability of such Seller or Acquired Subsidiary (including
indemnification and other contingent obligations) arising from or relating to
acts, events or omissions by any Person or circumstances or conditions existing
at or prior to the Effective Time;

(d) Any Liability of such Seller or Acquired Subsidiary arising out of any
violation by such Seller or Acquired Subsidiary of, or default by such Seller or
Acquired Subsidiary under, any Law prior to the Effective Time, or any remedial
obligation under any Law;

(e) Any Liability of such Seller or Acquired Subsidiary to any employee, agent,
officer, director, consultant, contractor or other Person as to any (i) salary,
bonus, commission, overtime, severance or other termination pay or benefits or
other compensation with respect to the period before the Effective Time, (ii)
benefits arising out of or in connection with any Plan of such Seller with
respect to the period before the Effective Time, including but not limited to,
liabilities or obligations for medical, dental, vision, travel, accident,
accidental death or dismemberment and life insurance expenses and employee
post-retirement life insurance or health care benefits (irrespective of the time
at which claims are presented), (iii) any claim for wrongful discharge, breach
of contract, unfair labor practice, employment discrimination, unemployment
compensation, workers’ compensation or any other claim relating to the terms and
conditions of employment that relate to the period before the Effective Time,
irrespective of whether such claims are made prior to or after the Effective
Time, (iv) any employment-related claims, penalties and assessments in respect
of the Business arising prior to the Effective Time, or (v) other Transaction
Expenses payable to any Excluded Employee and sale bonuses;

(f) Any Liability of such Seller arising from or relating to products or
services sold or provided by such Seller prior to the Effective Time, defects or
failure to meet specifications in products or services sold or provided by such
Seller prior to the Effective Time,

18

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

 

or any Liability of such Seller in respect of any express or implied
representation, warranty, condition, agreement or guaranty made (or claimed to
have been made) by such Seller or Liability imposed or asserted to be imposed by
operation of law, including products liability, any implied warranty or implied
condition, as regards any products or services sold or provided by such Seller
prior to the Effective Time;

(g) all Liabilities arising out of, under or in connection with Excluded
Contracts and, with respect to Purchased Contracts, Liabilities for such
Seller’s performance of the Purchased Contracts prior to the Effective Time and
Liabilities in respect of any breach by or default of such Seller accruing under
such Purchased Contracts with respect to, or relating to, any period prior to
the Effective Time, or based upon, relating to or arising out of events,
actions, or failures to act prior to the Effective Time;

(h) all Liabilities in respect of any Legal Proceeding, or any claim arising out
of, relating to or otherwise in respect of (i) the Business accruing with
respect to, or relating to, any period prior to the Effective Time or based
upon, relating to or arising out of events, actions, or failures to act prior to
the Effective Time, or (ii) any Excluded Asset or Excluded Contract;

(i) the Transaction Expenses; and

(j) all Retained Environmental Liabilities.

2.9 Further Conveyances and Assumptions: Consent of Third Parties.

(a) From time to time following the Closing, each Seller and each Purchaser
shall execute, acknowledge and deliver all such further discharges, conveyances,
notices, assumptions, releases and aquittances and such other instruments, and
shall take such further actions, including making filings with the United States
Patent and Trademark Office or the land titles office of Alberta or foreign
ownership of land administration office of Alberta, as may be necessary or
appropriate to assure fully to such Purchaser and its respective successors or
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges intended to be conveyed to such Purchaser under this
Agreement and to assure fully to such Seller and its successors and assigns, the
assumption of the liabilities and obligations intended to be assumed by such
Purchaser under this Agreement, and to otherwise make effective the
Transactions. From time to time following the Closing, each Seller shall work to
procure all instruments and documents necessary to cancel all outstanding credit
accounts and release any and all Liens other than Permitted Exceptions,
including payoff letters, appropriate UCC financing statement amendments
(termination statements) on the Purchased Assets.

(b) Nothing in this Agreement nor the consummation of the Transactions shall be
construed as an attempt or agreement to contribute or assign any Purchased
Asset, including any Contract, Permit, certificate, approval, authorization or
other right, which by its terms or by Law is nonassignable without the consent
of a third party or a Governmental Body or is cancelable by a third party in the
event of an assignment (“Nonassignable Assets”) unless and until such consent
shall have been obtained. To the extent permitted by applicable Law, in the
event consents to the assignment thereof cannot be obtained, such Nonassignable
Assets shall be held, as of and from the Effective Time, by each Seller in trust
for Purchasers and the covenants and

19

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

 

obligations thereunder shall be performed by Purchasers in such Seller’s name
and all benefits and obligations existing thereunder shall be for such
Purchaser’s account. Each Seller shall take or cause to be taken at the
appropriate Purchaser’s expense such actions in its name or otherwise as such
Purchaser may reasonably request so as to provide such Purchaser with the
benefits of the Nonassignable Assets and to effect collection of money or other
consideration that becomes due and payable under the Nonassignable Assets, and
such Seller shall promptly pay over to such Purchaser all money or other
consideration received by it in respect of all Nonassignable Assets. As of and
from the Effective Time, each Seller authorizes each Purchaser, to the extent
permitted by applicable Law and the terms of the Nonassignable Assets, at such
Purchaser’s expense, to perform all the obligations and receive all the benefits
of such Seller under the Nonassignable Assets and appoints such Purchaser its
attorney-in-fact to act in its name on its behalf with respect thereto.

2.10 Closing Date. The consummation of the Transactions other than the Jebel Ali
Stock Transfer and the Abu Dhabi Stock Transfer (the “Closing”) shall take place
at the offices of Haynes and Boone, LLP, located at 1221 McKinney Street, Suite
2100, Houston, Texas 77010 (or at such other place as the parties may designate
in writing) at 10:00 a.m. (Central time) on February 1, 2017 or such other date
as mutually specified by the parties (the “Closing Date”), which date shall be
no later than the third Business Day after the satisfaction or waiver of the
conditions set forth in Article VIII (other than conditions that by their nature
are to be satisfied at Closing, but subject to the satisfaction or waiver of
those conditions at such time). The effective time of the Transactions shall be
at midnight, Calgary, Alberta time, on the date immediately preceding the
Closing Date (the “Effective Time”).

2.11 Deliveries Prior to the Closing Date. No later than three Business Days
prior to the Closing Date, Sellers shall deliver to Purchasers copies of the
pay-off letters in respect of Indebtedness to be repaid as of the Closing and
the certificate setting forth an estimate of Indebtedness (other than capital
leases), pursuant to Section 7.12.

2.12 Seller and Shareholder Deliveries on the Closing Date. At the Closing,
Shareholder shall deliver or cause Sellers to deliver, as applicable, to
Purchasers:

(a) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of each of Sellers certifying that attached thereto are true and
complete copies of (i) the articles of incorporation of such Seller (certified
by the Registrar of Corporations of the Province of Alberta, Canada, or the
governing authority of the Sharjah Airport International Free Zone, United Arab
Emirates, as applicable, as of a date no more than twenty days prior to the
Closing Date), (ii) the bylaws of such Seller, (iii) all resolutions adopted by
the board of directors and shareholders of such Seller authorizing the
execution, delivery and performance of this Agreement, the other documents
contemplated by the Transactions, and the consummation of the Transactions, and
that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the Transactions, and (iv) the incumbency
of the officers executing documents or instruments on behalf of each Seller;

(b) copies of the notices and releases from Related Persons, pursuant to
Section 7.10;

20

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

 

(c) a General Conveyance in the form of Exhibit B (“General Conveyance”) duly
executed by each Company providing for the transfer of the Canadian Purchased
Assets to KMG ILC and such other deeds, conveyances, assurances, transfers,
discharges, releases and assignments and any other instruments necessary or
reasonably required to transfer the Canadian Purchased Assets to KMG ILC with a
good (and in the case of the Owned Properties, marketable) title, free and clear
of all Liens other than Permitted Exceptions; and

(d) an Asset Purchase Agreement in the form of Exhibit C (“FZE Asset Purchase
Agreement”) duly executed by FZE providing for the purchase of the FZE Purchased
Assets by KMG ILC; and

(e) a Consulting Agreement in the form of Exhibit D (“Consulting Agreement”)
duly executed by Dean Chisholm; and

(f) certificates of good standing dated not more than twenty Business Days prior
to the Closing Date with respect to each of Sellers and the Subsidiaries issued
by each jurisdiction in which any of Sellers or any Subsidiary is formed,
carries on or is qualified to do business as a foreign entity;

(g) copies of all instruments and documents necessary to release any and all
Liens other than Permitted Exceptions, including payoff letters, appropriate UCC
financing statement amendments (termination statements);

(h) the certificate indicating the amount of Indebtedness to be repaid as of the
Closing, pursuant to Section 7.12;

(i) an affidavit from the authorized representative of each Seller that states
that none of the Purchased Assets is a “United States real property interest”
within the meaning of Section 897(c) of the Code (a “FIRPTA Affidavit”);

(j) Noncompetition and Nonsolicitation Agreements in substantially the form of
Exhibit A hereto (the “Noncompetition and Nonsolicitation Agreements”) executed
by Sellers, FZE, Shareholder and the persons listed on Schedule 8.1(i) as of the
Closing;

(k) the certificate contemplated by Section 8.1(e);

(l) one or more documents of conveyance of all of the rights to the patent
application for the “Mongoose” valve, free and clear of any royalty obligations
to Shareholder or Sellers, to KMG ILC;

(m) Sellers shall have delivered, or caused to be delivered, to Purchasers
certificates of title for any automobiles, vehicles, rolling stock or, other
applicable Purchased Assets, duly endorsed to Purchasers;

(n) the corporate records of each of the Acquired Subsidiaries including: (i)
all constating documents and by-laws, (ii) all minutes of meetings and
resolutions of shareholders and directors (and any committees), and (iii) the
share certificate books, securities register, register of transfers and register
of directors;

21

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

 

(o) in the case of each of Sealweld Canada and Chisholm, a unanimous resolution
of its shareholders approving the sale of all or substantially of its assets, as
required under applicable corporate Law;

(p) an Escrow Agreement in the form of Exhibit E duly executed by Sealweld
Canada; and

(q) share certificates of Sealweld 2003 representing all of the issued and
outstanding capital stock of Sealweld 2003, duly endorsed for transfer to KMG;

(r) a Transition Services Agreement in the form of Exhibit F (the “Transition
Services Agreement”) duly executed by the Sellers;

(s) evidence of cancellation of the lease between Chisholm and Sealweld Canada;
and

(t) such other documents as Purchasers shall reasonably request.

2.13 Purchasers Deliveries on the Closing Date. At the Closing, Purchasers shall
deliver to Sellers:

(a) the Purchase Price, as adjusted pursuant to Section 3.3;

(b) the General Conveyance executed by KMG ILC as of the Closing Date;

(c) the FZE Asset Purchase Agreement executed by KMG ILC as of the Closing Date;

(d) the Consulting Agreement executed by KMG ILC as of the Closing Date; and

(e) the Noncompetition and Nonsolicitation Agreements executed by KMG ILC as of
the Closing Date;

(f) an Escrow Agreement in the form of Exhibit E duly executed by KMG ILC; and

(g) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of each of each Purchaser certifying (i) that attached thereto are true
and complete copies of all resolutions adopted by the board of directors of such
Purchaser authorizing the execution, delivery and performance of this Agreement,
the other documents contemplated by the Transactions, and the consummation of
the Transactions, and that all such resolutions are in full force and effect and
are all the resolutions adopted in connection with the Transactions, and
(ii) the incumbency of the officers executing documents or instruments on behalf
of such Purchaser;

(h) the Transition Services Agreement duly executed by KMG ILC; and

(i) such other documents as Sellers shall reasonably request.

22

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

 

Article III

PURCHASE PRICE

3.1 Purchase Price. The aggregate consideration for the purchase and sale of the
Purchased Assets shall be $23,000,000.00 in cash, subject to adjustment as
provided in Section 3.3 (the “Purchase Price”).

3.2 Payment of Purchase Price. On the Closing Date, Purchasers shall pay the
Purchase Price, less the Indemnity Escrow Amount, less the amounts of any
Indebtedness (other than capital leases) disclosed pursuant to Section 7.12 to
Sellers, and less the $200,000 to be paid for the Abu Dhabi Stock plus the Jebel
Ali Stock, by wire transfer of immediately available funds into an account or
accounts designated by Sellers in writing not fewer than three Business Days
prior to the Closing Date. Schedule 3.2 sets forth the allocation of the payment
of the Purchase Price among Sellers.

3.3 Purchase Price Adjustment.

(a) Closing Date Purchase Price Adjustment.

(i) Not later than three Business Days prior to the Closing Date, Sellers shall
provide Purchasers with an estimated consolidated balance sheet of each of
Sellers and the Acquired Subsidiaries at the Effective Time (the “Estimated
Closing Balance Sheet”) and a statement of the estimated Closing Working Capital
(as defined in Section 3.3(b)(i) below), derived from the Estimated Closing
Balance Sheet (“Estimated Closing Working Capital”). The Estimated Closing
Balance Sheet and Estimated Closing Working Capital shall be prepared by Sellers
in accordance with GAAP.

(ii) If Estimated Closing Working Capital is less than Target Working Capital,
then the Purchase Price to be paid at the Closing will be decreased by the
positive difference between Estimated Closing Working Capital and Target Working
Capital (the “Estimated Closing Working Capital Shortfall”). If Estimated
Closing Working Capital is greater than Target Working Capital, then the
Purchase Price to be paid at the Closing will be increased by the positive
difference between Estimated Closing Working Capital and Target Working Capital
(the “Estimated Closing Working Capital Excess”). “Target Working Capital” shall
be $6,200,000.

(iii) Purchasers shall not assume any Indebtedness of Sellers or the Acquired
Subsidiaries, except for any capital leases included in the Assumed Liabilities.

(iv) Any changes in the Purchase Price required by this Section 3.3(a), shall be
allocated among Sellers as set forth on Schedule 3.3(a).

(b) Post-Closing Date Purchase Price Adjustment.

(i) Following the Closing, the Purchase Price shall be adjusted as provided in
this Section 3.3(b) to reflect the difference between Closing Working Capital
and Estimated Closing Working Capital. “Closing Working Capital” means (A) the
consolidated Included

23

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

 

Current Assets of Sellers and the Acquired Subsidiaries, less (B) the
consolidated Included Current Liabilities of Sellers and the Acquired
Subsidiaries, determined as of the Effective Time. “Included Current Assets”
means accounts receivable (but excluding any Segregated Accounts Receivable),
Inventory owned by the Sellers, deposits, prepaid expenses, and other current
assets determined in accordance with GAAP, applied using the same accounting
methods, practices, principles, policies and procedures, with consistent
classifications, judgments and valuation and estimation methodologies that were
used in the preparation of the Sellers’ Financial Statements for the most recent
fiscal year end as if such accounts were being prepared as of a fiscal year end,
but excluding Excluded Assets and deferred tax assets and receivables from any
Subsidiary. “Included Current Liabilities” means accounts payable and accrued
expenses and other current liabilities determined in accordance with GAAP
applied using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Sellers’
Financial Statements for the most recent fiscal year end as if such accounts
were being prepared as of a fiscal year end, but excluding Excluded Liabilities,
payables to any Subsidiary and that portion of Indebtedness paid at closing and
deducted from the Purchase Price pursuant to Section 3.3(a)(iii).

(ii) Within sixty (60) days after the Closing Date, Purchasers shall cause to be
prepared and delivered to Sealweld Canada a consolidated balance sheet of
Sellers and the Acquired Subsidiaries as of the Effective Time (the “Closing
Balance Sheet”) and a statement of Closing Working Capital derived from the
Closing Balance Sheet (the “Closing Working Capital Statement”). The Closing
Balance Sheet and the Closing Working Capital Statement shall be prepared in
accordance with the same method by which the Estimated Closing Working capital
was prepared.

(iii) The Closing Balance Sheet and the Closing Working Capital Statement (and
the computation of Closing Working Capital indicated thereon) delivered by
Purchasers to Sealweld Canada shall be conclusive and binding upon the parties
unless Sealweld Canada, within 30 days after delivery to Sealweld Canada of the
Closing Balance Sheet and the Closing Working Capital Statement, notifies
Purchasers in writing that Sealweld Canada disputes any of the amounts set forth
therein, specifying the nature of the dispute and the basis therefor. The
parties shall in good faith attempt to resolve any dispute and, if the parties
so resolve all disputes, the Closing Balance Sheet and the Closing Working
Capital Statement (and the computation of Closing Working Capital indicated
thereon), as amended to the extent necessary to reflect the resolution of the
dispute, shall be conclusive and binding on the parties. If the parties do not
reach agreement in resolving the dispute within 20 days after notice is given by
Sealweld Canada to Purchasers pursuant to the second preceding sentence, the
parties shall submit the dispute to a partner at an internationally recognized
independent accounting firm which is mutually agreeable to the parties (the
“Arbiter”) for resolution. If the parties cannot agree on the selection of a
partner at an independent accounting firm to act as Arbiter, then, on
application by Sealweld Canada or a Purchaser, a judge of the Court of Queen’s
Bench of Alberta shall appoint the arbiter. Promptly, but no later than 30 days
after acceptance of his or her appointment as Arbiter, the Arbiter shall
determine (it being understood that in making such determination, the Arbiter
shall be functioning as an expert and not as an arbitrator), based solely on
written submissions by Purchasers and Sealweld Canada, and not by independent
review, only those issues in dispute and shall render a written report as to the
resolution of the dispute

24

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

 

and the resulting computation of the Closing Working Capital which shall be
conclusive and binding on the parties. All proceedings conducted by the Arbiter
shall take place in Calgary, Alberta. In resolving any disputed item, the
Arbiter shall be bound by the provisions of this Section 3.3 and may not assign
a value to any item greater than the greatest value for such items claimed by
any party or less than the smallest value for such items claimed by any party.
The fees, costs and expenses of the Arbiter shall be paid equally by Purchasers
and Sealweld Canada.

(iv) Upon final determination of Closing Working Capital as provided in Section
3.3(b)(iii) above, (A) if Closing Working Capital is greater than Estimated
Closing Working Capital, Purchasers shall pay to Sealweld Canada, in the manner
provided in Section 3.3(b)(v) below, the amount of such excess as an adjustment
to the Purchase Price, and (B) if Estimated Closing Working Capital is greater
than Closing Working Capital, Sealweld Canada shall pay to Purchasers, in the
manner provided in Section 3.3(b)(v) below, the amount of such excess as an
adjustment to the Purchase Price.

(v) Any payment pursuant to Section 3.3(b)(iv) above shall be made at a mutually
convenient time and place within three Business Days after Closing Working
Capital has been determined by wire transfer by Purchasers or Sealweld Canada,
as the case may be, of immediately available funds to the account of such other
party as may be designated in writing by such other party.

(vi) In addition to any payments made pursuant to Section 3.3(b)(iv) above,
Purchasers shall pay to Sealweld Canada the amount of any Segregated Accounts
Receivable for which payment is received by the Purchasers following the Closing
Date in accordance with the terms set forth in Exhibit H.

(c) Any portions of the Indebtedness paid at Closing, Included Current Assets or
Included Current Liabilities that are not originally reflected in the books and
records of the Sellers or the Acquired Subsidiaries in Canadian dollars shall be
converted to Canadian dollars for purposes of calculating any adjustments to the
Purchase Price pursuant to this Section 3.3 at the exchange rate cited in
Bloomberg.com between the applicable foreign currency and the Canadian dollar at
the Effective Time.

3.4 Purchase Price Allocation.

(a) Within sixty (60) days following the Closing, Purchaser shall deliver to
Sealweld Canada a statement allocating the Purchase Price plus other amounts
treated as consideration for tax purposes among the Purchased Assets (the
“Purchase Price Allocation Statement”).  Purchaser and Sealweld Canada shall
agree in good faith to revisions to the Purchase Price Allocation Statement to
reflect any purchase price adjustments.  In the event that Purchaser and
Sealweld Canada are unable to agree on the Purchase Price Allocation Statement
within thirty (30) days following Purchaser’s delivery of such statement to
Sealweld Canada, Purchaser and Sealweld Canada shall submit such dispute to the
Arbiter to be resolved in accordance with the provisions of Section 3.4(b)
below.  All Tax Returns and reports filed by Purchaser and Sealweld Canada shall
be prepared consistently with such allocation (as revised in accordance with
this Section 3.4(a)).

25

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

 

(b) If Purchaser and Sealweld Canada are unable to reach an agreement with
respect to the Purchase Price Allocation Statement within thirty (30) days
following Purchaser’s delivery of such statement to Sealweld Canada, they shall
promptly thereafter cause an Arbiter selected in the manner set forth in Section
3.3(b) to review this Agreement and the disputed items or amounts contained in
the Purchase Price Allocation Statement (it being understood that in making such
calculation, the Arbiter shall be functioning as an expert and not as an
arbitrator).  In making such calculation, the Arbiter shall consider only those
items or amounts in the Purchase Price Allocation Statement and Purchaser’s
calculation of such allocations as to which Sealweld Canada have disagreed.  The
Arbiter shall deliver to Purchaser and Sealweld Canada, as promptly as
practicable (but in any case no later than thirty (30) days from the date of
engagement of the Arbiter), a report setting forth such calculation.  Such
report shall be final and binding upon Purchaser and Sealweld Canada.  The fees,
costs and expenses of the Arbiter’s review and report shall be allocated to and
borne by Purchaser and Sealweld Canada based on the inverse of the percentage
that the Arbiter’s determination (before such allocation) bears to the total
amount of the total items in dispute as originally submitted to the Arbiter.

3.5 Proration of Certain Expenses. Except as otherwise provided in Section 9.6
with respect to Taxes, all expenses and other payments in respect of the Seller
Properties, including all rents and other payments (including utilities,
insurance and any prepaid amounts) due under the Real Property Leases and any
other leases constituting part of the Purchased Assets, shall be prorated
between Sellers, on the one hand, and Purchasers, on the other hand, as of the
Effective Time. Sellers shall be responsible for all payments with respect to
Seller Properties, including rents (including any percentage rent, additional
rent and any accrued tax and operating expense reimbursements and escalations),
charges and other payments of any kind accruing during any period under the Real
Property Leases or any such other leases up to and including the Effective Time.
Purchasers shall be responsible for all payments with respect to Seller
Properties, including rents, charges and other payments accruing during any
period under the Real Property Leases or any such other leases after the
Effective Time. Prior to the finalization of the Closing Balance Sheet, each
Purchaser shall pay the full amount of any invoices received by it and Seller’s
share of such expenses shall be accounted for in the Closing Balance Sheet.
After the Closing Balance Sheet has been finalized, each Purchaser shall pay the
full amount of any invoices received by it and shall submit a request for
reimbursement to the appropriate Seller for such Seller’s share of such expenses
and such Seller shall pay the full amount of any invoices received by it and the
appropriate Purchaser shall reimburse such Seller for such Purchasers’ share of
such expenses.

Article IV

REPRESENTATIONS AND WARRANTIES RELATING TO SHAREHOLDER

Shareholder hereby represents and warrants to Purchasers that:

4.1 Authorization of Agreement. Shareholder is an individual residing in British
Columbia, Canada. The execution, delivery and performance of this Agreement and
each of the Shareholder Documents, and the consummation of the Transactions, has
been duly authorized and approved by all required action on the part of the
shareholders of the Sellers. This Agreement has been, and each of the
Shareholder Documents will be at or prior to the Closing,

26

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

 

duly and validly executed and delivered by Shareholder and (assuming due
authorization, execution and delivery by Purchasers) this Agreement constitutes,
and each of the Shareholder Documents when so executed and delivered will
constitute, legal, valid and binding obligations of Shareholder, enforceable
against Shareholder in accordance with its terms.

4.2 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by Shareholder of this Agreement or the
Shareholder Documents, the consummation of the Transactions, or compliance by
Shareholder with any of the provisions hereof or thereof will conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination or cancellation under any
provision of (i) any Contract, or Permit to which Shareholder is a party or by
which any of the properties or assets of Shareholder are bound; (ii) any Order
of any Governmental Body applicable to Shareholder or by which any of the
properties or assets of Shareholder are bound; or (iii) any applicable Law.

(b) Except as set forth on Schedule 4.2(b) or on Exhibit G, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with,
or notification to, any Person or Governmental Body is required on the part of
Shareholder in connection with the execution and delivery of this Agreement, the
Shareholder Documents, the compliance by Shareholder with any of the provisions
hereof, or the consummation of the Transactions.

Article V

REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS

Sellers and Shareholder hereby jointly and severally represent and warrant to
Purchasers that:

5.1 Organization and Good Standing. Each Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
province of Alberta, Canada or the Sharjah Airport International Free Zone,
United Arab Emirates, and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on the Business as now
conducted and as currently proposed to be conducted. Except as set forth on
Schedule 5.1, no Seller is or is required as a result of the conduct of their
Business or the ownership of their respective properties to be qualified or
authorized to do business as a foreign entity in any other jurisdiction.

5.2 Authorization of Agreement. Each Seller has all requisite corporate power
and authority and has taken all corporate action to execute and deliver this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by such Seller, respectively,
in connection with the Transactions (collectively, the “Seller Documents”), to
perform its obligations hereunder and thereunder and to consummate the
Transactions. The execution, delivery and performance of this Agreement and each
of the Seller Documents, and the consummation of the Transactions, have been
duly authorized and approved by all requisite action on the part of each Seller.
This Agreement has been, and each of the Seller Documents will be at or prior to
the Closing, duly and validly executed and delivered by each Seller, as
applicable, and (subject to due authorization, execution and delivery by

27

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

 

Purchasers) this Agreement constitutes, and each of the Seller Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Sellers, enforceable against each Seller in accordance with their respective
terms, subject to applicable Laws.

5.3 Conflicts; Consents of Third Parties. (a) Except as set forth on Schedule
5.3(a), none of the execution and delivery by Sellers of this Agreement or the
Seller Documents, the consummation of the Transactions, or compliance by Sellers
with any of the provisions hereof or thereof will conflict with, or result in
any violation or breach of, conflict with or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or give rise to any obligation of Sellers to make any payment under, or
to the increased, additional, accelerated or guaranteed rights or entitlements
of any Person under, or result in the creation of any Liens upon any of the
properties or assets of Sellers or any Acquired Subsidiary under any provision
of (i) the Articles of Incorporation and Bylaws or comparable organizational
documents of Sellers or any Acquired Subsidiary; (ii) any Contract or Permit to
which any Seller or any Acquired Subsidiary is a party or by which any of the
properties or assets of Sellers or any Subsidiary are bound; (iii) any Order
applicable to any Seller or any Subsidiary or any of the properties or assets of
Sellers or any Subsidiary; or (iv) any applicable Law.

(b) Except as set forth on Schedule 5.3(b), no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of Seller or any
Acquired Subsidiary in connection with (i) the execution and delivery of this
Agreement or the Seller Documents, the compliance by Sellers with any of the
provisions hereof and thereof, or the consummation of the Transactions, or
(ii) the continuing validity and effectiveness immediately following the Closing
of any Permit or Contract of Sellers or any Subsidiary.

5.4 Capitalization. (a) The issued and outstanding equity interests of Chisholm
consist solely of shares that are owned by Shareholder, Chisholm Asset
Corporation and the Chisholm Family Trust (the “Chisholm Shares”); and the
issued and outstanding equity interests of Sealweld Canada consist solely of
shares that are owned by Shareholder, Chisholm Asset Corporation and the
Chisholm Family Trust (the “Sealweld Shares” and collectively with the Chisholm
Shares, the “Shares”). All of the Shares have been duly authorized for issuance
and are validly issued, fully paid and non-assessable, were issued in compliance
with all applicable Laws including applicable securities Laws and were not
issued in violation of any purchase or call option, right of first refusal,
subscription right, preemptive right or any similar rights.

(b) Except as set forth on Schedule 5.4(b), there are no obligations, contingent
or otherwise, of Sellers or any Acquired Subsidiary to (i) repurchase, redeem or
otherwise acquire any Shares or the capital stock or other equity securities of
any Subsidiary, or (ii) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or otherwise), or
provide any guarantee with respect to the obligations of, any Person. Except as
set forth on Schedule 5.4(b), there are no outstanding equity appreciation,
phantom equity, profit participation or similar rights with respect to Sellers
or any of the Acquired Subsidiaries.

5.5 Acquired Subsidiaries. Schedule 5.5 sets forth the name of each Acquired
Subsidiary, and, with respect to each Acquired Subsidiary, the jurisdiction in
which it is

28

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

 

incorporated or organized, the jurisdictions, if any, in which it carries on or
is qualified to do business, the number of shares of its authorized capital
stock, the number and class of shares thereof duly issued and outstanding as of
the date hereof and that will be issued and outstanding as of the Closing Date,
the names of all stockholders or other equity owners and the number of shares of
stock owned by each stockholder or the amount of equity owned by each equity
owner. Each Acquired Subsidiary is a duly organized and validly existing
corporation, partnership or other entity in good standing under the laws of the
jurisdiction of its incorporation or organization and is duly qualified or
authorized to do business as a foreign corporation or entity and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing has not had and would not reasonably be expected to have a
Material Adverse Effect. Each Acquired Subsidiary has all requisite corporate or
entity power and authority to own its properties and carry on its business as
presently conducted. The outstanding shares of capital stock or equity interests
of each Acquired Subsidiary are validly issued, fully paid and non-assessable,
were issued in compliance with all applicable Laws including applicable
securities Laws and were not issued in violation of any purchase or call option,
right of first refusal, subscription right, preemptive right or any similar
right. All such shares or other equity interests represented as being owned by
Sellers or any of the Acquired Subsidiaries are owned by them free and clear of
any and all Liens, except as set forth on Schedule 5.5. No shares of capital
stock are held by any Acquired Subsidiary as treasury stock. There is no
existing option, warrant, call, right or Contract to which any Acquired
Subsidiary is a party requiring, and there are no convertible securities of any
Acquired Subsidiary outstanding which upon conversion would require, the
issuance of any shares of capital stock or other equity interests of any
Acquired Subsidiary or other securities convertible into shares of capital stock
or other equity interests of any Acquired Subsidiary. Sellers do not own,
directly or indirectly, any capital stock or equity securities of any Person
other than the Subsidiaries. Except as set forth on Schedule 5.5, there are no
material restrictions on the ability of the Acquired Subsidiaries to make
distributions of cash to their respective equity holders.

5.6 Corporate Records.

(a) Sellers have delivered to Purchasers true, correct and complete copies of
the Articles of Incorporation and Bylaws or comparable organizational documents
of Sellers and each of the Acquired Subsidiaries, in each case as amended and in
effect on the date hereof, including all amendments thereto.

(b) The minute books of Sellers and each Acquired Subsidiary previously made
available to Purchasers are complete and accurate and contain true, correct and
complete records of: (i) all meetings and resolutions adopted by, and accurately
reflect all other action of, the stockholders and board of directors (including
committees thereof) of Sellers and the Acquired Subsidiaries, all of which have
been duly adopted; (ii) the registers of all past or present securities,
shareholders and security issuances, redemptions and transfers; and (iii) the
registers or directors listing all former and present directors of Sellers, all
of whom were properly elected. The stock certificate books, if any, and transfer
ledgers of Sellers and the Acquired Subsidiaries previously made available to
Purchasers are true, correct and complete. All transfer taxes levied, if any, or
payable with respect to all transfers of equity of Sellers and the Acquired
Subsidiaries prior to the date hereof have been paid and appropriate transfer
tax stamps affixed.

29

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

 

5.7 Financial Statements. (a) Sealweld Canada has delivered to Purchasers copies
of (i) the unaudited consolidated balance sheets of Sealweld Canada and its
Subsidiaries as at August 31, 2014 and 2013 and the related unaudited
consolidated statement of income and retained earnings and consolidated
statement of cash flows for Sealweld Canada and its Subsidiaries for the
twelve-month periods then ended, (ii) the unaudited consolidated balance sheet
of Sealweld Canada and its Subsidiaries as at December 31, 2015 and the related
unaudited consolidated statement of income and retained earnings and
consolidated statement of cash flows for Sealweld Canada and its Subsidiaries
for the sixteen-month period then ended, (iii) the unaudited consolidated
balance sheet of Sealweld Canada and its Subsidiaries as at July 31, 2016 and
the related consolidated income statement of Sealweld Canada and its
Subsidiaries for the seven-month period then ended (such statements referred to
in subsections (i), (ii) and (iii) immediately above, including the related
notes and schedules thereto, are referred to herein as the “Financial
Statements”). Each of the Financial Statements is complete and correct, has been
prepared consistently without modification of the accounting principles used in
the preparation thereof throughout the periods presented and fairly presents the
consolidated financial position, results of operations and cash flows of
Sealweld Canada and its Subsidiaries as at the dates and for the periods
indicated therein. The unaudited consolidated balance sheet of Sealweld Canada
and its Subsidiaries as at July 31, 2016 is referred to herein as the “Balance
Sheet” and July 31, 2016 is referred to herein as the “Balance Sheet Date.”

(b) All books, records and accounts of Sellers and the Subsidiaries are accurate
and complete and are maintained in all material respects in accordance with
standard business practice and all applicable Laws. Sellers and the Subsidiaries
maintain systems of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded
as necessary to permit the preparation of financial statements and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.

(c) The financial projections and business plan provided by Sellers to
Purchasers prior to the date hereof were reasonably prepared on a basis
reflecting management’s best estimates, assumptions and judgments, at the time
provided to Purchasers, as to the future financial performance of Sellers and
the Subsidiaries.

5.8 No Undisclosed Liabilities. No Sellers nor any Acquired Subsidiary has any
Indebtedness or Liabilities (whether or not required under GAAP to be reflected
on a balance sheet or the notes thereto) other than those (i) specifically
reflected on and fully reserved against in the Balance Sheet, (ii) incurred in
the Ordinary Course of Business since the Balance Sheet Date or (iii) that are
immaterial to Sellers and the Subsidiaries.

5.9 Absence of Certain Developments. Except as expressly contemplated by this
Agreement or as set forth on Schedule 5.9, since the Balance Sheet Date
(i) Sellers and the Subsidiaries have conducted the Business only in the
Ordinary Course of Business, (ii) there has not been any event, change,
occurrence or circumstance that, individually or in the aggregate with any such
events, changes, occurrences or circumstances, has had or could reasonably be
expected to have a Material Adverse Effect and (iii) no Seller nor any Acquired
Subsidiary has

30

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

 

taken any action that would be prohibited by Section 7.2(b) if proposed to be
taken by a Seller or any Acquired Subsidiary after the date of this Agreement.

5.10 Taxes. (a) To the Knowledge of Sellers, all Tax Returns required to be
filed by or on behalf of each of Sellers, any Acquired Subsidiary and any
Affiliated Group of which any Seller or any Acquired Subsidiary is or was a
member have been duly and timely filed with the appropriate Taxing Authority in
all jurisdictions in which such Tax Returns are required to be filed (after
giving effect to any valid extensions of time in which to make such filings),
and all such Tax Returns are true, complete and correct in all respects; and
(ii) all Taxes payable by or on behalf of each of Sellers, any Acquired
Subsidiary and any Affiliated Group of which Sellers or any Acquired Subsidiary
is or was a member have been fully and timely paid. With respect to any period
for which Tax Returns have not yet been filed or for which Taxes are not yet due
or owing, the Acquired Subsidiaries have made due and sufficient accruals for
such Taxes in the Financial Statements and their respective books and records.
All required estimated Tax payments sufficient to avoid any underpayment
penalties or interest have been timely made by or on behalf of Sellers and each
Acquired Subsidiary. Sellers and each Acquired Subsidiary have not received any
refund for Taxes to which it is not entitled.

(b) Sellers and each Acquired Subsidiary have complied in all material respects
with all applicable Laws relating to the payment and withholding of Taxes and
have duly and timely withheld and paid over to the appropriate Taxing Authority
all amounts required to be so withheld and paid under all applicable Laws.

(c) Purchasers have received complete copies of (i) all federal income Tax
Returns of Sellers and the Acquired Subsidiaries relating to the taxable periods
since March 31, 2013 and (ii) any audit report issued within the last three
years relating to any Taxes due from or with respect to any Seller or any
Acquired Subsidiary.

(d) Schedule 5.10 lists (i) all types of Taxes paid, and all types of Tax
Returns filed by or on behalf of Sellers or any Acquired Subsidiary, and (ii)
all of the jurisdictions that impose such Taxes or with respect to which Sellers
or any Acquired Subsidiary have a duty to file such Tax Returns. No claim has
been made by a Taxing Authority in a jurisdiction where Sellers or any Acquired
Subsidiary do not file Tax Returns such that they are or may be subject to
taxation by that jurisdiction.

(e) All deficiencies asserted or assessments made as a result of any
examinations by any Taxing Authority of the Tax Returns of, or including,
Sellers or any Acquired Subsidiary have been fully paid, and there are no audits
or investigations by any Taxing Authority in progress, nor have Sellers or any
of the Acquired Subsidiaries received any notice from any Taxing Authority that
it intends to conduct such an audit or investigation. No issue has been raised
by a Taxing Authority in any prior examination of Sellers or any Acquired
Subsidiary which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.

(f) None of the Purchased Assets constitute a “United States real property
interest” within the meaning of Section 897(c) of the Code.

31

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

 

(g) No Seller or Acquired Subsidiary is a party to any tax sharing, allocation,
indemnity or similar agreement or arrangement (whether or not written) pursuant
to which it will have any obligation to make any payments after the Closing.

(h) There is no Contract, agreement, plan or arrangement covering any person
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible by Purchasers, Sellers or any of their respective
Affiliates by reason of Section 280G of the Code.

(i) No Seller or Acquired Subsidiary is subject to any private letter ruling of
the IRS or comparable rulings of any Taxing Authority.

(j) There are no Liens, other than Liens that are Permitted Exceptions, as a
result of any unpaid Taxes upon any of the assets of Sellers or any Acquired
Subsidiary.

(k) No Seller or any of the Acquired Subsidiaries has ever been a member of any
consolidated, combined, affiliated or unitary group of corporations for any Tax
purposes other than a group in which Sealweld 2003 and Sealweld Texas are
members.

(l) There is no taxable income of any Seller or any of the Acquired Subsidiaries
that will be required under applicable Tax Law to be reported by Purchasers or
any of their Affiliates, including Sellers or any of the Acquired Subsidiaries,
for a taxable period beginning at the Effective Time which taxable income was
realized (and reflects economic income) arising prior to the Effective Time.

(m) There is no material property or obligation of Sellers, or the Acquired
Subsidiaries or any of their Affiliates, including uncashed checks to vendors,
customers, or employees, non-refunded overpayments, or unclaimed subscription
balances, that is escheatable or reportable as unclaimed property to any
Governmental Body under any applicable escheatment or unclaimed property laws.

(n) All of the property of Sellers, and the Acquired Subsidiaries that is
subject to property Tax has been properly listed and described on the property
tax rolls of the appropriate taxing authority.

(o) None of the Purchased Assets constitute “taxable Canadian property” within
the meaning of the Tax Act.

(p) Each Seller has, in accordance with applicable law, invoiced, collected,
withheld, reported and remitted to the appropriate taxing authority (within the
time prescribed) all: (i) sales, transfer, use customs, goods and services and
other Taxes which are due and payable by each Seller; (ii) withholding, payroll
or employment Taxes, employment insurance, Canada Pension Plan and provincial
pension plan contributions and other deductions at source as required by
applicable law; and (iii) all non-resident withholding Taxes as required by
applicable law. Each Seller of Canadian Purchased Assets is a registrant for the
purposes of the tax imposed under Part IX of the Excise Tax Act (Canada) with
the registration number set forth on Schedule 5.10.

32

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

 

5.11 Title To and Sufficiency of Assets. The only business or activities
conducted by Sellers and the Acquired Subsidiaries is the Business. No part of
the Business or any of the activities of any Seller or the Acquired Subsidiaries
is carried on by any Person other than Sellers or the Subsidiaries. Except for
the Permitted Exceptions and as set forth on Schedule 5.11, Sellers and the
Acquired Subsidiaries have, and upon the Closing will have, good, valid and
marketable title, or a valid leasehold interest in, all assets used in the
Business and such assets are sufficient to conduct the Business from and after
the Closing without interruption and in the Ordinary Course of Business as it
has been conducted prior to the Closing. Except as set forth on Schedule 5.11,
(a) Seller and the Subsidiaries have performed all current maintenance and
repair obligations for their respective assets pursuant to the terms of the
Contracts and have not deferred the performance of any such obligations and (b)
their respective assets are in good operating condition and repair, except for
normal wear and tear, and none of such assets is in need of maintenance or
repairs except for ordinary, routine maintenance or repairs that are not
material.

5.12 Real Property. Schedule 5.12(a) sets forth a complete list of (i) all real
property and interests in real property, including improvements thereon and
easements appurtenant thereto owned in fee simple by Sellers and the
Subsidiaries (individually, an “Owned Property” and collectively, the “Owned
Properties”), and (ii) all real property and interests in real property leased
by Sellers and the Subsidiaries (individually, a “Real Property Lease” and
collectively, the “Real Property Leases” and, together with the Owned
Properties, being referred to herein individually as a “Seller Property” and
collectively as the “Seller Properties”) as lessee or lessor, including a
description of each such Real Property Lease (including the name of the third
party lessor or lessee and the date of the lease or sublease and all amendments
thereto). Sellers and the Subsidiaries have good and marketable fee simple title
and hold legal and beneficial fee simple interest to all Owned Property free and
clear of all Liens of any nature whatsoever, except Permitted Exceptions and
Liens set forth on Schedule 5.12(a). The Seller Properties constitute all
interests in real property currently used, occupied or currently held for use in
connection with the Business and which are necessary for the continued operation
of the Business as the Business is currently conducted. All of the Seller
Properties and buildings, fixtures and improvements thereon (i) are in good
operating condition without material structural defects, and all mechanical and
other systems located thereon are in good operating condition, and no condition
exists requiring material repairs, alterations or corrections, (ii) are
suitable, sufficient and appropriate in all respects for their current and
contemplated uses, and (iii) Sellers have adequate rights of ingress and egress
into the Sellers Properties for the operation of the Business in the Ordinary
Course. None of the improvements located on the Seller Properties constitute a
legal non-conforming use or otherwise require any special dispensation, variance
or special permit under any Laws. Sellers have delivered to Purchasers true,
correct and complete copies of (i) all deeds, real property reports, title
reports and surveys for the Owned Properties and (ii) the Real Property Leases,
together with all amendments, modifications or supplements, if any, thereto. The
Seller Properties are not subject to any leases, rights of first refusal,
options to purchase or rights of occupancy, except the Real Property Leases set
forth on Schedule 5.12(a).

Each of Sellers and the Acquired Subsidiaries, as applicable, has a valid,
binding and enforceable leasehold interest under each of the Real Property
Leases under which it is a lessee, free and clear of all Liens other than
Permitted Exceptions.

33

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

 

(a) Sellers and the Acquired Subsidiaries have all certificates of occupancy and
Permits of any Governmental Body necessary or useful for the current use and
operation of each Seller Property, and Sellers and the Acquired Subsidiaries
have fully complied with all material conditions of the Permits applicable to
them. No default or violation, or event that with the lapse of time or giving of
notice or both would become a default or violation, has occurred in the due
observance of any Permit.

(b) There does not exist any actual or, to the Knowledge of Sellers, threatened
or contemplated expropriation, condemnation or eminent domain proceedings that
affect any Seller Property or any part thereof, and no Seller nor Shareholder or
any Subsidiary has received any notice, oral or written, of the intention of any
Governmental Body or other Person to take or use all or any part thereof.

(c) None of Shareholder, Sellers or any Acquired Subsidiary has received any
notice from any insurance company that has issued a policy with respect to any
Seller Property requiring performance of any structural or other repairs or
alterations to such Seller Property.

(d) No Seller nor any Acquired Subsidiary owns, holds, is obligated under or is
a party to, any option, right of first refusal or other contractual right to
purchase, acquire, sell, assign or dispose of any real estate or any portion
thereof or interest therein.

5.13 Tangible Personal Property.

(a) Except as set forth on Schedule 5.13(a), Sellers and the Acquired
Subsidiaries have good and marketable title to all of the items of tangible
personal property used in the Business (except as sold or disposed of subsequent
to the date hereof in the Ordinary Course of Business and not in violation of
this Agreement), free and clear of any and all Liens, other than Permitted
Exceptions. All such items of tangible personal property which, individually or
in the aggregate, are material to the operation of the Business are in
serviceable condition and an acceptable state of maintenance and repair
(ordinary wear and tear excepted) and are suitable for the purposes used.

(b) Schedule 5.13(b) sets forth all leases of personal property (“Personal
Property Leases”) involving annual payments in excess of $5,000 relating to
personal property used in the Business or to which Sellers or any of the
Acquired Subsidiaries is a party or by which the properties or assets of Sellers
or any of the Acquired Subsidiaries is bound. All of the items of personal
property under the Personal Property Leases are in good condition and repair
(ordinary wear and tear excepted) and are suitable for the purposes used, and
such property is in all material respects in the condition required of such
property by the terms of the lease applicable thereto during the term of the
lease. Sellers have delivered to Purchasers true, correct and complete copies of
the Personal Property Leases, together with all amendments, modifications or
supplements thereto.

5.14 Intellectual Property.

(a) Schedule 5.14(a) sets forth an accurate and complete list of all Internet
domain names, Patents, registered Marks, pending applications for registration
of Marks, unregistered Marks, registered Copyrights, and pending applications
for registration of Copyrights included in

34

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

 

the Seller Intellectual Property including the jurisdictions in which each such
item of Seller Intellectual Property has been issued, registered, otherwise
arises or in which any such application for such issuance and registration has
been filed and (ii) the registration or application number and date, as
applicable.

(b) Except as set forth on Schedule 5.14(b), each Seller is the sole and
exclusive owner of all right, title and interest in and to all of the Seller
Technology and Seller Intellectual Property, including each of the Copyrights in
any works of authorship prepared by or for any Seller or any of the Acquired
Subsidiaries that resulted from or arose out of any work performed by or on
behalf of any Seller or any of its Subsidiaries by Shareholder or any Employee,
Former Employee, officer, consultant or contractor of any Seller or any of the
Acquired Subsidiaries, in each case, free and clear of all Liens or obligations
to others (except for those specified licenses set forth on Schedule 5.14(b)).
Sellers have valid and continuing rights to use, sell and license, as the case
may be, all other Intellectual Property and Technology related to or used in
connection with the Business as the same is used, sold and licensed in such
business as presently conducted and proposed to be conducted, free and clear of
all Liens or obligations to others (except for those specified licenses set
forth on Schedule 5.14(b)).

(c) To the Knowledge of Seller, the Seller Intellectual Property and Seller
Technology, the design, development, manufacturing, licensing, marketing,
distribution, offer for sale, sale or use or maintenance of any products and
services in connection with the Business as presently and the present business
practices, methods and operations of Sellers and the Acquired Subsidiaries do
not infringe, constitute an unauthorized use of, misappropriate, dilute or
violate any Intellectual Property or other right of any Person (including
pursuant to any non-disclosure agreements or obligations to which any Seller or
any of their respective Employees or Former Employees is a party).

(d) Except with respect to licenses of commercial off-the-shelf Software
available on reasonable terms, and except pursuant to the Intellectual Property
Licenses listed on Schedule 5.14(d), no Seller nor any Acquired Subsidiary is
required, obligated, or under any Liability whatsoever, to make any payments by
way of royalties, fees or otherwise to any owner, licensor of, or other claimant
to, any Intellectual Property, or any other Person, with respect to the use
thereof or in connection with the conduct of the Business as currently
conducted.

(e) Sellers have taken reasonable security measures to protect the secrecy,
confidentiality and value of all the Trade Secrets included in the Seller
Intellectual Property and any other non-public, proprietary information included
in the Seller Technology.

(f) To the Knowledge of Sellers, no Person is infringing, violating, misusing or
misappropriating any Seller Intellectual Property, and no such claims have been
made against any Person by Sellers or any Acquired Subsidiary.

(g) The consummation of the Transactions will not result in the loss or
impairment of Sellers’ or any Acquired Subsidiary’s right to own or use any
Intellectual Property or Technology.

35

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

 

5.15 Material Contracts.

(a) Schedule 5.15(a) sets forth, by reference to the applicable subsection of
this Section 5.15(a), all of the following Contracts to which any Seller or any
of the Acquired Subsidiaries is a party or by which any of them or their
respective assets or properties are bound (collectively, the “Material
Contracts”):

(i) Real Property Lease, Personal Property Lease or Intellectual Property
License;

(ii) Contracts with Shareholder or any of its Affiliates or any current or
former officer, director, equity holder, manager, member or Affiliate of any
Seller or any of the Acquired Subsidiaries;

(iii) Contracts with any labor union or association representing any Employee;

(iv) Contracts for the sale of any of the assets of Sellers or any of the
Subsidiaries other than in the Ordinary Course of Business or for the grant to
any Person of any preferential rights to purchase any of its assets including
all Contracts that require a Seller to purchase or sell a stated portion of the
requirements or outputs of such Seller or that contain “take or pay” provisions;

(v) Contracts for joint ventures, strategic alliances, partnerships, licensing
arrangements, or sharing of profits or proprietary information;

(vi) Contracts containing covenants of any Seller or any of the Acquired
Subsidiaries not to compete in any line of business or with any Person in any
geographical area or not to solicit or hire any Person with respect to
employment or covenants of any other Person not to compete with any Seller or
any of the Acquired Subsidiaries in any line of business or in any geographical
area or not to solicit or hire any Person with respect to employment;

(vii) Contracts relating to the acquisition (by merger, purchase of equity or
assets or otherwise) by any Seller or any of the Acquired Subsidiaries of any
operating business or material assets or the capital stock of any other Person
or any real property;

(viii) Contracts relating to the incurrence, assumption or guarantee of any
Indebtedness or imposing a Lien on any of the assets of Sellers, including
indentures, guarantees, loan or credit agreements, sale and leaseback
agreements, purchase money obligations incurred in connection with the
acquisition of property, mortgages, pledge agreements, security agreements, or
conditional sale or title retention agreements;

(ix) purchase Contracts giving rise to Liabilities of any Seller or any of the
Acquired Subsidiaries in excess of $50,000;

36

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

 

(x) all Contracts providing for payments by or to any Seller or any of the
Acquired Subsidiaries in excess of $20,000 in any fiscal year or $60,000 in the
aggregate during the term thereof that are not cancellable without penalty, fees
or other payment without more than 30 days’ notice;

(xi) Contracts providing for the purchase, distribution or sale of lubricant
products by Sellers;

(xii) Contracts providing for severance, retention, change in control or other
similar payments;

(xiii) Contracts for the employment of any individual on a full-time, part-time
or consulting or other basis;

(xiv) material management Contracts and Contracts with independent contractors
or consultants (or similar arrangements) that are not cancelable without penalty
or further payment and without more than 30 days’ notice;

(xv) Contracts with any Governmental Body;

(xvi) powers of attorney currently effective and outstanding;

(xvii) outstanding Contracts of guaranty, surety or indemnification, direct or
indirect, by any Seller or any of the Acquired Subsidiaries;

(xviii) Contracts that are otherwise material to Sellers and the Acquired
Subsidiaries or the operation of the Business and are not previously disclosed
pursuant to this Section 5.15.

(b) Each of the Material Contracts is in full force and effect and is the legal,
valid and binding obligation of the Seller or Acquired Subsidiary which is a
party thereto, and of the other parties thereto enforceable against each of them
in accordance with its terms and, upon consummation of the Transactions, shall,
except as otherwise set forth on Schedule 5.15(b), continue in full force and
effect without penalty or other adverse consequence. No Seller nor any Acquired
Subsidiary is in default under any Material Contract, nor, to the Knowledge of
Sellers, is any other party to any Material Contract in breach of or default
thereunder, and no event has occurred that with the lapse of time or the giving
of notice or both would constitute a breach or default by Sellers, any Acquired
Subsidiary or any other party thereunder. Except as set forth on Schedule 5.15,
no party to any of the Material Contracts has exercised any termination rights
with respect thereto, and no party has given notice of any significant dispute
with respect to any Material Contract to Seller. Sellers have delivered to
Purchasers true, correct and complete copies of all of the Material Contracts,
together with all amendments, modifications or supplements thereto.

5.16 Employee Benefits Plans.

(a) Schedule 5.16(a) contains a true and complete list of all Plans.

37

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

 

(b) No Seller nor any Acquired Subsidiary nor any of their ERISA Affiliates
maintains or is obligated to provide benefits under any life, medical or health
plan (other than as an incidental benefit under a Plan intended to be
“qualified” within the meaning of Section 401(a) of the Code (“Qualified Plan”))
which provides benefits to retirees or other terminated employees other than
benefit continuation rights under COBRA, or any analogous statute of and
Canadian Governmental Body, as applicable.

(c) No Seller nor any Acquired Subsidiary nor any of their ERISA Affiliates has
at any time contributed to, or had any obligation to contribute to, or has any
Liability with respect to, any “multiemployer plan”, as that term is defined in
Section 4001 of ERISA, or any “employee benefit plan” subject to Title IV of
ERISA or Section 412 of the Code. No Plan is, has been or is intended to be (a)
a “multiple employer welfare arrangement” within the meaning of Section 3(40) of
ERISA or (b) a “registered pension plan”, a “deferred profit sharing plan”, a
“retirement compensation arrangement”, a “registered retirement savings plan” or
a “tax-free savings account” as such terms are defined in the Tax Act.

(d) Each of the Plans and its administration is currently in compliance, and has
at all times complied, with the requirements under ERISA and the Code and any
other applicable Laws and any applicable collective bargaining agreements, and
no statement, either written or oral, has been made by or on behalf of any
Seller or any Acquired Subsidiary or any of their ERISA Affiliates with regard
to any Plan that is not in accordance with the terms of such Plan or applicable
Law or collective bargaining agreement.

(e) Sellers, Acquired Subsidiaries and their ERISA Affiliates have performed all
of their respective obligations under all Plans, and all contributions and other
payments required to be made by Sellers, Acquired Subsidiaries and their ERISA
Affiliates to any Plan with respect to any period ending before or at or
including the Closing Date have been made, or reserves adequate for such
contributions or other payments have been or will be set aside therefor and have
been or will be reflected in the Sellers’ Financial Statements.

(f) No transaction contemplated by this Agreement will result in Liability to
the Pension Benefits Guaranty Corporation under Section 302(c)(ii), 4062, 4063,
4064 or 4069 of ERISA with respect to Sellers, Acquired Subsidiaries or any of
their ERISA Affiliates.

(g) There are no pending, or, to the Knowledge of Sellers, threatened claims by
or on behalf of any Plan, or by any Person covered thereby, other than ordinary
claims for benefits submitted by participants or beneficiaries, which,
individually or in the aggregate, could result in a material Liability on the
part of Purchasers or any fiduciary of any such Plan.

(h) No employer securities, employer real property or other employer property is
included in the assets of any Plan.

(i) Sellers have delivered to Purchasers all documents that set forth the terms
of each Plan and of any related trust, including (A) all plan descriptions and
summary plan descriptions of Plans for which Sellers, Acquired Subsidiaries or
their ERISA Affiliates are required to prepare, file, or distribute under any
applicable Law, and (B) all summaries and

38

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

 

descriptions furnished to participants and beneficiaries regarding each Plan for
which a plan description or summary plan description is not required by any
applicable Law.

(j) Each Plan can be terminated at any time by the Plan’s sponsor without
payment of any additional contribution or amount and, except for any vesting of
benefits under a Qualified Plan, without the vesting or acceleration of any
benefits promised by such Plan.

(k) Sellers and Acquired Subsidiaries have the right to modify and terminate
benefits as to retirees (other than pensions) with respect to both retired
Former Employees and active Employees and any non-Employees such as, for
example, any retired or active directors.

(l) The consummation of the Transactions will not result in the payment,
vesting, or acceleration of any benefit to any participant or beneficiary under
any Plan, assuming that no Employee incurs a termination of employment or
reduction in hours.

(m) No Plan is being terminated in connection with the Transactions.

(n) Neither the execution and delivery of this Agreement nor the consummation of
the Transactions (either alone or in conjunction with any other event) will (i)
increase any benefits otherwise payable under any Plan, (ii) result in any
acceleration of the time of payment or vesting of any such benefits, or (iii)
result in any payment (whether severance pay or otherwise) becoming due to, or
with respect to, any current or former employee or director of any Seller, any
Acquired Subsidiary or any of their ERISA Affiliates. No Seller, Acquired
Subsidiary nor any of their ERISA Affiliates is a party to any Contract,
arrangement or agreement with any employee, director, or consultant providing
for payments that could subject any person to liability for tax under Section
4999 of the Code or cause any Seller, any Acquired Subsidiary or any of their
ERISA Affiliates to lose a deduction under Section 280G of the Code. No Seller,
Acquired Subsidiary nor any of their ERISA Affiliates is party to any Contract,
arrangement or agreement providing for a tax gross-up, indemnification or other
reimbursement with respect to any taxes, excise taxes, penalties or interest
imposed pursuant to Section 4999 or 409A of the Code.

5.17 Labor.

(a) No Seller nor any of the Acquired Subsidiaries is a party to any labor,
collective bargaining or similar agreement and there are no labor or collective
bargaining agreements which pertain to Employees.

(b) No Employees are represented by any labor organization. No labor
organization holds bargaining rights with respect to any of the Employees by way
of certification, interim certification, voluntary recognition, or succession
rights and no labour organization or group of Employees has made a demand for
recognition, and there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of Sellers,
threatened to be brought or filed, with the National Labor Relations Board, the
Alberta Labour Relations Board, or any other labor relations tribunal. There is
no organizing activity involving any Seller or any of the Acquired Subsidiaries
pending or, to the Knowledge of Sellers, threatened by any labor organization or
group of Employees and there is no labour strike, dispute, work slowdown or
stoppage pending or involving or, to the Knowledge

39

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

 

of the Sellers, threatened in respect of the Business and no such event has
occurred within the last five (5) years. The Sellers have not and are not
engaged in any unfair labour practice and no unfair labour practice complaint,
grievance or arbitration proceeding is pending or, to the Knowledge of the
Sellers, threatened against the Sellers. No union has applied to have Sellers
declared a common or related employer pursuant to the Labour Relations Code
(Alberta) or any similar legislation in any jurisdiction in which Sellers carry
on the Business.

(c) Schedule 5.17 includes a true and complete list of all of each Employee and
independent contractor/consultant of the Sellers employed or retained in
connection with the Business, whether actively at work or not, showing without
names or employee numbers their salaries, wage rates, commissions and consulting
fees, bonus arrangements, benefits, positions, status as full-time or part-time
employees, location of employment, cumulative length of service with the
Business and whether they are subject to a written employment, service, union,
agency, consulting, termination and severance Contracts and agreements entered
into by Sellers. Schedule 5.17 contains for each Employee their annual vacation
entitlement in days, their accrued and unused vacation days as of January 31,
2017, any other annual paid time off entitlement in days and their accrued and
unused days or such other paid time off as of January 31, 2017. Schedule 5.17
lists any Employee currently on leave, together with the type of leave and their
expected date of return to work if known.

(d) Except as disclosed in Schedule 5.17 no Employee has any agreement as to
length of notice or severance payment required to terminate his or her
employment, other than such as results by Law from the employment of an employee
without an agreement as to notice or severance

(e) Each independent contractor who is disclosed on Schedule 5.17 has been
properly classified by the applicable Seller as an independent contractor and no
Seller nor any of the Acquired Subsidiaries have received any notice from any
Governmental Entity disputing such classification.

(f) No Seller is subject to any claim for wrongful dismissal, constructive
dismissal or any other claim or complaints actual or threatened in writing and
received by Sellers, or any litigation, actual or threatened in writing and
received by Sellers, relating to employment, discrimination or termination of
employment of any Employee or Former Employee of any Seller or relating to any
failure to hire a candidate for employment.

(g) There are no outstanding assessments, penalties, fines, liens, charges,
surcharges, or other amounts due or owing pursuant to any workplace safety and
insurance legislation in respect of Sellers and no Seller has been reassessed in
any material respect under such legislation during the past three (3) years and
to the Knowledge of Sellers, no audit of any Seller is currently being performed
pursuant to any applicable workplace safety and insurance legislation. There are
no claims or potential claims which may materially adversely affect any Seller’s
accident cost experience.

40

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

 

(h) Sellers have provided to Purchasers all orders and inspection reports under
applicable occupational health and safety Laws (“OHS”) relating to Sellers for
the past three (3) years. There are no charges pending under OHS in respect of
any Seller. Sellers have complied in all material respects with any orders
issued under OHS and there are no appeals of any orders under OHS currently
outstanding

(i) Except as set forth in Schedule 5.17, no Employee is employed pursuant to a
work permit issued by Canada Immigration and Schedule 5.17 discloses in respect
of each Employee who is employed pursuant to a work permit the expiry date of
such work permit and whether Seller has made any attempts to renew such work
permit.

(j) Except as set forth in Schedule 5.17, neither the execution and/or delivery
of this Agreement nor the consummation of the Transactions will result in any
payment, including without limitation severance, termination, “golden parachute”
or of a similar nature becoming due to any director, officer, Employee, agent or
consultant of any Seller, or increase any benefits otherwise payable under any
Plan.

(k) All amounts due or accrued due for all salary, wages, bonuses, commissions,
vacation with pay, sick days and benefits under the Plans have either been paid
or are accurately reflected in the books and records.

5.18 Litigation. Except as set forth in Schedule 5.18, there is no Legal
Proceeding outstanding, pending or, to the Knowledge of Sellers, threatened
against any Seller or any of the Subsidiaries (or to the Knowledge of Sellers,
pending or threatened, against any of the officers, managers, directors or
Employees of any Seller or any of the Acquired Subsidiaries relating to their
capacities as officer, manager, director or Employee), or to which any Seller or
any of the Acquired Subsidiaries is otherwise a party before any Governmental
Body; nor to the Knowledge of Sellers is there any reasonable basis for any such
Legal Proceeding. Except as set forth on Schedule 5.18, no Seller nor any
Acquired Subsidiary is subject to any Order, and no Seller nor any Acquired
Subsidiary is in breach or violation of any Order. Except as set forth on
Schedule 5.18, no Seller nor any Subsidiary is engaged in any Legal Proceeding
to recover monies due it or for damages sustained by it. There are no Legal
Proceedings outstanding, pending or, to the Knowledge of Sellers, threatened
against any Seller or to which such Seller is otherwise a party relating to this
Agreement or any Seller Document or the Transactions.

5.19 Compliance with Laws; Permits.

(a) Sellers and the Acquired Subsidiaries have conducted and continue to conduct
the Business in compliance in all material respects with (i) all Laws applicable
to their respective operations or assets or the Business, (ii) all applicable
United States export control laws and regulations, and (iii) the United States
Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public
Officials Act, Special Economic Measures Act or Freezing Assets of Corrupt
Foreign Officials Act and all other applicable anti-bribery or anti-corruption
Laws of any jurisdiction. No Seller nor any Subsidiary has received any notice
of or been charged with the violation of any Laws. To the Knowledge of Sellers,
no Seller nor any Subsidiary is under investigation with respect to the
violation of any Laws and there are no facts or circumstances which could form
the basis for any such violation.

41

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

 

(b) Schedule 5.19 contains a list of all Permits which are required for the use
or operation of the Business or Seller Property as presently conducted,
including all Permits required by or issued under, any applicable Environmental
Law (“Seller Permits”), other than those the failure of which to possess is
immaterial. Sellers and the Subsidiaries currently have all Permits which are
required for the operation of the Business as presently conducted, other than
those the failure of which to possess is immaterial. No Seller nor any Acquired
Subsidiary is in default or violation with respect to any Seller Permit, and to
the Knowledge of Seller no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation, in any material respect
of any term, condition or provision of any Seller Permit and, to the Knowledge
of Sellers, there are no facts or circumstances which could form the basis for
any such default or violation. There are no Legal Proceedings pending or, to the
Knowledge of Sellers, threatened, relating to the suspension, revocation or
modification of any Seller Permit. None of Seller Permits will be impaired or in
any way affected by the consummation of the Transactions.

5.20 Environmental Matters. Except as set forth on Schedule 5.20 hereto:

(a) The operations of Sellers and each of the Acquired Subsidiaries are and have
been in compliance with all applicable Environmental Laws, which compliance
includes obtaining, maintaining in good standing and complying with all
Environmental Permits and Seller has received no notice of any action or
proceeding pending or, to the Knowledge of Sellers, threatened to revoke, modify
or terminate any such Environmental Permit, and to the extent applicable, all
applications required to maintain the effectiveness of any such Environmental
Permit during the pendency of the application have been timely filed, and to the
Knowledge of Sellers, no facts, circumstances or conditions currently exist that
could adversely affect such continued compliance with Environmental Laws and
Environmental Permits or require currently unbudgeted capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits;

(b) No Seller nor any of the Acquired Subsidiaries is the subject of any
outstanding written Order or Contract with any Governmental Body or Person with
respect to Environmental Laws, Hazardous Materials, or any Release or threatened
Release of a Hazardous Material, and no Seller nor any Acquired Subsidiary has
received any request for information or notification alleging responsibility
under Environmental Laws;

(c) No claim has been made or is pending, or to the Knowledge of Sellers,
threatened against any Seller or any Acquired Subsidiary or for which any Seller
or any Acquired Subsidiary may be liable alleging either or both that any Seller
or any Acquired Subsidiary may be in violation of any Environmental Law or
Environmental Permit, or may have any Liability under any Environmental Law or
there has been any Release of Hazardous Material related to Seller or any
property currently or formerly owned, leased or used by Sellers or over which
Sellers have had charge, management or control;

(d) No Seller nor any Acquired Subsidiary has treated, stored, recycled or
disposed of any Hazardous Materials on any property in violation of any
Environmental Law or in a manner that could reasonably be expected to result in
Liability under Environmental Law; there has been no Release or threatened
Release of any Hazardous Materials on, at, under, to,

42

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

 

from or about (i) any property currently owned, operated or leased by Sellers or
any Acquired Subsidiary, or (ii) during the time period of ownership or
operations by Sellers or the Acquired Subsidiaries, any property formerly owned
or operated by Sellers, or (iii) to the Knowledge of Sellers, any location at
which Sellers or any Acquired Subsidiary have disposed or arranged for the
disposal of Hazardous Materials and no Seller Property is listed or proposed for
listing on any list established by a Governmental Body of sites potentially
requiring environmental remediation or response action;

(e) There are no pending or, to the Knowledge of Sellers, threatened,
investigations of any Seller or any Acquired Subsidiary, their operations or any
currently or formerly owned, operated, used or leased property which could lead
to the imposition of Liabilities or Liens under Environmental Law;

(f) All storage tanks and associated piping located on the Seller Property have
been maintained, inspected and tested in compliance with Environmental Law, and
to Knowledge of Seller there are no closed, out of service or abandoned storage
tanks on or under the Seller Property;

(g) The Transactions do not require the consent of or filings with any
Governmental Body with jurisdiction over Sellers or any Acquired Subsidiary with
respect to environmental matters;

(h) Sellers have delivered to Purchasers true and complete copies and results of
all assessments, audits, reports, studies, analyses, tests, or monitoring
possessed or initiated by Sellers or any Acquired Subsidiary pertaining to
environmental matters affecting Sellers or any property currently or formerly
owned, leased or used by Sellers or over which Sellers have had direct charge
management or control including: (i) the matters in this Section 5.20; (ii)
Hazardous Materials in, on or under the Seller Property or any property disposed
of by Sellers or any Acquired Subsidiary; and (iii) compliance with
Environmental Laws by Sellers or any other Person for whose conduct any Seller
is or may be held responsible relating to or otherwise affecting Sellers or any
Seller Property.

5.21 Insurance. Sellers and the Acquired Subsidiaries have insurance policies in
full force and effect (a) for such amounts as are sufficient for all
requirements of Law and all agreements to which any Seller or any of the
Acquired Subsidiaries is a party or by which it is bound, and (b) which are in
such amounts, with such deductibles and against such risks and losses, as are
reasonable for the Business, assets and properties of Sellers and the Acquired
Subsidiaries. Set forth on Schedule 5.21 is a list of all insurance policies and
all fidelity bonds held by or applicable to any Seller or any of the
Subsidiaries setting forth, in respect of each such policy, the policy name,
policy number, carrier, term, type and amount of coverage and annual premium,
any pending claims, whether the policies may be terminated upon consummation of
the Transactions and if and to what extent events being notified to the insurer
after the Closing Date are generally excluded from the scope of the respective
policy. All such policies are in full force and effect, all premiums due and
payable thereon have been paid (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with respect to
any period ending prior to the Closing Date), and no notice of cancellation or
termination has been received with respect to any such policy which has not been
replaced on substantially

43

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

 

similar terms prior to the date of such cancellation. There has been no gap in
insurance coverage for any risk covered by the insurance policies for the past
three years. To the Knowledge of Sellers, there are no claims pending under any
insurance policy.

5.22 Accounts and Notes Receivable and Payable

(a) A complete and accurate list of the accounts receivable reflected on the
Balance Sheet and arising after the Balance Sheet Date is included in Schedule
5.22. All accounts and notes receivable of Sellers and the Acquired Subsidiaries
have arisen from bona fide transactions in the Ordinary Course of Business
consistent with past practice and are payable on ordinary trade terms. All
accounts and notes receivable of Sellers and the Subsidiaries reflected on the
Closing Balance Sheet are collectible at the aggregate recorded amounts thereof,
net of any applicable reserve for returns or doubtful accounts reflected
thereon, which reserves are adequate and were calculated in a manner consistent
with past practice and in accordance with GAAP consistently applied. All
accounts and notes receivable on the Closing Balance Sheet are collectible at
the aggregate recorded amounts thereof. None of the accounts or the notes
receivable of any Seller or any of the Acquired Subsidiaries (i) is subject to
any setoffs or counterclaims or (ii) represents an obligation for goods sold on
consignment, on approval or on sale or return basis or subject to any other
repurchase or return arrangement.

(b) All accounts payable of Sellers and the Acquired Subsidiaries reflected in
the Closing Balance Sheet are the result of bona fide transactions in the
Ordinary Course of Business and have been or will, at or before Closing, be paid
or are not yet due and payable.

5.23 Related Party Transactions. Except as set forth on Schedule 5.23, no
Employee, officer, director, manager or stockholder of any Seller or any of the
Acquired Subsidiaries, any member of his or her immediate family or any of their
respective Affiliates (“Related Persons”) (i) owes any amount to any Seller or
any of the Subsidiaries nor does any Seller or any of the Acquired Subsidiaries
owe any amount to, or has any Seller or any of the Acquired Subsidiaries
committed to make any loan or extend or guarantee credit to or for the benefit
of, any Related Person, (ii) is involved in any business arrangement or other
relationship with any Seller or any of the Subsidiaries (whether written or
oral), (iii) owns any property or right, tangible or intangible, that is used by
any Seller or any of the Acquired Subsidiaries, (iv) has any claim or cause of
action against any Seller or any of the Subsidiaries or (v) owns any direct or
indirect interest of any kind in, or controls or is a manager, director,
officer, employee or partner of, or consultant to, or lender to or borrower from
or has the right to participate in the profits of, any Person which is a
competitor, supplier, service provider, customer, client, landlord, tenant,
creditor or debtor of any Seller or any Acquired Subsidiary.

5.24 Banks; Power of Attorney. Schedule 5.24 contains a complete and correct
list of the names and locations of all banks in which any Acquired Subsidiary
has accounts or safe deposit boxes and the names of all persons authorized to
draw thereon or to have access thereto. Except as set forth on Schedule 5.24, no
person holds a power of attorney to act on behalf of any Acquired Subsidiary.

5.25 Certain Payments. None of Sellers, any Subsidiary or Shareholder nor, to
the Knowledge of Sellers, any director, manager, officer, employee, agent or
representative or

44

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

 

other Person associated with or acting on behalf of any of them, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business for any Seller or any Subsidiary, (ii) to pay for
favorable treatment for business secured by any Seller or any Subsidiary, (iii)
to obtain special concessions or for special concessions already obtained, for
or in respect of any Seller or any Subsidiary, or (iv) in violation of any Law,
or (b) established or maintained any fund or asset with respect to any Seller or
any Subsidiary that has not been recorded in the books and records of Sellers
and the Subsidiaries.

5.26 Customers and Suppliers.

(a) Set forth on Schedule 5.26(a) are each of the ten (10) largest customers of
Sellers and the Acquired Subsidiaries, by dollar volume, during the twelve
months ended December 31, 2016 and set forth opposite the name of each such
customer is the dollar amount of sales attributable to such customer for such
periods. No Seller nor any Acquired Subsidiary is engaged in any material
dispute with any current customer, no such customer has notified any Seller or
any Subsidiary that it intends to terminate or materially reduce its business
relations with Sellers or any Acquired Subsidiary.

(b) Set forth on Schedule 5.26(b) are each of the ten (10) largest vendors of
Sellers and the Acquired Subsidiaries, by dollar volume, during the twelve
months ended December 31, 2016. No Seller nor any Subsidiary is engaged in any
material dispute with any current vendor and no such vendor has notified any
Seller or any Subsidiary that it intends to terminate or materially reduce its
business relations with Sellers or any Subsidiary.

5.27 Product Liability and Warranty Claims

(a) All warranty and repair claims made with respect to, or in connection with,
the products or services manufactured, constructed, installed, distributed or
sold by Sellers or the Acquired Subsidiaries have been administered in
accordance with policies and procedures standard in the industry and have
consisted only of routine warranty and repair claims for the return of defective
or non-conforming merchandise.

(b) Except as set out in Schedule 5.27(b), there are no presently pending or, to
the Knowledge of Sellers, threatened in writing, civil, criminal or
administrative investigations or proceedings relating to: (i) any alleged hazard
or alleged defect, latent or not, in design, manufacture, construction,
installation, materials or workmanship, including any failure to warn or alleged
breach, default or violation of express or implied warranty or representation,
relating to any product manufactured, constructed, installed, distributed,
shipped or sold by or on behalf of Sellers or the Acquired Subsidiaries; or any
breach, default or violation of any of the product warranties, indemnities or
performance guarantees made to customers of the Business.

5.28 Financial Advisors. Except as set forth on Schedule 5.28, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Shareholder, Sellers or any Acquired Subsidiary in connection with the
Transactions and no Person is or will be entitled to any fee or commission or
like payment in respect thereof.

45

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

 

5.29 Inventory. All Inventory of Sellers and the Acquired Subsidiaries, whether
or not reflected in the Balance Sheet, consists of a quality and quantity usable
and salable in the Ordinary Course of Business within a reasonable period of
time and at normal profit margins. All Inventory is free and clear of Liens,
other than Permitted Exceptions. Except as set forth on Schedule 5.29, none of
the Inventory is held on a consignment basis or to the Knowledge of Seller,
obsolete. As used herein, “obsolete” shall refer to any SKU in which there has
been no sale in the twenty-five month period prior to Closing. The quantities of
each item of Inventory are reasonable in the present and anticipated
circumstances of Sellers.

5.30 Investment Canada Act and Competition Act

(a) The value of the assets of Sellers and the enterprise value of Sellers,
calculated in accordance with the Investment Canada Act, are each less than the
applicable amount at which an application for review pursuant to Part IV of the
Investment Canada Act would be required in respect of the Transactions.

(b) For the purposes of Section 110(3) of the Competition Act, each of (i) the
total value of Sellers’ assets in Canada plus the assets in Canada that are
owned by corporations that are controlled by Sellers; and (ii) the gross
revenues from sales in or from Canada generated from the assets referred to in
(i) above; measured in accordance with the Competition Act, is less than the
review threshold amount as determined pursuant to Sections 110(8) and 110 (9) of
the Competition Act.

Article VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Each Purchaser hereby jointly and severally represents and warrants to Sellers
and Shareholder that:

6.1 Organization and Good Standing. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation.

6.2 Authorization of Agreement. Such Purchaser has full corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by such Purchaser in connection with the consummation of the
Transactions (the “Purchaser Documents”), and to consummate the Transactions.
The execution, delivery and performance by such Purchaser of this Agreement and
each Purchaser Document have been duly authorized by all necessary corporate
action on behalf of such Purchaser. This Agreement has been, and each Purchaser
Document will be at or prior to the Closing, duly executed and delivered by such
Purchaser and (subject to the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each Purchaser
Document when so executed and delivered will constitute, the legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, subject to applicable Laws.

46

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

 

6.3 Conflicts; Consents of Third Parties.

(a) Except as set forth on Schedule 6.3 hereto, none of the execution and
delivery by such Purchaser of this Agreement and of the Purchaser Documents, the
consummation of the Transactions, or the compliance by such Purchaser with any
of the provisions hereof or thereof will conflict with, or result in violation
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under any provision of (i) the
Certificate of Formation and Bylaws or comparable organizational documents of
such Purchaser; (ii) any Contract or Permit to which such Purchaser is a party
or by which any of the properties or assets of such Purchaser are bound; (iii)
any Order of any Governmental Body applicable to such Purchaser or by which any
of the properties or assets of such Purchaser are bound; or (iv) any applicable
Law.

(b) Except as set forth on Schedule 6.3, no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of such Purchaser in
connection with the execution and delivery of this Agreement or the Purchaser
Documents or the compliance by such Purchaser with any of the provisions hereof
or thereof, except for such consents, waivers, approvals, Orders, Permits,
authorizations, declarations, filings or notifications that, if not obtained,
made or given, would not, individually or in the aggregate, have a material
adverse effect on the ability of such Purchaser to consummate the Transactions.

6.4 Litigation. There are no Legal Proceedings pending or, to the Knowledge of
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of such Purchaser to enter into this Agreement or consummate the
Transactions.

6.5 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for such Purchaser in connection with the
Transactions and no Person is entitled to any fee or commission or like payment
in respect thereof.

6.6 Financial Resources. Such Purchaser has cash or credit available, and will
have cash available at Closing, to enable it to purchase the Purchased Assets on
the terms hereof and otherwise perform its obligations hereunder.

6.7 No Other Representations and Warranties. Purchasers acknowledge and agree
that they have not been induced by and have not relied on any representations,
warranties or statements, whether express or implied, made by Shareholder or any
Seller or any of their representatives, Affiliates, or agents that are not
expressly set forth in this Agreement, whether or not any of those
representations, warranties or statements were made in writing or orally.

Article VII

COVENANTS

7.1 Access to Information; Confidentiality. Sellers shall, and Sellers shall
cause the Acquired Subsidiaries to, afford to Purchasers and their accountants,
counsel, and other representatives, and each of their respective
representatives, full access, during normal business hours upon reasonable
notice throughout the period prior to the Closing, to Sellers’ and the

47

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

 

Subsidiaries’ respective properties and facilities (including all owned and
leased real property and the buildings, structures, fixtures, appurtenances and
improvements erected, attached or located thereon), books, financial information
(including working papers and data in the possession of Sellers or any of the
Subsidiaries or their respective independent public accountants, internal audit
reports, and “management letters” from such accountants with respect to Sellers’
or any of the Subsidiary’s systems of internal control), Contracts and records
of Sellers and the Subsidiaries and, during such period, shall furnish promptly
such information concerning the businesses, properties and personnel of Sellers
and the Subsidiaries as Purchasers shall reasonably request; provided, that such
investigation shall not unreasonably disrupt Sellers’ operations. Prior to the
Closing, Sellers shall generally keep Purchasers informed as to all material
matters involving the operations and businesses of Sellers and each of the
Subsidiaries. Sellers shall authorize and direct the appropriate officers,
directors, managers and Employees to discuss matters involving the Business, as
the case may be, with representatives of Purchasers. Prior to the Closing, all
nonpublic information provided to, or obtained by, Purchasers in connection with
the Transactions shall be Confidential Information and Purchasers shall not, and
shall cause their directors, officers, employees, agents, consultants and
Affiliates not to, directly or indirectly, disclose, reveal, divulge or
communicate to any Person other than authorized officers, directors and
employees of Purchasers or use, other than in connection with the Transactions
or as otherwise required by applicable Law, any Confidential Information;
provided, that Purchasers and Sellers may disclose such information as may be
necessary in connection with (i) seeking necessary consents and approvals as
contemplated hereby and (ii) obtaining financing for the Transactions and for
the operations of Sellers after the Closing (the “Financing”). No information
provided to or obtained by Purchasers pursuant to this Section 7.1 or otherwise
shall limit or otherwise affect the remedies available hereunder to Purchasers
(including Purchasers’ right to seek indemnification pursuant to Article IX), or
the representations or warranties of, or the conditions to the obligations of,
the parties hereto. Notwithstanding the foregoing, any information obtained from
Seller that does not relate to the Purchased Assets shall continue to be treated
as Confidential Information and shall at no time be used by Purchasers without
Sellers written consent, and this provision shall survive Closing for a period
of two years.

7.2 Conduct of the Business Pending the Closing.

(a) Except as otherwise expressly provided by this Agreement or with the prior
written consent of Purchasers, between the date hereof and the Closing,
Shareholder and Sellers shall, and Sellers shall cause the Acquired Subsidiaries
to:

(i) conduct the Business only in the Ordinary Course of Business;

(ii) use their commercially reasonable efforts to (A) preserve the present
business operations, organization (including officers and Employees) and
goodwill of Sellers and the Acquired Subsidiaries and (B) preserve the present
relationships with Persons having business dealings with Sellers and the
Subsidiaries (including clients, customers and suppliers and service providers);

(iii) maintain (A) all of the assets and properties of, or used by, Sellers and
the Acquired Subsidiaries in their current condition, ordinary wear and tear
excepted, and (B)

48

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

 

insurance upon all of the properties and assets of Sellers and the Acquired
Subsidiaries in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;

(iv) (A) maintain the books, accounts and records of Sellers and the Acquired
Subsidiaries in the Ordinary Course of Business, (B) continue to collect
accounts receivable and pay accounts payable utilizing normal procedures and
without discounting or accelerating payment of such accounts, and (C) comply
with all contractual and other obligations of Sellers and the Acquired
Subsidiaries;

(v) comply with the capital expenditure plan of Sellers and the Acquired
Subsidiaries for 2017, including making such capital expenditures in the amounts
and at the times set forth in such plan; and

(vi) comply in all material respects with all applicable Laws.

(b) Without limiting the generality of the foregoing, except as otherwise
expressly provided on Schedule 7.2(b) or with the prior written consent of
Purchasers, Shareholder and Sellers shall not, and Sellers shall cause the
Acquired Subsidiaries not to:

(i) declare, set aside, make or pay any dividend or other distribution in
respect of the capital stock of or other securities of, or other ownership
interests in, Sellers or any of the Acquired Subsidiaries or repurchase, redeem
or otherwise acquire any outstanding equity interests or other securities of, or
other ownership interests in, Sellers or any of the Acquired Subsidiaries,
except for cash dividends;

(ii) transfer, issue, sell, pledge, encumber or dispose of the equity interests
or other securities of, or other ownership interests in, Sellers or any of the
Subsidiaries or grant options, warrants, calls or other rights to purchase or
otherwise acquire equity interests or other securities of, or other ownership
interests in, Sellers or any of the Acquired Subsidiaries;

(iii) effect any recapitalization, reclassification, stock split, combination or
like change in the capitalization of Sellers or any of the Subsidiaries, or
amend the terms of any outstanding securities of Sellers or any of the Acquired
Subsidiaries;

(iv) amend the certificate of incorporation or bylaws or equivalent
organizational or governing documents of Sellers or any of the Acquired
Subsidiaries;

(v) (A) increase the salary or other compensation of any director, manager,
officer or Employee, except for normal periodic increases in the Ordinary Course
of Business (B) grant any unusual or extraordinary bonus, benefit or other
direct or indirect compensation to any director, officer, Employee or
consultant, (C) except as required by law, increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the directors,
managers, officers, Employees, agents or representatives of any Seller or any of

49

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

 

the Subsidiaries or otherwise modify or amend or terminate any such plan or
arrangement or (D) enter into any employment, deferred compensation, severance,
special pay, consulting, non-competition or similar agreement or arrangement
with any directors, managers or officers of Sellers or any of the Acquired
Subsidiaries (or amend any such agreement) to which any Seller or any of the
Acquired Subsidiaries is a party;

(vi) (A) issue, create, incur, assume, guarantee, endorse or otherwise become
liable or responsible with respect to (whether directly, contingently or
otherwise) any Indebtedness, other than accounts payable in the Ordinary Course
of Business; (B) except in the Ordinary Course of Business, pay, repay,
discharge, purchase, repurchase or satisfy any Indebtedness of Sellers or any of
the Acquired Subsidiaries; or (C) modify the terms of any Indebtedness or other
Liability;

(vii) subject to any Lien or otherwise encumber or, except for Permitted
Exceptions, permit, allow or suffer to be encumbered, any of the properties or
assets (whether tangible or intangible) of, or used by, any of Sellers or the
Acquired Subsidiaries;

(viii) acquire any material properties or assets or sell, assign, license,
transfer, convey, lease or otherwise dispose of any of the material properties
or assets of, or used by, Sellers and the Acquired Subsidiaries, other than for
fair consideration in the Ordinary Course of Business;

(ix) enter into or agree to enter into any merger or consolidation with any
corporation or other entity, and not engage in any new business or invest in,
make a loan, advance or capital contribution to, or otherwise acquire the
securities, of any other Person;

(x) cancel or compromise any debt or claim or waive or release any material
right of any Seller or any of the Acquired Subsidiaries except in the Ordinary
Course of Business;

(xi) enter into any individual commitment for capital expenditures of Sellers
and the Acquired Subsidiaries in excess of $20,000;

(xii) except as required by law, enter into, modify or terminate any labor or
collective bargaining agreement of any Seller or any of the Subsidiaries or,
through negotiation or otherwise, make any commitment or incur any Liability to
any labor organization with respect to any Seller or any of the Acquired
Subsidiaries;

(xiii) introduce any material change with respect to the operation of any Seller
or any of the Acquired Subsidiaries, including any material change in the types,
nature, composition or quality of its products or services, or, other than in
the Ordinary Course of Business, make any change in product specifications or
prices or terms of distributions of such products or change its pricing,
discount, allowance or return policies or grant any pricing, discount, allowance
or return terms for any customer or supplier not in accordance with such
policies;

50

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

 

(xiv) enter into any transaction or enter into, modify or renew any Contract
which by reason of its size, nature or otherwise is not in the Ordinary Course
of Business;

(xv) except for transfers of Cash pursuant to normal cash management practices
in the Ordinary Course of Business, make any investments in or loans to, or pay
any fees or expenses to, or enter into or modify any Contract with any Related
Persons;

(xvi) make a change in its accounting or Tax reporting principles, methods or
policies;

(xvii) (i) make, change or revoke any Tax election, settle or compromise any Tax
claim or Liability or enter into a settlement or compromise, or change (or make
a request to any Taxing Authority to change) any material aspect of its method
of accounting for Tax purposes, or (ii) prepare or file any Tax Return (or any
amendment thereof) unless such Tax Return shall have been prepared in a manner
consistent with past practice and Sellers shall have provided Purchasers a copy
thereof (together with supporting papers) at least three Business Days prior to
the due date thereof for Purchasers to review and approve (such approval not to
be unreasonably withheld or delayed);

(xviii) enter into any Contract, understanding or commitment that restrains,
restricts, limits or impedes the ability of any Seller or any Acquired
Subsidiary to compete with or conduct any business or line of business in any
geographic area or solicit the employment of any persons;

(xix) terminate, amend, restate, supplement, abandon or waive any rights under
any (A) Material Contract other than in the Ordinary Course of Business or (B)
Permit;

(xx) settle or compromise any pending or threatened in writing and received by
Sellers Legal Proceeding or any claim or claims;

(xxi) change or modify its credit, collection or payment policies, procedures or
practices, including acceleration of collections or receivables (whether or not
past due) or fail to pay or delay payment of payables or other Liabilities;

(xxii) knowingly take any action which would adversely affect the ability of the
parties to consummate the Transactions;

(xxiii) agree to do anything (A) prohibited by this Section 7.2, (B) which would
make any of the representations and warranties of Shareholder in this Agreement
or any of the Shareholder Documents or Seller Documents untrue or incorrect in
any material respect or could result in any of the conditions to the Closing not
being satisfied or (C) that would be reasonably expected to have a Material
Adverse Effect; or

(xxiv) fail to pay any required maintenance or other similar fees or otherwise
fail to make required filings or payments required to maintain and further
prosecute any applications for registration of Intellectual Property.

51

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

 

7.3 Third Party Consents. Shareholder and Sellers shall use, and Sellers shall
cause the Subsidiaries to use, their commercially reasonable efforts to obtain
at the earliest practicable date (a) all consents, waivers and approvals from,
and provide all notices to, all Persons that are not a Governmental Body,
required to consummate, or in connection with, the Transactions, including the
consents, waivers, approvals and notices referred to in Sections 4.2(b) and
5.3(b) hereof (except for such matters covered by Section 7.4) and (b) all
estoppel certificates reasonably requested by Purchasers. All such consents,
waivers, approvals, notices and estoppels shall be in writing and in form and
substance satisfactory to Purchasers, and executed counterparts of such
consents, waivers, approvals and estoppels shall be delivered to Purchasers
promptly after receipt thereof, and copies of such notices shall be delivered to
Purchasers promptly after the making thereof. Notwithstanding anything to the
contrary in this Agreement, no Purchaser nor any of its Affiliates (which for
purposes of this sentence shall include Sellers) shall be required to pay any
amounts in connection with obtaining any consent, waiver or approval.

7.4 Governmental Consents and Approvals. Each of Purchasers, Shareholder and
Sellers shall use, and Sellers shall cause each of the Acquired Subsidiaries to
use, its commercially reasonable efforts to obtain at the earliest practical
date all consents, waivers, approvals, Orders, Permits, authorizations and
declarations from, make all filings with, and provide all notices to, all
Governmental Bodies which are required to consummate, or in connection with, the
Transactions, including the consents, waivers, approvals, Orders, Permits,
authorizations, declarations, filings and notices referred to in Sections 4.2(b)
and 5.3(b).

7.5 Further Assurances. Subject to, and not in limitation of, Sections 7.3
and 7.4, each of Shareholder, Sellers and Purchasers shall use its commercially
reasonable efforts to (i) take, or cause to be taken, all actions necessary or
appropriate to consummate the Transactions and (ii) cause the fulfillment at the
earliest practicable date of all of the conditions to their respective
obligations to consummate the Transactions. At or after Closing, and without
further consideration, Sellers will execute and deliver to Purchasers such
further instruments of conveyance and transfer as Purchasers may reasonably
request to more effectively convey and transfer the Purchased Assets to
Purchasers, free and clear of any Lien and subject to no legal or equitable
restrictions of any kind, other than the Permitted Exceptions or to exercising
rights with respect to such Purchased Assets. Sellers and Shareholder will
cooperate fully, and to the extent reasonably requested by Purchasers, in
connection with any post-Closing filings or notifications of Purchasers or
Sellers required under applicable Law including, without limitation, the filing
of a notification pursuant to the Investment Canada Act. After Closing each of
Shareholder, Sellers and Purchasers shall use its commercially reasonable
efforts to take, or cause to be taken, all actions necessary or appropriate to
(i) give Purchasers the benefit of the Purchased Assets and (ii) give Sellers
the benefit of the Assumed Liabilities. The parties shall provide reasonable
cooperation to ensure that amounts collected by either party that belong to the
other are promptly remitted to the proper party. In addition, the parties shall
provide reasonable cooperation to ensure that bills received are timely paid by
the party(ies) obligated under this Agreement to pay such amounts.

7.6 Preservation of Records. Subject to any retention requirements relating to
the preservation of Tax records, Sellers, Shareholder and Purchasers agree that
each of them shall (and shall cause the Acquired Subsidiaries to) preserve and
keep the records held by them

52

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

 

or their Affiliates relating to the Business for a period of six years from the
Closing Date and shall make such records and personnel available to the other as
may be reasonably required by such party in connection with, among other things,
any insurance claims by, Legal Proceedings against or governmental
investigations of Shareholder, Sellers, the Subsidiaries or Purchasers or any of
their Affiliates or in order to enable Sellers, Shareholder or Purchasers to
comply with their respective obligations under this Agreement and each other
agreement, document or instrument contemplated hereby or thereby. In the event
Sellers, Shareholder or Purchasers wish to destroy (or permit to be destroyed)
such records after that time, such party shall first give 90 days’ prior written
notice to the other and such other party shall have the right at its option and
expense, upon prior written notice given to such party within that 90 day
period, to take possession of the records within 180 days after the date of such
notice.

7.7 Publicity. (a) Except and to the extent required by applicable Law or by the
applicable rules of any applicable stock exchange, none of Purchasers, Sellers,
any Acquired Subsidiary or any Affiliate of any of the foregoing parties shall
issue any press release or public announcement concerning this Agreement or the
Transactions without obtaining the prior written agreement of Sellers and
Purchasers, which approval will not be unreasonably withheld or delayed,
provided that, to the extent required by applicable Law, the party intending to
make such release shall use its commercially reasonable efforts consistent with
such applicable Law to consult with the other party with respect to the text
thereof.

(b) Each of Purchasers, Shareholder and Sellers agrees that the terms of this
Agreement shall not be disclosed or otherwise made available to the public and
that copies of this Agreement shall not be publicly filed or otherwise made
available to the public, except where such disclosure, availability or filing is
required by applicable Law and only to the extent required by such Law. The
Parties understand that this Agreement and a Form 8-K describing the
Transactions will be filed by KMG with the Securities and Exchange Commission
within four Business Days of its execution.

7.8 Use of Name. Sellers hereby agree that upon the Closing, Purchasers shall
have the sole right to the use of the name “Sealweld” or similar names and any
service marks, trademarks, trade names, d/b/a names, fictitious names,
identifying symbols, logos, emblems, signs or insignia related thereto or
containing or comprising the foregoing, or otherwise used in the Business,
including any name or mark confusingly similar thereto and the trademarks and
service marks listed on Schedule 5.14(a) (collectively, the “Seller Marks”).
Sellers shall not, and shall not permit their respective Affiliates to, use such
name or any variation or simulation thereof or any of the Seller Marks. Within
20 Business Days of Closing, Sellers and Shareholder shall cause each of
Sealweld Canada and FZE to change its name to remove Sealweld or any variation
thereof from its name.

7.9 Environmental Matters. (a) Sellers shall permit Purchasers and Purchasers’
environmental consultant, to conduct at Purchasers’ sole cost, risk and expense,
such assessments and investigations (including investigations known as “Phase I”
and “Phase II” Environmental Site Assessments) of the environmental conditions
of any real property owned, operated or leased by or for Sellers or any Acquired
Subsidiary and the operations conducted thereat (subject to any limitations
contained in valid, previously executed leases as Purchasers, in their sole
discretion, shall deem necessary or prudent) (“Purchasers’ Environmental

53

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

 

Assessment”). Purchasers’ Environmental Assessment shall be conducted by a
qualified environmental consulting firm in compliance with applicable Laws and
in a manner that minimizes the disruption of the operations of Sellers.

(b) Sellers shall promptly file all materials required by Environmental Laws as
a result of or in furtherance of the transaction contemplated hereunder,
including any notifications or approvals required under environmental property
transfer laws and all requests required or necessary for the transfer or
re-issuance of Environmental Permits required to conduct the Business.
Purchasers shall cooperate in all reasonable respects with Sellers with respect
to such filings.

7.10 Related-Party Transactions. On or prior to the Closing Date, Sellers and
the Acquired Subsidiaries shall (a) terminate all Contracts with Related
Persons, including those set forth on Schedule 5.23 (other than (i) those
Contracts set forth on Schedule 7.10 and (ii) Contracts between Sellers and the
Acquired Subsidiaries, Contracts between Sellers and the Subsidiaries and their
respective officers and Employees, and Contracts, the continuation of which,
Purchasers have approved in writing) and (b) deliver releases executed by such
Affiliates with whom Sellers have terminated such Contracts pursuant to this
Section 7.10 providing that no further payments are due, or may become due,
under or in respect of any such terminated Contacts; provided, that in no event
shall Sellers or any of the Acquired Subsidiaries pay any fee or otherwise incur
any expense or financial exposure with respect to any such termination or
release.

7.11 Notification of Certain Matters. Prior to the Closing, Shareholder shall
promptly give notice to Purchasers in writing upon becoming aware of (a) any
fact, change, condition, circumstance, event, occurrence or non-occurrence that
has caused or is reasonably likely to cause any representation or warranty made
by Shareholder in this Agreement to be untrue or inaccurate in any respect at
any time after the date hereof and prior to the Closing, (b) any material
failure on Sellers’ or Shareholder’s part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by Sellers or
Shareholder hereunder or (c) the institution of any Legal Proceeding against
Shareholder, any Seller or any of the Subsidiaries related to this Agreement or
the Transactions; provided that the delivery of any notice pursuant to this
Section 7.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice, or the representations or
warranties of, or the conditions to the obligations of, the parties hereto.

7.12 Debt. No later than the third Business Day prior to the Closing Date,
Sellers shall provide Purchasers with (i) a certificate of Sellers setting forth
an estimate of the balance of all Indebtedness (other than capital leases) of
Sellers and the Acquired Subsidiaries as of the close of business on the day
immediately preceding the Closing Date and (ii) customary pay-off letters from
all holders of Indebtedness (other than capital leases) to be repaid as of or
prior to the Closing, including without limitation, all Indebtedness (other than
capital leases) of Sellers or the Acquired Subsidiaries relating to (A)
intercompany accounts, (B) amounts owed to Shareholder, or any family member or
Affiliate of Shareholder, or (C) amounts for borrowed money under the Loan
Facilities. Sellers shall also make arrangements reasonably satisfactory to
Purchasers for such holders to provide to Purchasers recordable form mortgage
and lien releases, canceled notes and other documents reasonably requested by
Purchasers prior to the Closing

54

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

 

such that all Liens on the assets or properties of Sellers or any of the
Acquired Subsidiaries that are not Permitted Exceptions shall be satisfied,
terminated and discharged on, prior to, or within a reasonable period of time
following the Closing Date. On the Closing Date prior to the Closing, Sellers
shall deliver to Purchasers a certificate of Sellers setting forth all
Indebtedness (other than capital leases) of Sellers and the Subsidiaries as of
the close of business on the day immediately preceding the Closing Date. At the
Effective Time, Purchasers shall pay all Indebtedness disclosed by Sellers
pursuant to this Section 7.12, other than any capital leases included in the
Assumed Liabilities, in accordance with the pay-off letters provided by Sellers.

7.13 Resignation of directors and officers. Upon request of the Purchasers,
Sellers shall cause each of the directors and officers of the Acquired
Subsidiaries to submit a letter of resignation in a form approved by Purchasers
effective on the Closing Date.

7.14 Privacy and Transfer of Personal Information.

(a) Prior to the Closing, none of the Parties shall use Transferred Information
for any purposes other than those related to the performance of this Agreement
and the completion of the transaction contemplated herein. Each of the Parties
acknowledge and confirm that the collection, disclosure and use of personal
information is necessary for the purposes of determining whether the parties
shall proceed with the transaction herein, and that the disclosure of
Transferred Information relates solely to the completion of the transaction
herein. If the Closing do not occur, Purchasers shall cease all use of the
Transferred Information acquired by Purchasers in connection with this Agreement
and, at Shareholder’s or Sellers’ request, will return to Shareholder or
Sellers, as applicable, or destroy in a secure manner, the Transferred
Information.

(b) Each Party covenants and agrees to, upon request, use reasonable efforts to
advise the recipient of all documented purposes for which the Transferred
Information was initially collected from or in respect of the individual to
which such Transferred Information relates and all additional documented
purposes where the disclosing Party has notified the individual of such
additional purpose, and where required by Laws, obtained the consent of such
individual to such use or disclosure.

(c) In addition to its other obligations hereunder, each Party covenants and
agrees, after the completion of the Transactions to: (i) collect, use and
disclose the Transferred Information only for those purposes for which the
Transferred Information was initially collected from or in respect of the
individual to which such Transferred Information relates or for the completion
of the Transactions, unless required by Laws and unless (A) such individual has
first been notified of such additional purpose, and where required by Laws, the
consent of such individual to such additional purpose has been obtained, or (B)
such use or disclosure is permitted or authorized by Laws, without notice to, or
consent from, such individual; (ii) where required by Laws, promptly notify the
individuals to whom the Transferred Information relates that the Transactions
have taken place and that the Transferred Information has been disclosed; and
(iii) notwithstanding any other provision herein, where the disclosure or
transfer of Transferred Information requires the consent of, or the provision of
notice to, the individual to which such Transferred Information relates, to not
require or accept the disclosure or transfer of such Transferred Information
until such individual has first been notified of such disclosure or

55

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

 

transfer and the purpose for same, and where required by Laws, the individual's
consent to same is obtained and to only collect, use and disclose such
information to the extent necessary to complete the Transactions and as
authorized or permitted by Laws.

(d) Recipient shall at all times keep strictly confidential all Transferred
Information provided to it, and shall instruct those employees or advisors
responsible for processing such Transferred Information to protect the
confidentiality of such information in a manner consistent with the Recipient's
obligations hereunder and according to applicable Laws.

(e) Recipient shall ensure that access to the Transferred Information shall be
restricted to those employees or advisors of the respective Recipient who have a
bona fide need to access such information in order to complete the Transactions.

(f) For the purpose of this Section 7.14, “Transferred Information” means any
personal information (namely, information about an identifiable individual other
than their business contact information when used or disclosed for the purpose
of contacting such individual in that individual's capacity as an employee or an
official of an organization and for no other purpose) disclosed or conveyed to
Purchasers or any of their representatives or agents by or on behalf of
Shareholder or Sellers as a result of or in conjunction with the Transactions,
and includes all such personal information disclosed to Purchasers during the
period leading up to and including the completion of the Transactions.

7.15 Employment.

(a) Transferred Employees. Prior to Closing, Purchasers shall seek from each
Employee in Canada, with the exception of those Employees listed on Schedule
7.15(a), a written consent for KMG ILC to assume the obligations of Sealweld
Canada under such Employee’s employment agreement as the employer. Such
individuals who sign and return such written consent within seven days of
Closing Date are hereinafter referred to as the “Transferred Employees.” Subject
to applicable Laws, on and after the Closing Date, Purchasers shall have the
right to dismiss any or all Transferred Employees at any time, with or without
cause, and to change the terms and conditions of their employment (including
compensation and employee benefits provided to them), consistent with the terms
of such employment agreements. Purchasers shall make available to the
Transferred Employees employee benefits in accordance with the Plans being
assumed hereunder. The Purchasers shall credit each Transferred Employee for
such Transferred Employee’s time of service dating back to the commencement of
their employment with Sellers or the Acquired Subsidiaries, as applicable, for
purposes of calculating the vacation, severance and other benefits of such
Transferred Employees following the Closing to the maximum extent allowed under
the Plans.

(b) Excluded Employees. Included on Schedule 7.15(b) is a list of Employees who
will not have their employment agreements assumed by Purchasers. Any Employee
included on Schedule 7.15(b) is hereinafter referred to as an “Excluded
Employee.” The Sellers shall be responsible for all severance payments, damages
for wrongful dismissal and all related costs in respect of the termination by
the Seller of the employment of any Excluded Employee listed on Schedule
7.15(b).

56

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

 

(c) Special Employee. Included on Schedule 7.15(c) is an Employee who will not
have his employment agreement assumed by Purchasers. If the Employee included on
Schedule 7.15(c) does not agree to by employed by Purchasers, Purchasers shall
be responsible for all severance payments, damages for wrongful dismissal and
all related costs in respect of the termination by the Seller of the employment
of that employee.

(d) Special Employee. Included on Schedule 7.15(d) is an Employee who will not
have his employment agreement assumed by Purchasers. If the Employee included on
Schedule 7.15(d) does not agree to by employed by Purchasers, Sellers shall be
responsible for all severance payments, damages for wrongful dismissal and all
related costs in respect of the termination by the Seller of the employment of
that employee.

(e) COBRA. Each Seller and each ERISA Affiliate that, prior to the Closing Date,
sponsored a group health plan (as defined in Section 5000b of the Code, Section
607 of ERISA, or both) which provides welfare benefits to any Employee or Former
Employee will maintain such group health plan after the Closing Date.

Article VIII

CONDITIONS TO CLOSING

8.1 Conditions Precedent to Obligations of Purchasers. The obligations of
Purchasers to consummate the Transactions is subject to the fulfillment, on or
prior to the Closing Date, of each of the following conditions (any or all of
which may be waived by Purchasers in whole or in part to the extent permitted by
applicable Law):

(a) the representations and warranties of Shareholder set forth in this
Agreement or any certificate or other document furnished or to be furnished to
Purchasers pursuant to this Agreement qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects (other than the representations and warranties contained in
(i) Section 5.1 (organization), (ii) Section 5.4 (capitalization), (iii) Section
5.5 (subsidiaries), (iv) Section 5.23 (related party transactions), (v) Section
5.25 (certain payments), and (vi) Section 5.29 (financial advisors), which
representations and warranties shall be true and correct), in each case, as of
the date of this Agreement and as of the Closing as though made at and as of the
Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date);

(b) Shareholder and Sellers shall have performed and complied in all respects
with all obligations and agreements required in this Agreement to be performed
or complied with by them on or prior to the Closing Date, and Purchasers shall
have received copies of such resolutions and other documents evidencing
performance thereof as Purchasers may reasonably request;

(c) since the date hereof, there shall not have been or occurred any event,
change, occurrence or circumstance that, individually or in the aggregate with
any such events, changes, occurrences or circumstances, has had or which could
reasonably be expected to have a Material Adverse Effect since the Balance Sheet
Date;

57

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

 

(d) no Legal Proceedings shall have been instituted or threatened in writing and
received by Sellers or claim or demand made against Shareholder, Sellers or any
of the Acquired Subsidiaries or Purchasers, seeking to restrain or prohibit, or
to obtain substantial damages with respect to, the consummation of the
Transactions, and there shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the Transactions;

(e) Purchasers shall have received a certificate signed by Shareholder and by
the Chief Executive Officer of each Seller, each in form and substance
reasonably satisfactory to Purchasers, dated the Closing Date, to the effect
that each of the conditions specified above in Sections 9.1(a)-(d) have been
satisfied in all respects;

(f) (i) Sellers or the Acquired Subsidiaries shall have obtained or made any
consent, approval, Order or authorization of, or registration, declaration or
filing with, any Governmental Body required to be obtained or made in connection
with the execution and delivery of this Agreement or the consummation of the
Transactions and (ii) Shareholder, Sellers or the Acquired Subsidiaries shall
have obtained all consents, waivers and approvals referred to in Sections 4.2(b)
and 5.3(b) hereof, as applicable, in a form satisfactory to Purchasers and
copies thereof shall have been delivered to Purchasers;

(g) Purchasers shall have received the written resignations and release of
claims to fees or expenses of each of the directors and officers of the Acquired
Subsidiaries each in form and substance reasonably satisfactory to Purchasers;

(h) Sellers shall have obtained the issuance, reissuance or transfer of all
Permits (including Environmental Permits) required under Law (including
Environmental Laws), other than any which are not transferrable until after
Closing, to conduct the operations of the Business as of the Closing Date, and
Sellers shall have satisfied all property transfer requirements and permitting
reliance thereon by Sellers’ lenders arising under Law (including Environmental
Laws);

(i) each of the persons listed on Schedule 8.1(i) shall have executed and
delivered a Noncompetition and Nonsolicitation Agreement substantially in the
form attached hereto as Exhibit A;

(j) Purchasers shall have received the items listed in Sections 2.11 and 2.12;

(k) Purchasers shall have received written evidence, satisfactory to Purchasers
in their sole discretion, that Shareholder, the Sellers and its Affiliates and
the directors and officers of the Acquired Subsidiaries have irrevocably and
unconditionally released the Acquired Subsidiaries from any and all Liabilities.

58

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

 

8.2 Conditions Precedent to Obligations of Sellers. The obligations of Sellers
to consummate the Transactions are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by Sellers in whole or in part to the extent permitted by applicable
Law):

(a) the representations and warranties of Purchasers set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, in each case, as
of the date of this Agreement and as of the Closing as though made at and as of
the Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date);

(b) Purchasers shall have performed and complied in all material respects with
all obligations and agreements required by this Agreement to be performed or
complied with by Purchasers on or prior to the Closing Date;

(c) there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the Transactions;

(d) Purchasers shall have obtained or made any consent, approval, certificate,
exemption, waiver, order or authorization of, or registration, declaration or
filing with, any Governmental Body required to be obtained or made by it in
connection with the execution and delivery of this Agreement or the consummation
of the Transactions; and

(e) Shareholder shall have received the items listed in Section 2.13.

Article IX

INDEMNIFICATION

9.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement, any certificate delivered
pursuant hereto shall survive the Closing through and including the 18 month
anniversary of the Closing Date (the “General Survival Period”); provided, that
(a) the representations and warranties of Shareholder or Sellers set forth in
Sections 5.10 (taxes) and 5.16 (employee benefit plans) shall survive the
Closing until ninety (90) days following the expiration of the applicable
statute of limitations with respect to the particular matter that is the subject
matter thereof (in each case, the “Survival Period”), and (b) any claim with
respect to any fraudulent breach or misrepresentation of any representation will
survive and can be made by a Purchaser Indemnified Party or Shareholder
Indemnified Party as the case may be, pursuant to such statute of limitations as
may be applicable. Notwithstanding anything to the contrary in this Section 9.1,
the indemnification obligations pursuant to this Article IX shall not terminate
with respect to any indemnification claim made by a Purchaser Indemnified Party
or a Shareholder Indemnified Party, as the case may be, prior to the expiration
of the applicable Survival Period until such claim is resolved.

59

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

 

9.2 Indemnification.

(a) From and after the Closing, subject to Sections 9.1, 9.4 and 9.5 hereof,
Shareholder and each Seller, jointly and severally, hereby agrees to indemnify
and hold Purchasers, the Acquired Subsidiaries, their Affiliates, and their
respective directors, managers, officers, employees, equity holders, members,
partners, agents, attorneys, representatives, successors and assigns
(collectively, the “Purchaser Indemnified Parties”) harmless from and against,
and pay to the applicable Purchaser Indemnified Parties the amount of, any and
all Liabilities, deficiencies, demands, judgments (excluding any punitive
damages, except to the extent arising from a Third Party Claim), interest,
suits, actions, causes of action, assessments, awards, costs and expenses
(including costs of investigation and defense and reasonable attorneys’ and
other professionals’ fees on a solicitor and client basis and including those
arising under Environmental Law), whether or not involving a Third Party Claim
or Legal Proceeding (individually, a “Loss” and, collectively, “Losses”) to the
extent based upon, attributable to or resulting from:

(i) any breach of the representations or warranties made by Shareholder or
Sellers in this Agreement;

(ii) any breach of any covenant or other agreement on the part of Sellers or
Shareholder under this Agreement; and

(iii) any Excluded Asset or any Excluded Liability or the operation of the
Business by Seller on or prior to the Closing.

THIS INDEMNITY OBLIGATION SHALL INCLUDE, WITHOUT LIMITATION, (I) ANY CLAIMS
RESULTING FROM THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY PURCHASER INDEMNIFIED
PARTY AND (II) STATUTORY AND COMMON LAW NEGLIGENCE AND STRICT LIABILITY CLAIMS
AS WELL AS ALL OTHER CLAIMS ARISING UNDER ENVIRONMENTAL LAWS.

(b) From and after the Closing and subject to Sections 9.1 and 9.4, each
Purchaser, jointly and severally, hereby agrees to indemnify and hold Sellers,
Shareholder and their respective Affiliates, equity holders, directors,
officers, employees, members, partners, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Shareholder Indemnified
Parties”) harmless from and against, and pay to the applicable Shareholder
Indemnified Parties the amount of, any and all Losses based upon, attributable
to or resulting from:

(i) any breach or inaccuracy of the representations or warranties made by
Purchasers in this Agreement;

(ii) any breach of any covenant or other agreement on the part of Purchasers
under this Agreement; and

(iii) any Assumed Liability or the operation of the Business by Purchasers after
the Closing.

60

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

 

(c) The right to indemnification or any other remedy based on representations,
warranties, covenants and agreements in this Agreement shall not be affected by
any investigation conducted at any time, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of, or compliance with, any such representation, warranty, covenant
or agreement. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or agreement, will not affect the right to indemnification or any other
remedy based on such representations, warranties, covenants and agreements.

9.3 Indemnification Procedures.

(a) A claim for indemnification for any matter not involving a Third Party Claim
may be asserted by written notice to the party from whom indemnification is
sought.

(b) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any third party in respect of which
indemnification may be sought under Section 9.2 hereof (regardless of the
limitations set forth in Section 9.4) (a “Third Party Claim”), the indemnified
party shall promptly cause written notice of the assertion of any Third Party
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying party. The failure of the indemnified party to
give reasonably prompt notice of any Third Party Claim shall not release, waive
or otherwise affect the indemnifying party’s obligations with respect thereto
except to the extent that the indemnifying party can demonstrate actual material
loss and prejudice as a result of such failure. Subject to the provisions of
this Section 9.3, the indemnifying party shall have the right, at its sole
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Third Party Claim which relates to any Losses
indemnified against by it hereunder. If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Third Party Claim which
relates to any Losses indemnified against by it hereunder, it shall within 20
days of the indemnified party’s written notice of the assertion of such Third
Party Claim (or sooner, if the nature of the Third Party Claim so requires)
notify the indemnified party of its intent to do so. If the indemnifying party
elects not to defend against, negotiate, settle or otherwise deal with any Third
Party Claim which relates to any Losses indemnified against by it hereunder,
fails to notify the indemnified party of its election as herein provided or
contests its obligation to indemnify the indemnified party for such Losses under
this Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Third Party Claim. If the indemnified party defends any
Third Party Claim, then the indemnifying party shall reimburse the indemnified
party for the expenses of defending such Third Party Claim upon submission of
periodic bills. If the indemnifying party shall assume the defense of any Third
Party Claim, the indemnified party may participate, at his or its own expense,
in the defense of such Third Party Claim; provided, that such indemnified party
shall be entitled to participate in any such defense with separate counsel at
the expense of the indemnifying party if in the reasonable opinion of counsel to
the indemnified party, a conflict or potential conflict exists between the
indemnified party and the indemnifying party that would make such separate
representation advisable; and provided, further, that the indemnifying party
shall not be required to pay for more than one such counsel (plus any
appropriate local counsel) for all indemnified parties in connection with any
Third Party Claim. Each party hereto agrees to

61

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

 

provide reasonable access to each other party to such documents and information
as may be reasonably requested in connection with the defense, negotiation or
settlement of any such Third Party Claim. Notwithstanding anything in this
Section 9.3 to the contrary, neither the indemnifying party nor the indemnified
party shall, without the prior written consent of the other party, settle or
compromise any Third Party Claim or permit a default or consent to entry of any
judgment unless (x) the claimant (or claimants) and such party provide to such
other party an unqualified release from all Liability in respect of the Third
Party Claim and such settlement or compromise does not lead to the creation of a
financial or other obligation on the part of the indemnified party, or (y) if
such Third Party Claim is with respect to Taxes and such settlement or
compromise could not reasonably be expected to have an adverse effect on
Purchasers or Sellers. If the indemnifying party makes any payment on any Third
Party Claim, the indemnifying party shall be subrogated, to the extent of such
payment, to all rights and remedies of the indemnified party to any insurance
benefits or other claims of the indemnified party with respect to such Third
Party Claim.

(c) After any final decision, judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement, in each case with respect to a Third Party Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall pay all of such remaining sums
so due and owing to the indemnified party in accordance with Section 9.5.

9.4 Limitations on Indemnification for Breaches or Inaccuracies of
Representations and Warranties.

(a) An indemnifying party shall not have any liability under Section 9.2(a)(i)
or Section 9.2(b)(i) hereof unless the aggregate amount of Losses incurred by
the indemnified parties and indemnifiable hereunder exceeds $100,000 (the
“Deductible”) and, in such event, the indemnifying party shall be required to
pay the entire amount of all such Losses, including the Deductible; provided
that the Deductible limitation shall not apply to Losses related to (x) the
failure to be true and correct of any of the representations and warranties set
forth in Sections 4.1 (authorization of agreement), 5.1 (organization and good
standing), 5.2 (authorization of agreement), 5.5 (subsidiaries), 5.10 (taxes),
5.16 (employee benefit plans), and 5.20 (environmental matters), and 6.1
(organization and good standing) and 6.2 (authorization of agreement) hereof, or
(y) any indemnification claim arising out of any fraudulent, intentional or
willful breach or misrepresentation of any representation or warranty of
Shareholder or Sellers in this Agreement.

(b) None of Sellers, Shareholder nor Purchasers shall be required to indemnify
any Person or Persons under Section 9.2(a) or 9.2(b) for an aggregate amount of
Losses exceeding $12,500,000 (the “Cap”).

(c) Any amounts payable pursuant to this Article IX shall be net of any
insurance proceeds actually received by the party in connection with such Loss.

62

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

 

(d) Sellers and Shareholder shall have no right of contribution or other
recourse against the Acquired Subsidiaries or their respective directors,
managers, officers, Employees, Affiliates, agents, attorneys, stockholders,
members, representatives, assigns or successors for any Third Party Claims
asserted by Purchaser Indemnified Parties, it being acknowledged and agreed that
the covenants and agreements of Sellers are solely for the benefit of the
Purchaser Indemnified Parties.

9.5 Indemnity Escrow. On the Closing Date, Purchasers shall, on behalf of
Sellers, pay to TSX Trust Company, as agent to Purchasers and Sellers (the
“Escrow Agent”), in immediately available funds, to the account designated by
the Escrow Agent, an amount equal to $1,000,000 (the “Indemnity Escrow Amount”),
in accordance with the terms of this Agreement and the Escrow Agreement, which
will be executed at the Closing, by and among Purchasers, Sealweld Canada and
the Escrow Agent (the “Escrow Agreement”). Any payment Shareholder or Sellers
are obligated to make to any Purchaser Indemnified Parties pursuant to this
Article IX shall be paid first, to the extent there are sufficient funds in the
Indemnity Escrow Account, by release of funds to the Purchaser Indemnified
Parties from the Indemnity Escrow Account by the Escrow Agent in accordance with
the terms of the Escrow Agreement. The Escrow Agent shall not be obligated to
release any money to Sealweld Canada or the Purchasers without the prior written
consent of both Sealweld Canada and the Purchasers. On the expiration of the
General Survival Period, the Escrow Agent shall release the Indemnity Escrow
Amount (to the extent not utilized to pay Purchasers for any indemnification
claim) to Sealweld Canada, except that the Escrow Agent shall retain an amount
(up to the total amount then held by the Escrow Agent) equal to the amount of
claims for indemnification under this Article IX asserted prior to the
expiration of the General Survival Period but not yet resolved (“Unresolved
Claims”). The Indemnity Escrow Amount retained for Unresolved Claims shall be
released by the Escrow Agent (to the extent not utilized to pay Purchasers for
any such claims resolved in favor of Purchasers) upon their resolution in
accordance with this Article IX and the Escrow Agreement.

9.6 Tax Matters.

(a) Tax Indemnification. Shareholder and each Seller, jointly and severally,
hereby agrees to be liable for and to indemnify and hold the Purchaser
Indemnified Parties harmless from and against, and pay to the Purchaser
Indemnified Parties the amount of, any and all Losses respect of (i) all Taxes
of Sellers; (ii) all Taxes of the Subsidiaries (or any predecessor thereof) (A)
for any taxable period ending on or before the Effective Time, and (B) for the
portion of any Straddle Period ending at the Effective Time (determined as
provided in Section 9.6(c)); (iii) any and all Taxes imposed on any member of a
consolidated, combined or unitary group of which any Seller or any Subsidiary
(or any predecessor thereof) is or was a member on or prior to the Effective
Time, by reason of the liability of any Seller or any Subsidiary (or any
predecessor thereof), pursuant to Treasury Regulation Section 1.1502-6(a) (or
any predecessor or successor thereof or any analogous or similar provision under
state, local or foreign Law); (iv) the failure of any of the representations and
warranties contained in Section 5.10 to be true and correct in all respects
(determined without regard to any qualification related to materiality contained
therein) or the failure to perform any covenant contained in this Agreement with
respect to Taxes; (v) any failure by any Seller to timely pay any and all Taxes
required to be borne by such Seller pursuant to Section 9.6(d).

63

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

 

(b) Filing of Tax Returns; Payment of Taxes.

(i) Sellers and the Acquired Subsidiaries shall file or cause to be filed, (A)
the Tax Returns of the Acquired Subsidiaries or their Affiliates for the taxable
periods of the Acquired Subsidiaries ending on or prior to the Effective Time
and shall pay any and all Taxes due with respect to such Tax Returns. All Tax
Returns described in this Section 9.6(b)(i) shall be prepared in a manner
consistent with prior practice. Sellers shall provide Purchasers with copies of
such completed Tax Returns at least twenty days prior to the due date for filing
thereof, along with supporting workpapers, for Purchasers’ review and approval.
Shareholder and Purchasers shall attempt in good faith to resolve any
disagreements regarding such Tax Returns prior to the due date for filing. In
the event that Shareholder and Purchasers are unable to resolve any dispute with
respect to such Tax Return at least ten (10) days prior to the due date for
filing, such dispute shall be resolved pursuant to Section 9.6(e), which
resolution shall be binding on the parties.

(ii) Following the Closing, Purchasers shall cause to be timely filed all Tax
Returns (other than those Tax Returns described in Section 9.6(b)(i)) required
to be filed by the Acquired Subsidiaries after the Closing Date and, subject to
the right to payment from Shareholder and Sellers under Section 9.6(b)(iii), pay
or cause to be paid all Taxes shown due thereon.

(iii) Not later than ten days prior to the due date for the payment of Taxes on
any Tax Returns which Purchasers have the responsibility to cause to be filed
pursuant to Section 9.6(b)(ii), Shareholder and Sellers shall pay to Purchasers
the amount of Taxes, as reasonably determined by Purchasers, owed by Shareholder
and Sellers pursuant to the provisions of Section 9.6(a). No payment pursuant to
this Section 9.6(b)(iii) shall excuse Shareholder and Sellers from their
indemnification obligations pursuant to Section 9.6(a) if the amount of Taxes as
ultimately determined (on audit or otherwise) for the periods covered by such
Tax Returns exceeds the amount of the Shareholder’s and Sellers’ payment under
this Section 9.6(b)(iii).

(c) Straddle Period Tax Allocation. Sellers and the Acquired Subsidiaries will,
unless prohibited by applicable Law, close the taxable period of the Acquired
Subsidiaries as of Effective Time. If applicable Law does not permit an Acquired
Subsidiary to close its taxable year at the Effective Time or in any case in
which a Tax is assessed with respect to a taxable period which includes the
Effective Time (but does not begin or end at that time) (a “Straddle Period”),
the Taxes, if any, attributable to a Straddle Period shall be allocated (i) to
Sellers for the period up to and including the Effective Time, and (ii) to
Purchasers for the period subsequent to the Effective Time. Any allocation of
income or deductions required to determine any Taxes attributable to a Straddle
Period shall be made by means of a closing of the books and records of Sellers
and the Subsidiaries as of Effective Time, provided that exemptions, allowances
or deductions that are calculated on an annual basis (including, but not limited
to, depreciation and amortization deductions) shall be allocated between the
period ending on the Effective Time and the period after the Effective Time in
proportion to the number of days in each such period.

64

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

 

(d) Transfer Taxes. Except as set forth on Exhibit G, Purchasers shall be liable
for and shall pay (and shall indemnify and hold harmless the Shareholder
Indemnified Parties against) all sales, use, stamp, documentary, filing,
recording, transfer or similar fees or taxes or governmental charges as levied
by any Governmental Body (including any interest and penalties) in connection
with the Transactions. If required by Law, Purchaser shall remit to the
appropriate Governmental Body any Goods and Services Tax applicable with respect
to the Transactions pursuant to the Excise Tax Act (Canada), or any successor,
harmonized or parallel federal or provincial legislation that imposes a tax on
the recipient of goods and services. The registration number of Sealweld Canada
for purposes of the GST is 876247362 RT001 and the registration number for
Chisholm is 815642467 RT001. The Sellers and the Purchasers shall file all forms
and take all actions necessary to eliminate or reduce the GST payable in
connection with the Transactions.

(e) Disputes. Any dispute as to any matter covered hereby shall be resolved by
an Arbiter appointed in the manner set forth in Section 3.3. The fees and
expenses of such accounting firm shall be borne equally by Shareholder, on the
one hand, and Purchasers on the other. If any dispute with respect to a Tax
Return is not resolved prior to the due date of such Tax Return, such Tax Return
shall be filed in the manner which the party responsible for preparing such Tax
Return deems correct.

(f) Time Limits. Any claim for indemnity with respect to matters set forth under
this Section 9.6 may be made at any time prior to sixty (60) days after the
expiration of the applicable Tax statute of limitations with respect to the
relevant taxable period (including all periods of extension, whether automatic
or permissive).

(g) Mutual Cooperation. Purchasers and Shareholder will cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of Tax Returns of Acquired Subsidiaries and any audit or other action
with respect to Taxes. Such cooperation will include the retention and (upon the
other party’s request) the provision of records and information reasonably
relevant to any such audit or action and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Purchasers will retain all books and records
with respect to Tax matters pertinent to Shareholder relating to any taxable
period beginning before the Effective Time until expiration of the statute of
limitations of the respective taxable periods and to give Shareholder written
notice prior to transferring, destroying or discarding any such books and
records and, if Shareholder so requests, Purchasers shall allow Shareholder to
take possession of such books and records prior to destroying or discarding
them. Purchasers and Shareholder further agree, upon request, to use their
commercially reasonable best efforts to obtain any certificate or other document
from any Governmental Body or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
Transactions).

9.7 Tax Treatment of Indemnity Payments. To the extent permitted by Law,
Shareholder and Purchasers agree to treat any indemnity payment made pursuant to
this Article IX as an adjustment to the Purchase Price for all Tax purposes.

65

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

 

9.8 Canadian Tax Elections. The Parties shall use their best efforts in good
faith to minimize (or eliminate) any taxes payable under the Tax Act and Excise
Tax Act (Canada) in respect of the Closing by, among other things, making such
elections and taking such steps as may be provided for under that Act
(including, for greater certainty, making a joint election in a timely manner
under Section 167 of the Excise Tax Act (Canada) and subsections 20(24) and
22(1) of the Tax Act) as may reasonably be requested by Purchasers in connection
with the Closing.

Article X

TERMINATION

10.1 Termination of Agreement. This Agreement may be terminated prior to the
Closing as follows:

(a) by written consent of Sealweld Canada and Purchasers;

(b) upon written notice from either Sealweld Canada or Purchasers to the other
on or after March 31, 2017, if the Closing shall not have occurred by the close
of business on such date, provided that the terminating party is not in material
default of any of its obligations hereunder;

(c) by written notice from Purchasers to Sealweld Canada that there has been,
and describing in reasonable detail an event, change, occurrence or
circumstance, individually or in the aggregate with any such events, changes,
occurrences or circumstances that has had or could reasonably be expected to
have a Material Adverse Effect;

(d) by Sealweld Canada or Purchasers if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
Transactions; it being agreed that the parties hereto shall promptly appeal any
adverse determination which is not nonappealable (and pursue such appeal with
reasonable diligence); provided, that the right to terminate this Agreement
under this Section 10.1(d) shall not be available to a party if such Order was
primarily due to the failure of such party to perform any of its obligations
under this Agreement;

(e) by Purchasers if Shareholder or any Seller shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, or if any representation or warranty of Shareholder or
any Seller shall have become untrue, in either case such that the conditions set
forth in Sections 8.1(a) or 8.1(b) would not be satisfied and such breach is
incapable of being cured or, if capable of being cured, shall not have been
cured within ten (10) days following receipt by Sealweld Canada of notice of
such breach from Purchasers;

(f) by Sealweld Canada if Purchasers shall have breached or failed to perform
any of their representations, warranties, covenants or agreements set forth in
this Agreement, or if any representation or warranty of Purchasers shall have
become untrue, in either case such that the conditions set forth in Sections
8.2(a) or 8.2(b) would not be satisfied and such breach is

66

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

 

incapable of being cured or, if capable of being cured, shall not have been
cured within ten (10) days following receipt by Purchasers of notice of such
breach from Sealweld Canada; or

(g) by Purchasers pursuant to Article XI.

10.2 Procedure Upon Termination. In the event of termination and abandonment by
Purchasers or Sealweld Canada, or both, pursuant to Section 10.1, written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the purchase of the Purchased Assets hereunder
shall be abandoned, without further action by Purchasers, Sellers or
Shareholder.

10.3 Effect of Termination. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of
their duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Purchasers,
Shareholder or Sellers; provided, that the obligations of the parties set forth
in this Section 10.3, Article XII, Section 7.1, Section 7.7 and Section 7.15
hereof shall survive any such termination and shall be enforceable hereunder;
provided further, that nothing in this Section 10.3 shall relieve Purchasers,
Shareholder or Sellers of any Liability for a breach of this Agreement prior to
the effective date of termination.

Article XI

REAL PROPERTY MATTERS

11.1 Title. (a) Title Documents. Purchasers may order, at their own expense, (i)
one or more ALTA leasehold title commitments or ALTA fee title commitments, as
applicable, for title insurance for the Owned Property and Improvements (the
“Commitment”) issued by FCT Insurance Company Ltd. and First American Title
Insurance Company (collectively, the “Title Company”), and (ii) a survey of the
Owned Property (the “Survey”) conforming to one or more of the 2011 ALTA/ACSM
Land Urban survey requirements. The Commitment and Survey together with all
exception documents referred to in the Commitment are collectively referred to
in this Agreement as the “Title Documents.” Sellers have delivered to
Purchasers, to the extent in the possession of Sellers or their agents or
attorneys, copies of any existing title insurance policies and surveys for the
Owned Property (“Existing Surveys”).

(b) Permitted Variances. On the Closing Date, title to the Owned Property shall
be subject to no facts, conditions, requirements or exceptions, excepting only
(i) Permitted Exceptions, (ii) the Owned Property Leases, and (iii) liens,
encumbrances or other matters of title created or suffered to be created by
Purchasers or any party whose rights derive by, through or under Purchasers
(collectively, the “Permitted Variances”).

(c) Notice of Objection. Purchasers shall have the right, in their sole
discretion, to object to any fact, condition, requirement or exception set forth
or otherwise disclosed in the Title Documents other than the Permitted Variances
set forth in clauses (i), (iii), (iv) and (v) in Section 11.1(b) above, upon
written notice given to Chisholm (“Notice of Objection”) no later than five
Business Days prior to Closing. Subject to Section 11.1(d) below, Purchasers
shall be deemed to have accepted any fact, condition, requirement or exception
reflected in the Title Documents which is not specifically objected to in a
timely manner in a Notice of Objection.

67

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

 

(d) Chisholm’s Title Rights and Obligations. Chisholm shall have the right, in
its sole discretion, and upon written notice to Purchasers given within five (5)
Business Days after the receipt of any Notice of Objection shall have been
received by Chisholm, or such longer period as agreed to in writing between
Chisholm, Sellers and Purchasers (the “Reply Period”), within which to agree to
satisfy or cure any title objection so noticed by Purchasers. Chisholm shall be
deemed to have refused to satisfy or cure, as the case may be, any and each
fact, condition, requirement and/or exception so noticed by Purchasers for which
no such notice of cure (“Notice of Cure”) shall be given within the Reply
Period. Notwithstanding the foregoing, and without the requirement that any
Notice of Objection be given by Purchasers, Chisholm hereby agrees as follows:

(i) On the Closing Date, to deliver to the Title Company all appropriate
substantiation of the existence, good standing, power and authority of Chisholm;

(ii) On the Closing Date, to deliver to the Title Company (a) a standard seller
affidavit in a form reasonably acceptable to Chisholm and Purchasers (such form
to be determined by the parties prior to the end of the Inspection Period),
sufficient in order to delete exceptions based upon rights or claims of parties
in possession, exceptions for mechanics liens, and exceptions for any gap
between the effective date of the title commitment issued to Purchasers and the
Closing Date, and (b) if requested by Purchasers, with respect to one or more
Existing Surveys, an affidavit that there have not been any changes to the
matters depicted on such Existing Surveys (to the extent true); and

(iii) On the Closing Date, (x) cause to be paid and satisfied in full and
released of record any and all mortgage or deed of trust liens granted by any
Seller and all delinquent real estate taxes, if any, together with any and all
interest and penalties thereon, if any, and (y) to pay and satisfy in full, or
otherwise cause to be affirmatively insured (either by obtaining a full release
of record of, or bonding over, indemnifying or escrowing with the Title
Company), mechanics’ and materialmen’s liens and/or notices of liens filed
against the Owned Property or any portion of the Owned Property and arising out
of work performed or materials supplied for or on behalf of Sellers, and other
monetary judgments and/or actions at law against any Seller and constituting a
lien against the Owned Property or any portion of the Owned Property, it being
understood that Sellers may, at their sole discretion, apply the Purchase Price,
or any portion thereof to satisfy Sellers’ obligations under this clause (iii).

(e) Purchasers Rights. If Chisholm shall not give a Notice of Cure with respect
to each fact, condition, requirement and/or exception which is the subject of
any proper Notice of Objection, Purchasers thereupon shall have the right in the
sole discretion of Purchasers and as Purchasers’ exclusive right and remedy
hereunder to elect to terminate this Agreement within five (5) Business Days
after the expiration of the Reply Period, in which event this Agreement shall
terminate, and none of Shareholder, Sellers nor Purchasers shall have any
further rights against or obligations to the other hereunder except as expressly
provided in this Agreement, it being agreed that, if Purchasers for any reason
shall fail to timely terminate this Agreement, then Purchasers conclusively
shall be deemed to have elected to close hereunder without abatement of the
Purchase Price or any claim against Sellers notwithstanding the existence of
such fact,

68

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

 

condition, requirement and/or exception, except for any matters required to be
cured by Sellers pursuant to subsection (iii) of Section 11.1(d). In the event
Chisholm shall give a Notice of Cure and agrees to satisfy, correct, cure or
remove any fact, condition, requirement and/or exception which is the subject of
any proper Notice of Objection, and thereafter Chisholm fails to satisfy,
correct, cure or remove such fact, condition, requirement and/or exception,
Purchasers shall have the right to terminate this Agreement.

11.2 Casualty or Condemnation.

(a) If, prior to Closing, any Owned Property and the associated Improvements or
any part thereof shall be subject to a taking by any public or quasi-public
authority through expropriation, condemnation, eminent domain or otherwise
(including, but not limited to, any transfer made in lieu of or in anticipation
of the exercise of such taking) (collectively, “Condemnation”), and Chisholm
reasonably estimates the proceeds from such Condemnation to be in excess of two
hundred fifty thousand dollars ($250,000) (a “Major Condemnation Event”),
Chisholm shall promptly provide Purchasers with notice thereof and Purchasers
shall have the option, exercisable within ten (10) days after Chisholm notifies
Purchasers of such Condemnation to terminate this Agreement. If Purchasers elect
to consummate the Transactions or if Purchasers do not have the right to
terminate the Agreement because the Condemnation is not a Major Condemnation
Event, at the Closing, Purchasers, shall succeed to (x) the rights of the
applicable Seller to the Condemnation proceeds with respect to a Condemnation
(“Condemnation Proceeds”), and (y) the rights to settle any such Condemnation
proceeding, and Purchasers shall, at Closing succeed to the rights of the
applicable Seller to all required proofs of loss, assignments of claims and
similar items. Sellers shall not settle any such proceedings without the consent
of Purchasers. Sellers’ compliance with this Section 11.2(a) shall cure any
breach of covenant or inaccuracy of any representation and warranty arising as a
result of a Major Condemnation Event.

(b) Prior to Closing, Sellers shall bear the risk of loss with respect to the
Purchased Assets. If, prior to Closing, any Owned Property and the associated
Improvements or any part thereof shall be destroyed or damaged by fire or other
casualty (collectively, “Casualty”), and Chisholm reasonably estimates the costs
to repair to damage from such Casualty to be in excess of two hundred fifty
thousand dollars ($250,000) (a “Major Casualty Event”), Chisholm shall promptly
provide Purchasers with notice thereof and Purchasers shall have the option,
exercisable within ten (10) days after Chisholm notifies Purchasers of such
Casualty either (i) to terminate this Agreement, or (ii) to elect to take title
to the Purchased Assets relating to such affected Owned Property and
Improvements without any reduction in, abatement of, or credit against the
Purchase Price, notwithstanding such Casualty; if Purchasers fail to make either
election, Purchasers shall be deemed to have elected option (ii). If Purchasers
elect to consummate the Transactions or in the event Purchaser do not have the
right to terminate this Agreement because such Casualty is not a Major Casualty
Event, at the Closing, Purchasers, shall succeed to (x) the rights of the
applicable Seller to the Casualty proceeds with respect to such Major Casualty
Event (“Casualty Proceeds”), including without duplication, giving Purchasers a
credit against the Purchase Price in the amount of the Casualty Proceeds
actually received by the applicable Seller and not applied by the applicable
Seller to repair prior to Closing and giving Purchasers a credit against the
Purchase Price for all deductibles payable under the applicable insurance
policy(ies) relating to such event to the extent not previously paid

69

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

 

by Sellers (it being agreed that Sellers shall be responsible for the payment in
full of all applicable deductibles or Purchasers shall receive a credit to the
Purchase Price at Closing for the amount of all such deductibles), and (y) the
rights to settle any loss under all policies of insurance applicable to the
Casualty, and Purchasers shall, at Closing and thereafter, succeed to the rights
of Sellers to all required proofs of loss, assignments of claims and other
similar items. Sellers shall not settle any such claims without the consent of
Purchasers. Sellers’ compliance with this Section 11.2(b) shall cure any breach
of covenant or inaccuracy of any representation and warranty arising as a result
of a Major Casualty Event.

Article XII

MISCELLANEOUS

12.1 Expenses. Except as otherwise provided in this Agreement, Sellers,
Shareholder and Purchasers shall each bear their own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the Transactions.

12.2 Specific Performance. Sellers and Shareholder acknowledge and agree that a
breach of this Agreement would cause irreparable damage to Purchasers and that
Purchasers will not have an adequate remedy at law. Therefore, the obligations
of Sellers and Shareholder under this Agreement, including Sellers’ obligation
to sell the Purchased Assets to Purchasers, shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.

12.3 Submission to Jurisdiction; Consent to Service of Process.

(a) The parties hereto hereby irrevocably submit to the exclusive jurisdiction
of the courts of the Province of Alberta, and all courts of appeal therefrom,
over any dispute arising out of or relating to this Agreement or any of the
Transactions, and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.

(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any Legal Proceeding by delivery of a copy thereof in
accordance with the provisions of Section 12.6.

12.4 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto), the FZE Asset Purchase Agreement, the Consulting
Agreement, the Noncompetition Agreement, the Shareholder Documents, the Seller

70

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

 

Documents and the Purchaser Documents represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No oral statements or prior written material
not specifically incorporated in this Agreement shall be of any force and
effect. The parties hereto represent and acknowledge that in executing this
Agreement, the parties did not rely, and have not relied, on any communications,
promises, statements, inducements, or representation(s), oral or written, by any
other party hereto, except as expressly contained in this Agreement. No action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by Law.

12.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Alberta applicable to contracts made and performed
in such province, without regard to any conflict-of-law principles thereof.

12.6 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (i) when delivered personally by hand (with
written confirmation of receipt), (ii) when sent by email (with written
confirmation of transmission) or (iii) one Business Day following the day sent
by overnight courier (with written confirmation of receipt), in each case at the
following addresses and fax numbers (or to such other address or fax number as a
party may have specified by notice given to the other party pursuant to this
provision):

 

If to Shareholder or any Seller:

Dean Chisholm

#513, 9805 Second Street

Sidney, British Columbia V8L 4T9 CANADA

 

With a copy (which shall not constitute notice) to:

Hadley & Davis

#311, 1711 - 4 Street SW

Calgary, Alberta

T2S 1V8

CANADA

403-264-1234 (tel)

Email: scdavis@hadleydavis.com

71

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

 

Attention: Stephen C. Davis

 

If to Purchasers or to any single entity comprising Purchaser, to:

KMG Chemicals, Inc.

300 Throckmorton Street, Floor 19
Fort Worth, Texas 76102
USA

Email: cfraser@kmgchemicals.com
Attention: President & CEO

 

With a copy (which shall not constitute notice) to:

Haynes and Boone, LLP

1221 McKinney Street, Suite 2100
Houston, Texas 77010

USA

Fax: Bill.Nelson@HaynesBoone.com
Attention: William B. Nelson, Esq.

12.7 Severability. If any term, other provision or part thereof of this
Agreement is determined to be invalid, illegal, or incapable of being enforced
by any law or public policy by an arbitrator or any court of competent
jurisdiction from which no appeal exists or is taken, that term, provision or
part thereof will be severed from this Agreement and all other terms or
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected
in any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the Transactions are consummated as originally
contemplated to the greatest extent possible.

12.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement
except as provided in Sections 9.2 and 9.6. No assignment of this Agreement or
of any rights or obligations hereunder may be made by any Seller, Shareholder or
any Purchaser (by operation of Law or otherwise) without the prior written
consent of the other parties hereto and any attempted assignment without the
required consents shall be void; provided, that Purchasers may assign this
Agreement and any or all rights or obligations hereunder (including Purchasers’
rights to purchase the Purchased Assets and Purchasers’ rights to seek
indemnification hereunder) to any Affiliate of Purchasers, any Person from which
it has borrowed money or any Person to which Purchasers or any of their
Affiliates proposes to sell all or substantially all of the Purchased Assets.
Upon any such permitted assignment, the references in this Agreement to
Purchasers shall also apply to any such assignee unless the context otherwise
requires.

72

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

 

12.9 Counterparts. This Agreement may be executed in one or more counterparts,
and delivered by facsimile and each counterpart when so delivered will be deemed
to be an original copy of this Agreement, all of which, when taken together,
will be deemed to constitute one and the same agreement. Any party hereto
delivering this Agreement by facsimile undertakes to deliver, within a
reasonable time, an executed original.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

73

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

 

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

 

KMG CHEMICALS, INC.

 

KMG ELECTRONIC CHEMICALS

 

 

 

 

LUXEMBOURG HOLDINGS S.A.R.L

 

 

 

 

 

 

 

By:

 

/s/ Christopher T. Fraser

 

By:

 

/s/ Roger C. Jackson

Name:

 

Christopher T. Fraser

 

Name:

 

Roger C. Jackson

Title:

 

President and Chief Executive Officer

 

Title:

 

Authorized Representative

 

 

 

 

 

 

 

KMG INDUSTRIAL LUBRICANTS

 

 

 

 

CANADA, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Christopher T. Fraser

 

 

 

 

Name:

 

Christopher T. Fraser

 

 

 

 

Title:

 

President and Chief Executive Officer

 

 

 

 

 

signature page to Asset Purchase Agreement

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

 

 

SEALWELD CORPORATION

 

CHISHOLM ASSET CORPORATION

 

 

 

 

 

 

 

By:

 

/s/ Andrea Arient

 

By:

 

/s/ Andrea Arient

Name:

 

Andrea Arient

 

Name:

 

Andrea Arient

Title:

 

President

 

Title:

 

President

 

 

 

 

 

 

 

SEALWELD CORPORATION (FZE)

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Dean Chisholm

 

/s/ Dean Chisholm

Name:

 

Dean Chisholm

 

DEAN CHISHOLM

Title:

 

President

 

 

 

 

 

signature page to Asset Purchase Agreement