STOCK PURCHASE AGREEMENT
 
by and among
 
DXP ENTERPRISES, INC.,
 
PRECISION INDUSTRIES, INC.
 
and
 
THE SELLING STOCKHOLDERS
 

 
______________________
 

 
Dated as of August 19, 2007
 
 
 

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STOCK PURCHASE AGREEMENT
 
This STOCK PURCHASE AGREEMENT, dated August 19, 2007 (the “Agreement”), by and
among DXP Enterprises, Inc., a corporation existing under the laws of Texas
(“Purchaser”), Precision Industries, Inc., a Nebraska corporation, (the
“Company”), and the stockholders of the Company listed on the signature pages
hereof under the heading “Selling Stockholders” (collectively, the “Selling
Stockholders”).

W I T N E S S E T H:
 
WHEREAS, the Selling Stockholders own an aggregate of (i) 472 shares of Common
Stock, Class A, $100.00 par value per share (the “Class A Shares”), of the
Company and (ii) 160 shares of Common Stock, Class B, $100.00 par value per
share (the “Class B Shares”; and collectively with the Class A Shares, the
“Shares”), which collectively constitute all of the issued and outstanding
shares of capital stock of the Company;
WHEREAS, the Selling Stockholders desire to sell to Purchaser, and Purchaser
desires to purchase from the Selling Stockholders, the Shares for the purchase
price and upon the terms and conditions hereinafter set forth; 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:

DEFINITIONS
Certain Definitions.  For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 1.1:
“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.
“Business” means the business and operations of the Company and its Subsidiaries
as held by Purchaser separate or separable from the other business and
operations of the Purchaser and its subsidiaries (other than the Company and its
Subsidiaries) from and after the Closing in accordance with Schedule 2.8 hereof.
“Business Day” means any day of the year on which national banking institutions
in Texas or Nebraska are open to the public for conducting business and are not
required or authorized to close.
“Closing Bonuses” means the bonuses and payments in an aggregate amount of
approximately $3,500,000 processed for payment through the payroll of the
Company on the Closing Date (and promptly paid in accordance with such payroll
process) to current officers and employees of the Company with such bonuses and
payments reducing the Purchase Price as contemplated under Section 2.2 hereof as
a result of the transactions contemplated hereby.
“Closing Working Capital” means (A) the consolidated Included Current Assets of
the Company and the Subsidiaries, less (B) the consolidated Included Current
Liabilities of the Company and the Subsidiaries, determined as of the open of
business on the Closing Date.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Transaction Expenses” means, except as otherwise expressly set forth in
this Agreement, the aggregate amount of all out-of-pocket fees and expenses,
incurred by or on behalf of, or paid or to be paid by, the Company or any of the
Subsidiaries in connection with the process of selling the Company (including in
respect of any previous efforts (not pursuant to this Agreement) to sell the
Company or all or substantially all of its assets) or otherwise relating to the
negotiation, preparation or execution of this Agreement or any documents or
agreements contemplated hereby or the performance or consummation of the
transactions contemplated hereby, including (A) any fees and expenses associated
with obtaining necessary or appropriate waivers, consents or approvals of any
Governmental Body or third parties on behalf of the Company or any of the
Subsidiaries, (B) any fees or expenses associated with obtaining the release and
termination of any Liens; (C) all brokers’ or finders’ fees; (D) fees and
expenses of counsel, advisors, consultants, investment bankers, accountants, and
auditors and experts, and (E) all sale, “stay-around,” retention, or similar
bonuses or payments to current or former directors, officers, employees and
consultants paid as a result of or in connection with the transactions
contemplated hereby, but shall not include the amount of Closing Bonuses (that
are paid in accordance with the requirements of such defined term).
“Contract” means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license, commitment or other arrangement, understanding,
undertaking, commitment or obligation.
“Controlling Owner” means Dennis P. Circo.
“DXP Business” means the business and operations of Purchaser and its
subsidiaries, as distinct and separate from the Company and its Subsidiaries
(and as held by Purchaser separate or separable therefrom from and after the
Closing in accordance with Schedule 2.8 hereof).
“EBITDA” means, for any applicable period, the net income (or loss) of the
Business excluding (a) extraordinary items and/or non-operating items and/or
non-cash items to the extent increasing net-income, (b) provisions for taxes
based on income of the Business, (c) total interest expense of the Business with
respect to indebtedness held by or for the benefit of the Business, (d) to the
extent that net income of the Business has been reduced thereby, depreciation
expense, and (e) to the extent that net income for the Business has been reduced
thereby, amortization expense, all as determined 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 Company’s audited Financial Statements for the
most recent fiscal year end.
“Environmental Costs and Liabilities” means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages
(including punitive damages and consequential damages) costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person or in response to any violation of Environmental Law, whether
accrued or contingent, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or otherwise, to the
extent based upon, related to, or arising under or pursuant to any Environmental
Law, Environmental Permit, Order or agreement with any Governmental Body or
other Person, which relates to any environmental, health or safety condition,
violation of Environmental Law or a Release or threatened Release of Hazardous
Materials.
“Environmental Law” means any Law in any way relating to the protection of human
health and safety, the environment or natural resources including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 etseq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
§ 1801 etseq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901
etseq.), the Clean Water Act (33 U.S.C. § 1251 etseq.), the Clean Air Act
(42 U.S.C. § 7401 etseq.) the Toxic Substances Control Act (15 U.S.C. § 2601
etseq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
etseq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 etseq.), as
each has been or may be amended and the regulations promulgated pursuant
thereto.
“Environmental Permit” means any Permit required by Environmental Laws for the
operation of the Company and the Subsidiaries.
“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.
“GAAP” means generally accepted accounting principles in the United States as of
the date hereof.
“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
“Hazardous Material” means any substance, material or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words
of similar meaning or effect, including petroleum and its by-products, asbestos,
polychlorinated biphenyls, radon, mold and urea formaldehyde insulation.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
“Included Current Assets” means cash and cash equivalents, accounts receivable,
other receivables, inventory, deposits and prepaid expenses, 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 Company’s audited Financial Statements for the most recent fiscal year end
as if such accounts were being prepared and audited as of a fiscal year end;
provided, however, that such determination shall be subject to the exceptions
and other qualifications as set forth on Schedule 2.7 hereto.
“Included Current Liabilities” means accounts payable and accrued expenses, but
excluding the current portion of long term Indebtedness, 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 Company’s audited Financial Statements for the most recent fiscal year end
as if such accounts were being prepared and audited as of a fiscal year end;
provided, however, that (i) such determination shall be subject to the
exceptions and other qualifications as set forth on Schedule 2.7 hereto and (ii)
such Liabilities shall exclude the amount of Closing Bonuses (that are paid in
accordance with the requirements of such defined term).
“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 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 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).  The term “Indebtedness” does not
include trade accounts payable and other accrued current liabilities arising in
the Ordinary Course of Business (other than the current liability portion of any
indebtedness for borrowed money).
“Indemnity Escrow Account” means an account, set up pursuant to the Escrow
Agreement, where the Indemnity Escrow Amount is held for disbursement by the
Escrow Agent.
“Intellectual Property” means any rights available (including with respect to
Technology) under patent, copyright, trade secret or trademark law or any other
similar statutory provision or common law doctrine in the United States or
anywhere else in the Territory, and also domain names.
“IRS” means the Internal Revenue Service.
“Knowledge” means, with respect to any Person that is not an individual, the
knowledge of such Person’s chief executive officer, president, chief operating
officer and chief financial officer or, in the case of an individual, knowledge
after due inquiry of the Company’s and the Subsidiaries’ books and records.
“Law” means any foreign, federal, state or local law (including common law),
statute, code, ordinance, rule, regulation, Order or other requirement.
“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, mediation, investigation, inquiry, proceedings or claims (including
counterclaims) by or before a Governmental Body.
“Liability” means any debt, loss, damage, adverse claim, fines, penalties,
liability or obligation (whether direct or indirect, absolute or contingent,
accrued or unaccrued, matured or unmatured, determined or determinable,
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, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
“Material Adverse Effect” means a material adverse effect on (i) the historical,
near-term or long-term projected business, assets, properties, results of
operations, condition (financial or otherwise) or prospects of the Company or
the Subsidiaries, (ii) the financial, banking, capital markets or general
economic conditions, (iii) regulatory or political conditions, or securities
markets in the United States or worldwide or any outbreak of hostilities,
terrorist activities or war, or any material worsening of any such hostilities,
activities or war underway as of the date hereof or (iv) the ability of the
Selling Stockholders to consummate the transactions contemplated by this
Agreement or perform their obligations under this Agreement or the Selling
Stockholder Documents; provided, in each case, that any such effect has a
non-annualized negative impact on the EBITDA of the Company and its Subsidiaries
in an amount of at least $750,000.
“Order” means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of  operations
of the business of the Company and the Subsidiaries through the date hereof
consistent with past practice (including, without limitation, operations as
conducted and reflected in the Company’s audited Financial Statements for the
most recent fiscal year).
“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.
“Permitted Exceptions” means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been delivered or made available to Purchaser; (ii)
statutory liens for current Taxes, assessments or other governmental charges not
yet delinquent or the amount or validity of which is being contested in good
faith by appropriate proceedings, provided an appropriate reserve has been
established herefore in the Financial Statements in accordance with GAAP; (iii)
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 Company Property so encumbered and that are not
resulting from a breach, default or violation by the Company or any of the
Subsidiaries of any Contract or Law; and (iv) 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.
“Pre-Closing Covenant” means a covenant or other agreement set forth in this
Agreement that by its nature is required to be performed by or prior to the
Closing.
“Precision de Mexico” means Precision Industries de Mexico, S. de R.L. de C.V.
“Program Synergies” means the dollar amount of actual and realized incentives,
commissions and rebates based upon, attributable to, resulting and accrued from
Alliance Marketing Commissions, inventory purchasing incentive and other rebate
programs provided by suppliers of inventory purchases of the Company and its
Subsidiaries (whether arising from programs that are new to Purchaser due to the
purchase of the Company and its Subsidiaries hereunder or from existing programs
in which the DXP Business currently participates (which are evidenced in
documentation provided by Purchaser to the Controlling Owner), except that only
the incremental Alliance Marketing Commissions, incentive, and rebate revenue
provided thereby shall be counted for existing programs in which the DXP
Business participates) that become available and accrue to the benefit of the
DXP Business from and after the Closing.
“Release” means any release, spill, emission, leaking, pumping, poring,
injection, deposit, dumping, emptying, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, or into or out of any
property.
“Remedial Action” means all actions including any capital expenditures
undertaken to (i) clean up, remove, treat or in any other way address any
Hazardous Material; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv) to correct a condition of
noncompliance with Environmental Laws.
“Securities Act” means the Securities Act of 1933, as amended.
“Software” means any and all computer programs, whether in source code or object
code; databases and compilations, whether machine readable or otherwise;
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing; and 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 the Company or (ii) the Company is entitled, directly or
indirectly, to appoint a majority of the board of directors, board of managers
or comparable body of such Person.
“Target Working Capital” means an amount equal to $41,940,112.
“Taxes” means (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including all income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all 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 transferee liability in respect of any items described
in clauses (i) 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 of any analogous or similar provision under
Law) or otherwise.
“Taxing Authority” means the IRS an any other Governmental Body responsible for
the administration of any Tax.
“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, 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 the Company, any of the
Subsidiaries, or any of their Affiliates.
“Technology” means, collectively, designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, results of research and development,
Software, tools, data, inventions, apparatus, creations, improvements, works of
authorship and other similar materials, and all recordings, graphs, drawings,
reports, analyses, and other writings, and any other embodiments of the above,
in any form whether or not specifically listed herein, and all related
technology, that are used, incorporated, or embodied in or displayed by any of
the foregoing or used in the design, development, reproduction, sale, marketing,
maintenance or modification of any of the foregoing.
“Territory” means the territory comprised by the geographic locations (whether
of metropolitan areas, counties, parishes or other relevant political
subdivisions) of Canada, Mexico and the United States in which the Company and
its Subsidiaries have conducted business and operations, including, without
limitation, those locations into which the Company and its Subsidiaries have
made contact with any actual or prospective customer or supplier or otherwise
sought business arrangements or a relationship.
“Trust” means the “Dennis P. Circo Irrevocable Trust No. 4”, which is a Selling
Stockholder hereunder.
“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as
amended.
 
1.1           Terms Defined Elsewhere in this Agreement.  For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
 
Term
Section
Acquisition Transaction
6.6(a)
Agreement
Recitals
Allocation Statement
8.5(b)(iv)
Antitrust Division
6.4(a)
Antitrust Laws
6.4(b)
Balance Sheet
4.7(a)
Balance Sheet Date
4.7(a)
Cap
8.4(c)
Class A Shares
Recitals
Class B Shares
Recitals
Closing
2.4
Closing Balance Sheet
2.7(b)
Closing Date
2.4
Closing Working Capital Statement
2.7(b)
COBRA
4.15(p)
Common Stock
4.4(a)
Company
Recitals
Company Documents
4.2
Company Permits
4.18(b)
Company Plans
4.15(a)
Company Properties
4.11(b)
Confidential Information
6.7(c)
Confidentiality Agreement
6.1
Covenant Basket
8.4(b)
Distributable Assets
6.2(c)
Employees
4.15(a)
ERISA Affiliate
4.15(a)
Escrow Agent
8.6
Escrow Agreement
8.6
Expenses
9.3
Final Closing Working Capital
2.7(c)
Financial Statements
4.7(a)
Financing
5.7
FIRPTA Affidavit
2.6(h)
FTC
6.4(a)
Government Contract
4.28
Indemnity Escrow Amount
8.6
Losses
8.2(a)
Material Contracts
4.14(a)
Multiemployer Plan
4.15(a)
PBGC
4.15(i)
Personal Property Leases
4.12(b)
Purchase Price
2.2
Purchaser
Recitals
Purchaser Documents
5.2
Purchaser’s Environmental Assessment
6.10(a)
Purchaser Indemnified Parties
8.2(a)
QSSS
4.10(v)
Real Property Lease
4.11(b)
Related Persons
4.23
Rep Basket
8.4(a)
Rep Deductible
8.4(a)
Representatives
6.6(a)
Restricted Business
6.7(a)
Section 338(h)(10) Election
8.5(b)(i)
Selling Stockholders
Recitals
Selling Stockholder Documents
3.2
Selling Stockholder Indemnified Parties
8.2(b)
Stockholder Representative
10.2(a)
Straddle Period
8.5(d)
Shares
Recitals
Survival Period
8.1(a)
Tax Claim
8.5(e)(i)
Termination Date
9.1(a)
Third Party Claim
8.3(b)
Title IV Plans
4.15(a)
Unresolved Claims
8.6

 
1.2           Other Definitional and Interpretive Matters.  
 
·           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.
Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.
Exhibits/Schedules.  The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this
Agreement.  All Exhibits and Schedules annexed hereto or referred to herein 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.
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.
 
·           The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement 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.
 
SALE AND PURCHASE OF SHARES, PURCHASE PRICE; CLOSING
 
1.3           Sale and Purchase of Shares.  Upon the terms and subject to the
conditions contained herein, on the Closing Date, each Selling Stockholder
agrees to sell to Purchaser, free and clear of any and all Liens, and Purchaser
agrees to purchase from each Selling Stockholder, the Shares owned by such
Selling Stockholder set forth opposite such Selling Stockholder’s name on
Exhibit A hereto.
 
1.4           Purchase Price.  The aggregate purchase price to be paid by
Purchaser for the Shares shall be an amount in cash equal to $106,000,000.00
less an amount equal to (i) any consolidated Indebtedness of the Company and the
Subsidiaries as of the close of business on the day immediately preceding the
Closing Date plus (ii) the amount of Closing Bonuses (such amount as reduced
under clauses (i) and (ii) hereof, the “Purchase Price”), subject to adjustment
as provided under Sections 2.7, 2.8 and 8.7.
 
1.5           Payment of Purchase Price.
 
·           On the Closing Date, Purchaser shall pay the Purchase Price less the
Indemnity Escrow Amount to the Selling Stockholders by wire transfer of
immediately available funds into accounts designated in writing by the Selling
Stockholders not less than three Business Days prior to the Closing Date and
allocated among the Selling Stockholders in accordance with their respective
aggregate percentage ownership of the Shares as set forth on Exhibit A.
 
·           On the Closing Date, Purchaser shall pay the Indemnity Escrow Amount
to the Escrow Agent in cash payable by wire transfer of immediately available
funds for deposit into the Indemnity Escrow Account.  The deposit of the
Indemnity Escrow Amount to the Escrow Agent in accordance with the terms of this
Agreement shall be deemed not to be a failure to pay the Purchase Price
hereunder.
 
·           On the Closing Date, Purchaser (for and on behalf of the Company)
shall pay, by wire transfer of immediately available funds, an amount equal to
the Closing Bonuses to the Company for payment through its payroll system to the
officers and employees of the Company that are the recipients thereof (and the
Company shall be entitled to withhold in respect of such payments to such
officers and employees any employment-related Taxes as required by applicable
federal and state withholding Laws).
 
1.6           Closing Date.  The consummation of the sale and purchase of the
Shares provided for in Section 2.1 hereof (the “Closing”) shall take place at
the offices of McGrath North Mullin & Kratz, PC LLO located at First National
Tower, Suite 3700, 1601 Dodge Street, Omaha, Nebraska 68102-1627 (or at such
other place as the parties may designate in writing) at 10:00 a.m. (Omaha time)
on a date to be 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 VII (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), unless another time, date or place is agreed to
in writing by the parties hereto.
 
1.7           Deliveries Prior to the Closing Date.  No later than three
Business Days prior to the Closing Date, the Company shall deliver to Purchaser
the pay-off letters in respect of Indebtedness to be repaid as of the Closing
and the certificate setting forth an estimate of Indebtedness, each as provided
in the first sentence of Section 6.16.
 
1.8           Deliveries on the Closing Date.  At the Closing, the Selling
Stockholders shall deliver or cause the Company to deliver, as applicable, to
Purchaser:
 
·           copies of resolutions, certified by the Secretary of the Company and
an authorized person of each Selling Stockholder, respectively, as to the
authorization of this Agreement and all of the transactions contemplated hereby;
 
·           copies of the releases from Affiliates of the Company, pursuant to
Section 6.12;
 
·           stock certificates from each of the Selling Stockholders
representing the Shares, duly endorsed in blank or accompanied by stock transfer
powers and with all requisite stock transfer tax stamps attached and otherwise
sufficient to transfer the Shares to Purchaser free and clear of all Liens;
 
·           all documents required to transfer from Controlling Owner to
Purchaser, free and clear of all Liens, all title and ownership of all shares or
other equity interest (with all requisite transfer tax stamps attached and
otherwise sufficient to transfer such shares and equity interest) held by the
Controlling Owner in Precision de Mexico;
 
·           certificates of good standing dated not more than ten (10) Business
Days prior to the Closing Date with respect to the Company issued by the
Secretary of State of the State of Nebraska and for each state in which the
Company is qualified to do business as a foreign corporation and with respect to
each Subsidiary issued by the appropriate governmental official as to the good
standing of such Subsidiary; provided that with respect to Precision de
 
·           Mexico, the Selling Stockholders shall deliver instead a joint
certification from said Subsidiary’s chief executive officer and chief financial
officer stating that as at the Closing Date no action has been taken to dissolve
and liquidate said Subsidiary and that said Subsidiary is in substantial
compliance with its obligations under the Laws of Mexico;
 
·           all instruments and documents necessary to release any and all Liens
other than Permitted Exceptions, including appropriate UCC financing statement
amendments (termination statements);
 
·           the certificate indicating the amount of Indebtedness to be repaid
as of the Closing, pursuant to Section 6.16; and
 
·           affidavits of non-foreign status from each of the Selling
Stockholders that complies with Section 1445 of the Code (a “FIRPTA Affidavit”).
 
1.9           Purchase Price Adjustment.
 
·           Following the Closing, the Purchase Price shall be adjusted as
provided in this Section 2.7 to reflect the difference between Final Closing
Working Capital and Target Working Capital.
 
·           Within ninety (90) days following the Closing Date, (i) Purchaser
shall cause the Company to prepare a consolidated balance sheet of the Company
and the Subsidiaries as of the open of business on the Closing Date (the
“Closing Balance Sheet”) and a statement of Closing Working Capital derived from
the Closing Balance Sheet (the “Closing Working Capital Statement”), and such
prepared Closing Balance Sheet and Closing Working Capital Statement shall be
delivered to the Stockholder Representative and KPMG, LLP, the Company’s
historical auditors and (ii) the Closing Balance Sheet shall be audited by KPMG,
LLP, and KPMG, LLP shall perform the agreed-upon procedures as set forth in
Schedule 2.7(b) hereto in order to determine that the Closing Balance Sheet and
the Closing Working Capital Statement were prepared 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 Company’s
audited Financial Statements for the most recent fiscal year end as if such
Closing Balance Sheet was as of a fiscal year end (provided, however, that such
preparation and determination shall be subject to the limited adjustments,
exceptions and other qualifications as set forth on Schedule 2.7 hereto so that
the Closing Working Capital Statement will be determined on a basis consistent
with the Company’s historical application and interpretations concerning
determination and calculation of working capital).  The Company shall (and
Purchaser shall cause the Company to) instruct KPMG, LLP to provide its report
and any required adjustments pursuant to its audit under clause (ii) of the
immediately preceding sentence prior to the date that is ninety (90) days
following the Closing Date.  Purchaser shall cause the Company to accept any
required adjustments to the Closing Balance Sheet and Closing Working Capital
Statement as set forth in the report from KPMG, LLP, and each thereof, as so
adjusted, shall constitute the final Closing Balance Sheet and Closing Working
Capital Statement for purposes hereof.  Each of Purchaser, on the one hand, and
the Stockholder Representative (on behalf of the Selling Stockholders), on the
other hand, shall pay one-half (1/2) of the fees, costs and expenses of KPMG,
LLP arising in
 
·           connection with such review and audit; provided, however, that
Purchaser’s maximum aggregate responsibility for such fees, costs and expenses
shall not exceed $30,000.  Each of the Company, Selling Stockholders and
Purchaser shall, and shall cause their respective representatives and Affiliates
to, cooperate and assist in the preparation of the Closing Balance Sheet and the
Closing Working Capital Statement and in the conduct of the review referred to
in this Section 2.7(b).  Each of Purchaser and the Stockholder Representative
shall retain their rights to dispute the final Closing Working Capital Statement
hereunder if the procedures and substance of this Section 2.7 are not complied
with.
 
·           The Closing Working Capital as set forth in the Closing Working
Capital Statement, as adjusted in respect of the review and audit of KPMG, LLP,
shall constitute the “Final Closing Working Capital”.  If Final Closing Working
Capital is greater than Target Net Working Capital, then the Purchase Price
shall be increased by the amount of such excess and Purchaser shall pay the
Stockholder Representative an amount equal to such excess together with interest
thereon from the Closing Date to the date of payment.  If Final Closing Working
Capital is less than Target Net Working Capital, then the Purchase Price shall
be decreased by the amount of such deficiency and the Selling Stockholders,
jointly and severally, shall pay Purchaser an amount equal to such deficiency
together with interest thereon from the Closing Date to the date of payment.
 
·           Any payment to be made pursuant to Section 2.7(c) shall be made at a
mutually convenient time and place within five (5) Business Days after the date
on which the applicable amount of such payment has been finally determined.  Any
such payment shall be made by wire transfer of immediately available funds.  For
purposes of Section 2.7(c), applicable interest will be payable at the “prime”
rate, as announced by The Wall Street Journal, Eastern Edition, from time to
time to be in effect, calculated based on a 365 day year and the actual number
of days elapsed.  Any payment to be made by Purchaser to the Selling
Stockholders under Section 2.7(c) shall be made to the Stockholder
Representative, for distribution to the Selling Stockholders in accordance with
their respective pro rata portion of the Purchase Price.
 
1.10           Sellers’ Earn Outs.  In addition to the amounts to be paid by the
Purchaser under Section 2.3 and, if any, Section 2.7, Purchaser shall pay to the
Stockholder Representative (for distribution to the Selling Stockholders in
accordance with their respective pro rata portion of the Purchase Price)
additional amounts as set forth on Schedule 2.8 hereof.
 
REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLING STOCKHOLDERS
 
Each Selling Stockholder, severally and jointly, hereby represents and warrants
to Purchaser that:
 
1.11           Organization and Good Standing.  Such Selling Stockholder (other
than those that are individuals) is a limited liability company or irrevocable
trust duly organized, validly existing and, to the extent such concept is
applicable, in good standing under the laws of
 
1.12           the jurisdiction of its organization and has all requisite
limited liability company or other organizational power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
 
1.13           Authorization of Agreement.  Such Selling Stockholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such Selling Stockholder in
connection with the consummation of the transactions contemplated by this
Agreement (the “Selling Stockholder Documents”), and to consummate the
transactions contemplated hereby and thereby.  The execution, delivery and
performance of this Agreement and each of the Selling Stockholder Documents, and
the consummation of the transactions contemplated hereby and thereby, has been
duly authorized and approved by all required action on the part of such Selling
Stockholder.  This Agreement has been, and each of the Selling Stockholder
Documents will be at or prior to the Closing, duly and validly executed and
delivered by such Selling Stockholder and (assuming due authorization, execution
and delivery by Purchaser) this Agreement constitutes, and each of the Selling
Stockholder Documents when so executed and delivered will constitute, legal,
valid and binding obligations of such Selling Stockholder, enforceable against
such Selling Stockholder in accordance with its terms.
 
1.14           Conflicts; Consents of Third Parties.
 
·           None of the execution and delivery by such Selling Stockholder of
this Agreement or the Selling Stockholder Documents, the consummation of the
transactions contemplated hereby or thereby, or compliance by such Selling
Stockholder 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) with respect to those Selling Stockholders that are not
individuals, the articles of organization and operating agreement or comparable
organizational documents of such Selling Stockholder; (ii) any Contract, or
Permit to which any Selling Stockholder is a party or by which any of the
properties or assets of such Selling Stockholder are bound; (iii) any Order of
any Governmental Body applicable to such Selling Stockholder or by which any of
the properties or assets of such Selling Stockholder are bound; or (iv) any
applicable Law.
 
·           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 Selling Stockholder in connection with the
execution and delivery of this Agreement, the Selling Stockholder Documents, the
compliance by such Selling Stockholder with any of the provisions hereof, or the
consummation of the transactions contemplated hereby, except for compliance with
the applicable requirements of the HSR Act.
 
1.15           Ownership and Transfer of Shares.  Such Selling Stockholder is
the record (other than the Trust, of which Christopher W. Circo is the
beneficial owner) and beneficial owner of the Shares indicated as being owned by
such Selling Stockholder on Exhibit A, free and clear of any and all
Liens.  Such Selling Stockholder has the power and authority to sell, transfer,
assign and deliver such Shares as provided in this Agreement, and such delivery
will
 
1.16           convey to Purchaser good and marketable title to such Shares,
free and clear of any and all Liens.  No payments made to the Selling
Stockholders, who are (or were) employees of the Company, under this Agreement
are subject to reduction for employment-related Taxes as required by applicable
federal and state withholding Laws.
 
1.17           Litigation.  There is no Legal Proceeding pending or, to the
Knowledge of such Selling Stockholder, threatened against such Selling
Stockholder or to which such Selling Stockholder is otherwise a party relating
to this Agreement, the Selling Stockholder Documents or the transactions
contemplated hereby or thereby.
 
1.18           Financial Advisors.  None of the Company, its Subsidiaries,
Purchaser or any other Purchaser Indemnified Party is or will be obligated or
liable for the payment of any fee or commission or like payment in respect of
any broker, finder or financial advisor for such Selling Stockholder in
connection with the transactions contemplated by this Agreement.
 
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
 
The Selling Stockholders, jointly and severally, hereby represent and warrant to
Purchaser that:
 
1.19           Organization and Good Standing.  The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nebraska and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now conducted
and as currently proposed to be conducted.  The Company is duly qualified or
authorized to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which it owns or leases real property and each
other jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where a failure
to be so qualified and authorized could not reasonably be expected to be
material.
 
1.20           Authorization of Agreement.  The Company has all requisite power,
authority and legal capacity to execute and deliver this Agreement and each
other agreement, document, or instrument or certificate contemplated by this
Agreement or to be executed by the Company in connection with the transactions
contemplated by this Agreement (the “Company Documents”), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution, delivery and performance of
this Agreement and each of the Company Documents, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all required action on the part of the Company.  This Agreement has
been, and each of the Company Documents will be at or prior to the Closing, duly
and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Purchaser) this Agreement constitutes,
and each of the Company Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms.
 
1.21           Conflicts; Consents of Third Parties.
 
·           None of the execution and delivery by the Company of this Agreement
or the Company Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by the Company 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 to loss of a material benefit under, or give rise to any
obligation of the Company 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 Company or any Subsidiary under, any provision of (i) the articles of
incorporation and by-laws or comparable organizational documents of the Company
or any Subsidiary; (ii) any Contract or Permit to which the Company or any
Subsidiary is a party or by which any of the properties or assets of the Company
or any Subsidiary are bound; (iii) any Order applicable to the Company or any
Subsidiary or any of the properties or assets of the Company or any Subsidiary;
or (iv) any applicable Law, except as set forth on Schedule 4.3.
 
·           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 the Company or any Subsidiary in connection with (i)
the execution and delivery of this Agreement, the Company Documents,
respectively, the compliance by the Company with any of the provisions hereof
and thereof, or the consummation of the transactions contemplated hereby or
thereby, or (ii) the continuing validity and effectiveness immediately following
the Closing of any Permit or Contract of the Company or any Subsidiary, except
for (A) compliance with the applicable requirements of the HSR Act and (B) those
set forth on Schedule 4.3.
 
1.22           Capitalization.
 
·           The authorized capital stock of the Company consists of 2,000 common
shares, $100.00 par value per share (the “Common Stock”), of which 1,500 such
shares are designated Common Stock, Class A, and 500 such shares are designated
Common Stock, Class B.  As of the date hereof, there are 472 Class A Shares
issued and outstanding, and 160 Class B Shares issued and outstanding, and the
Company does not hold any shares of Common Stock as treasury stock.  All of the
issued and outstanding shares of Common Stock were duly authorized for issuance
and are validly issued, fully paid and non-assessable and were not issued in
violation of any purchase or call option, right of first refusal, subscription
right, preemptive right or any similar rights.  All of the outstanding shares of
Common Stock are owned of record by the holders and in the respective amounts as
are set forth on Exhibit A.
 
·           There is no existing option, warrant, call, right or Contract to
which any Selling Stockholder or the Company is a party requiring, and there are
no securities of the Company outstanding which upon conversion or exchange would
require, the issuance, sale or transfer of any additional shares of capital
stock or other equity securities of the Company or other securities convertible
into, exchangeable for or evidencing the right to subscribe for or purchase
shares of capital stock or other equity securities of the Company.  There are no
obligations, contingent or otherwise, of the Company or any Subsidiary to (i)
repurchase, redeem or otherwise acquire any shares of Common Stock or the
capital stock or other equity interests 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.  There are no outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Company or any of the Subsidiaries.  There are no bonds, debentures, notes or
other indebtedness of the Company or the Subsidiaries having the right to vote
or consent (or, convertible into, or exchangeable for, securities having the
right to vote or consent) on any matters on which stockholders (or other
equityholders) of the Company of the Subsidiaries may vote.  There are no voting
trusts, irrevocable proxies or other Contracts or understandings to which the
Company or any Subsidiary or any Selling Stockholder is a party or is bound with
respect to the voting or consent of any shares of Common Stock or the equity
interests of any Subsidiary.
 
1.23           Subsidiaries.  Schedule 4.5 sets forth the name of each
Subsidiary, and, with respect to each Subsidiary, the jurisdiction in which it
is incorporated or organized, the jurisdictions, if any, in which it 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, 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
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 a failure
to be so qualified and authorized could not reasonably be expected to be
material.  Each 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
Subsidiary are validly issued, fully paid and non-assessable 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 the Company or any of the
Subsidiaries are owned by them free and clear of any and all Liens.  No shares
of capital stock are held by any Subsidiary as treasury stock.  There is no
existing option, warrant, call, right or Contract to which any Subsidiary is a
party requiring, and there are no convertible securities of any Subsidiary
outstanding which upon conversion would require, the issuance of any shares of
capital stock or other equity interests of any Subsidiary or other securities
convertible into shares of capital stock or other equity interests of any
Subsidiary.  Except as set forth on Schedule 4.5, the Company does not own,
directly or indirectly, any capital stock or equity securities of any Person
other than the Subsidiaries.  Except as set forth on Schedule 4.5, there are no
material restrictions on the ability of the Subsidiaries to make distributions
of cash to their respective equity holders.
 
1.24           Corporate Records.
 
·           The Company has made available to Purchaser true, correct and
complete copies of the articles of incorporation (each certified by the
Secretary of State or other appropriate official of the applicable jurisdiction
of organization) and by-laws (each certified by the secretary, assistant
secretary or other appropriate officer) or comparable organizational documents
of the Company and each of the Subsidiaries in each case as amended and in
effect on the due date hereof, including all amendments thereto.
 
·      The minute books of the Company and each Subsidiary previously made
available to Purchaser contain true and correct records of all meetings and
accurately reflect all other corporate action of the shareholders and board of
directors (including committees thereof) of the Company and the
Subsidiaries.  The stock certificate books and stock transfer ledgers of the
Company and the Subsidiaries previously made available to Purchaser are true,
correct and complete.  All stock transfer taxes levied, if any, or payable with
respect to all transfers of shares of the Company and the Subsidiaries prior to
the date hereof have been paid and appropriate transfer tax stamps affixed.
 
1.25           Financial Statements.  
 
·           The Company has delivered to Purchaser copies of (i) the audited
consolidated balance sheets of the Company and the Subsidiaries as at December
31, 2006, 2005 and 2004 and the related audited consolidated statements of
income and of cash flows of the Company and the Subsidiaries for the years then
ended and (ii) the unaudited consolidated balance sheet of the Company and the
Subsidiaries as at June 25, 2007 and the related consolidated statements of
income and cash flows of the Company and the Subsidiaries for the six-month
period then ended (such audited and unaudited statements, 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 in accordance with GAAP consistently applied by the Company
without modification of the accounting principles used in the preparation
thereof throughout the periods presented and presents fairly in all material
respects the consolidated financial position, results of operations and cash
flows of the Company and the Subsidiaries as at the dates and for the periods
indicated therein (provided, however, that the existence of ineligible inventory
or ineligible accounts receivable in the amounts as reflected in Schedule 2.7
shall not be a breach of this or any other representation in this Agreement).
 
The consolidated balance sheet of the Company and the Subsidiaries as at
December 27, 2006 is referred to herein as the “Balance Sheet” and December 27,
2006 is referred to herein as the “Balance Sheet Date.”
 
All books, records and accounts of the Company and the Subsidiaries are accurate
and complete and are maintained in all material respects in accordance with good
business practice and all applicable Laws.
 
·           The financial projections and business plan provided by the Company
to Purchaser prior to the date hereof were reasonably prepared on a basis
reflecting management’s best estimates, assumptions and judgments, at the time
provided to Purchaser, as to the future financial performance of the Company and
the Subsidiaries.  Purchaser acknowledges that such projections and business
plan are based on the current knowledge of the Company, as well as assumptions
the Company’s management believes to be reasonable, that such information and
assumptions contain known and unknown risks and uncertainties, and that actual
results may differ due to factors, including changes in the Company’s operating
environment, market changes, the success of the Company in implementing its
business plan, competitive conditions in the Company’s industry and other
factors.
 
·           The Company has provided to Purchaser copies of all issued auditors’
reports relating to the Company or any of the Subsidiaries and their respective
operations, whether the same are issued to the Company or any of its
Subsidiaries.  The Company has not received, or been provided, any letters to
management regarding accounting practices relating to the Company or any of the
Subsidiaries and their respective operations, whether the same are issued to the
Company or any of its Subsidiaries, during any of the periods covered by the
Financial Statements.
 
1.26           No Undisclosed Liabilities.  Neither the Company nor any
Subsidiary has any Liabilities of any kind that would have been required to be
reflected in, reserved against or otherwise described on the Balance Sheet or in
the notes thereto in accordance with GAAP and were not so reflected, reserved
against or described, other than (i) Liabilities incurred in the Ordinary Course
of Business since the Balance Sheet Date and (ii) Liabilities incurred in
connection with the transactions contemplated hereby (including, without
limitation, Company Transaction Expenses).
 
1.27           Absence of Certain Developments.  Except as expressly
contemplated by this Agreement or as set forth on Schedule 4.9, since the
Balance Sheet Date (i) the Company and the Subsidiaries have conducted their
respective businesses only in the Ordinary Course of Business and (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.  Without
limiting the generality of the foregoing, except as set forth on Schedule 4.9,
since the Balance Sheet Date:
 
·           there has not been any damage, destruction or loss, whether or not
covered by insurance, with respect to the property and assets of the Company or
any Subsidiary having a replacement cost of more than $100,000 for any single
loss or $250,000 for all such losses;
 
·           there has not been any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of capital stock of the
Company or any repurchase, redemption or other acquisition by the Company or any
Subsidiary of any outstanding shares of capital stock or other securities of, or
other ownership interest in, the Company or any Subsidiary;
 
·           except in the Ordinary Course of Business, neither the Company nor
any Subsidiary has awarded or paid any bonuses to employees of the Company or
any Subsidiary except to the extent accrued on the Balance Sheet, or entered
into any employment, deferred compensation, severance or similar agreement (nor
amended any such agreement) or agreed to increase the compensation payable or to
become payable by it to any of the Company’s or any Subsidiary’s directors,
officers, employees, agents or representatives or agreed to increase the
coverage or benefits available under any 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, payment or arrangement made to, for or with such
directors, officers, employees, agents or representatives;
 
·           there has not been any change by the Company or any Subsidiary in
accounting or Tax reporting principles, methods or policies;
 
·           neither the Company nor any Subsidiary has made or rescinded any
election relating to Taxes or settled or compromised any claim relating to
Taxes;
 
·           [omitted];
 
·           neither the Company nor any Subsidiary has failed to promptly pay
and discharge current liabilities except where disputed in good faith by
appropriate proceedings;
 
·           neither the Company nor any Subsidiary has made any loans, advances
or capital contributions to, or investments in, any Person or paid any fees or
expenses to any Selling Stockholder or any director, officer, partner,
stockholder or Affiliate of any Selling Stockholder (other than reimbursements
of business expenses incurred and reimbursed in the Ordinary Course of
Business);
 
·           neither the Company nor any Subsidiary has (A) mortgaged, pledged or
subjected to any Lien any of its assets, or (B) acquired any assets or sold,
assigned, transferred, conveyed, leased or otherwise disposed of any assets of
the Company or any Subsidiary, except, in the case of clause (B), for assets
acquired, sold, assigned, transferred, conveyed, leased or otherwise disposed of
in the Ordinary Course of Business;
 
·           [omitted];
 
·           neither the Company nor any Subsidiary has amended, canceled,
terminated, relinquished, waived or released any Contract or right except in the
Ordinary Course of Business or which, in the aggregate, would not be material to
the Company and the Subsidiaries taken as a whole;
 
·           neither the Company nor any Subsidiary has made or committed to make
any capital expenditures or capital additions or betterments in excess of
$100,000 individually or $2,500,000 in the aggregate;
 
·           [omitted];
 
·           the Company has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property owned by the Company or any
of its Subsidiaries except in the Ordinary Course of Business;
 
·           neither the Company nor any Subsidiary has instituted or settled any
Legal Proceeding resulting in a loss of revenue in excess of $250,000 in the
aggregate; and
 
·           none of the Selling Stockholders or the Company has agreed,
committed, arranged or entered into any understanding to do anything set forth
in this Section 4.9.
 
1.28           Taxes.
 
·           Except as set forth on Schedule 4.10(a):  (i) (A) all material Tax
Returns required to be filed by or on behalf of each of the Company, any
Subsidiary and any Affiliated
 
·           Group of which the Company or any 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 material respects; and
(B) all Taxes required to be paid by or on behalf of each of the Company, any
Subsidiary and any Affiliated Group of which the Company or any Subsidiary is or
was a member have been fully and timely paid; (ii) 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 Company has made due and sufficient accruals for such Taxes in the
Financial Statements and its books and records; and (iii) all required estimated
Tax payments sufficient to avoid any underpayment penalties or interest have
been made by or on behalf of the Company and each Subsidiary.
 
·           The Company and each Subsidiary has complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes and has 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.
 
·           The Company has made available to Purchaser complete copies of (i)
all federal, state, local and foreign income or franchise Tax Returns of the
Company and the Subsidiaries relating to the taxable periods since January 1,
2001 and (ii) any audit report issued within the last three years relating to
any Taxes due from or with respect to the Company or any Subsidiary.  Except as
set forth on Schedule 4.10(c), all income and franchise Tax Returns filed by or
on behalf of the Company or any Subsidiary have been examined by the relevant
Taxing Authority or the statute of limitations with respect to such Tax Returns
has expired.
 
·           Schedule 4.10(d) lists (i) all material types of Taxes paid, and all
material types of Tax Returns filed by or on behalf of Company or any
Subsidiary, and (ii) all of the jurisdictions that impose such Taxes or with
respect to which the Company or any Subsidiary has a duty to file such Tax
Returns.  No claim has been made by a Taxing Authority in a jurisdiction where
the Company or any Subsidiary does not file Tax Returns such that it is or may
be subject to taxation by that jurisdiction.
 
·           All deficiencies asserted or assessments made as a result of any
examinations by any Taxing Authority of the Tax Returns of, or including, the
Company or any Subsidiary have been fully paid, and there are no other audits or
investigations by any Taxing Authority in progress, nor has the Selling
Stockholders, the Company or any of the 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 the Company or any 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.
 
·           Except as set forth on Schedule 4.10(f), none of the Company, any
Subsidiary or any other Person on their behalf has (i) filed a consent pursuant
to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company or such Subsidiary, (ii)
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of Law or has any knowledge that any
 
·           Taxing Authority has proposed any such adjustment, or has any
application pending with any Taxing Authority requesting permission for any
changes in accounting methods that relate to the Company or any Subsidiary,
(iii) since January 1, 2000, executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of Law with
respect to the Company or any Subsidiary, (iv) requested any extension of time
within which to file any Tax Return, which Tax Return has since not been filed,
(v) granted any extension for the assessment or collection of Taxes, which Taxes
have not since been paid, or (vi) granted to any Person any power of attorney
that is currently in force with respect to any Tax matter.
 
·           No property owned by the Company or any Subsidiary is (i) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) “tax-exempt use property” within the meaning of Section 168(h)(1) of the
Code or (iii) “tax-exempt bond financed property” within the meaning of Section
168(g) of the Code, (iv) “limited use property” within the meaning of Rev. Proc.
76-30, (v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to any
provision of state, local or foreign Law comparable to any of the provisions
listed above.
 
·           No Selling Stockholder is a foreign person within the meaning of
Section 1445 of the Code.
 
·           Neither the Company nor any 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.
 
·           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 Purchaser, the Company or any of their
respective Affiliates by reason of Section 280G of the Code.
 
·           Neither the Company nor any Subsidiary is subject to any private
letter ruling of the IRS or comparable rulings of any Taxing Authority.
 
·           There are no Liens as a result of any unpaid Taxes upon any of the
assets of the Company or any Subsidiary.
 
·           Except with respect to any period(s) closed by the applicable
statute of limitations regarding such Tax matters, neither the Company nor any
of the 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 the Company is the common parent.
 
·           Neither the Company nor any of the Subsidiaries has constituted
either a “distributing corporation” or a “controlled corporation” (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A) in the two
years prior to the date of this Agreement or (B) in a distribution which could
otherwise constitute part of a “plan” or “series of related transactions”
 
·           (within the meaning of Section 355(e) of the Code) in conjunction
with the transactions contemplated by this Agreement.
 
·           There is no taxable income of the Company or any of the Subsidiaries
that will be required under applicable Tax Law to be reported by the Purchaser
or any of its Affiliates, including the Company or any of the Subsidiaries, for
a taxable period beginning after the Closing Date which taxable income was
realized (and reflects economic income) arising prior to the Closing Date.
 
·           Except with respect to any period(s) closed by the applicable
statute of limitations regarding such Tax matters, neither the Company nor any
Subsidiary has (i) engaged in any “intercompany transactions” in respect of
which gain was and continues to be deferred pursuant to Treasury Regulations
Section 1.1502-13 or any analogous or similar provision of Law or (ii) has any
“excess loss accounts” in respect of the stock of any Subsidiary pursuant to
Treasury Regulations Section 1.1502-19, or any analogous or similar provision of
Law.
 
·           The Selling Stockholders, the Company and the Subsidiaries are
members of a “selling consolidated group” within the meaning of Treasury
Regulation Section 1.338(h)(10)-1(b)(2).
 
·           The Company and the Subsidiaries have disclosed on their federal
income Tax Returns all positions taken therein that could give rise to
substantial understatement of federal income tax within the meaning of Section
6662 of the Code.
 
·           Other than Precision de Mexico and I.N.T. Precision Industries of
Canada, LTD./I.N.T. Les Industries Precision du Canada, LTEE (each of which is a
Subsidiary of the Company), neither the Company nor any of the Subsidiaries has,
or has ever had, a permanent establishment in any country other than the United
States, or has engaged in a trade or business in any country other than the
United States that subjected it to tax in such country.
 
·           The Company has been a validly electing “S” corporation within the
meaning of Sections 1361 and 1362 of the Code at all times since November 1,
1990 and the Company will be an “S” corporation up to and including the day
before the Closing Date.
 
·           Except as set forth on Schedule 4.10(u), the Company has been a
validly electing “S” corporation under each provision of state or local law
analogous to Sections 1361 and 1362 of the Code in each jurisdiction where the
Company is required to file a Tax Return at all times since November 1, 1990 and
the Company will be an “S” corporation up to and including the day before the
Closing Date.
 
·           Each Subsidiary of the Company has been a validly electing Qualified
Subchapter S Subsidiary (a “QSSS”), within the meaning of Section 1361(b)(3) of
the Code at all times since inception and each Subsidiary will be a QSSS up to
and including the day before the Closing Date.
 
·           The Company has no potential liability for any Tax under Section
1374 of the Code.  Neither the Company nor any Subsidiary has, in the past ten
years, (i) acquired assets
 
·           from another corporation in a transaction in which such entity’s tax
basis for the acquired asset was determined, in whole, or in part, by reference
to the Tax basis of the acquired assets (or any other property) in the hands of
the transferor or (ii) acquired the stock of any corporation which is a QSSS.
 
1.29           Real Property.
 
·           Except as set forth on Schedule 4.11(a), neither the Company or any
of the Subsidiaries owns on the date hereof or will own as of the Closing Date
any real property and/or interests in real property (including improvements
thereon and easements appurtenant thereto) in fee.
 
·           Schedule 4.11(b) sets forth a complete list of all real property and
interests in real property leased by the Company and the Subsidiaries as lessee
or lessor (including three (3) real properties which are part of the
Distributable Assets and will be distributed to an Affiliate of the Controlling
Owner prior to the Closing and then leased to the Company, each a “Real Property
Lease”, and collectively the “Company Properties”), 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).  The
Company Properties constitute all interests in real property currently used,
occupied or currently held for use in connection with the business of the
Company and the Subsidiaries and which are necessary for the continued operation
of the business of the Company and the Subsidiaries as the business is currently
conducted.  Each of the Company and the 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.  Each of the Real Property Leases is in full force
and effect.  Neither the Company nor an Subsidiary is in default under any Real
Property Lease, and no event has occurred and no circumstance exists which, if
not remedied, and whether with or without notice or the passage of time or both,
would result in such a default.  Neither the Company nor any Subsidiary has
received or given any notice of any default or event that with notice or lapse
of time, or both, would constitute a default by the Company or any Subsidiary
under any of the Real Property Leases and, to the Knowledge of the Company and
the Selling Stockholders, no other party is in default thereof, and no party to
any Real Property Lease has exercised any termination rights with respect
thereto.  The Company has delivered to Purchaser true, correct and complete
copies of the Real Property Leases, together with all amendments, modifications
or supplements, if any, thereto.
 
·           To the Knowledge of the Company and the Selling Stockholders, all of
the Company Properties and buildings, fixtures and improvements thereon (i) are
in good operating condition (ordinary wear and tear excepted) without 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 and (ii) are suitable, sufficient and appropriate in
all respects for their current and contemplated uses.  None of the improvements
located on the Company Properties constitute a legal non-conforming use or
otherwise require any special dispensation, variance or special permit under any
Laws.  The Company 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 4.11(b).
 
·           The Company and the Subsidiaries have all certificates of occupancy
and Permits of any Governmental Body necessary or useful for the current use and
operation of each Company Property, and the Company and the 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.
 
·           There does not exist any actual or, to the Knowledge of the Company
and the Selling Stockholders, threatened or contemplated condemnation or eminent
domain proceedings that affect any Company Property or any part thereof, and
none of the Company, and Subsidiary or any Selling Stockholder 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.
 
·           None of the Selling Stockholders, the Company or any Subsidiary has
received any notice from any insurance company that has issued a policy with
respect to any Company Property requiring performance of any structural or other
repairs or alterations to such Company Property.
 
·           Neither the Company nor any 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.
 
1.30           Tangible Personal Property.
 
·           The Company and the Subsidiaries have good and marketable title to
all of the items of tangible personal property used in the business of the
Company and the Subsidiaries (except as sold or disposed of subsequent to the
date thereof in the Ordinary Course of Business and not in violation of this
Agreement), free and clear of any and all Liens, other than the Permitted
Exceptions.  All such items of tangible personal property which, individually or
in the aggregate, are material to the operation of the business of the Company
and the Subsidiaries are in good condition and in a state of good maintenance
and repair (ordinary wear and tear excepted) and are suitable for the purposes
used.
 
·           Schedule 4.12(b) sets forth all leases of personal property
(“Personal Property Leases”) involving annual payments in excess of $25,000
relating to personal property used in the business of the Company or any of the
Subsidiaries or to which the Company or any of the Subsidiaries is a party or by
which the properties or assets of the Company or any of the 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.  The Company has delivered to Purchaser
true, correct and complete copies of the Personal Property Leases, together with
all amendments, modifications or supplements thereto.
 
·           The Company and each of the Subsidiaries has a valid and enforceable
leasehold interest under each of the Personal Property Leases under which it is
a lessee.  Each of the Personal Property Leases is in full force and effect and
neither the Company nor any
 
·           Subsidiary has received or given any notice of any default or event
that with notice or lapse of time, or both, would constitute a default by the
Company or any Subsidiary under any of the Personal Property Leases and, to the
Knowledge of the Company and the Selling Stockholders, no other party is in
default thereof, and no party to the Personal Property Leases has exercised any
termination rights with respect thereto.
 
1.31           Technology and Intellectual Property.
 
·           Schedule 4.13(a) sets forth a complete and accurate list, as of the
date of this Agreement, of (i) each issued patent owned by the Company or any of
its Subsidiaries, (ii) each pending patent application filed by or on behalf of
the Company or any of its Subsidiaries, (iii) each trademark registration,
service mark registration, and copyright registration owned by the Company or
any of its Subsidiaries, (iv) each application for trademark registration,
service mark registration, and copyright registration made by or on behalf of
the Company or any of its Subsidiaries, (v) each domain name registered by or on
behalf of the Company or any of its Subsidiaries and (vi) each material trade
name, d/b/a, unregistered trademark, and unregistered service mark used by the
Company or any of its Subsidiaries in connection with its
business.  Schedule 4.13(a) lists, for each such item of Intellectual Property
owned by the Company or any of its Subsidiaries, the item, the jurisdiction, the
filing and, if issued, issuance dates and any serial or registration
numbers.  All such Intellectual Property is subsisting, and all necessary
registration, maintenance, renewal, and other relevant filing fees due in
connection therewith have been timely paid and all necessary documents and
certificates in connection therewith have been timely filed with the relevant
patent, copyright, trademark, or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
registered Intellectual Property in full force and effect.
 
·           The Company and its Subsidiaries own all right, title and interest
in and to, or have valid and continuing rights to use, all Intellectual
Property, Software and other Technology used in the conduct of the business and
operations of the Company and its Subsidiaries as presently conducted and as
currently proposed to be conducted, free and clear of all Liens or obligations
to others.
 
·           Except with respect to licenses of Software (i) generally available
for an annual or one-time license fee of no more than $10,000 in the aggregate,
(ii) distributed as “freeware” or (iii) distributed via Internet access without
charge and for use without charge, Schedule 4.13(c) sets forth a complete and
accurate as of the date of this Agreement, of all agreements pursuant to which
the Company or any of its Subsidiaries licenses in or otherwise is authorized to
use all Intellectual Property, Software and other Technology used in the conduct
of the business and operations of the Company and its Subsidiaries as presently
conducted and as currently contemplated to be conducted.  The Company has
delivered to Purchaser correct, complete and current copies of all such
agreements.
 
·           Following the Closing, the Company and its Subsidiaries will have
the right to exercise all of their current rights under agreements granting
rights to the Company or any of its Subsidiaries with respect to Intellectual
Property, Software and other Technology of a third party to the same extent and
in the same manner they would have been able to had the transaction contemplated
by this Agreement not occurred, and without the payment of any
 
·           additional consideration as a result of such transaction and without
the necessity of any third party consent as a result of such transaction.
 
·           All of the material Intellectual Property owned by the Company or
any of its Subsidiaries is valid and enforceable.  Since January 1, 2005 neither
the Company nor any of its Subsidiaries has brought any action, suit or
proceeding or asserted any claim (other than claims that have been resolved to
the Company’s satisfaction) against any Person for infringing or
misappropriating any Technology or, to the Company’s Knowledge, Intellectual
Property owned by the Company or any of its Subsidiaries, nor is there any basis
for any such action, suit or proceeding.
 
·           There is no action, suit, proceeding, hearing, investigation, notice
or complaint pending or, to the Company’s Knowledge, threatened, by any third
party before any court or tribunal (including, without limitation, the United
States Patent and Trademark Office or equivalent authority anywhere in the
world) relating to any of Company’s or any of its Subsidiaries’ Intellectual
Property or Technology, nor has any claim or demand been made by any third party
that (i) challenges the validity, enforceability, use or exclusive ownership of
any Intellectual Property or Technology owned by the Company or any of its
Subsidiaries or (ii) alleges any infringement, misappropriation, violation, or
unfair competition or trade practices by the Company or any of its Subsidiaries
of any Intellectual Property or Technology of any third party, nor is the
Company aware of any basis for any such claim or demand.
 
·           None of the Company’s or any of its Subsidiaries’ Technology or
Intellectual Property is subject to any outstanding injunction, decree, order,
judgment, agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or any of its Subsidiaries or
affects the validity, use or enforceability of any such Technology or
Intellectual Property.
 
1.32           Material Contracts.
 
·           Schedule 4.14(a) sets forth, by reference to the applicable
subsection of this Section 4.14(a), all of the following Contracts to which the
Company or any of the Subsidiaries is a party or by which any of them or their
respective assets of properties are bound (collectively, the “Material
Contracts”):
 
·      Contracts with any Selling Stockholder or Affiliate thereof or any
current or former officer, director, stockholder or Affiliate of the Company or
any of the Subsidiaries;
 
·      Contracts with any labor union or association representing any employee
of the Company or any of the Subsidiaries;
 
·      Contracts for the sale of any of the assets of the Company 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;
 
·      Contracts for joint ventures, strategic alliances, partnerships,
licensing arrangements, or sharing of profits or proprietary information
(excluding any general Contracts for marketing commissions or other purchasing
incentive or rebate programs);
 
·      Contracts containing covenants of the Company or any of the Subsidiaries
not to compete in any material line of business or with any Person in any
material geographical area or not to solicit or hire any person with respect to
employment or covenants of any other Person not to compete with the Company or
any of the Subsidiaries in any material line of business or in any material
geographical area or not to solicit or hire any person with respect to
employment;
 
·      Contracts for the acquisition (by merger, purchase of stock or assets or
otherwise) by the Company or any of the Subsidiaries of any operating business
or material assets or the capital stock of any other Person of which any
operative provision thereof is still in effect and creates an obligation of the
Company or any of the Subsidiaries;
 
·      Contracts relating to the incurrence, assumption or guarantee of any
Indebtedness or imposing a Lien on any of the assets of the Company or any
Subsidiary, 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;
 
·      all Contracts providing for payments by or to the Company or any of the
Subsidiaries in excess of $2,000,000 in any fiscal year or $5,000,000 in the
aggregate during the term thereof;
 
·      all Contracts obligating the Company or any of the Subsidiaries to
provide or obtain products or services for a period of one year or more
(requiring the payment of $2,000,000 or more) or requiring the Company to
purchase or sell a stated portion of its requirements or outputs;
 
·      Contracts under which the Company or any of the Subsidiaries has made
advances or loans to any other Person (other than accounts payable arising in
the Ordinary Course of Business);
 
·      Contracts providing for severance, retention, change in control or other
similar payments;
 
·      Contracts, involving expected payment of $150,000 or more in any annual
period, for the employment of any individual on a full-time, part-time or
consulting basis;
 
·      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; and
 
·      outstanding Contracts of guaranty, surety or indemnification, direct or
indirect, by the Company or any of the Subsidiaries.
 
·           Each of the Material Contracts is in full force and effect and is
the legal, valid and binding obligation of the Company or any Subsidiary which
is party thereto, and of the other parties thereto enforceable against each of
them in accordance with its terms and, assuming that the consents or waivers (as
applicable) set forth on Schedule 4.3 are obtained, upon consummation of the
transactions contemplated by this Agreement shall continue in full force and
effect without penalty or other adverse consequence.  Neither the Company nor
any Subsidiary is in default under any Material Contract, nor, to the Knowledge
of the Company or the Selling Stockholders, 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 on the Company, any Subsidiary or any other party thereunder.  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.  The Company has made available to Purchaser
true, correct and complete copies of all of the Material Contracts, together
with all amendments, modifications or supplements thereto.
 
1.33           Employee Benefits Plans.
 
·           Schedule 4.15(a) sets forth a correct and complete list of:  (i) all
“employee benefit plans” (as defined in Section 3(3) of ERISA), and all other
employee benefit plans, programs, agreements, policies, arrangements or payroll
practices, including bonus plans, employment, consulting or other compensation
agreements, collective bargaining agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, change in control,
termination or severance plans or arrangements, stock purchase, severance pay,
sick leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance and scholarship plans and programs maintained
by the Company or any of its Subsidiaries or to which the Company or any of the
Subsidiaries contributed or is obligated to contribute thereunder for current or
former employees of the Company or any of the Subsidiaries (the “Employees”)
(collectively, the “Company Plans”), and (ii) all “employee pension plans” (as
defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, maintained by the Company or any of its Affiliates and any trade or
business (whether or not incorporated) that is or has ever been under common
control, or that is or has ever been treated as a single employer, with any of
them under Section 414(b), (c), (m) or (o) of the Code (each, an “ERISA
Affiliate”) or to which the Company or any ERISA Affiliate contributed or has
ever been obligated to contribute thereunder (the “Title IV Plans”).  Schedule
4.15(a) sets forth each Company Plan and Title IV Plan that is a “multiemployer
plan” (as defined in Section 3(37) of ERISA (a “Multiemployer Plan”)), or is or
has been subject to Sections 4063 or 4064 of ERISA.
 
·           Correct and complete copies of the following documents, with respect
to each of the Company Plans (other than a Multiemployer Plan), have been made
available or delivered to Purchaser by the Company, to the extent
applicable:  (i) any plans, all amendments thereto and related trust documents,
insurance contracts or other funding arrangements, and amendments thereto; (ii)
the most recent Forms 5500 and all schedules thereto and the most
 
·           recent actuarial report, if any; (iii) the most recent IRS
determination letter; (iv) summary plan descriptions; (v) written communications
to employees relating to the Company Plans; and (vi) written descriptions of all
non-written agreements relating to the Company Plans.
 
·           The Company Plans have been maintained in all material respects in
accordance with their terms and with all provisions of ERISA, the Code
(including rules and regulations thereunder) and other applicable Federal and
state Laws and regulations, and neither the Company (or any of the Subsidiaries)
nor any “party in interest” or “disqualified person” with respect to the Company
Plans has engaged in a non-exempt “prohibited transaction” within the meaning of
Section 4975 of the Code or Section 406 of ERISA.  No fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any Company
Plan.
 
·           The Company Plans intended to qualify under Section 401 of the Code
are so qualified and any trusts intended to be exempt from Federal income
taxation under Section 501 of the Code are so exempt, and nothing has occurred
with respect to the operation of the Company Plans that could cause the loss of
such qualification or exemption or the imposition of any liability, penalty or
tax under ERISA or the Code.
 
·           Each Company Plan that is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code
meets such requirements.
 
·           Neither the Company nor any ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan prior to the Closing
Date, nor have any of them incurred any liability due to the termination or
reorganization of a Multiemployer Plan.  Purchaser will not have (i) any
obligation to make any contribution to any Multiemployer Plan or (ii) any
withdrawal liability from any Multiemployer Plan under Section 4201 of ERISA,
which it would not have had but for the consummation of the transactions
contemplated by this Agreement.
 
·           Schedule 4.15(g) sets forth on a plan by plan basis, the present
value of benefits payable presently or in the future to Employees under each
unfunded Company Plan.
 
·           All contributions (including all employer contributions and employee
salary reduction contributions) required to have been made under any of the
Company Plans (including workers compensation) or Title IV Plans or by Law
(without regard to any waivers granted under Section 412 of the Code), to any
funds or trusts established thereunder or in connection therewith have been made
by the due date thereof (including any valid extension), and all contributions
for any period ending on or before the Closing Date that are not yet due will
have been paid or sufficient accruals for such contributions and other payments
in accordance with GAAP are duly and fully provided for on the Balance
Sheet.  No accumulated funding deficiencies exist in any of the Company Plans or
Title IV Plans subject to Section 412 of the Code.
 
·           There is no “amount of unfunded benefit liabilities” (as defined in
Section 4001(a)(18) of ERISA) in any of the Title IV Plans.  Each of the Title
IV Plans are fully funded in accordance with the actuarial assumptions used by
the Pension Benefit Guaranty Corporation (“PBGC”) to determine the level of
funding required in the event of the termination of a Title IV Plan and the
“benefit liabilities” (as defined in Section 4001(a)(16) of ERISA) of such Title
IV Plan using such PBGC assumptions do not exceed the assets of such Title IV
Plan.
 
·           There has been no “reportable event” (as defined in Section 4043 of
ERISA) with respect to the Title IV Plans that would require the giving of
notice or any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA.
 
·           Neither the Company nor any ERISA Affiliate has terminated any Title
IV Plan, or incurred any outstanding liability under Section 4062 of ERISA to
the PBGC or to a trustee appointed under Section 4042 of ERISA.  All premiums
due the PBGC with respect to the Title IV Plans have been paid.
 
·           No liability under any Company Plan or Title IV Plan has been funded
nor has any such obligation been satisfied with the purchase of a contract from
an insurance company that is not rated AA by Standard & Poor’s Corporation or
the equivalent by any other nationally recognized rating agency.
 
·           None of the Company, any ERISA Affiliate nor any organization to
which the Company or any ERISA Affiliate is a successor or parent corporation
within the meaning of Section 4069(b) of ERISA has engaged in any transaction
within the meaning of Section 4069 or 4212(c) of ERISA.
 
·           There are no pending actions, claims or lawsuits that have been
asserted or instituted against the Company Plans, the assets of any of the
trusts under the Company Plans or the sponsor or administrator of any of the
Company Plans, or against any fiduciary of the Company Plans with respect to the
operation of any of the Company Plans (other than routine benefit claims), nor
does the Company or the Selling Stockholders have any Knowledge of facts that
could form the basis for any such claim or lawsuit.
 
·           There is no material violation of ERISA or the Code with respect to
the filing of applicable reports, documents and notices regarding the Company
Plans with the Secretary of Labor or the Secretary of the Treasury or the
furnishing of such documents to the participants in or beneficiaries of the
Company Plans.  All amendments and actions required to bring the Company Plans
into conformity in all material respects with all of the applicable provisions
of the Code, ERISA and other applicable Laws have been made or taken.  Any
bonding required with respect to the Company Plans in accordance with applicable
provisions of ERISA has been obtained and is in full force and effect.
 
·           Except as set forth on Schedule 4.15(p), none of the Company Plans
provides for post-employment life or health insurance, benefits or coverage for
any participant or any beneficiary of a participant, except as may be required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), and at the expense of the participant or the participant’s
beneficiary.  Each of the Company and any ERISA Affiliate
 
·           which maintains a “group health plan” within the meaning Section
5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder.
 
·           Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any Employee from the Company or any Subsidiary, (ii)
increase any benefits otherwise payable under any Company Plan or Title IV Plan
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits under any Company Plan or Title IV Plan.
 
·           Neither the Company nor any of the Subsidiaries has a contract, plan
or commitment, whether legally binding or not, to create any additional Company
Plan or to modify any existing Company Plan.
 
·           No stock or other security issued by the Company or any of the
Subsidiaries forms or has formed a material part of the assets of any Company
Plan.
 
·           Any individual who performs services for the Company or any of the
Subsidiaries (other than through a contract with an organization other than such
individual) and who is not treated as an employee of the Company or any of the
Subsidiaries for Federal income tax purposes by the Company or any of the
Subsidiaries is not an employee for such purposes.
 
1.34           Labor.
 
·           Neither the Company nor any of the Subsidiaries is a party to any
labor or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of the Company or any of the
Subsidiaries.
 
·           No Employees are represented by any labor organization.  No labor
organization or group of Employees has made a pending demand for recognition,
and there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of the Company
or the Selling Stockholders, threatened to be brought or filed, with the
National Labor Relations Board or other labor relations tribunal.  There is no
organizing activity involving the Company or any of the Subsidiaries pending or,
to the Knowledge of the Company or the Selling Stockholders, threatened by any
labor organization or group of Employees.
 
·           There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances or other labor disputes pending or, to
the Knowledge of the Company or the Selling Stockholders, threatened against or
involving the Company or any of the Subsidiaries.  There are no unfair labor
practice charges, grievances or complaints pending or, to the Knowledge of the
Company or the Selling Stockholders, threatened by or on behalf of any Employee
or group of Employees.
 
·           There are no material complaints, charges or claims against the
Company or any of the Subsidiaries pending or, to Knowledge of the Company or
the Selling Stockholders,
 
·           threatened that could be brought or filed, with any Governmental
Body based on, arising out of, in connection with or otherwise relating to the
employment or termination of employment of or failure to employ, any
individual.  Each of the Company and the Subsidiaries is in material compliance
with all Laws relating to the employment of labor, including all such Laws
relating to wages, hours, WARN and any similar state or local “mass layoff” or
“plant closing” Law, collective bargaining, discrimination, civil rights, safety
and health, workers’ compensation and the collection and payment of withholding
and/or social security taxes and any similar tax.  There has been no “mass
layoff” or “plant closing” (as defined by WARN) with respect to the Company or
any of the Subsidiaries within the six (6) months prior to Closing.
 
1.35           Litigation.  Except as set forth in Schedule 4.17, there is no
Legal Proceeding pending or, to the Knowledge of the Company or the Selling
Stockholders, threatened against the Company or any of the Subsidiaries (or to
the Knowledge of the Company or the Selling Stockholders, pending or threatened,
against any of the officers, directors or employees of the Company or any of the
Subsidiaries with respect to their business activities on behalf of the
Company), or to which the Company or any of the Subsidiaries is otherwise a
party before any Governmental Body.  Except as set forth on Schedule 4.17,
neither the Company nor any Subsidiary is subject to any Order, and neither the
Company nor any Subsidiary is in breach or violation of any Order.  Except as
set forth on Schedule 4.17, neither the Company nor any Subsidiary is engaged in
any legal action to recover monies due it or for damages sustained by it.  There
are no Legal Proceedings pending or, to the Knowledge of the Company or the
Selling Stockholders, threatened against the Company or to which the Company is
otherwise a party relating to this Agreement or, any Company Document or the
transactions contemplated hereby or thereby.
 
1.36           Compliance with Laws; Permits.
 
·           The Company and the Subsidiaries are in compliance in all material
respects with all Laws applicable to its business, operations or
assets.  Neither the Company nor any Subsidiary has received any notice of or,
to the Knowledge of the Company or the Selling Stockholders, been charged with
the violation of any Laws.  To the Knowledge of the Company or the Selling
Stockholders, neither the Company 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.
 
·           Schedule 4.18 contains a list of all Permits which are required for
the operation of the business of the Company and the Subsidiaries as presently
conducted and as presently intended to be conducted (“Company Permits”), other
than those the failure of which to possess is immaterial.  The Company and the
Subsidiaries currently have all Permits which are required for the operation of
their respective businesses as presently conducted and as presently intended to
be conducted, other than those the failure of which to possess is
immaterial.  Neither the Company nor any Subsidiary is in default or violation,
and 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 Company Permit, and to the Knowledge of the
Company or the Selling Stockholders, 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 the Company or the Selling Stockholders, threatened,
relating to the suspension, revocation or modification of any Company
Permit.  Assuming that the consents or waivers (as applicable) set forth on
Schedule 4.3 are obtained, none of the Company Permits will be impaired or in
any way affected by the consummation of the transactions contemplated by this
Agreement.
 
1.37           Environmental Matters.  Except as set forth on Schedule 4.19
hereto:
 
·           the operations of the Company and each of the Subsidiaries are and
have been in material compliance with all applicable Environmental Laws, which
compliance includes obtaining, maintaining in good standing and complying with
all Environmental Permits and no action or proceeding is pending or, to the
Knowledge of the Company or the Selling Stockholders, threatened to revoke,
modify or terminate any such Environmental Permit, and, to the Knowledge of the
Company or the Selling Stockholders, 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;
 
·           neither the Company nor any of the Subsidiaries is the subject of
any outstanding written Order or Contract with any Governmental Body or Person
with respect to (i) Environmental Laws, (ii) Remedial Action or (iii) any
Release or threatened Release of a Hazardous Material;
 
·           no claim has been made or is pending or, to the Knowledge of the
Company or the Selling Stockholders, threatened against the Company or any
Subsidiary alleging either or both that the Company or any of the Subsidiaries
may be in violation of any Environmental Law or Environmental Permit or may have
any material liability under any Environmental Law;
 
·           to the Knowledge of the Company or the Selling Stockholders, no
facts, circumstances or conditions exist with respect to the Company or any of
the Subsidiaries or any property currently or formerly owned, operated or leased
by the Company or any of the Subsidiaries or any property to which the Company
or any of the Subsidiaries arranged for the disposal or treatment of Hazardous
Materials that could reasonably be expected to result in the Company or any of
the Subsidiaries incurring material unbudgeted Environmental Costs and
Liabilities;
 
·           there are no investigations of the business or operations, currently
or, to the Knowledge of the Company or the Selling Stockholders, previously
owned, operated or leased property of the Company or any of the Subsidiaries
pending or, to the Knowledge of the Company or the Selling Stockholders,
threatened which could lead to the imposition of any material Environmental
Costs and Liabilities or Liens under Environmental Law;
 
·           the transactions contemplated hereunder do not require the consent
of or filings with any Governmental Body with jurisdiction over the Company or
any Subsidiary with respect to environmental matters;
 
·           there is not located at any of the properties currently or (while
owned, operated or leased by the Company or any Subsidiary) previously owned,
operated or leased by the Company or any of the Subsidiaries any (i) underground
storage tanks, (ii) landfill, (iii) surface impoundment, (iii)
asbestos-containing material or (iv) equipment containing polychlorinated
biphenyls; and
 
·           the Company has provided to Purchaser all environmentally related
audits, studies, reports, analyses, and results of investigations that have been
performed by or on behalf of the Selling Stockholders, the Company or any of its
Subsidiaries with respect to the currently or previously owned, leased or
operated properties of the Company or any of the Subsidiaries.
 
1.38           Insurance.  The Company and the Subsidiaries have insurance
policies in full force and effect (a) for such amounts as are reasonable for all
requirements of Law and all agreements to which the Company or any of the
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 the Company and the
Subsidiaries.  Set forth in Schedule 4.20 is a list of all insurance policies
and all fidelity bonds held by or applicable to the Company 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,
whether the policies may be terminated upon consummation of the transactions
contemplated hereby 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.  Except as set forth on Schedule 4.20, no event relating to
the Company or any of the Subsidiaries has occurred which could reasonably be
expected to result in a retroactive upward adjustment in premiums under any such
insurance policies or which could reasonably be expected to result in a
prospective upward adjustment in such premiums.  Excluding insurance policies
that have expired and been replaced in the Ordinary Course of Business, no
insurance policy has been cancelled within the last two years and, to the
Knowledge of the Company or the Selling Stockholders, no threat has been made to
cancel any insurance policy of the Company or any of the Subsidiaries during
such period.  Except as noted on Schedule 4.20, all such insurance will remain
in full force and effect immediately following the consummation of the
transactions contemplated hereby.  No event has occurred, including the failure
by the Company or any of the Subsidiaries to give any notice or information or
the Company or any of the Subsidiaries giving any inaccurate or erroneous notice
or information, which limits or impairs the rights of the Company or any of the
Subsidiaries under any such insurance policies.
 
1.39           Inventories.  Subject, in each instance, to the effects of the
proviso contained in the last sentence of the first paragraph of Section
4.7(a):  (a) the inventories of the Company and the Subsidiaries are in good and
marketable condition, and are usable and of a quantity and quality saleable in
the Ordinary Course of Business; (b) the inventories of the Company and the
Subsidiaries set forth in the Balance Sheet were valued at the lower of cost (on
a FIFO/LIFO basis) or market and were properly stated therein in accordance with
GAAP consistently applied; (c) adequate reserves have been reflected in the
Balance Sheet for obsolete, excess, damaged, slow-moving, or otherwise unusable
inventory, which reserves were calculated in a manner consistent with past
practice and in accordance with GAAP consistently applied; and (d) the
inventories of the Company and the Subsidiaries constitute sufficient quantities
for the normal operation of business in accordance with past practice.
 
1.40           Accounts and Notes Receivable and Payable
 
·           Subject, in each instance, to the effects of the proviso contained
in the last sentence of the first paragraph of Section 4.7(a):  (i) all accounts
and notes receivable of the Company and the Subsidiaries have arisen from bona
fide transactions in the Ordinary Course of Business consistent with past
practice and are payable on ordinary trade terms; (ii) all accounts and notes
receivable of the Company and the Subsidiaries reflected on the Balance Sheet
are good and 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; (iii) all accounts
and notes receivable arising after the Balance Sheet Date are good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts, which reserves are adequate and were
calculated in a manner consistent with past practice and in accordance with GAAP
consistently applied; and (iv) none of the accounts or the notes receivable of
the Company or any of the Subsidiaries (A) are subject to any setoffs or
counterclaims or (B) represent obligations for goods sold on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement.
 
·           All accounts payable of the Company and the Subsidiaries reflected
in the Balance Sheet or arising after the date thereof are the result of bona
fide transactions in the Ordinary Course of Business and have been paid or are
not yet due and payable.
 
1.41           Related Party Transactions.  Except as set forth on Schedule
4.23, no employee, officer, director, stockholder, partner or member of the
Company of any of the Subsidiaries, any member of his or her immediate family or
any of their respective Affiliates (“Related Persons”) (i) owes any amount to
the Company or any of the Subsidiaries nor does the Company or any of the
Subsidiaries owe any amount to, or has the Company or any of the 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 the Company or any of the Subsidiaries (whether written or
oral), (iii) owns any property or right, tangible or intangible, that is used by
the Company or any of the Subsidiaries, (iv) has any claim or cause of action
against the Company or any of the Subsidiaries or (v) owns any direct or
indirect interest of any kind in, or controls or is a 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, customer, landlord, tenant, creditor or debtor of the Company or any
Subsidiary.
 
1.42           Customers and Suppliers.  
 
·           Schedule 4.24(a) sets forth a list of the thirty (30) largest
customers and the ten (10) largest suppliers of the Company and the
Subsidiaries, as measured by the dollar amount of purchases therefrom or
thereby, during each of the fiscal years ended December 31, 2006 and 2005,
showing the approximate total sales by the Company and the Subsidiaries to each
such customer and the approximate total purchases by the Company and the
Subsidiaries from each such supplier, during such period.
 
·           Except as set forth on Schedule 4.24(b), since the Balance Sheet
Date, no customer or supplier listed on Schedule 4.24(a) has terminated its
relationship with the Company or any of the Subsidiaries or materially reduced
or changed the pricing or other terms of its business with the Company or any of
the Subsidiaries and, to the Knowledge of the Company or the Selling
Stockholders, no customer or supplier listed on Schedule 4.24(a) has notified
the Company or the Subsidiaries that it intends to terminate or materially
reduce or change the pricing or other terms of its business with the Company or
any of the Subsidiaries.
 
1.43           Product Warranty; Product Liability.  
 
·           To the Knowledge of the Company and the Selling Stockholders, each
product manufactured, sold or delivered by the Company or any of the
Subsidiaries in conducting its business has been in material conformity with all
product specifications, all express and implied warranties and all applicable
Laws.  Neither the Company nor any of the Subsidiaries has any material
liability for replacement or repair of any such products or other damages in
connection therewith or any other customer or product obligations not reserved
against on the Balance Sheet.
 
·           Neither the Company nor any of the Subsidiaries has any material
liability arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product designed, manufactured,
assembled, repaired, maintained, delivered, sold or installed, or services
rendered, by or on behalf of the Company or any of the Subsidiaries.  Neither
the Company nor any of the Subsidiaries has committed any act or failed to
commit any act, which would result in, and there has been no occurrence which
would give rise to or form the basis of, any material product liability or
liability for breach of warranty (whether covered by insurance or not) on the
part of the Company or any of the Subsidiaries with respect to products
designed, manufactured, assembled, repaired, maintained, delivered, sold or
installed or services rendered by or an behalf of the Company or any of the
Subsidiaries.
 
1.44           Banks; Power of Attorney.  Schedule 4.26 contains a complete and
correct list of the names and locations of all banks in which the Company or any
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 4.26, no person holds a power of attorney to act on behalf of the
Company or any Subsidiary.
 
1.45           Certain Payments.  To the Knowledge of the Company or the Selling
Stockholders, none of the Company, any Subsidiary or any Selling Stockholder or
any director, officer, employee, or other Person associated with or acting on
behalf of any of them, has directly or indirectly (a) made in violation of any
Law 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 the Company or any Subsidiary, (ii) to pay for favorable treatment
for business secured by the Company or any Subsidiary, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any Subsidiary, or (b) established or maintained any fund or
asset with respect to the Company or any Subsidiary that has not be recorded in
the books and records of the Company and the Subsidiaries.
 
1.46           Certain Governmental Matters.  Neither the Company nor any
Subsidiary has received from any U.S. Governmental Body or any prime contractor
or subcontractor from a U.S. Governmental Body any special, preferential or
advantageous treatment in the award of a Government Contract, or in any other
manner, including as a “small business concern,” “small disadvantaged business”
(or “minority-owned business”), “women-owned” concern, or any other socially and
economically disadvantaged classification, as defined in the Small Business Act
(15 U.S.C. Sec. 631, et. seq.), the Federal Property and Administrative Services
Act (41 U.S.C. Sec. 252), section 7102 of the Federal Acquisition Streamlining
Act of 1994 (Public Law 103-355), 10 U.S.C. Sec 2323, Executive Order 12138, May
18, 1979, or regulations implementing these requirements, including the Federal
Acquisition Regulations.  “Government Contract” means any prime contract with a
U.S. Governmental Body and any subcontract with a prime contractor or higher
tier subcontractor under a prime contract with a U.S. Governmental Body.
 
1.47           Financial Advisors.  Except as set forth on Schedule 4.29, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Company or any Subsidiary in connection with the transactions
contemplated by this Agreement.  On and after the Closing Date, none of the
Company, its Subsidiaries, Purchaser or any other Purchaser Indemnified Party is
or will be obligated or liable for the payment of any fee or commission or like
payment in respect of any broker, finder or financial advisor for the Company or
any Subsidiary in connection with the transactions contemplated by this
Agreement.
 
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to the Selling Stockholders that:
 
1.48           Organization and Good Standing.  Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has all requisite corporate power and authority to own, lease and
operate properties and carry on its business.
 
1.49           Authorization of Agreement.  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 Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the “Purchaser Documents”), and to consummate
the transactions contemplated hereby and thereby.  The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser.  This
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming 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 Purchaser,
enforceable against Purchaser in accordance with its respective terms.
 
1.50           Conflicts; Consents of Third Parties.
 
·           None of the execution and delivery by Purchaser of this Agreement
and of the Purchaser Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by Purchaser with any of the
provisions hereof or thereof will conflict with, or result in 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 under any provision of (i) the certificate of
incorporation and by-laws or comparable organizational documents of such
Purchaser; (ii) any Contract, or Permit to which Purchaser is a party or by
which any of the properties or assets of Purchaser are bound; (iii) any Order of
any Governmental Body applicable to Purchaser or by which any of the properties
or assets of Purchaser are bound; or (iv) any applicable Law.
 
·           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 Purchaser in connection with the execution and
delivery of this Agreement or the Purchaser Documents or the compliance by
Purchaser with any of the provisions hereof or thereof, except for compliance
with the applicable requirements of the HSR Act.
 
1.51           Litigation.  There are no Legal Proceedings pending or, to the
Knowledge of Purchaser, threatened against Purchaser or to which Purchaser is
otherwise a party relating to this Agreement, the Purchaser Documents or the
transactions contemplated hereby and thereby.
 
1.52           Investment Intention.  Purchaser is acquiring the Shares for its
own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act
thereof.  Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
 
1.53           Financial Advisors.  Except for Stephens, Inc., no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser in connection with the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof.
 
1.54           Financing.  Schedule 5.7 sets forth complete and correct copies
of firm commitment letters from the financial institutions signatories thereto
for the debt financing to be used in connection with the transactions
contemplated hereby (the “Financing”).  The amount of the Financing, together
with other financing to be provided by Purchaser, will provide sufficient funds
for Purchaser to consummate the transactions contemplated by this Agreement.
 
 
COVENANTS
 
1.55           Access to Information; Confidentiality.  The Company shall, and
the Company shall cause the Subsidiaries to, afford to Purchaser and its
accountants, counsel, financial advisors and other representatives, and to
prospective lenders and other financing
 
1.56           sources and each of their respective representatives, access,
during normal business hours upon reasonable notice throughout the period prior
to the Closing, to the Company’s and the Subsidiaries’ respective properties and
facilities (including all owned or 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 the Company’s or the Subsidiaries’ or their respective
independent public accountants, internal audit reports, and “management letters”
from such accountants with respect to the Company’s or any of the Subsidiaries’
systems of internal control), Contracts and records of the Company and the
Subsidiaries and, during such period, shall furnish promptly such information
concerning the businesses, properties and personnel of the Company and the
Subsidiaries as Purchaser shall reasonably request; provided, however, such
investigation shall not unreasonably disrupt the Company’s operations.  Prior to
the Closing, the Company shall generally keep Purchaser informed as to all
material matters involving the operations and businesses of the Company and each
of the Subsidiaries.  The Company shall authorize and direct the appropriate
directors, managers and employees of each such Subsidiary to discuss matters
involving the operations and business of the Company or such Subsidiary, as the
case may be, with representatives of Purchaser and its prospective lenders or
placement agents and other financial sources.  All nonpublic information
provided to, or obtained by, Purchaser in connection with the transactions
contemplated hereby shall be “Confidential Information” for purposes of (a) the
Confidentiality Agreement dated January 9, 2007 among Purchaser and the Company,
(b) the Non-Disclosure Non-Use and Confidentiality Agreement dated March 21,
2007 among Purchaser and the Company and certain of their Affiliates and certain
representative persons thereof, and (c) the Mutual Non-Disclosure Agreement
dated June 13, 2007 among Purchaser and the Company (collectively, the
“Confidentiality Agreement”), the terms of which shall continue in force until
the Closing; provided that Purchaser and the Company may disclose such
information as may be necessary in connection with seeking necessary consents
and approvals as contemplated hereby.  Notwithstanding the foregoing, the
Company and the Subsidiaries shall not be required to disclose any information
if such disclosure would contravene any applicable Law.
 
1.57           Conduct of the Business Pending the Closing.
 
·           Except as otherwise expressly provided in this Agreement or with the
prior written consent of Purchaser, between the date hereof and the Closing, the
Selling Stockholders and the Company shall, and the Company shall cause the
Subsidiaries to:
 
·       conduct the respective businesses of the Company and the Subsidiaries
only in the Ordinary Course of Business;
 
·       use their commercially reasonable efforts to (A) preserve the present
business operations, organization (including officers and employees) and
goodwill of the Company and the Subsidiaries and (B) preserve the present
relationships with Persons having business dealings with the Company and the
Subsidiaries (including customers and suppliers);
 
·       maintain (A) all of the assets and properties of, or used by, the
Company and the Subsidiaries in their current condition, ordinary wear and tear
excepted, and (B)
 
·       insurance upon all of the properties and assets of the Company and the
Subsidiaries in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;
 
·      (A) maintain the books, accounts and records of the Company and the
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 in
all material respects with all contractual and other obligations of the Company
and the Subsidiaries;
 
·      comply with the capital expenditure plan of the Company and the
Subsidiaries for the current fiscal year, including making such capital
expenditures in the amounts and at the times set forth in such plan; and
 
·      comply in all material respects with all applicable Laws.
 
·           Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or with the prior written consent
of Purchaser, the Selling Stockholders and the Company shall not, and the
Company shall cause the Subsidiaries not to:
 
·       declare, set aside, make or pay any dividend or other distribution in
respect of the capital stock of, or other ownership interests in, the Company or
any of the Subsidiaries or repurchase, redeem or otherwise acquire any
outstanding shares of the capital stock or other securities of, or other
ownership interests in, the Company or any of the Subsidiaries;
 
·       transfer, issue, sell, pledge, encumber or dispose of any shares of
capital stock or other securities of, or other ownership interests in, the
Company or any of the Subsidiaries or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the capital stock or other
securities of, or other ownership interests in,  the Company or any of the
Subsidiaries;
 
·       effect any recapitalization, reclassification, stock split, combination
or like change in the capitalization of the Company or any of the Subsidiaries,
or amend the terms of any outstanding securities of the Company or any
Subsidiary;
 
·       amend the certificate of incorporation or by-laws or equivalent
organizational or governing documents of the Company or any of the Subsidiaries;
 
·       except in the Ordinary Course of Business, (A) increase the salary or
other compensation of any director, officer or employee of the Company or any of
the Subsidiaries, (B) grant any unusual or extraordinary bonus, benefit or other
direct or indirect compensation to any director, officer, employee or
consultant, (C) 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,
 
·       officers, employees, agents or representatives of the Company or any of
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 or officers of the Company or any Subsidiary (or amend any
such agreement to which the Company or any of the Subsidiaries is a party);
 
·       issue, create, incur, assume, guarantee, endorse or otherwise become
liable or responsible with respect to (whether directly, contingently or
otherwise) any Indebtedness; pay, repay, discharge, purchase, repurchase or
satisfy any Indebtedness of the Company or any of the Subsidiaries, except in
the Ordinary Course of Business; or modify the terms of any Indebtedness or
other Liability;
 
·       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, the Company or any of
the Subsidiaries;
 
·       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, the Company and the Subsidiaries, other than in the
Ordinary Course of Business;
 
·       enter into or agree to enter into any merger or consolidation with any
corporation or other entity; or 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;
 
·       cancel or compromise any debt or claim or waive or release any material
right of the Company or any of the Subsidiaries except in the Ordinary Course of
Business;
 
·       enter into any commitment for capital expenditures of the Company and
the Subsidiaries in excess of $50,000 for any individual commitment and $250,000
for all commitments in the aggregate;
 
·       enter into, modify or terminate any labor or collective bargaining
agreement of the Company or any of the Subsidiaries or, through negotiation or
otherwise, make any commitment or incur any liability to any labor organization
with respect to the Company or any of the Subsidiaries;
 
·       introduce any material change with respect to the operation of the
Company or any of the 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;
 
·       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;
 
·       make a change in its accounting or Tax reporting principles, methods or
policies;
 
·       (A) 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 (B) 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 the Company shall have provided
Purchaser a copy thereof (together with supporting papers) at least three
Business Days prior to the due date thereof for Purchaser to review and approve
(such approval not to be unreasonably withheld or delayed);
 
·       enter into any Contract, understanding or commitment that restrains,
restricts, limits or impedes the ability of the Company or any Subsidiary to
compete with or conduct any business or line of business in any geographic area
or solicit the employment of any persons;
 
·       terminate, amend, restate, supplement or waive any rights under any (A)
Material Contract, Real Property Lease, Personal Property Lease or Intellectual
Property License, other than in the Ordinary Course of Business or (B) Permit;
 
·       settle or compromise any pending or threatened Legal Proceeding or any
claim or claims for, or that would result in a loss of revenue of, an amount
that could, individually or in the aggregate, reasonably be expected to be
greater than $150,000;
 
·       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;
 
·       take any action which would adversely affect the ability of the parties
to consummate the transactions contemplated by this Agreement;
 
·       agree to do anything (A) prohibited by this Section 6.2, (B) which would
make any of the representations and warranties of the Selling Stockholders in
this Agreement or any of the Selling Stockholder Documents or Company 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; and
 
·       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.
 
·       Notwithstanding any of the foregoing terms of this Section 6.2 or any
other terms and provisions of this Agreement to the contrary, on or prior to the
Closing, the Company shall sell, transfer, assign, convey or otherwise deliver
those assets identified on Schedule 6.2 hereto (the “Distributable Assets”) to
the Selling Stockholders or such other Person(s) as they may choose and such
actions (subject to their being taken in the manner described in this Section
6.2) shall not cause a failure of any of the representations and warranties made
by the Selling Stockholders in this Agreement or any Selling Stockholder
Document or Company to be true and correct or otherwise constitute a breach of
any other covenant or other agreement on the part of the Company or the Selling
Stockholders pursuant to this Agreement.  The sale, transfer, assignment,
conveyance or other delivery of the Distributable Assets shall in any event be
pursuant to agreements, instruments and other documentation in form and
substance reasonably acceptable to Purchaser, including, without limitation,
that, other than as specifically identified on Schedule 6.2, none of the
Company, its Subsidiaries or any Purchaser Indemnified Parties shall retain or
otherwise be responsible or obligated for any Liabilities relating to any of the
Distributable Assets (including any thereof based upon, attributable to or
resulting from the Company’s or an applicable Subsidiary’s maintenance,
operation and ownership of any such Distributable Assets prior to such sale,
transfer, assignment, conveyance or other delivery).
 
1.58           Third Party Consents.  The Selling Stockholders and the Company
shall use, and the Company shall cause the Subsidiaries to use, their
commercially reasonable efforts to obtain at the earliest practicable date all
consents, waivers and approvals from, and provide all notices to, all Persons
that are not a Governmental Body, which consents, waivers, approvals and notices
are required to consummate, or in connection with, the transactions contemplated
by this Agreement, including the consents, waivers, approvals and notices
referred to in Sections 3.3(b) and 4.3(b) hereof (except for such matters
covered by Section 6.4).  All such consents, waivers, approvals and notices
shall be in writing and in form and substance satisfactory to Purchaser, and
executed counterparts of such consents, waivers and approvals shall be delivered
to Purchaser promptly after receipt thereof, and copies of such notices shall be
delivered to Purchaser promptly after the making thereof.  Notwithstanding
anything to the contrary in this Agreement, neither Purchaser nor any of its
Affiliates (which for purposes of this sentence shall include the Company) shall
be required to pay any amounts in connection with obtaining any such consent,
waiver or approval.
 
1.59           Governmental Consents and Approvals.
 
·           Each of Purchaser, the Selling Stockholders and the Company shall
use, and the Company shall cause each of the 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 contemplated by this Agreement, including the consents, waivers,
approvals, Orders, Permits, authorizations, declarations, filings and notices
referred to in Sections 3.3(b), 4.3(b) and 5.3(b).  Without limiting the
foregoing, Purchaser, Selling Stockholders and the Company shall (i) make all
filings required of each of them or any of their respective Subsidiaries or
Affiliates under the HSR Act or other Antitrust Laws with respect to the
transactions contemplated hereby as
 
·           promptly as practicable and, in any event, within three (3) Business
Days after the date of this Agreement in the case of all filings required under
the HSR Act, (ii) comply at the earliest practicable date with any request under
the HSR Act for additional information, documents, or other materials received
by each of them or any of their respective Subsidiaries or Affiliates from the
U.S. Federal Trade Commission (the “FTC”), the Antitrust Division of the U.S.
Department of Justice (the “Antitrust Division”) or any other Governmental Body
in respect of such filings or such transactions, and (iii) cooperate with each
other in connection with any such filing (including, to the extent permitted by
applicable Law, providing copies of all such documents to the non-filing parties
prior to filing and considering all reasonable additions, deletions or changes
suggested in connection therewith) and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Body under any Antitrust Laws with respect to any such filing
or any such transaction.  Each such party shall use commercially reasonable
efforts to furnish to each other party hereto all information required for any
application or other filing to be made pursuant to any applicable Law in
connection with the transactions contemplated by this Agreement.  Each such
party shall promptly inform the other parties hereto of any oral communication
with, and provide copies of written communications with, any Governmental Body
regarding any such filings or any such transaction and permit the other party to
review in advance any proposed communication by such party to any Governmental
Body.  No party hereto shall independently participate in any formal meeting
with any Governmental Body in respect of any such filings, investigation, or
other inquiry without giving the other parties hereto prior notice of the
meeting and, to the extent permitted by such Governmental Body, the opportunity
to attend and/or participate.  Subject to applicable Law, the parties hereto
shall consult and cooperate with one another in connection with the matters
described in this Section 6.4, including in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and proposals
made or submitted by or on behalf of any party hereto relating to proceedings
under the HSR Act or other Antitrust Laws.
 
·           Each of Purchaser, the Selling Stockholders and the Company shall
use commercially reasonable efforts to resolve such objections, if any, as may
be asserted by any Governmental Body with respect to the transactions
contemplated by this Agreement under any Law, including the HSR Act, the Sherman
Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act,
as amended, and any other Laws that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, the “Antitrust Laws”).  In connection therewith, if any
Legal Proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as in violation of any Law, the
Selling Stockholders and the Company shall use commercially reasonable efforts,
and Purchaser shall cooperate with the Selling Stockholders and the Company, to
contest and resist any such Legal Proceeding, and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, or restricts consummation of the transactions contemplated by this
Agreement, including by pursuing all available avenues of administrative and
judicial appeal unless, by mutual agreement, Purchaser and the Selling
Stockholders decide that litigation is not in their respective best
interests.  Each of Purchaser, the Selling Stockholders and the Company shall
use commercially reasonable efforts to take such action as may be required to
cause the expiration of the notice periods under the HSR Act or
 
·           other Antitrust Laws with respect to such transactions as promptly
as possible after the execution of this Agreement.  Notwithstanding anything to
the contrary in this Agreement, neither Purchaser nor any of its Affiliates
(which for purposes of this sentence shall include the Company) shall be
required, in connection with the matters covered by this Section 6.4, (i) to pay
any amounts (other than the payment of filing fees and expenses and fees of
counsel), (ii) to commence or defend any litigation, (iii) to hold separate
(including by trust or otherwise) or divest any of their respective businesses,
product lines or assets, (iv) to agree to any limitation on the operation or
conduct of their or the Company’s or any of the Subsidiaries’ respective
businesses or (v) to waive any of the conditions set forth in Article VII of
this Agreement.  Purchaser shall pay the fees associated with filings required
by the HSR Act.
 
1.60           Further Assurances.  Subject to, and not in limitation of,
Section 6.4, each of the Selling Stockholders, the Company and Purchaser shall
use its commercially reasonable efforts to (a) take, or cause to be taken, all
actions necessary or appropriate to consummate the transactions contemplated by
this Agreement and (b) cause the fulfillment at the earliest practicable date of
all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
 
1.61           No Shop.
 
·           The Selling Stockholders and the Company shall not, and shall not
permit the Subsidiaries or any of the Affiliates, directors, officers,
employees, representatives or agents of the Selling Stockholders, the Company or
any of the Subsidiaries (collectively, the “Representatives”) to, directly or
indirectly, (i) discuss, encourage, negotiate, undertake, initiate, authorize,
recommend, propose or enter into, whether as the proposed surviving, merged,
acquiring or acquired corporation or otherwise, any transaction involving a
merger, consolidation, business combination, purchase or disposition of any
material amount of the assets of the Company or any of the Subsidiaries or any
capital stock or other ownership interests of the Company or any of the
Subsidiaries other than the transactions contemplated by this Agreement (an
“Acquisition Transaction”), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person,
any information concerning the business, operations, properties or assets of the
Company or the Subsidiaries in connection with an Acquisition Transaction, or
(iv) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
any of the foregoing.
 
·           The Selling Stockholders and the Company shall (and the Selling
Stockholders and the Company shall cause their Representatives to, and the
Company shall cause the Subsidiaries and their Representatives to) immediately
cease and cause to be terminated any existing discussions or negotiations with
any Persons (other than Purchaser) conducted heretofore with respect to any
Acquisition Transaction.  The Selling Stockholders and the Company agree not to
(and the Company agrees to cause the Subsidiaries not to) release any third
party from the confidentiality and standstill provisions of any agreement to
which the Company or any of the Subsidiaries is a party.
 
1.62           Non-Competition; Non-Solicitation; Confidentiality.
 
1.63           In consideration of Purchaser’s purchase of the goodwill and
business relationships of the Company and its Subsidiaries hereunder, for a
period of three (3) years from and after the Closing Date, the Selling
Stockholders shall not, and shall cause their Affiliates not to, directly or
indirectly, own, manage, engage in, operate, control, work for, consult with,
maintain any interest in (proprietary, financial or otherwise) or participate in
the ownership, management, operation or control of, any business, whether in
corporate, proprietorship or partnership form or otherwise, engaging in the
Territory in a business the same or similar to that, or that otherwise competes
with, Purchaser, the Company or any of the Subsidiaries (a “Restricted
Business”); provided, however, that the restrictions contained in this
Section 6.7(a) shall not restrict (i) the acquisition by the Selling
Stockholders, directly or indirectly, of less than two percent (2%) of the
outstanding capital stock of any publicly traded company engaged in a Restricted
Business and (ii) the business and activities of the trustee of the Trust other
than solely those business and activities engaged in on behalf of the
Trust.  The automated payment processing and cash flow management system
business of CFO-PE Strategies, LLC, and incidental activities relating thereto,
as engaged in as of the date hereof, shall not constitute a Restricted Business;
provided, however, that the foregoing shall not permit CFO-PE Strategies, LLC to
engage in business (other than in Canada, which shall be excluded from the
Territory for this purpose) with (A) the industrial distribution companies that
have over ninety percent (90%) of their aggregate business and operations or
revenues in supplying the following industrial products:  bearings and power
transmission, pumps, pipes, valves and fittings, fluid power, rubber belts and
hoses; or (B) those supply chain service businesses listed on Schedule 6.7(a).
 
·           Additionally, in consideration of Purchaser’s purchase of the
goodwill and business relationships of the Company and its Subsidiaries
hereunder, for a period of three (3) years from and after the Closing Date, the
Selling Stockholders shall not, and shall cause their directors, officers and
Affiliates not to, directly or indirectly:  (i) cause, solicit, induce or
encourage any employees of Purchaser, the Company or the Subsidiaries to leave
such employment or (ii) cause, induce or encourage any material actual or
prospective client, customer, supplier, or licensor of Purchaser, the Company or
any of the Subsidiaries (including any existing or former customer of the
Company or the Subsidiaries and any Person that becomes a client or customer of
Purchaser, the Company or any of the Subsidiaries after the Closing) or any
other Person who has a material business relationship with Purchaser, the
Company or any of the Subsidiaries, to terminate or modify any such actual or
prospective relationship.
 
·           From and after the Closing Date, the Selling Stockholders shall not
and shall cause their directors, officers and Affiliates not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person other than
authorized officers, directors and employees of Purchaser or use or otherwise
exploit for its own benefit or for the benefit of anyone other than Purchaser,
any Confidential Information (as defined below).  The Selling Stockholders shall
not have any obligation to keep confidential (or cause its officers, directors
or Affiliates to keep confidential) any Confidential Information if and to the
extent disclosure thereof is specifically required by applicable Law; provided,
however, that in the event disclosure is required by applicable Law, the Selling
Stockholders shall, to the extent reasonably possible, provide Purchaser with
prompt notice of such requirement prior to making any disclosure so that
Purchaser may seek an appropriate protective order.  For purposes of this
Section 6.7(c), “Confidential Information” means any information with respect to
Purchaser, the Company or
 
·           any of the Subsidiaries, including methods of operation, customer
lists, products, prices, fees, costs, Technology, inventions, 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, (ii) becomes generally available to the public other
than as a result of a disclosure not otherwise permissible hereunder, (iii) is
or has been independently developed by a Selling Stockholder or an Affiliate
without use or reference to or other derivation from any Confidential
Information, or (iv) refers to Purchaser, the Company or any of the Subsidiaries
as customers of CFO-PE Strategies, LLC or that provides historical information
of benefits or services CFO-PE Strategies, LLC has provided them (or makes them
available as a customer reference thereof), provided, however, that such
information does not disclose or make reference to any customers or suppliers
relationships of Purchaser, the Company and any of the Subsidiaries and of
Confidential Information relating to any such customer or supplier
relationships.
 
·           The covenants and undertakings contained in this Section 6.7 relate
to matters which are of a special, unique and extraordinary character and a
violation of any of the terms of this Section 6.7 will cause irreparable injury
to Purchaser, the Company or its Subsidiaries (as applicable), the amount of
which will be impossible to estimate or determine and which cannot be adequately
compensated.  Accordingly, the remedy at law for any breach of this Section 6.7
will be inadequate.  Therefore, Purchaser and the Company will be entitled to a
temporary and permanent injunction, restraining order or other equitable relief
from any court of competent jurisdiction in the event of any breach of this
Section 6.7 without the necessity of proving actual damage or posting any bond
whatsoever.  The rights and remedies provided by this Section 6.7 are cumulative
and in addition to any other rights and remedies which Purchaser may have
hereunder or at law or in equity.  In the event that Purchaser were to seek
damages for any breach of this Section 6.7, the portion of the consideration
delivered to the Selling Stockholders hereunder which is allocated by the
parties to the foregoing covenant shall not be considered a measure of or limit
on such damages.
 
·           The parties hereto agree that, if any court of competent
jurisdiction determines that a specified time period, a specified geographical
area, a specified business limitation or any other relevant feature of this
Section 6.7 is unreasonable, arbitrary or against public policy, then a lesser
period of time, geographical area, business limitation or other relevant feature
which is determined by such court to be reasonable, not arbitrary and not
against public policy may be enforced against the applicable party.
 
1.64           Preservation of Records.  Subject to any retention requirements
relating to the preservation of Tax records, the Selling Stockholders and
Purchaser agree that each of them shall (and Purchaser shall cause the Company
and the Subsidiaries to) preserve and keep the records held by them on the date
of this Agreement relating to the respective businesses of the Company and the
Subsidiaries for a period of seven (7) 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 the
Selling Stockholders, the Company, the Subsidiaries or Purchaser or any of their
Affiliates or in order to enable the Selling Stockholders or Purchaser to
 
1.65           comply with their respective obligations under this Agreement and
each other agreement, document or instrument contemplated hereby or thereby.
 
1.66           Publicity.  
 
·           None of the Purchaser, Selling Stockholders or the Company shall
issue any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of Purchaser, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which Purchaser or its Affiliates lists securities, 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.
 
·           Each of Purchaser, the Selling Stockholders and the Company 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.
 
1.67           Environmental Matters.  
 
·           The Company shall permit Purchaser and Purchaser's environmental
consultant, to conduct such additional 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 the Company or any Subsidiary and the operations conducted thereat (subject
to any limitations contained in valid, previously executed leases) as Purchaser,
in its reasonable discretion, shall deem necessary (“Purchaser's Environmental
Assessment”).  Purchaser acknowledges that it has used commercially reasonable
efforts to complete the Purchaser’s Environmental Assessment prior to the date
hereof and agrees that any further investigations from and after the date hereof
shall be limited to those that the Purchaser believes absolutely are
necessary.  Purchaser agrees that any such remaining investigation as part of
Purchaser’s Environmental Assessment shall be conducted by a qualified
environmental consulting firm, possessing reasonable levels of insurance, in
compliance with applicable Laws and in a manner that minimizes the disruption of
the operations of the Company.
 
·           The Company 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
Company’s business.  Purchaser shall cooperate in all reasonable respects with
the Company with respect to such filings.
 
1.68           Cooperation with Financing.  In order to assist with obtaining
the Financing, the Selling Stockholders and the Company shall, and the Company
shall cause the Subsidiaries to, provide such assistance and cooperation as
Purchaser may reasonably request,
 
1.69           including (i) cooperating with prospective lenders and their
respective advisors in performing their due diligence and (ii) helping procure
other definitive financing documents or other reasonably requested certificates
or documents at Purchaser’s cost.
 
1.70           Related-Party Transactions with Non-Management Affiliates.  On or
prior to the Closing Date, the Company and the Subsidiaries shall (a) terminate
all Contracts with any of the Selling Stockholders or their respective
Affiliates (other than (i) those Contracts set forth on Schedule 6.12 and (ii)
Contracts between the Company and the Subsidiaries, Contracts between the
Company and the Subsidiaries and their respective officers and employees and
Contracts the continuation of which Purchaser has approved in writing) and (b)
deliver releases executed by such Affiliates with whom the Company has
terminated such Contracts pursuant to this Section 6.12 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 the Company or any of the
Subsidiaries pay any fee or otherwise incur any expense or financial exposure
with respect to any such termination or release.
 
1.71           Monthly Financial Statements.  As soon as reasonably practicable,
but in no event later than twenty (20) days after the end of each calendar month
during the period from the date hereof to the Closing, the Company shall provide
Purchaser with (a) unaudited monthly financial statements and (b) operating or
management reports (such reports to be in the form prepared by the Company in
the Ordinary Course of Business) of the Company for such preceding month.  As
soon as reasonably practicable, but in no event later than twenty (20) days
after the end of each calendar month, during the period from the date hereof to
the Closing, the Company shall provide Purchaser with (i) unaudited monthly
financial statements and (ii) operating or management reports (such reports to
be in the form prepared by the Company and the Subsidiaries in the Ordinary
Course of Business) of each of the Subsidiaries for which financial statements
are prepared (to the extent the same are prepared in the Ordinary Course of
Business) for such preceding month.
 
1.72           Employee Matters.  From and after the date hereof, and after the
Closing Date Purchaser shall cause, the Company and its Subsidiaries to retain
their current employees subject, except with respect to those employees that are
executive officers of the Company and its Subsidiaries, to the discretion of the
Company’s president and chief financial officer (including from and after the
Closing Date when Purchaser has purchased the Company and its Subsidiaries
pursuant hereto), and the employment of such employees shall be on terms and
conditions, including in respect of benefits and other compensation programs, no
less favorable, in the aggregate, than as those that the Company and its
Subsidiaries provides as of the date hereof; the retained employees shall not be
required to complete any additional pre-employment screening or testing as a
condition of continued employment as of the Closing with the Company or its
Subsidiaries; provided, however, that the foregoing shall not change the
“at-will” condition of employment generally of such employees or limit
Purchaser’s, the Company’s or any applicable Subsidiary’s ability to conduct
random drug testing of the retained employees.  If, in the future, Purchaser
determines that the employees of the Company and its Subsidiaries should be
transferred from the employee benefit programs maintained by the Company and its
Subsidiaries to those provided or otherwise maintained by Purchaser generally
for its employees (other than those that may have been previously provided or
maintained generally for the employees of the Company and its Subsidiaries),
then Purchaser shall provide such employee
 
1.73           benefits that are no less favorable, in the aggregate, than those
provided and maintained by the Company and its Subsidiaries for such employees
as of the date hereof and shall, for purposes of eligibility, vesting and levels
of benefits under any such employee benefit programs of Purchaser, credit each
such employee with his or her years of service with the Company and its
Subsidiaries to the same extent as such employee was entitled under those
employee benefit programs maintained by the Company and its Subsidiaries for
such employees as of the date hereof.  Additionally, any such employee benefit
programs provided or otherwise maintained by Purchaser generally for its
employees to which Purchaser transfers the employees of the Company and its
Subsidiaries (if any transfer shall occur) shall not deny such employees
coverage on the basis of pre-existing conditions (and shall not require any
conditional screening or testing for purposes thereof) and shall credit such
transferred employees for any deductibles and out-of-pocket expenses paid in the
year of such transfer in the employee benefit programs of the Company and its
Subsidiaries.
 
1.74           Notification of Certain Matters.  The Selling Stockholders shall
give notice to Purchaser and Purchaser shall give notice to the Selling
Stockholders, as promptly as reasonably practicable 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
in this Agreement made by it to be untrue or inaccurate in any material respect
at any time after the date hereof and prior to the Closing, (b) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (c) the
institution of or the threat of institution of any Legal Proceeding against any
of the Selling Stockholders, the Company or any of the Subsidiaries related to
this Agreement or the transactions contemplated hereby; provided that the
delivery of any notice pursuant to this Section 6.15 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.
 
1.75           Debt.  No later than the third Business Day prior to the Closing
Date, the Company shall provide Purchaser with (i) a certificate of the Company
setting forth an estimate of the balance of all Indebtedness of the Company and
the 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 to be repaid as of or prior to the Closing.  The Company shall also
make arrangements reasonably satisfactory to Purchaser for such holders to
provide to Purchaser recordable form mortgage and lien releases, canceled notes
and other documents reasonably requested by Purchaser prior to the Closing such
that all Liens on the assets or properties of the Company or any of the
Subsidiaries that are not Permitted Exceptions shall be satisfied, terminated
and discharged on or prior to the Closing Date.  On the Closing Date prior to
the Closing, the Company shall deliver to Purchaser a certificate of the Company
setting forth all Indebtedness of the Company and the Subsidiaries as of the
close of business on the day immediately preceding the Closing Date.
 
1.76           Resignation of Directors.  The Selling Stockholders shall cause
each of the directors of the Company and the Subsidiaries to submit a letter of
resignation effective on or before the Closing Date.
 
1.77           Nomination of Director for Purchaser Board.  Upon consummation of
the Closing, Purchaser shall use reasonable efforts to appoint a person named by
the Controlling Owner to the Board of Directors of Purchaser; provided, however,
that such right and appointment of such person named by the Controlling Owner
shall be subject to (a) the rules and requirements of applicable Law as well as
the rules and regulation promulgated by the United States Securities and
Exchange Commission and by any other self-regulatory organization applicable to
Purchaser’s securities and governance obligations in respect thereof and (b)
such person’s meeting the applicable requirements for serving on Purchaser’s
Board of Directors (whether under Purchaser’s organizational documents or
applicable Law, including the rules and regulations noted under clause (a)).  In
recognition of such foregoing provision, Purchaser shall undertake to have
liability coverage under Purchaser’s director and office insurance policy as set
forth on Schedule 6.18.
 
 
CONDITIONS TO CLOSING
 
1.78           Conditions Precedent to Obligations of Purchaser.  The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions precedent (any or all of which may be waived by Purchaser
in whole or in part to the extent permitted by applicable Law):
 
·           the representations and warranties of the Selling Stockholders
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects as of the Closing
as though made at and as of the Closing, except to the extent such
representations and warranties expressly speak as of 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);
 
·           the Selling Stockholders and the Company shall have performed and
complied in all material 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;
 
·           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 could reasonably be expected
to have a Material Adverse Effect since the date of this Agreement;
 
·           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 contemplated hereby;
 
·           Purchaser shall have received (i) a certificate signed by the
Stockholder Representative, for and on behalf of each of the Selling
Stockholders and (ii) a certificate signed by each of the chief executive
officer, chief operating officer and chief financial officer of the Company,
each in form and substance reasonably satisfactory to Purchaser, dated the
Closing
 
·           Date, to the effect that each of the conditions specified above in
Sections 7.1(a)-(d) have been satisfied in all respects; provided that with
respect to Section 7.1(a), the chief executive officer, chief operating officer
and chief financial officer of the Company shall only be required to certify as
to the representations and warranties contained in Article IV;
 
·           the waiting period under the HSR Act shall have expired or early
termination shall have been granted;
 
·           the Selling Stockholders and the Company shall have obtained those
consents, approvals, orders and authorizations, the issuance, reissuance and
transfer of Permits, and made the registrations, declarations and filings listed
on Schedule 7.1(g) in a form satisfactory to Purchaser and copies thereof shall
have been delivered to Purchaser;
 
·           Purchaser shall have received the written resignations and release
of claims to fees or expenses of each of the directors and officers of the
Company and the Subsidiaries identified by Purchaser prior to Closing, each in
form and substance reasonably satisfactory to Purchaser;
 
·           each of the employment agreements of Christopher W. Circo, as the
Company’s president, and Chuck Strader, as its chief financial officer, dated as
of the date hereof to be effective upon the Closing Date (and set forth in
Schedule 7.1(i)), shall be (subject only to such condition of effectiveness) in
full force and effect;
 
·           all stock or other outstanding equity interests in Subsidiaries of
the Company or any of the Company’s Subsidiaries not owned by the Company or
such Subsidiary as of the date hereof (including, without limitation, with
respect to Precision de Mexico) shall have been transferred to Purchaser (or as
directed by Purchaser), free and clear of all Liens;
 
·           [omitted];
 
·           Purchaser shall have received any material items listed in Sections
2.5 and 2.6 (and, for purposes hereof, any items that are required for delivery
by Purchaser or the Company as a condition to closing the Financing shall be
deemed to be material);
 
·           the Stockholder Representative and the Escrow Agent shall have
entered into and executed the Escrow Agreement, substantially in the form of
Exhibit B hereto;
 
·           the Controlling Owner shall have entered into and executed an Access
Agreement, substantially in the form of Exhibit C hereto;
 
·           the sale, transfer, assignment, conveyance or other delivery of the
Distributable Assets in accordance with Section 6.2(c) shall be pursuant to
agreements, instruments and other documentation in form and substance reasonably
acceptable to Purchaser;
 
·           the Company and Controlling Owner or the applicable Affiliates or
Related Persons thereof shall have entered into and executed leases (or other
lease documentation) for the facilities of the Company and its Subsidiaries
listed on Schedule 7.1(p)
 
·           hereto, in each case subject to the basic terms and provisions as
described on Schedule 7.1(p) and otherwise in form and substance reasonably
acceptable to Purchaser, and each of the Affiliates or Related Persons (as
applicable) of the Company and the Subsidiaries that leases real property to the
Company or a Subsidiary (as applicable) shall have executed and delivered a form
of release document, dated as of the Closing Date and substantially in the form
included with Schedule 7.1(p) hereto, regarding each such leased property;
 
·           (i) Neterprise, Inc., an Affiliate of the Controlling Owner, shall
have entered into and executed an amendment to the Software License Agreement,
dated and effective July 22, 1999, with the Company, substantially in the form
included in Schedule 7.1(q), with the Company, and (ii) CFO-PE Strategies, LLC,
another Affiliate of the Controlling Owner, shall have entered into and executed
a technology license agreement, substantially in the form also included in
Schedule 7.1(q), with Purchaser and, subject to the payment by Purchaser for the
license under clause (ii) at the time of Closing, such agreements shall be in
full force and effect; and
 
·           Purchaser shall have received written evidence, in the form and
substance provided by Purchaser to Controlling Owner on or prior to the date
hereof, that the Selling Stockholders and their Affiliates have irrevocably and
unconditionally released the Company and the Subsidiaries from any and all
Liabilities to the Selling Stockholders and their Affiliates (other than
pursuant to arrangements as specifically contemplated by the terms and
conditions hereof).
 
1.79           Conditions Precedent to Obligations of the Selling
Stockholders.  The obligations of the Selling Stockholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions precedent
(any or all of which may be waived by the Selling Stockholders in whole or in
part to the extent permitted by applicable Law):
 
·           the representations and warranties of Purchaser set forth in this
Agreement qualified as to materially shall be true and correct, and those not so
qualified shall be true and correct in all material respects 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 materially 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);
 
·           Purchaser 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 Purchaser on or prior to the Closing Date;
 
·           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 contemplated hereby;
 
·           Purchaser and the Escrow Agent shall have entered into and executed
the Escrow Agreement, substantially in the form of Exhibit B hereto;
 
·           the Selling Stockholders shall have obtained those, consents,
approvals, orders, authorizations, the issuance, reissuance and transfer of
Permits, and made the registrations, declarations and filings listed on Schedule
7.2(e);
 
·           Purchaser and the Company shall have entered into and executed an
Access Agreement, substantially in the form of Exhibit C hereto; and
 
·           the waiting period under the HSR Act shall have expired or early
termination shall have been granted and Purchaser shall have obtained or made
any other consent, approval, 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 contemplated hereby.
 
 
INDEMNIFICATION
 
1.80           Survival of Provisions.
 
·           The representations and warranties of the parties contained in this
Agreement, any certificate delivered pursuant hereto or any Selling Stockholder
Document, Company Document or Purchaser Document shall survive the Closing
through and including the first (1st) anniversary of the Closing Date; provided,
however, that the representations and warranties set forth in Sections 3.1
(Organization), 3.2 (Authorization), 3.4 (Ownership), 3.6 (Financial Advisors),
4.1 (Organization), 4.2 (Authorization), 4.4 (Capitalization), 4.5
(Subsidiaries), 4.10 (Taxes), 4.29 (Financial Advisors), 5.1 (Organization), 5.2
(Authorization) and 5.6 (Financial Advisors) shall survive the Closing until 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”).
 
·           No claim for a breach of a Pre-Closing Covenant may be made or
brought by any party hereto after the first (1st) anniversary of the Closing
Date.
 
·           Notwithstanding any of the foregoing provisions to the contrary, the
obligations for indemnification as provided under Section 8.2 shall not
terminate with respect to any Losses as to which the Person to be indemnified
shall have given notice (stating in reasonable detail the basis of the claim for
indemnification) to the indemnifying party in accordance with Section 8.3 before
the termination of the applicable Survival Period.
 
1.81           Indemnification.
 
·           Subject to Sections 8.1, 8.4 and 8.5 hereof, the Selling
Stockholders hereby agree, jointly and severally (except as provided in Section
8.4(d)), to indemnify and hold Purchaser, the Company, and their respective
directors, officers, employees, Affiliates, stockholders, 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 losses, liabilities,
claims, obligations,
 
·           deficiencies, demands, judgments, damages, interest, fines,
penalties, claims, suits, actions, causes of action, assessments, awards, costs
and expenses (including attorneys’ and other professionals’ fees), whether or
not involving a third party claim (individually, a “Loss” and, collectively,
“Losses”):
 
·      based upon, attributable to or resulting from the failure of any of the
representations and warranties made by the Selling Stockholders in this
Agreement to be true and correct at of the date hereof and at and as of the
Closing Date;
 
·      based upon, attributable to or resulting from the breach of any
Pre-Closing Covenant on the part of the Company or any Selling Stockholders;
 
·      based upon, attributable to or resulting from the breach of any covenant
or other agreement under Sections 2.7, 2.8, 6.7, 6.8, 6.9, 9.3, Article X and
this Article VIII, as well as those covenants and agreements related to certain
state tax matters set forth in Schedule 4.10(a) and relating to certain federal
and state tax matters set forth in Schedule 6.2, on the part of the Selling
Stockholders under this Agreement;
 
·      arising from or related to (A) any Company Transaction Expenses (to the
extent and only if any such Company Transaction Expenses (I) are an obligation
or Liability of a Purchaser Indemnified Party after the Closing and (II) are not
included in Included Current Liabilities for purposes of calculation of the
Closing Working Capital and, thus, not incorporated into the adjustment as
provided under Section 2.7) or (B) Indebtedness of the Company or any of its
Subsidiaries, in each case to the extent not paid by the Selling Stockholders or
the Company or the Subsidiaries prior to the Closing or paid contemporaneously
with the Closing; and
 
·      based upon, attributable to or resulting from any Legal Proceeding that
on or prior to the Closing Date shall have been instituted against the Selling
Stockholders, the Company or any of the Subsidiaries, or Purchaser, seeking to
restrain or prohibit or obtain substantial damages with respect to the
consummation of the transactions contemplated by this Agreement.
 
·           Subject to Sections 8.1, 8.4 and 8.5 hereof, Purchaser hereby agrees
to indemnify and hold the Selling Stockholders and their respective Affiliates,
stockholders, agents, attorneys, representatives, successors and permitted
assigns (collectively, the “Selling Stockholder Indemnified Parties”) harmless
from and against, and pay to the applicable Selling Stockholder Indemnified
Parties the amount of any and all Losses:
 
·      based upon, attributable to or resulting from the failure of any of the
representations or warranties made by Purchaser in this Agreement to be true and
correct at the date hereof and as of the Closing Date;
 
·      based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of Purchaser under this Agreement.
 
·      The waiver of any condition based on the accuracy of any such
representation or warranty, or on the performance of or compliance with any such
covenant or agreements, will not affect the right to indemnification or any
other remedy based on such representations, warranties, covenants and
agreements.
 
1.82           Indemnification Procedures.
 
·           A claim for indemnification for any matter not involving a third
party claim may be asserted by notice to the party from whom indemnification is
sought; provided, however, that failure to so notify the indemnifying shall not
preclude the indemnified party from any indemnification which it may claim in
accordance with this Article VIII.
 
·           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 8.2 hereof (regardless of the
limitations set forth in Section 8.4) (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 loss and
prejudice as a result of such failure.  Subject to the provisions of this
Section 8.3, 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 hereunder; provided that the indemnifying party shall have
acknowledged in writing to the indemnified party its unqualified obligation
(subject to the limitations of Section 8.4) to indemnify the indemnified party
as provided 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 by it hereunder, it shall within five 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; provided, that the indemnifying party
must conduct the defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard.  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 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, however,
that such indemnified party shall be entitled to participate in any such defense
with separate counsel at the expense of the indemnifying party if (i) so
requested by the indemnifying party to participate or (ii) 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 for all indemnified parties in
connection with any Third Party Claim.  The parties hereto agree to provide
reasonable access to the other 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 8.3 to
the contrary, neither the indemnifying party nor the indemnified party shall,
without the 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 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.  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.
 
·           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 (or the Stockholder Representative, in the case of a claim
for indemnification for which payment may be sought under Section 8.2(b), and
the indemnifying party (or, in the case of a claim for indemnification for which
payment may be sought under Section 8.2(a), the Stockholder Representative)
shall have arrived at a mutually binding agreement with respect to a claim for
indemnification hereunder, the indemnified party (or, as applicable, the
Stockholder Representative) shall forward to the indemnifying party (or, in the
case of a claim for indemnification for which payment may be sought under
Section 8.2(a), the Stockholder Representative) notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such
matter.
 
·           Following the determination of any applicable amount that the
Selling Stockholders shall be obligated to indemnify pursuant to Section
8.2(a)(i) or 8.2(a)(ii), the Stockholder Representative shall (i) promptly
direct, in accordance with Section 8.6, the Escrow Agent to distribute to the
applicable Purchaser Indemnified Party such amount in satisfaction of such
obligations and (ii) to the extent such applicable amounts are not within the
Cap but are properly payable pursuant to Sections 8.2 and 8.4, notify the
Selling Stockholders so that payment may be made to the applicable Purchaser
Indemnified Party by each such Selling Stockholder in satisfaction of its
respective obligations under Section 8.2(a).
 
1.83           Limitations on Indemnification.  
 
(a)           An indemnifying party shall not have any liability under Section
8.2(a)(i) hereof unless the aggregate amount of Losses incurred by the
indemnified parties and indemnifiable thereunder based upon, attributable to or
resulting from the failure of any of the representations or warranties to be
true and correct exceeds $1,000,000 (the “Rep Basket”) and, in such event, the
indemnifying party shall be required to pay only the amount of such Losses in
excess of $250,000 (the “Rep Deductible”); provided that the Rep Basket and Rep
Deductible limitations shall not apply to Losses related to breaches of
representations and warranties as set forth in Sections 3.1 (Organization), 3.2
(Authorization), 3.4 (Ownership), 3.6 (Financial Advisors), 4.1 (Organization),
4.2 (Authorization), 4.4 (Capitalization), 4.5 (Subsidiaries), 4.10 (Taxes)
and  4.29 (Financial Advisors).
 
(b)           The Selling Stockholders shall not have any liability for
indemnification under Section 8.2(a)(ii) hereof unless the aggregate amount of
Losses incurred by Purchaser Indemnified Parties and indemnifiable thereunder
based upon, attributable to or resulting from the breach of any Pre-Closing
Covenant on the part of the Company or any Selling Stockholders exceeds $100,000
(the “Covenant Basket”) and, in such event the Selling Stockholders shall be
required to pay the amount of such Losses only to the extent of such
excess.  Notwithstanding any of the foregoing provisions to the contrary, to the
extent that any liability for indemnification by the Selling Stockholders based
upon, attributable to or resulting from a breach of a Pre-Closing Covenant on
the part of the Company or any Selling Stockholders is also covered under this
Agreement under indemnification obligations of the Selling Stockholders relating
to a breach of a representation or warranty of the Selling Stockholders, then
such liability shall be deemed to arise and be incurred pursuant to Section
8.2(a)(i) and, thus, be subject to the Rep Basket and Rep Deductible for
purposes of the limitations set forth in this Section 8.4.
 
(a)           The Selling Stockholders shall not be required to indemnify any
Person under Sections 8.2(a)(i) and 8.2(a)(ii) for an aggregate amount of Losses
exceeding an amount equal to $5,000,000 of the Purchase Price (the “Cap”);
provided that there shall be no Cap with respect to Losses related to breaches
of any representations or warranties contained in Sections 3.1 (Organization),
3.2 (Authorization), 3.4 (Ownership), 3.6 (Financial Advisors), 4.1
(Organization), 4.2 (Authorization), 4.4 (Capitalization), 4.5 (Subsidiaries),
4.10 (Taxes) and 4.29 (Financial Advisors) of this Agreement.
 
(b)           Notwithstanding anything herein to the contrary, (i) no Selling
Stockholder, other than the Controlling Owner, shall be liable for
indemnification obligations in an amount in excess of its respective portion of
the Purchase Price received (or, in respect of the Indemnity Escrow Amount,
receivable) pursuant hereto and (ii) the Trust shall have no liability for
indemnification obligations hereunder
 
(c)           The amount of any Losses for which indemnification is provided
under this Article VIII shall be net of any (i) amounts actually recovered by
the indemnified party pursuant to any indemnification by or indemnification or
other agreement with any third party or (ii) insurance proceeds or other cash
receipts or sources of reimbursement actually received (in each case, net of any
costs of collection or increased premiums relating thereto); provided, however,
that clause (ii) shall apply only if the effect of such provision does not
constitute an impermissible waiver of the insurer’s rights of subrogation
against the indemnifying party.  The parties acknowledge and agree that nothing
in this Section 8.4(e) shall (i) create an obligation of any party to maintain
any form or level of insurance or other arrangements after the Closing, (ii)
name any other party as an additional indemnitee, insured or other party or
(iii) obtain approval for any waiver of rights of subrogation.
 
(d)           For purposes of calculating Losses hereunder, any materiality or
Material Adverse Effect qualifications in the representations, warranties,
covenants and agreements shall be disregarded.
 
(e)           The Selling Stockholders shall have no right of contribution or
other recourse against the Company or the Subsidiaries or their respective
directors, officers, employees, Affiliates, agents, attorneys, representatives,
assigns or successors for any Third
 
(f)           Party Claims asserted by Purchaser Indemnified Parties, it being
acknowledged and agreed that the covenants and agreements of the Company are
solely for the benefit of the Purchaser Indemnified Parties.
 
1.84           Tax Matters.
 
·           Tax Indemnification.  The Selling Stockholders hereby agree 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 the Company and the Subsidiaries
(or any predecessor thereof) (A) for any taxable period ending on or before the
Closing Date, and (B) for the portion of any Straddle Period ending at the close
of business on the Closing Date (determined as provided in Section 8.5(d)); (ii)
any and all Taxes imposed on any member of a consolidated, combined or unitary
group of which the Company or any Subsidiary (or any predecessor thereof) is or
was a member on or prior to the Closing Date, by reason of the liability of the
Company 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); (iii) the
failure of any of the representations and warranties contained in Section 4.10
to be true and correct in all respects or the failure to perform any covenant
contained in this Agreement with respect to Taxes; (iv) any recapture of
Nebraska LB 775 tax credits from the Company due to the failure to meet or
maintain the requirements of LB 775 prior to the Closing Date; and (v) any Taxes
resulting from, arising out of or based on the Section 338(h)(10) Election (as
defined in Section 8.5(b)).
 
·           338(h)(10) Election.
 
·      The Selling Stockholders shall join with Purchaser in making an election
under Section 338(h)(10) of the Code and the Treasury Regulations and any
corresponding or similar elections under state, local or foreign tax law
(collectively, the “Section 338(h)(10) Election”) with respect to the Company
and each of the Subsidiaries.  For the purpose of making the Section 338(h)(10)
Election for federal income Tax purposes, on or prior to the Closing Date, the
Selling Stockholders shall deliver to Purchaser an executed original IRS Form
8023 (or successor form).  If no Section 338(h)(10) Election is to be made, the
Form 8023 will be returned to the Selling Stockholders within 120 days after the
Closing Date.  If a Section 338(h)(10) Election is to be made, Purchaser will
file the Form 8023 with the IRS.  At least 30 days prior to the due date of such
form Purchaser will provide the Stockholder Representative a copy of the
proposed Form 8023 and all attachments thereto and Purchaser shall negotiate in
good faith with the Stockholder Representative concerning any reasonable
adjustments thereto.
 
·      Purchaser shall be responsible for the preparation and filing of all
forms and documents required to effectuate the Section 338(h)(10) Election.  In
addition to the Form 8023, the Selling Stockholders shall execute (or cause to
be executed) and deliver to Purchaser such additional documents or forms as are
reasonably requested to complete properly the Section 338(h)(10) Election at
least 15 days prior to the date such Section 338(h)(10) Election is required to
be filed.
 
·      Purchaser and the Selling Stockholders shall file, and shall cause their
Affiliates to file, all Tax Returns and statements, form and schedules in
connection therewith in a manner consistent with the Section 338(h)(10) Election
and shall take no position contrary thereto unless required to do so by
applicable Tax Laws.
 
·      If Purchaser notifies the Selling Stockholders of its intent to make a
Section 338(h)(10) Election, the allocation statement set forth on Schedule
8.5(b) (the “Allocation Statement”), which allocates the Purchase Price and any
other items that are treated as additional Purchase Price for tax purposes among
the Company and the Subsidiaries and among the different items of assets of the
Company and the Subsidiaries, shall be applicable.  All Tax Returns and reports
filed by Purchaser, the Selling Stockholders and their respective Affiliates
shall be prepared consistently with such Allocation Statement.
 
·           Filing of Tax Returns; Payment of Taxes.
 
·      The Company shall (and shall cause the Subsidiaries to) timely file all
Tax Returns required to be filed by it on or prior to the Closing Date and shall
pay or cause to be paid all Taxes shown due thereon.  All such Tax Returns shall
be prepared in all material respects in a manner consistent with prior
practice.  The Company shall provide Purchaser with copies of such completed Tax
Returns at least twenty (20) days prior to the due date for filing thereof,
along with supporting workpapers, for Purchaser’s review and approval.  The
Selling Stockholders and Purchaser shall attempt in good faith to resolve any
disagreements regarding such Tax Returns prior to the due date for filing.  In
the event that the Selling Stockholders and the Purchaser are unable to resolve
any dispute with respect to such Tax Return at least ten days prior to the due
date for filing, such dispute shall be resolved pursuant to Section 8.5(g),
which resolution shall be binding on the parties.
 
·      Following the Closing, Purchaser shall cause to be timely filed all Tax
Returns required to be filed by the Company and the Subsidiaries after the
Closing Date and, subject to the rights to payment from the Selling Stockholders
under Section 8.5(c)(iii), pay or cause to be paid all Taxes shown due thereon;
provided that, if an applicable Tax Return sets forth Taxes for which the
Selling Stockholders are responsible (including, without limitation, as an
indemnification obligation under this Section 8.5) then Purchaser shall provide
a copy of such Tax Return to the Stockholder Representative at least ten (10)
days prior to filing and shall negotiate in good faith with the Stockholder
Representative concerning any reasonable adjustments thereto.
 
·      Not later than ten (10) days prior to the due date for the payment of
Taxes on any Tax Returns which Purchaser has the responsibility to cause to be
filed pursuant to Section 8.5(c)(ii), the Selling Stockholders shall pay to
Purchaser or the applicable Governmental Body the amount of Taxes, as reasonably
determined by Purchaser, owed by the Selling Stockholders pursuant to the
provisions of Section 8.5(a).  No payment pursuant to this Section 8.5(c)(iii)
shall excuse the Selling Stockholders from its indemnification obligations
pursuant to Section 8.5(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 Selling Stockholders’ payment under
this Section 8.5(c)(iii)
 
·           Straddle Period Tax Allocation.  The Company will, unless prohibited
by applicable Law, close the taxable period of the Company and the Subsidiaries
as of the close of business on the Closing Date.  If applicable Law does not
permit the Company or a Subsidiary to close its taxable year on the Closing Date
or in any case in which a Tax is assessed with respect to a taxable period which
includes the Closing Date (but does not begin or end on that day) (a “Straddle
Period”), the Taxes, if any, attributable to a Straddle Period shall be
allocated (i) to the Selling Stockholders for the period up to and including the
close of business on the day immediately preceding the Closing Date and (ii) to
Purchaser for the period subsequent to the day immediately preceding the Closing
Date; provided, however, that such allocation shall in no way affect the
obligation of the Selling Stockholders to be responsible and liable for any and
all Taxes (including, without limitation, arising out of or based on the Section
338(h)(10) Election) relating to the consummation of the transactions under this
Agreement, other than such Taxes for which Purchaser is responsible as set forth
under Section 8.5(f) hereof.  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 the Company and the Subsidiaries as of the
close of the Closing Date, 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 Closing Date and the period after the Closing Date in proportion
to the number of days in each such period.
 
·           Tax Audits.
 
·      If notice of any Legal Proceeding with respect to Taxes of the Company or
any of the Subsidiaries (a “Tax Claim”) shall be received by either party for
which the other party may reasonably be expected to be liable pursuant to
Section 8.5(a), the notified party shall notify such other party in writing of
such Tax Claim; provided, however, that the failure of the notified party to
give the other party notice as provided herein shall not relieve such failing
party of its obligations under this Section 8.5 except to the extent that the
other party is actually and materially prejudiced thereby.
 
·      Purchaser shall have the right, at the expense of the Selling
Stockholders to the extent such Tax Claim is subject to indemnification by the
Selling Stockholders pursuant to Section 8.5(a) hereof, to represent the
interests of the Company and the Subsidiaries in any Tax Claim, provided that
with respect to a Tax Claim relating exclusively to taxable periods ending on or
before the Closing Date, the Stockholder Representative shall represent the
interests of the Company and shall not settle such claim without the consent of
Purchaser, which consent shall not be unreasonably withheld.
 
·           Transfer Taxes.  Purchaser shall be liable for and shall pay (and
shall indemnify and hold harmless the Selling Stockholders 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 contemplated by this
Agreement.
 
·           Disputes.  Any dispute as to any matter covered hereby shall be
resolved by an independent accounting firm mutually acceptable to the
Stockholder Representative and the Purchaser.  The fees and expenses of such
accounting firm shall be borne equally by the Selling Stockholders, on the one
hand, and the Purchaser 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.
 
·           Time Limits.  Any claim for indemnity under this Section 8.5 may be
made at any time prior to ninety (90) 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).
 
·           Exclusivity.  The indemnification provided for in this Section 8.5
shall be the sole remedy for any claim in respect of Taxes, including any claim
arising out of or relating to a breach of Section 4.10.  In the event of a
conflict between the provisions of this Section 8.5, on the one hand, and the
provisions of Sections 8.1 through 8.4, on the other, the provisions of this
Section 8.5 shall control.
 
1.85           Indemnity Escrow.  On the Closing Date, Purchaser shall deposit
with First National Bank of Omaha (the “Escrow Agent”), as agent to Purchaser
and the Stockholder Representation (on behalf of the Selling Stockholders), in
immediately available funds, to the account designated by the Escrow Agent, and
amount equal to $5,000,000.00 (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 Purchaser, the Stockholder Representative
and the Escrow Agent (the “Escrow Agreement”).  Any payment the Selling
Stockholders are obligated to make to any Purchaser Indemnified Parties pursuant
to this Article VIII 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 and shall accordingly reduce
the Indemnity Escrow Amount and, second, to the extent the Indemnity Escrow
Amount is insufficient (and such claims are not subject to the Cap limitation
under Section 8.4(c)) to pay any remaining sums due, then the Selling
Stockholders shall be required to pay all of such additional sums due and owing
to the applicable Purchaser Indemnified Party by wire transfer of immediately
available funds within five (5) Business Days after the date of such notice.  On
the first (1st) anniversary of the Closing Date, the Escrow Agent shall release
the Indemnity Escrow Amount (to the extent not utilized to pay any Purchaser
Indemnified Parties for any indemnification claim) to the Stockholder
Representative (for distribution to the Selling Stockholders in accordance with
their respective pro rata portion of the Purchase Price), 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 VIII
asserted prior to such first (1st) anniversary 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 Purchaser
Indemnified Parties for any such claims resolved in favor thereof) upon their
resolution in accordance with this Article VIII and the terms of the Escrow
Agreement.
 
1.86           Treatment of Indemnity Payments.  The Selling Stockholders and
the Purchaser agree to treat any indemnity payment made pursuant to this Article
VIII as an adjustment to the Purchase Price for all purposes, including relating
to income Taxes.
 
1.87           Exclusive Remedy.  Except for claims for intentional acts of
fraud by any of the Controlling Owner, the chief financial officer or chief
operating officer of the Company, from and after the Closing, the sole and
exclusive remedy available to the parties hereto for claims arising out of the
subject matter of this Agreement shall be indemnification in accordance with
this Article VIII.  Notwithstanding the foregoing, this Section 8.8 shall not
(i) operate to interfere with or impede the operation under Sections 2.7, 2.8,
9.3 or this Article VIII for the resolution of certain disputes and payment of
funds in respect thereof or (ii) limit the rights of the parties to seek
non-monetary equitable remedies (including specific performance or injunctive
relief).
 
 
TERMINATION
 
1.88           Termination of Agreement.  This Agreement may be terminated prior
to the Closing as follows:
 
·           At the election of the Stockholder Representative or Purchaser after
October 1, 2007 (such date, as it may be extended under this Section 9.1(a), the
“Termination Date”), 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; and provided, further, that either
Purchaser or the Stockholder Representative shall have the option to extend,
from time to time, the Termination Date for additional periods of time not to
exceed 60 days in the aggregate if all other conditions to the Closing are
satisfied or capable of then being satisfied and the sole reason that the
Closing has not been consummated is that the condition set forth in Section
7.1(f) has not been satisfied due to the failure to obtain the necessary
consents and approvals under applicable Laws;
 
·           by mutual written consent of the Stockholder Representative and
Purchaser;
 
·           by the Stockholder Representative or Purchaser 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 contemplated hereby; provided, however, that the right to
terminate this Agreement under this Section 9.1(c) 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;
 
·           by Purchaser if any Selling Stockholder or the Company 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 any Selling Stockholder or the Company shall have become untrue, in either
case such that the conditions set forth in Sections 7.1(a) or 7.1(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 the Stockholder Representative of notice of such
breach from the Purchaser; or
 
·           by the Stockholder Representative if Purchaser 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
Purchaser shall have become untrue, in either case such that the conditions set
forth in Sections 7.2(a) or 7.2(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 Purchaser of notice of such
breach from the Stockholder Representative.
 
1.89           Procedure Upon Termination.  In the event of termination and
abandonment by Purchaser or the Stockholder Representative, or both, pursuant to
Section 9.1, written notice thereof shall forthwith be given to the other party
or parties, and this Agreement shall terminate, and the purchase of the Shares
hereunder shall be abandoned, without further action by Purchaser, the Company
or the Selling Stockholders; provided, however, that the obligations of the
parties under Section 6.9, Section 9.3 and Article X shall remain in full force
and effect.
 
1.90           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
Purchaser, any Selling Stockholder or the Company; provided, however, that in
the event that this Agreement is terminated by the Stockholder Representative
pursuant to Section 9.1(e) (for any reason other than solely for to the failure
of the Closing to be consummated due to the failure to satisfy the conditions
set forth in Section 7.1(f) or Section 7.1(g) at such time as the Stockholder
Representative, the other Selling Stockholders and the Company are not in
material default of any of their respective obligations hereunder) or by
Purchaser pursuant to Sections 9.1(d) (for any reason other than solely for to
the failure of the Closing to be consummated due to the failure to satisfy the
conditions set forth in Section 7.1(f) or Section 7.1(g) at such time as
Purchaser is not in material default of any of its obligations hereunder), then
the Company, if the Stockholder Representative is such terminating party, or
Purchaser, if Purchaser is such terminating party, shall pay to Purchaser (if
the Stockholder Representative is such terminating party) or the Company (if
Purchaser is such terminating party) a termination fee equal to $2,500,000.00
(as liquidated damages for any such termination.  Any payment required by the
immediately foregoing sentence shall be made by the applicable party within five
(5) Business Days after such applicable termination.  The obligations of the
parties set forth in this Section 9.3, Section 6.9 and Article X hereof shall
survive any such termination and shall be enforceable hereunder.
 
 
MISCELLANEOUS
 
1.91           Expenses.  Except as otherwise provided in this Agreement, each
of the Selling Stockholders and Purchaser shall each bear its own expenses
incurred in connection with
 
1.92           the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby.  Unpaid Company
Transaction Expenses shall be accrued by the Company and its Subsidiaries and
shall either be incorporated into the adjustment as provided under Section 2.7
as Included Current Liabilities for purposes of calculation of Closing Working
Capital or otherwise be an obligation of the Selling Stockholders as provided
under Section 8.2(a)(iv).  Notwithstanding anything to the contrary herein,
Purchaser shall be responsible for and shall pay the fees associated with
filings required by the HSR Act.
 
1.93           Stockholder Representative.  
 
·           Each Selling Stockholder hereby irrevocably appoints Dennis P. Circo
(the “Stockholder Representative”) as such Selling Stockholder’s representative,
attorney-in-fact and agent, with full power of substitution to act in the name,
place and stead of such Selling Stockholder with respect to the transfer of such
Selling Stockholder’s Shares to Purchaser in accordance with the terms and
provisions of this Agreement and to act on behalf of such Selling Stockholder in
any amendment of or litigation or arbitration involving this Agreement and to do
or refrain from doing all such further acts and things, and to execute all such
documents, as such Stockholder Representative shall deem necessary or
appropriate in conjunction with any of the transactions contemplated by this
Agreement, including the power:
 
·      to take all action necessary or desirable in connection with the waiver
of any condition to the obligations of the Selling Stockholders to consummate
the transactions contemplated by this Agreement;
 
·      to negotiate, execute and deliver all ancillary agreements, statements,
certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to be given in connection
with the consummation of the transactions contemplated by this Agreement (it
being understood that such Selling Stockholder shall execute and deliver any
such documents which the Stockholder Representative agrees to execute);
 
·      to terminate this Agreement if the Selling Stockholders are entitled to
do so;
 
·      to give and receive all notices and communications to be given or
received under this Agreement and to receive service of process in connection
with the any claims under this Agreement, including service of process in
connection with arbitration; and
 
·      to take all actions which under this Agreement may be taken by the
Selling Stockholders and to do or refrain from doing any further act or deed on
behalf of the Selling Stockholder which the Stockholder Representative deems
necessary or appropriate in his sole discretion relating to the subject matter
of this Agreement as fully and completely as such Selling Stockholder could do
if personally present.
 
·      If Dennis P. Circo becomes unable to serve as Stockholder
Representative,  Christopher W. Circo, or such other Person or Persons as may be
designated by a majority of the Selling Stockholders, shall succeed as the
Stockholder Representative.
 
1.94           Specific Performance.  The Selling Stockholders acknowledge and
agree that a breach of this Agreement would cause irreparable damage to
Purchaser and that Purchaser will not have an adequate remedy at
law.  Therefore, the obligations of the Selling Stockholders under this
Agreement to sell the Shares to Purchaser, 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 remedy shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement.
 
1.95           Submission to Jurisdiction; Consent to Service of Process; Waiver
of Jury Trial.
 
·           Except as otherwise specifically provided under Sections 2.7(b), 2.8
(with respect to clauses (a)(iii) and (b)(iii) of Schedule 2.8) and 8.5(g), the
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of
any federal or state court located within the State of Nebraska over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby 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.
 
·           Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action or proceeding by delivery of
a copy thereof in accordance with the provisions of Section 10.7.
 
·           THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY, OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
 
·           Entire Agreement; Amendments and Waivers.  This Agreement (including
the schedules and exhibits hereto), the Confidentiality Agreement, the Selling
Stockholder 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 action taken
pursuant to this Agreement 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.
 
1.96           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Nebraska applicable to contracts
made and performed in such state.
 
1.97           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
facsimile (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 facsimile numbers (or to
such other address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):
 
If to the Company (on or prior to the Closing Date) or any Selling Stockholder,
to:
    c/o Precision Industries, Inc.
    4611 S. 96th Street
    Omaha, NE 68127
    Facsimile:  (402) 827-1393
    Attention:  Dennis P. Circo, Chairman of the Board and Chief Executive
Officer
 
With a copy to:
    McGrath North Mullin & Kratz, PC LLO
    First National Tower, Suite 3700
    1601 Dodge Street
    Omaha, NE 68102-1627
    Facsimile:  (402) 341-0216
    Attention:  David L. Hefflinger
 
If to Purchaser, to:
    DXP Enterprises, Inc.
    7272 Pinemont
    Houston, TX 77040
    Facsimile:  (713) 996-4701
    Attention:  David R. Little, Chief Executive Officer
 
 
With a copy to:
    Looper Reed & McGraw, P.C.
    1300 Post Oak Blvd., Suite 2000
    Houston, TX 77056
    Facsimile:  (713) 986-7100
    Attention:  Jeffrey D. Hopkins

1.98           Severability.  If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any law or public policy,
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 contemplated hereby 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 contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
 
1.99           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 below.  No assignment of this Agreement or of
any rights or obligations hereunder may be made by either the Selling
Stockholders or 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, however, that Purchaser may
assign this Agreement and any or all rights or obligations hereunder (including
Purchaser’s rights to purchase the Shares and Purchaser’s rights to seek
indemnification hereunder) to any Affiliate of Purchaser, any Person from which
it has borrowed money or any Person to which Purchaser or any of its Affiliates
proposes to sell all or substantially all of the assets relating to the
business, provided, Purchaser shall remain primarily liable under this
Agreement.  Upon any such permitted assignment, the references in this Agreement
to Purchaser shall also apply to any such assignee unless the context otherwise
requires.
 
1.100                      Non-Recourse.  No past, present or future director,
officer, employee, incorporator, member, partner, stockholder, Affiliate, agent,
attorney or representative of Purchaser shall have any liability for any
obligations or liabilities of Purchaser under this Agreement or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby.
 
1.101                      Counterparts.  This Agreement may be executed in one
or more counterparts (including by facsimile), each of which will be deemed to
be an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
DXP ENTERPRISES, INC.
 
By: /s/David R.
Little                                                                
David R. Little, Chief Executive Officer

 
PRECISION INDUSTRIES, INC.
 
By: /s/Dennis P.
Circo                                                                
Dennis P. Circo, Chief Executive Officer

 
SELLING STOCKHOLDERS:
 
DENNIS P. CIRCO

/s/Dennis P.
Circo                                                                
 
CHRISTOPHER W. CIRCO
 
/s/Christopher W.
Circo                                                                
 
CIRCO ENTERPRISES, LLC
 
By: /s/Dennis P.
Circo                                                                
Name:  Dennis P. Circots:
Its:  Manager

CIRCO HOLDINGS, LLC
 
By: /s/Dennis P.
Circo                                                                
Name: Dennis P. Circo
 
Its:  Manager
 
DENNIS P. CIRCO IRREVOCABLE TRUST NO. 4

By: Security National Bank, Trustee
       /s/Douglas S.
Oldaker                                                                           
Name:  Douglas S. Oldaker
 
Its:  Senior Vice President
 

 
 

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Schedules and exhibits omitted pursuant to Item 601(b)(3) of Regulation S-K.