Exhibit 10.1

Execution Version

STOCK PURCHASE AGREEMENT

BY AND AMONG

THE SHAREHOLDERS OF

SCHAEFER MANUFACTURING, INC.,

WABTEC HOLDING CORPORATION

and

CCP LIMITED PARTNERSHIP, AS SELLERS’ AGENT

AS OF OCTOBER 6, 2006

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is made as of October 6, 2006, by and among the
shareholders of SCHAEFER MANUFACTURING, INC., a Wisconsin corporation (the
“Company”) identified on Schedule A attached hereto (the “Sellers”), WABTEC
HOLDING CORPORATION, a Delaware corporation (the “Purchaser”), and CCP LIMITED
PARTNERSHIP, a Wisconsin limited partnership, in its capacity as Sellers’ Agent
pursuant to the terms and conditions hereof (the “Sellers’ Agent”).

RECITALS

A. Sellers own as of Closing all of the issued and outstanding shares of capital
stock of the Company and, in turn, the Company owns as of Closing all of the
issued and shares of capital stock of Schaefer Equipment, Inc., an Ohio
corporation (“Equipment Co.”).

B. Sellers wish to sell the Shares to Purchaser, and Purchaser wishes to
purchase the Shares from Sellers, on the terms and conditions set forth in this
Agreement.

AGREEMENTS

In consideration of the recitals and of the mutual agreements, provisions and
covenants set forth below, the Parties agree as follows:

1. DEFINITIONS. For purposes of this Agreement, the following definitions shall
apply:

“AAA” shall mean the American Arbitration Association.

“Accounts Receivable” shall have the meaning specified in Section 3.24 of this
Agreement.

“Agreement” shall mean this Stock Purchase Agreement.

“Ancillary Agreements” shall mean the agreements, documents and instruments
related to this Agreement to which Purchaser, the Company or any Seller is a
party.

“Annual Financial Statements” shall mean the audited consolidated financial
statements of the Company and its Subsidiaries for their 2004 and 2005 fiscal
years, copies of which have been provided by Sellers to Purchaser.

“Base Amount” shall have the meaning specified in Section 2.2 of this Agreement.

“Basket Amount” shall have the meaning specified in Section 9.3(d)(i) of this
Agreement.

“Benefit Plans” shall mean any employee benefit plan as that term is defined in
ERISA Sections 3(1), (2), (3), (37) and (40), and each pension plan, profit
sharing plan, stock bonus plan, incentive compensation plan, incentive bonus
plan, stock ownership plan, stock

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purchase plan, stock option plan, stock appreciation plan, employee benefit
plan, employee benefit policy, retirement plan, fringe benefit program, employee
insurance plan, severance plan, disability plan, health care plan, sick leave
plan, death benefit plan or any other plan or program to provide retirement
income, fringe benefits or other benefits for former or current employees or
directors of any Schaefer Company, to which any Schaefer Company currently
contributes or has an obligation to contribute in the future (including without
limitation employment agreements and any other agreements containing “golden
parachute” provisions and deferred compensation agreements) or any plan or
program under which any employee, former employee or director (or beneficiary of
any employee, former employee or director) of any Schaefer Company has or may
have any current or future right to benefits.

“BOCP” shall mean BOCP, II, LLC, a Delaware limited liability company.

“Bonus Plan” shall mean that certain Sale Bonus and Severance Plan adopted
June 6, 2006, between the Company and the key management employees of Equipment
Co.

“Bonus Plan Releases” shall have the meaning specified in Section 5.1(k) hereof.

“Business Day” shall mean any day except a Saturday, a Sunday or a day on which
commercial banks in Chicago, Illinois are authorized or required by law to
close.

“Cash and Cash Equivalents” shall mean the sum of the fair market value,
expressed in United States dollars, of all cash and cash equivalent assets
(including marketable securities and short term instruments) of the Schaefer
Companies as of immediately prior to the Closing.

“CCP” shall mean CCP Limited Partnership, a Wisconsin limited partnership.

“Closing” shall mean the conference to be held at 10:00 a.m., Eastern Daylight
Time, on the Closing Date at the offices of Reed Smith LLP, 435 Sixth Avenue,
Pittsburgh, Pennsylvania, or such other time and place as Sellers and Purchaser
may mutually agree, at which time the transactions contemplated by this
Agreement shall be consummated.

“Closing Cash” shall mean the aggregate amount of Cash and Cash Equivalents of
the Schaefer Companies on hand as of the Closing Date.

“Closing Date” shall mean the date first written above.

“Closing Funded Debt” shall mean (i) the aggregate amount of Funded Debt of the
Schaefer Companies outstanding as of the Closing Date, plus (ii) the other long
term liabilities (other than retiree health and retiree life insurance and
unfunded death benefits) outstanding as of the Closing Date, plus (iii) the
Purchase Price as defined and set forth in the Warrant Repurchase Agreement.

“Closing Payment” shall have the meaning specified in Section 2.3 of this
Agreement.

 

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“Closing Working Capital” shall mean the Net Working Capital of the Schaefer
Companies determined as of the Closing Date.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.

“Company” shall be defined as set forth above.

“Computer Systems” shall have the meaning specified in Section 3.26 of this
Agreement.

“Confidentiality Agreement” means that certain confidentiality agreement between
the Company and Purchaser dated April 18, 2006.

“Consent” shall mean any approval, consent, ratification, waiver, license,
permit, certification, registration or other authorization of any Person,
including any Governmental Authority.

“Contract” shall mean (i) any written agreement, contract, obligation, promise
or undertaking that is legally binding (a) under which any Schaefer Company has
or may acquire any rights, (b) under which any Schaefer Company has or may
become subject to any obligation or liability or (c) by which any Schaefer
Company or any of the assets owned or used by it is or may become bound or
(ii) any oral agreement, contract, obligation, promise or undertaking (whether
express or implied) meeting the requirements of (i) of this definition that, to
the Knowledge of any of the Sellers, exists.

“Current Assets” shall mean as of the date of determination, the current assets
of the Schaefer Companies as 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 Reference Balance Sheet,
other than Cash and Cash Equivalents and deferred Taxes.

“Current Liabilities” shall mean as of the date of determination, the current
liabilities of the Schaefer Companies as 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 Reference
Balance Sheet, other than Funded Debt and accrued Taxes.

“Cut-off Date” shall have the meaning specified in Section 9.1(a) of this
Agreement.

“Dispute” shall have the meaning specified in Section 10.1 of this Agreement.

“Dispute Notice” shall have the meaning specified in Section 10.3 of this
Agreement.

 

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“Disputed Item” shall have the meaning specified in Section 2.4(e) of this
Agreement.

“Encumbrance” shall mean any lien, security interest, mortgage, pledge or other
encumbrance of any nature, including without limitation any easement, right of
way, charge, claim, community property interest, condition, equitable interest,
option, right of first refusal or restriction or adverse claim of any kind,
including without limitation any restriction on use, voting, transfer, receipt
of income or exercise of any other attribute of ownership or any other
encumbrance or exception to title of any kind, other than, with respect solely
to any asset of a Schaefer Company, Permitted Encumbrances.

“Environmental Claim” shall mean any claim, action, cause of action,
investigation or notice by any Person alleging liability (including, without
limitation, liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (i) the release by any
Schaefer Company prior to Closing into the environment of any Hazardous
Substances at any location, or (ii) any violation or alleged violation of any
Environmental Law by any Schaefer Company prior to Closing.

“Environmental Laws” shall mean all Laws in effect as of the Closing Date
relating to pollution or protection of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata), including Laws
relating to emission, discharge, release, or to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances and each individually, an “Environmental Law.”

“Environmental Losses” means any of Purchaser’s Losses resulting from a breach
of the representations and warranties in Section 3.16 of this Agreement.

“Equipment Co.” shall be defined as set forth above.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.

“Escrow Agent” shall mean Mellon Bank, N.A., a national banking association with
its principal place of business at One Mellon Center, Pittsburgh, Pennsylvania
15258.

“Escrow Agreement” shall mean the Escrow Agreement among Purchaser, Sellers’
Agent on behalf of Sellers, and the Escrow Agent in substantially the form of
Exhibit “A” hereto.

“Escrow Amount” shall have the meaning specified in Section 2.3(b) of this
Agreement.

“Existing Plans” shall mean the existing Benefit Plans with respect to employees
of the Schaefer Companies, all of which are listed and described on the Sellers’
Disclosure Schedule.

 

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“Final Closing Balance Sheet” shall mean the Preliminary Closing Balance Sheet,
as determined to be binding and conclusive upon, deemed accepted by, and as
amended to reflect resolution of any disputes between the parties pursuant to
Section 2.4 of this Agreement.

“Final Closing Cash” shall mean the amount of Cash and Cash Equivalents as
determined based on the Final Closing Balance Sheet.

“Final Closing Working Capital” shall mean the amount of Net Working Capital as
determined based on the Final Closing Balance Sheet.

“Final Purchase Price” shall mean the Purchase Price as determined based on the
Final Closing Balance Sheet.

“Financial Statements” shall mean the Annual Financial Statements and Interim
Financial Statements, collectively.

“Funded Debt” shall mean indebtedness for borrowed money of any of the Schaefer
Companies, including but not limited to the indebtedness listed on Exhibit “B”
hereto.

“GAAP” means United States generally accepted accounting principles,
consistently applied in accordance with the historical practices of the Schaefer
Companies.

“Governmental Authority” means any United States federal, state or local
government or political agency, division, subdivision thereof or any regulatory
body, agency or authority or any authority, agency or commission entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power, any court or tribunal (or any
department, bureau or division thereof).

“Hazardous Substances” means all hazardous substances, as that term is defined
in CERCLA, solid waste, hazardous waste and any other individual or class of
pollutants, contaminants, toxins, chemicals, substances, wastes or materials in
their solid, liquid or gaseous phase, defined, regulated, classified or
identified under any Environmental Law.

“Improvements” shall have the meaning specified in Section 3.12(c)(iv) of this
Agreement.

“Indemnified Party” shall have the meaning specified in Section 9.4(a) of this
Agreement.

“Indemnifying Party” shall have the meaning specified in Section 9.4(a) of this
Agreement.

“Information” shall mean all nonpublic, confidential or proprietary information
regarding any of the Schaefer Companies.

“Intellectual Property” shall have the meaning specified in Section 3.15 of this
Agreement.

 

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“Interim Balance Sheet” shall have the meaning specified in Section 3.5 of this
Agreement.

“Interim Financial Statement” shall mean the internally prepared interim monthly
consolidated financial statement of the Company and its Subsidiaries (including
balance sheets and income statements) for the seven-month period beginning
January 1, 2006 through July 31, 2006, copies of which have previously been
provided to Purchaser.

“Inventory” shall mean goods, merchandise and other personal property, including
without limitation all raw materials, work in progress, finished goods and
materials and supplies of any kind or nature used in the business of the
Equipment Co. or used in selling or furnishing such goods, merchandise or other
personal property.

“Knowledge” shall mean with respect to (i) a natural Person, the actual
knowledge of such Person, (ii) Sellers who are not natural Persons, the actual
knowledge of David Kostolansky, Barry Anderson, Richard Barnhart, David Rubino
and Philip Oswald, including such knowledge as they would reasonably be expected
to know in the normal course of their duties with the Equipment Co., and
(iii) Purchaser, the actual knowledge of Al Neupaver, Alvaro Garcia-Tunon, Barry
Pennypacker and Keith Hildum, including such knowledge as they would reasonably
be expected to know in the normal course of their duties with Purchaser.

“Law” shall mean any United States federal or state, local municipal or
administrative order, constitution, law, rule, regulation, ordinance, principle
of common law, court order, consent, decree, governmental license, permit,
statute or treaty as in effect on the Closing Date.

“Losses” shall mean damages, liabilities, judgments, losses, or costs and
expenses of whatever kind or nature (including reasonable attorneys’ fees and
reasonable costs of investigation and defense); provided, however, that Losses
shall not include consequential, incidental or punitive damages unless the
Losses are the result of a Third-Party Claim; provided further, that lost
profits shall not be considered to be consequential damages.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, assets, results of operations or condition (financial or
otherwise) of the Schaefer Companies taken as a whole or (b) the ability of any
of the Sellers to consummate the transactions contemplated by this Agreement.

“Material Contract” shall have the meaning specified in Section 3.14(a) of this
Agreement.

“Media” shall have the meaning specified in Section 9.3(e)(i) of this Agreement.

“Named Representatives” shall mean Al Neupaver, Alvaro Garcia-Tunon, Barry
Pennypacker and Keith Hildum.

“Net Working Capital” shall mean for any date of determination, the excess of
the Current Assets as of the close of business on such date of determination
over the Current Liabilities as of such date of determination, calculated in all
respects in accordance with GAAP

 

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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 Reference
Balance Sheet.

“O&G Properties” shall mean oil and gas wells and oil and gas fee or leasehold
interests.

“Objection Notice” shall have the meaning specified in Section 2.4(d)(i) of this
Agreement.

“Order” shall mean any award, decision, injunction, judgment order, ruling,
subpoena or verdict entered, issued, made or rendered by any Governmental
Authority or by any arbitrator as in effect on the Closing Date.

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

“Other Real Estate” shall mean the Real Estate other than the Owned Real Estate.

“Owned Real Estate” shall mean the Real Estate owned by the Schaefer Companies.

“Parties” or “parties” shall mean, as the context requires, any of the
Purchaser, the Sellers and/or the Sellers’ Agent.

“Permissible Activities” shall have the meaning specified in Section 9.3(e)(i)
of this Agreement.

“Permitted Encumbrances” means any lien for current Taxes not yet due and
payable, any lien securing Taxes or any lien of materialmen, carriers, landlords
and similar Persons, in each case not yet due or payable, any minor interest in
an asset in favor of another Person which does not materially impair the value,
ownership or use of such asset to the extent that the foregoing are
appropriately reflected on the Interim Balance Sheet and those Encumbrances
which are identified as Permitted Encumbrances on Part 1(PE) of the Sellers’
Disclosure Schedule.

“Person” shall mean a natural person, corporation (including any not-for-profit
corporation), trust, estate, partnership, association, general or limited
partnership, joint venture, limited liability company, governmental entity,
agency or branch or department thereof, or any other legal entity.

“Physical Inventory” shall have the meaning specified in Section 2.4(a) of this
Agreement.

 

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“Preliminary Closing Balance Sheet” shall have the meaning specified in
Section 2.4(c) of this Agreement.

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

“Purchase Price” shall have the meaning specified in Section 2.2 of this
Agreement.

“Purchaser” shall mean Wabtec Holding Corporation, a Delaware corporation.

“Purchaser Disclosure Schedule” shall mean the Purchaser Disclosure Schedule,
dated the date of this Agreement, delivered by the Purchaser to the Sellers.

“Purchaser Indemnified Persons” shall have the meaning specified in
Section 9.3(a) of this Agreement.

“Real Estate” shall mean the real estate owned or leased by the Schaefer
Companies, including without limitation all O&G Properties, together with all
buildings, structures, fixtures and improvements thereon and all of the rights
thereto.

“Real Estate Permit” shall have the meaning specified in Section 3.12(c)(ii) of
this Agreement.

“Reference Balance Sheet” shall have the meaning specified in Section 3.5 of
this Agreement.

“Release” has the meaning specified in 42 U.S.C. § 9601.

“Remediation Action” means any action to mitigate, remediate, monitor or
otherwise respond to a Release of Hazardous Substances on, in, at, upon or from
the Real Estate.

“Representatives” means, with respect to a particular Person, the affiliates,
directors, officers, employees, agents, consultants, advisors or other
representatives of such Person, including legal counsel, accountants and
financial advisors.

“Review Period” shall have the meaning specified in Section 2.4(d)(i) of this
Agreement.

“Schaefer Companies” shall mean the Company and the Equipment Co.

“Securities Act” means the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.

“Sellers” shall be defined as set forth above.

 

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“Sellers’ Agent” shall have the meaning specified in Section 13.18 of this
Agreement.

“Sellers’ Disclosure Schedule” shall mean the Sellers’ Disclosure Schedule,
dated the date of this Agreement, delivered by the Sellers to Purchaser.

“Shares” shall mean the issued and outstanding shares of capital stock of the
Company.

“Straddle Period” shall have the meaning specified in Section 6.1(a) of this
Agreement.

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

“Target Working Capital” shall mean $6,443,836 (which amount reflects the
average Net Working Capital for the twelve month period ending July 31, 2006, as
reflected in the internally prepared consolidated balance sheets of the Schaefer
Companies as at the end of each calendar month during that period).

“Tax” shall mean all United States federal, state, local, foreign and other
taxes of any kind, levies or other like assessments, customs, duties, imposts or
charges, including without limitation, income, gross receipts, ad valorem,
value-added, excise, real or personal property, asset, transfer, sales, use,
license, payroll, franchise, withholding, employment, occupation, premium,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind, whether disputed or not, and including obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person and in each
instance such term shall include any interest, penalties or additions to tax
attributable to any such Tax.

“Tax Returns” shall mean all returns, declarations, reports, claims for refund
and information returns and statements of any Person required to be filed or
sent by or with respect to it regarding any Taxes, including any schedule or
attachment thereto and any amendment thereof.

“Third-Party Claim” shall have the meaning specified in Section 9.5(a) of this
Agreement.

“Title Commitment” shall have the meaning specified in Section 5.2(a) of this
Agreement.

“Title Company” shall have the meaning specified in Section 5.2(a) of this
Agreement.

 

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“Trust” shall mean that certain Agreement of Trust for the Schaefer 401(k) Plan
dated January 1, 1990, as amended.

“Unrelated Accountant” shall mean Grant Thornton LLP, Cleveland, Ohio.

“Warrant Repurchase Agreement” shall mean that certain Warrant Repurchase
Agreement dated as of the date hereof among the Company, the Sellers’ Agent and
BOCP.

2. PURCHASE AND SALE OF SHARES.

2.1 Purchase and Sale of Shares. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, in consideration of the Purchase Price,
Sellers shall sell to Purchaser, and Purchaser shall purchase from Sellers, the
Shares, free and clear of all Encumbrances (except to the extent, if any,
provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law).
The Parties agree that Sellers are solely responsible for satisfying the Closing
Funded Debt and Purchaser shall not assume any portion of the Closing Funded
Debt. The purchase and sale of the Shares pursuant to this Agreement shall be
effective as of the close of business on the Closing Date.

2.2 Purchase Price. The Purchase Price to be paid by Purchaser to Sellers for
the Shares shall be an amount equal to the sum of (i) Thirty Six Million Three
Hundred Thousand and 00/100 Dollars ($36,300,000.00) (the “Base Amount”), plus
(ii) an amount equal to the Closing Cash, and (iii) (A) plus an amount equal to
the amount (if any) by which the Closing Working Capital shall exceed the Target
Working Capital or (B) less an amount equal to the amount (if any) by which the
Target Working Capital shall exceed the Closing Working Capital (the “Purchase
Price”). Purchaser shall pay the Purchase Price in the manner provided in
Sections 2.3 and 2.4.

2.3 Closing Payment and Escrow Deposits.

(a) Closing Payment. At the Closing, Purchaser shall pay to Sellers’ Agent (or
as Sellers’ Agent may direct in writing), by wire transfer in immediately
available funds for the benefit of the Shareholders, an amount equal to the sum
of (i) ninety percent (90%) of the Base Amount, plus (ii) the Closing Cash, plus
(or minus) (iii) an agreed upon estimate of the amount (if any) by which the
Closing Working Capital will exceed (or be less than) the Target Working Capital
less (iii) the Closing Funded Debt (together with the Escrow Amount, the
“Closing Payment”).

(b) Escrow Deposits. At the Closing, Purchaser shall pay to the Escrow Agent, by
wire transfer in immediately available funds, an amount equal to (i) ten percent
(10%) of the Base Amount (the “Escrow Amount”), plus (ii) the Closing Funded
Debt. The Escrow Agent shall retain the Escrow Amount for distribution in
accordance with the terms of this Agreement, and shall immediately pay off the
Closing Funded Debt with the remaining amount of the deposit.

 

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2.4 Payment-Related Items; Post-Closing Purchase Price Adjustment.

(a) Physical Inventory. At least five Business Days prior to Closing, the
Company and Purchaser, with the assistance of the Company’s audit firm, shall
conduct a complete physical inventory (the “Physical Inventory”) of Equipment
Co.’s Inventory then on hand, which inventory shall be conducted following the
methodologies and procedures set forth in Part 2.4 of the Sellers’ Disclosure
Schedule.

(b) Determination of Final Purchase Price. Following the Closing, the Parties
shall determine the amount of the Closing Cash, the amount of the Closing
Working Capital and, accordingly, the Purchase Price. The Closing Cash and the
Closing Working Capital shall be 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 Reference
Balance Sheet and, in the case of the Closing Working Capital, the determination
of the Target Working Capital.

(c) Closing Balance Sheet. Not later than ninety (90) calendar days following
the Closing Date, Purchaser shall prepare and deliver or cause to be prepared
and delivered to the Sellers’ Agent a consolidated balance sheet of the Company
and its Subsidiaries as of the Closing Date prepared in accordance with GAAP
(the “Preliminary Closing Balance Sheet”), and a statement of the proposed Final
Closing Cash, the Final Closing Working Capital and, accordingly, the Final
Purchase Price, in each case, as of immediately prior to the Closing and, if
applicable, derived from the Preliminary Closing Balance Sheet. The Final
Closing Cash and the Final Closing Working Capital shall be calculated in
accordance with the provisions of this Section 2.4(c) and shall reflect the
results of the Physical Inventory.

(d) Preliminary Closing Balance Sheet Review.

(i) The Sellers’ Agent shall have thirty (30) days following the delivery by the
Purchaser to the Sellers’ Agent of the Preliminary Closing Balance Sheet (the
“Review Period”) to review the Preliminary Closing Balance Sheet. The
Preliminary Closing Balance Sheet shall be conclusive and binding upon the
Parties as to items set forth therein unless, within ten (10) days following the
expiration of the Review Period, the Sellers’ Agent notifies Purchaser in
writing (the “Objection Notice”) that the Sellers’ Agent disputes any of the
amounts set forth therein. The Objection Notice shall (a) clearly identify each
item of the Preliminary Closing Balance Sheet to which the Sellers’ Agent
objects and (b) describe in detail the nature of such objection and the Sellers’
Agent’s calculation of such disputed item.

(ii)(A) If Sellers’ Agent does not deliver an Objection Notice to Purchaser
within the Review Period or (B) following delivery of any Objection Notice to
Purchaser on a timely basis in respect of which the Parties achieve resolution
of any disputes set forth therein within the time period set forth in subsection
(e) below, the Preliminary Closing Balance Sheet (as amended to the extent
necessary to reflect the resolution of such disputes), shall be conclusive and
binding on the Parties, and Purchaser shall prepare a schedule setting forth the
calculation of the Final Closing Working Capital and the Final Purchase Price
(each such calculation to be made in accordance with the provisions of this
Agreement) and shall deliver such schedule to the Sellers’ Agent within ten
(10) Business Days after the expiration of the Review Period (in the case of
(A) above) or resolution of the disputes (in the case of (B)

 

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above). The date of such delivery shall be deemed the date of the determination
of the Final Purchase Price for the purposes of subsection (g) below. Any item
of the Preliminary Closing Balance Sheet as finally determined pursuant to this
subparagraph shall be deemed to be final and binding.

(e) Objection Notice and Disputes. If the Sellers’ Agent delivers an Objection
Notice to Purchaser on a timely basis, Purchaser and the Sellers’ Agent shall
during the twenty (20) Business Day period following receipt of such Objection
Notice use commercially reasonable efforts to negotiate in good faith and reach
agreement on each item of the Preliminary Closing Balance Sheet disputed
pursuant to the Objection Notice. If during such period, Purchaser and Sellers’
Agent are unable to reach agreement, they shall immediately refer any such
unresolved items to the Unrelated Accountant for resolution in accordance with
subsection (f) below (any such referred item, a “Disputed Item”).

(f) Determination of Dispute. Promptly, but no later than twenty (20) days after
acceptance of his or her appointment as Unrelated Accountant, the Unrelated
Accountant shall determine (it being understood that in making such
determination, the Unrelated Accountant shall be functioning as an expert and
not as an arbitrator), those Disputed Items and shall render a written report as
to the resolution of the Disputed Items and the resulting computation of the
Final Closing Cash, or the Final Closing Working Capital, as the case may be,
which computation shall be conclusive and binding on the Parties. In the course
of the Unrelated Accountant’s review, the Parties shall deliver written
submissions to the Unrelated Accountant describing their respective positions.
In addition, the parties shall be entitled to make oral presentations or
arguments if either party so requests. In resolving any Disputed Item, the
Unrelated Accountant (i) shall be bound by the provisions of this Section 2.4,
(ii) may not assign a value to any item greater than the greatest value for such
item claimed by either party or less than the lowest value for such item claimed
by either party; provided, that if a value assigned to an item in dispute
requires under GAAP that a corresponding or related adjustment or adjustments be
made, the Unrelated Accountant shall have the authority to make such other
adjustment or adjustments and (iii) may review (and the parties shall provide)
any and all documents and records as the Unrelated Accountant deems appropriate.
Upon receipt of the Unrelated Accountant’s written report, (A) the Preliminary
Closing Balance Sheet, as modified to reflect the Unrelated Accountant’s
determinations, shall be deemed accepted by, and such determinations shall be
final and binding on, the Sellers’ Agent and Purchaser and enforceable as an
arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. § 1-16, and
(B) Purchaser shall prepare a schedule setting forth the calculation of the
Final Closing Cash, the Final Closing Working Capital and the Final Purchase
Price (each such calculation to be made in accordance with the procedures of
this Agreement) and shall deliver such schedule to the Sellers’ Agent within ten
(10) Business Days after Purchaser’s receipt of the Unrelated Accountant’s
written report. The Unrelated Accountant’s fees and expenses shall be borne by
Purchaser and the Sellers’ Agent in such proportion as the Unrelated Accountant
may determine and, in the absence of such determination, equally.

(g) Upon final determination of the Final Purchase Price as provided in
subsections (d)(ii) or (f) above: (i) if the Final Purchase Price exceeds the
Closing Payment, Purchaser shall pay to Sellers an amount equal to such excess
by wire transfer of immediately available funds in such portions and to an
account or accounts designated by Sellers’ Agent in

 

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writing, no later than five (5) Business Days after such final determination, or
(ii) if the Closing Payment exceeds the Final Purchase Price, Purchaser shall
withdraw an amount equal to such excess , plus any interest due and owing
thereon, from the Escrow Amount. Interest shall accrue on any amount not paid by
either party to the other within five (5) Business Days after such final
determination at a rate of one percent (1%) per month. Sellers’ Agent hereby
directs that 14.593% of any amount payable by Purchaser under clause (i) shall
be paid to BOCP in accordance with its written instructions (which payment is
attributable to the warrant being repurchased by Schaefer immediately prior to
the Closing as described in the Warrant Purchase Agreement). The Parties may not
amend the previous sentence without the written consent of BOCP.

3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Except as set forth in this
Agreement and/or the Sellers’ Disclosure Schedule, each of the Sellers, jointly
and severally, hereby make the following representations and warranties to
Purchaser. Regardless of the foregoing, the representations and warranties of
the Sellers set forth in Sections 3.1(b) and 3.3(a) are made severally by each
Seller, with respect to such Seller only.

3.1 Organizational Matters.

(a) Organization and Qualification; Power. Part 3.1(a) of the Sellers’
Disclosure Schedule contains a complete and accurate list for each Schaefer
Company of its name, its jurisdiction of incorporation, other jurisdictions in
which it is authorized to do business. Each Schaefer Company is a corporation
duly organized and validly existing under the Laws of its jurisdiction of
incorporation. Each Schaefer Company is duly qualified or licensed, as the case
may be, to do business and is in good standing as a foreign corporation under
the Laws of each jurisdiction where the nature of their respective activities or
the ownership or use of properties owned or used by it require such
qualification or licensing, except where the failure to be so qualified or
licensed would not have a Material Adverse Effect. Each Schaefer Company has all
requisite power and authority to own, lease and operate its properties and
assets that it purports to own, lease or operate, to perform its obligations
under any Contract to which it is a party or by which it is bound and to carry
on its business as it is now being conducted. The Company has no assets other
than the capital stock of Equipment Co., has no employees, has no business
operations, has no contracts or other liabilities other than as disclosed in
Part 3.1(a) of the Sellers’ Disclosure Schedule. Equipment Co. has no
Subsidiaries. The Sellers have delivered to Purchaser copies of the
Organizational Documents, as currently in effect, of each of the Schaefer
Companies.

(b) Authority; Validity. Each Seller warrants and represents that: (i) he or it
has all requisite power and authority to enter into this Agreement and the
related agreements referred to herein and to carry out his or its respective
obligations hereunder and thereunder; (ii) his or its execution and delivery of
this Agreement and the other documents and agreements to be executed by him or
it pursuant hereto and (with respect to the Sellers, where such Seller is a
business entity or trust) the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on its behalf; (iii) no further act or proceeding on the part
of the Company or such Seller is necessary to authorize this Agreement or the
other documents and instruments to be executed and delivered by him or it
pursuant hereto or the consummation of the transactions contemplated hereby and

 

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thereby; (iv) this Agreement and the Ancillary Agreements to which such Seller
is a party have been duly executed and delivered by such Seller and constitute
the valid and binding obligations of the Company or such Seller enforceable
against him or it in accordance with their respective terms except that
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors’ rights generally and by general
equitable principles and (v) the execution and delivery of this Agreement and
the Ancillary Agreements to which such Seller is a party, the sale and transfer
of the Shares and the consummation of the transactions contemplated hereby does
not and will not violate or conflict with any Law or Order to which the Company
or such Seller, as the case may be, is bound.

3.2 Compliance; Binding Effect. The execution and delivery of this Agreement and
the Ancillary Agreements which any of the Sellers is a party, the sale and
transfer of the Shares and the consummation of the transactions contemplated
hereby will not directly or indirectly (with or without notice or lapse of
time): (a) (with respect to the Sellers, where such Seller is a business entity)
violate any provision of the Organizational Documents of any Seller or either of
the Schaefer Companies or any resolution adopted by the board of directors (or
similar governing body) or the shareholders of such Seller or either of the
Schaefer Companies; (b) contravene, conflict with, result in a violation or
breach of any provision of, constitute a default under or constitute an event
which with the giving of notice or the lapse of time or both would become a
default or give any Person the right to declare a default or exercise any remedy
under or to accelerate the maturity or performance of or to cancel, terminate or
modify any material Contract to which any Seller or either of the Schaefer
Companies is a party; (c) violate or conflict with any Law or Order to which any
Seller or Schaefer Company is subject or bound; (d) contravene, conflict with or
result in a violation of or give any Governmental Authority or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy or obtain any relief under any Law or any Order to which any
Seller or Schaefer Company may be subject; (e) contravene, conflict with or
result in a violation of any of the terms or requirements of or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any Consent of such Governmental Authority that is held by any
Schaefer Company and which is necessary to the conduct of the business of such
Schaefer Company or that is held by any Seller that otherwise relates to the
business or assets of any Schaefer Company or (f) result in the imposition or
creation of any Encumbrance upon or with respect to any of the Shares owned by
any Seller or Schaefer Company or any of the assets owned or used by any
Schaefer Company.

3.3 Shares.

(a) Sellers own all of the issued and outstanding shares of the Company’s
capital stock. The authorized capital stock of the Company consists of 8,000
Shares of $.01 par value Class A Voting Common Stock and 1,000 Shares of $.01
par value Class B Nonvoting Common Stock. None of the shares of Class B
Nonvoting Common Stock is outstanding and the Class A Voting Common Stock and is
owned of record as set forth in Part 3.3(a) of the Sellers’ Disclosure Schedule.
Except as set forth in Part 3.3(a) of the Sellers’ Disclosure Schedule, no
legend or other reference to any purported Encumbrance appears on any
certificate representing the Shares. The Shares have been duly authorized and
validly issued and are fully paid and nonassessable (except to the extent, if
any, provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation
Law). Each Seller warrants and represents that he or it

 

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owns (or will own as of Closing) beneficially and of record all of the Shares
attributed to such Seller on Part 3.3(a) of the Sellers’ Disclosure Schedule
free and clear of all Encumbrances. Except as set forth on Part 3.3(a) of the
Sellers’ Disclosure Schedule, such Seller has no other rights relating to the
issuance, purchase, registration or transfer of any equity or other securities
of the Company. Except as set forth in Part 3.3(a) of the Sellers’ Disclosure
Schedule, such Seller does not have and is not bound by any outstanding
subscriptions, warrants, options or other rights calling for the purchase of
shares of Company capital stock or any other equity securities of the Company.
None of the outstanding equity securities or other securities of the Company was
issued in violation of any preemptive rights or the Securities Act or any state
securities Law.

(b) The Company owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of Equipment Co. as
set forth in Part 3.3(b) of the Sellers’ Disclosure Schedule, free and clear of
all Encumbrances, and all of such shares or equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable and were not
issued in violation of any preemptive right. Except as set forth on Part 3.3(b)
of the Sellers’ Disclosure Schedule, none of the Schaefer Companies has or is
bound by any outstanding subscriptions, options, warrants, calls, purchase
rights, exchange rights or other contracts or commitments of any character which
require such Schaefer Company to issue, sell, or otherwise to cause to become
outstanding any shares of capital stock of such Schaefer Company or any other
equity security of such Schaefer Company or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Schaefer Company. Except as set forth in Part 3.3(b) of
the Seller Schedule, there are no Contracts relating to the issuance, sale,
registration or transfer of any equity securities or other securities of the
Company. None of the outstanding equity securities or other securities of any
Schaefer Company was issued in violation of any preemptive rights or the
Securities Act or any state securities Law. None of the Schaefer Companies owns
or has any Contract to acquire any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
company (other than Schaefer Companies).

3.4 Consents. No notice to or Consent or Order of any Governmental Authority or
any other Person (including the spouse of any Seller) is required in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the transactions contemplated by this Agreement.

3.5 Financial Statements. The Sellers have delivered to the Purchaser: (a) the
Annual Financial Statements, and the related consolidated statements of
operations, changes in shareholders’ deficit and cash flows for the years then
ended, together with the report thereon of Virchow, Krause & Company, LLP,
independent public accountants (the December 31, 2005 consolidated balance
sheet, together with the related notes thereto, is hereinafter referred to as
the “Reference Balance Sheet”), (b) a combined audited balance sheet of the
Schaefer Companies as of December 31, 2005, and the related combined statements
of income, shareholders’ equity and cash flows for the year then ended, together
with the report thereon of Virchow, Krause & Company, LLP, and (c) an unaudited
consolidated balance sheet of the Schaefer Companies as of July 31, 2006 (the
“Interim Balance Sheet”) and related unaudited consolidated statements of
operations and cash flows for the seven months then ended, including in the case
of (a) and (b), the related notes thereto. Such financial statements and related
notes

 

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thereto present fairly in all material respects the financial position, results
of operations and cash flows of the Schaefer Companies, taken as a whole, as of
the respective dates and for the periods referred to in such financial
statements, all in accordance with GAAP (except as otherwise indicated therein
or in the notes thereto and, in the case of Interim Financial Statements, normal
recurring year-end adjustments and the absence of notes and other presentation
items). The financial statements referred to in this Section 3.5 reflect the
consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than the Schaefer
Companies are required by GAAP to be included in the consolidated financial
statements of the Company. The warranties and representations herein related to
financial statements other than audited financial statements are to the
Knowledge of the Sellers.

3.6 No Material Adverse Changes. Since December 31, 2005, there has not been a
material adverse change in the business, operations, assets, results of
operations or condition (financial or otherwise) of the Schaefer Companies,
taken as a whole, and no event has occurred or circumstance exists that would
reasonably be expected to have a Material Adverse Effect on (a) the business,
operations, assets, results of operations or condition (financial or otherwise)
of the Schaefer Companies or (b) the ability of the Company or the Sellers to
consummate the transactions contemplated by this Agreement.

3.7 Absence of Certain Changes. Except as set forth in Part 3.7 of the Sellers’
Disclosure Schedule, since December 31, 2005, the business of the Schaefer
Companies has been operated in the ordinary course of business consistent with
past practice and without limiting the generality of the foregoing, except as
set forth in Part 3.7 of the Sellers’ Disclosure Schedule, since that date,
neither of the Schaefer Companies:

(a) has suffered any material damage, destruction or loss (not covered by
insurance) affecting its assets;

(b) has suffered any material increase or commitment to increase in either the
rate of compensation or the actual compensation payable or to become payable to
any employees of such Schaefer Company, except in the ordinary course of
business;

(c) has suffered the termination or received notice of termination of any
Material Contract or license of such Schaefer Company, other than terminations
or expirations of such Contracts or licenses in the ordinary course of business;

(d) has suffered any cancellation of a Contract to purchase goods by a customer
of such Schaefer Company;

(e) has made any capital expenditures (other than in the ordinary course of
business) in excess of $100,000 in the aggregate;

(f) has created and no event has occurred or circumstance exists that would
result in any Encumbrance on of any of its property or assets, other than
Permitted Encumbrances;

 

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(g) has sold, leased, transferred, or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the ordinary course of
business consistent with past practice;

(h) has entered into any transaction, commitment, Contract or license (or series
of related transactions, commitments, Contracts or licenses) either involving
more than $100,000 or outside the ordinary course of business;

(i) has received notice of any acceleration, termination, modification or
cancellation of any Contract or license (or series of related Contracts or
licenses) involving more than $10,000 to which such Schaefer Company is a party
or by which it is bound;

(j) has failed to pay, delayed or postponed the payment of accounts payable or
other liabilities in excess of $50,000 in any single instance or $100,000 in the
aggregate;

(k) has cancelled, compromised, waived, or released any debt, right or claim (or
series of related rights and claims);

(l) changed its authorized or issued capital stock, declared, set aside, or paid
any dividend or made any distribution or other payment with respect to its
capital stock (whether in cash or in kind), granted any stock option or right to
purchase shares of capital stock, issued any security convertible into capital
stock, granted any registration rights or redeemed, retired, purchased or
otherwise acquired any of its capital stock;

(m) has granted and no event has occurred or circumstance exists that would
result in any change in the base compensation, commission, bonus or other direct
or indirect remuneration payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, incentive, retention or other
compensation, retirement, welfare, fringe or severance benefit or vacation pay,
to or in respect of any of its shareholders, directors, officers, employees,
salesmen, distributors or agents outside the ordinary course of business;

(n) has adopted, amended, modified or agreed to modify or terminate any bonus,
profit-sharing, incentive, severance, or other plan, contract, or commitment for
the benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Benefit Plan) or adopted any plan, fund,
program or arrangement falling within the definition of a Schaefer Benefit Plan;

(o) has made any other change in employment terms for any of its directors,
officers, and employees outside the ordinary course of business;

(p) has made or pledged to make any charitable or other capital contribution
outside the ordinary course of business;

(q) discharged or satisfied any Encumbrance or liability other than those then
required to be discharged or satisfied, or paid any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to become due, other
than capitalized leases,

 

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current liabilities shown on the Reference Balance Sheet and current liabilities
incurred since the date thereof in the ordinary course of business;

(r) has instituted, settled or agreed to settle any Proceeding relating to its
property, assets or business other than (i) in the ordinary course of business
consistent with past practice or (ii) in cases involving amounts in the
aggregate not in excess of $100,000; or

(s) has taken any action or omitted to take any action, and no event has
occurred or circumstance exists, that would result in the occurrence of any of
the foregoing.

3.8 Powers of Attorney. Except as set forth in Part 3.8 of the Sellers’
Disclosure Schedule, no Representative of either Schaefer Company holds any
power of attorney to act with respect to such Schaefer Company.

3.9 Litigation.

(a)(i) There are no facts, events or circumstances that have occurred on or
prior to the Closing Date that would give rise to or result in a Third Party
Claim against either Schaefer Company; (ii) there is no Proceeding pending or
threatened against either Schaefer Company, and (iii) there is no Proceeding
pending or threatened against either Schaefer Company or any Seller which
challenges or questions the legality, validity or propriety of or that may have
the effect of preventing, delaying, making illegal or otherwise interfering with
the transactions contemplated by this Agreement.

(b)(i) There is no outstanding Order against or involving either of the Schaefer
Companies; and (ii) no shareholder, officer, director or employee of either
Schaefer Company is subject to any Order that prohibits such shareholder,
officer, director or employee from engaging in or continuing any conduct,
activity or practice relating to the business or assets of such Schaefer
Company.

(c)(i) Each Schaefer Company is in compliance with all of the terms and
requirements of each Order to which its business or assets is subject, (ii) each
Schaefer Company has been in compliance with all of the terms and requirements
of each Order to which its business or assets were, on the date of determination
of such compliance, subject, (iii) no Schaefer Company has received notice of
any present or past unremedied violation of any Order and (iv) no event has
occurred or circumstance exists that may constitute or result in (with or
without notice or lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which any Schaefer Company or its business
or assets is subject.

3.10 Licenses; Compliance With Laws and Regulations.

(a) Governmental Licenses; Notices. Except as set forth in Part 3.10(a) of the
Sellers’ Disclosure Schedule, to the Knowledge of Sellers, each Schaefer Company
has all Consents from Governmental Authorities (for purposes of this
Section 3.10, “Governmental Authorizations”) necessary to lawfully conduct and
operate its business as conducted on the Closing Date and to permit such
Schaefer Company to own and use its assets in the manner in which it currently
owns and uses such assets. Part 3.10(a) of the Sellers’ Disclosure Schedule
contains a complete and accurate list of each Governmental Authorization

 

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that is held by either Schaefer Company, and each such Governmental
Authorization is in full force and effect. Except as set forth in Part 3.10(a)
of the Sellers’ Disclosure Schedule, both of the Schaefer Companies are in
compliance in all material respects with all such Governmental Authorizations,
and neither of the Schaefer Companies has received notice of any asserted
present, or past and unremedied, failure to obtain any Governmental
Authorization.

(b) Compliance With Laws and Regulations. Except as provided in Part 3.10(b) of
the Sellers’ Disclosure Schedule, (i) each Schaefer Company is in material
compliance with all Laws applicable to it or to the conduct or operation of its
business or the ownership or use of any of the properties or assets owned or
used by it and, to the Knowledge of Sellers, each Schaefer Company has been in
compliance with each Law that was, on the date of determination of such
compliance, applicable to it or to the conduct or operation of its business or
the ownership or use of any of the properties owned or used by it; (ii) to the
Knowledge of the Sellers, no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) constitutes a violation by either
Schaefer Company of or a failure on the part of either Schaefer Company to
comply with, any Law, or (B) results in the imposition of any Encumbrance
against either Schaefer Company or any of its property under any Law and
(iii) neither Schaefer Company has received any written notice from any
Governmental Authority or any other Person regarding any actual or alleged
violation of or failure to comply with, any Law.

3.11 Title to and Condition of Personal Property.

(a) Title. Except as provided in Part 3.11(a) of the Sellers’ Disclosure
Schedule, each of the Schaefer Companies has good and marketable title to, or a
valid leasehold interest in, all of its personal property free and clear of all
Encumbrances other than Permitted Encumbrances.

(b) Condition. Both of the Schaefer Companies’ personal property, taken as a
whole, is in good operating condition, subject to normal wear and tear.

3.12 Real Estate.

(a) Part 3.12(a) of the Sellers’ Disclosure Schedule contains a complete and
correct list of the Real Estate. The Schaefer Companies own and have good and
marketable fee simple title to the Owned Real Estate free and clear of all
Encumbrances other than the Permitted Encumbrances. The Schaefer Companies hold
a valid leasehold interest in and to the Other Real Estate. Except as set forth
in Part 3.12(a) of the Sellers’ Disclosure Schedule, (i) (A) there are no
commenced or, to the Knowledge of Sellers, planned public improvements related
to the Owned Real Estate that may result in special assessments for which the
owner of such Real Estate would be responsible, and (B) to the Knowledge of the
Sellers, there are no commenced or planned public improvements related to the
Other Real Estate that may result in special assessments for which the lessee of
such Real Estate would be responsible; (ii) there is, to the Knowledge of
Sellers, no planned condemnation or similar action or material change in any
zoning or building ordinance materially and adversely affecting the Real Estate,
(iii) to the Knowledge of the Sellers, the Real Estate is not in violation of
any zoning law or use or occupancy restriction and (iv) (A) no part of the Owned
Real Estate is located within a flood plain or lakeshore erosion hazard area and
(B) to the Knowledge of Sellers, no part of the Other

 

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Real Estate is located within a flood plain or lakeshore erosion hazard area. No
Schaefer Company has received any notice requiring material repairs, alterations
or correction of any existing conditions of the Real Estate that have not been
addressed. No Schaefer Company leases any real property, has options to purchase
or lease real property or owns any real property interest therein other than the
Real Estate.

(b) The Sellers have furnished or made available to the Purchaser true, correct
and complete copies of all (i) title reports, if any, (ii) surveys, if any and
(iii) deeds (as recorded), title holding or trust agreements under which any of
the Real Estate have been conveyed to the Sellers.

(c) With respect to each parcel of Owned Real Estate:

(i) the Schaefer Companies are in compliance with all applicable zoning laws,
deed restrictions and building codes, except for non-compliance which would not
materially interfere with the present use of such Real Estate. To the Knowledge
of Sellers, if any building or improvement located on any parcel of such Real
Estate is damaged or destroyed, the Purchaser or the Schaefer Companies (as the
case may be) would have the unconditional right under applicable existing zoning
laws to rebuild such building or improvement;

(ii) the Schaefer Companies have all permits, licenses and approvals with
respect to the ownership and the current use and occupancy of such Real Estate,
other than those the lack of which would not materially interfere with the
present use of such Real Estate (for purposes of this Section 3.12,
individually, a “Real Estate Permit” and collectively, “Real Estate Permits”).
All such Real Estate Permits are set forth on Part 3.12(c)(ii) of the Sellers’
Disclosure Schedule and are in full force and effect. The current use and
occupancy of such Real Estate does not violate any such Real Estate Permits, and
no Proceeding is pending or, to the Knowledge of the Sellers, threatened, to
revoke, suspend, modify or limit any such Real Estate Permits. No such Real
Estate Permits will be subject to revocation, suspension, modification or
limitation as a result of this Agreement or the consummation of the transactions
contemplated hereby;

(iii) except as disclosed on Part 3.12(c)(iii) of the Sellers’ Disclosure
Schedule, there are no defects with respect to any such Real Estate which would
impair, in any material respect, the operation of the business of the Schaefer
Companies or the day-to-day use of such Real Estate or which would subject the
Schaefer Companies to any liability under applicable law;

(iv) all buildings, structures, improvements, fixtures, building systems and
equipment, pipelines, gathering systems, pumping systems, compression systems,
and all components thereof (for purposes of this Section 3.12, the
“Improvements”) are in good condition and repair, subject to normal wear and
tear, and are usable in the ordinary course of business and, except as disclosed
on Part 3.12(c)(iv) of the Sellers’ Disclosure Schedule, do not contain asbestos
or other Hazardous Substances. To the Knowledge of the Sellers, there are no
structural deficiencies affecting any of the Improvements, and there are no
facts or conditions affecting any of the Improvements which would, individually
or in the aggregate, interfere in any

 

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material respect with the use or occupancy of the Improvements or any portion
thereof in the operation of the business of the Schaefer Companies therein. All
of the Improvements lie wholly within the boundaries of such Real Estate and do
not encroach upon the property of, or otherwise conflict with, the property
rights of any other Persons; and

(v) all facilities located on such Real Estate are supplied with utilities and
other services necessary for the operation of such Real Estate as presently
operated.

(d) With respect to each parcel of Other Real Estate, to the Knowledge of
Sellers:

(i) the Schaefer Companies are in compliance with all applicable zoning laws,
deed restrictions and building codes, except for non-compliance which would not
materially interfere with the present use of such Real Estate. If any building
or improvement located on any parcel of such Real Estate is damaged or
destroyed, the Purchaser or the Schaefer Companies (as the case may be) would
have the unconditional right under applicable existing zoning laws to rebuild
such building or improvement;

(ii) the Schaefer Companies have all Real Estate Permits, other than those the
lack of which would not materially interfere with the present use of such Real
Estate. All such Real Estate Permits are set forth on Part 3.12(d)(ii) of the
Sellers’ Disclosure Schedule and are in full force and effect. The current use
and occupancy of such Real Estate does not violate any such Real Estate Permits,
and no Proceeding is pending or threatened, to revoke, suspend, modify or limit
any such Real Estate Permits. No such Real Estate Permits will be subject to
revocation, suspension, modification or limitation as a result of this Agreement
or the consummation of the transactions contemplated hereby;

(iii) there are no defects with respect to any such Real Estate which would
impair, in any material respect, the operation of the business of the Schaefer
Companies or the day-to-day use of such Real Estate or which would subject the
Schaefer Companies to any liability under applicable law;

(iv) all Improvements are in good condition and repair, subject to normal wear
and tear, and are usable in the ordinary course of business and do not contain
asbestos or other Hazardous Substances. There are no structural deficiencies
affecting any of the Improvements, and there are no facts or conditions
affecting any of the Improvements which would, individually or in the aggregate,
interfere in any material respect with the use or occupancy of the Improvements
or any portion thereof in the operation of the business of the Schaefer
Companies therein. All of the Improvements lie wholly within the boundaries of
such Real Estate and do not encroach upon the property of, or otherwise conflict
with, the property rights of any other Persons; and

(v) all facilities located on such Real Estate are supplied with utilities and
other services necessary for the operation of such Real Estate as presently
operated.

(e) Except as disclosed on Part 3.12(e) of the Sellers’ Disclosure Schedule,
there are no restrictions of any nature on the ability of the Schaefer Companies
to assign and transfer their interests in the Real Estate to the Purchaser (or
its designee) by operation by law and there are no consents of third parties
necessary for such assignment or transfer.

 

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3.13 Taxes.

(a) The Schaefer Companies (i) have timely filed or has caused to be timely
filed with the appropriate Governmental Authorities all Tax Returns required to
be filed by them as of the date of this Agreement for all periods ended on or
prior to the Closing Date and (ii) have paid or have caused to be paid all Taxes
(whether or not shown on any Tax Returns). All Tax Returns filed by the Schaefer
Companies are correct and complete in all material respects. All Taxes relating
to either of the Schaefer Companies that either is required by Law to withhold
or collect for all periods ending on or prior to the Closing Date have been
withheld or collected and have been paid over to the proper authorities to the
extent due and payable.

(b) Neither of the Schaefer Companies is currently the subject of an audit or
other examination of Taxes by the tax authorities of any nation, state or
locality nor has either Schaefer Company received any written notices from any
taxing authority that such an audit or examination is contemplated or pending.
There is no material dispute or claim concerning any Tax liability of the
Schaefer Companies claimed or raised by any tax authority in writing.

(c) Neither of the Schaefer Companies (i) has entered into a written agreement
or waiver extending any statute of limitations relating to the payment or
collection of a material amount of Taxes of either Schaefer Company that has not
expired or (ii) is presently contesting any material Tax liability of either
Schaefer Company before any Governmental Authority.

(d) As of the Closing Date, neither of the Schaefer Companies has received
written notification from a Tax authority that threatens a Proceeding for
collection of Taxes that could subject either Schaefer Company to any liability
for such Taxes, except for Taxes properly recorded on the Financial Statements.

(e) There are no Encumbrances for Taxes (other than Taxes not yet due and
payable) upon any of the assets of either Schaefer Company.

(f) Neither Schaefer Company is a party to any agreement, contract, arrangement,
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any “excess parachute payment” within the meaning of Code
Section 280G (or any corresponding provision of state or local Tax law).

(g) Neither Schaefer Company is a party to or bound by any Tax allocation or
sharing agreement.

(h) Neither Schaefer Company (i) has been a member of an Affiliated Group filing
a consolidated federal income Tax Return (other than a group the common parent
of which was the Company) or (ii) has any liability for Taxes of any Person
(other than any Schaefer Company) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local, or foreign law), as transferee or
successor, by contract, or otherwise. For purposes of

 

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this Section 3.13, the term “Affiliated Group” shall mean any affiliated group
within the meaning of Code Section 1504(a) or any similar group defined under a
similar provision of state, local or foreign law.

(i) The unpaid Taxes of the Schaefer Companies (i) did not, as of the date of
the Interim Financial Statements, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Interim Financial
Statements and (ii) will not exceed that reserve as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Schaefer Companies in filing their Tax Returns.

3.14 Contracts and Commitments.

(a) Part 3.14(a) of the Sellers’ Disclosure Schedule sets forth a list of the
following Contracts to which either of the Schaefer Companies is a party
(collectively, the “Material Contracts”): (i) a material agreement with any
senior executive that is not cancelable by Equipment Co. on notice of not longer
than thirty (30) days and without liability, penalty or premium; (ii) a lease of
personal property involving consideration or other expenditure in excess of One
Hundred Thousand Dollars ($100,000) per annum; (iii) except for purchase or sale
orders for the purchase of materials or supplies or customer contracts entered
into in the ordinary course of business, an agreement involving payment or other
expenditure of more than One Hundred Thousand Dollars ($100,000) in the
aggregate that is not cancelable on less than 12 months’ notice; (iv) an
agreement providing for the disposition of a material asset, other than in the
ordinary course of business; (v) an agreement which provides for severance
benefits upon termination of employment; (vi) a material agreement with a sales
representative, dealer or distributor; (vii) a material license agreement;
(viii) a material agreement under which Equipment Co. is indebted for borrowed
money; and (ix) an agreement with a customer of Equipment Co.

(b) Neither of the Schaefer Companies is and, to the Knowledge of Sellers, none
of the other parties to each Material Contract is, in breach, violation of or
default under any provision of any Material Contract. Each Material Contract is
in full force and effect and represents a valid and binding obligation of such
Schaefer Company party thereto and, to the Knowledge of Sellers, each other
party thereto. To the Knowledge of the Sellers, no event has occurred or
circumstance exists that would give any Person the right (with or without notice
or lapse of time) to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify
such Material Contract.

(c) There are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any amounts paid or payable to either Schaefer Company
under current or completed Material Contracts with any Person, and no such
Person has made demand (written or otherwise) for such renegotiation.

(d) The Material Contracts relating to the sale, design or provision of products
or services by the Schaefer Companies have been entered into in the ordinary
course of business consistent with past practice and have been entered into
without the commission of any

 

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act alone or in concert with any other Person, or any consideration having been
paid or promised, that is or would be in violation of any Law.

(e) None of the Sellers has or may acquire any rights under, and none of the
Sellers has or may become subject to any obligation or liability under, any
Material Contract that relates to the business of, or any of the assets owned or
used by, either Schaefer Company and (ii) to the Knowledge of the Sellers, no
shareholder, officer, director, agent, employee, consultant or contractor of
either Schaefer Company is bound by any Material Contract (other than those
certain Wabtec Corporation Employee Non-Competition and Confidentiality
Agreements referred to in Section 5.1(m) hereof) that purports to limit the
ability of such shareholder, officer, director, agent, employee, consultant or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of either Schaefer Company or (B) assign to either
Schaefer Company or to any other Person any rights to any invention,
improvement, or discovery.

3.15 Intellectual Property. Part 3.15 of the Sellers’ Disclosure Schedule lists
all patents, trademarks, trade names, trade dress, trade secrets, service marks,
copyrights and licenses thereof used or owned by the Schaefer Companies and all
pending applications therefor (collectively, the “Intellectual Property”), all
of which are free and clear of any material adverse claims or interests. The
Schaefer Companies own or have the right to use all items of Intellectual
Property. To Sellers’ Knowledge, the Schaefer Companies’ use of the Intellectual
Property does not infringe, and there exists no reasonable basis for any claim
of infringement, of any patents, trademarks, trade names, service marks, or
copyrights of others. There are no pending claims or litigation and, to Sellers’
Knowledge, there are no inquiries or investigations challenging or threatening
to challenge the Schaefer Companies’ right, title and interest with respect to
its continued use and right to preclude others from using any such Intellectual
Property. To Sellers’ Knowledge, no other person is infringing on the
Intellectual Property.

3.16 Environmental Matters.

(a) The Sellers have delivered to Purchaser true and correct copies of all
environmental reports and assessments with respect to any real property,
including without limitation all O&G Properties, now or previously owned, leased
or operated by either Schaefer Company.

(b) Except as set forth on Part 3.16 of the Sellers’ Disclosure Schedule, as of
the Closing Date:

(i)(A) each Schaefer Company has at all times operated in material compliance
with all applicable Environmental Laws with respect to any and all real property
(other than the O&G Properties) now or previously owned, leased or operated by
either of the Schaefer Companies, and (B) to the Knowledge of Sellers, each
Schaefer Company has at all times operated in material compliance with all
applicable Environmental Laws with respect to the O&G Properties now or
previously owned, leased or operated by either of the Schaefer Companies;

 

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(ii)(A) no Schaefer Company has received any notice from a Governmental
Authority alleging that either Schaefer Company is not in compliance with
applicable Environmental Laws with respect to any and all real property (other
than the O&G Properties) now or previously owned, leased or operated by either
of the Schaefer Companies, and (B) to the Knowledge of Sellers, no Schaefer
Company has received any notice from a Governmental Authority alleging that
either Schaefer Company is not in compliance with applicable Environmental Laws
with respect to the O&G Properties now or previously owned, leased or operated
by either of the Schaefer Companies;

(iii) all licenses and permits currently held by the Schaefer Companies pursuant
to Environmental Laws in effect as of the Closing Date are identified on Part
3.16(b)(iii) of the Sellers’ Disclosure Schedule, and each of the Schaefer
Companies is in compliance in all material respects with such licenses and
permits;

(iv) there is no Environmental Claim pending or, to the Knowledge of Sellers,
threatened against either of the Schaefer Companies with respect to any real
property, including without limitation the O&G Properties, now or previously
owned, leased or operated by either of the Schaefer Companies;

(v)(A) there are no Hazardous Substances or underground storage tanks in, on or
under any real property (other than the O&G Properties) now or previously owned,
leased or operated by either of the Schaefer Companies as of the Closing Date,
and (B) to the Knowledge of Sellers, there are no Hazardous Substances or
underground storage tanks in, on or under the O&G Properties now or previously
owned, leased or operated by either of the Schaefer Companies as of the Closing
Date, except (with respect to both (A) and (B) above) those that are both (i) in
material compliance with all applicable Environmental Laws and environmental
permits and (ii) disclosed on Part 3.16(b)(v) of the Sellers’ Disclosure
Schedule;

(vi) to the Knowledge of Sellers, there have been and are currently no releases
or threatened releases of Hazardous Substances for which either of the Schaefer
Companies has had or could have any material liability under any applicable
Environmental Law at any real property, including, without limitation, all O&G
Properties formerly used, owned, operated or leased by either of the Schafer
Companies; or

(vii) to the Knowledge of Sellers, there are no Hazardous Substances or
contaminants located in, on, at, upon or under any surface soil, subsurface
soil, surface water, groundwater, building material or any other media of any
form or type at, in, on, under or from the O&G Properties, including but not
limited to ground water contamination, brine ponds (if any) used to hold well
liquids and/or surface contamination from or by oil removed from the wells.

3.17 Transactions with Affiliates. Except as contemplated by this Agreement,
neither Schaefer Company is a party to any Contract with any Seller or its
Representatives.

 

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3.18 Benefit Plans.

(a) Except for the Existing Plans set forth on Part 3.18(a) of the Sellers’
Disclosure Schedule, neither Schaefer Company maintains any other Benefit Plan.
Sellers have made available to Purchaser true, complete and accurate copies of
each of the Existing Plans, together with copies of any summary plan description
thereof and, as applicable, copies of the current plan determination letters and
most recent Form 5500 series form filed with respect to each such Existing Plan
and most recent trustee or custodian report.

(b) No Existing Plan is a “multiemployer plan” as that term is defined in
Section 3(37) of ERISA, nor a “multiple employer welfare arrangement” as that
term is defined in Section 3(40) of ERISA, nor a defined benefit plan subject to
Title IV of ERISA.

(c) Except as set forth on Part 3.18(c) of the Seller’s Disclosure Schedule,
each Existing Plan that is an ERISA governed plan (as defined in Sections 3 (1),
(2), (3), (37) and (40) of ERISA), is in compliance with all applicable
provisions of ERISA and the regulations issued thereunder, and all Existing
Plans are in compliance with all other applicable laws, and, in all material
respects, have been administered, operated and managed in accordance with the
governing documents. All Existing Plans that are intended to qualify (for
purposes of this Section 3.18, the “Qualified Plans”) under Section 401(a) of
the Code have been determined by the Internal Revenue Service to be so
qualified. To the extent that any Qualified Plans have not been amended to
comply with applicable law, the remedial amendment period permitting retroactive
amendment of such Qualified Plans has not expired and will not expire within 120
days after the Closing Date. All Existing Plan reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to, annual reports,
summary annual reports, audits or tax returns) have been timely filed or
distributed.

As to the items set forth on Part 3.18(c) of the Sellers’ Disclosure Schedule
concerning the Schaefer 401(k) Plan (the “401(k) Plan”) and its violations of
the of the Average Deferral Percentage (“ADP”) test which may have occurred
between January 1, 2000 and January 1, 2006 (“ADP Violations”), on or before the
Closing Date Sellers or the Schaefer Companies:

(i) have made all applicable corrections resulting from the ADP violations in
accordance with the applicable provisions of the Employee Plan Compliance
Resolution System (“EPCRS”) as set forth in Revenue Procedure 2006-27; and

(ii) have filed, to the extent required, the applicable Federal excise tax
return and paid the ten percent (10% ) excise tax required under Code
Section 4979, including all applicable penalties and interest, resulting from
the ADP violations ; and

(iii) have issued any required Federal Forms 1099 and/or other Federal income
tax forms, including filing with the Internal Revenue Service as necessary; and

(iv) have provided Buyer with evidence of such EPCRS required corrections and
payment of the applicable excise tax required under Code Section 4979.

If items (i), (ii), (iii) and (iv) above are not satisfied prior to the Closing
Date, Sellers covenant and agree that they shall , within thirty days after the
Closing Date, take any and all actions required or requested by Buyer necessary
to effectuate such EPCRS corrections as to the ADP

 

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violations and, as necessary, filing of the applicable Federal excise tax return
and payment of the excise tax, including interest and penalties and issuance and
filing of the applicable Forms 1099. Sellers further agree to indemnify Buyer
for all costs associated with correction of the ADP failure (including but not
limited to 401(k) Plan contributions, excise taxes, interest, penalties, legal
fees, administration fees and accounting fees) incurred by the Buyer or the
401(k) Plan in connection with such ADP corrections without regard to the
provisions of Section 9.3(d)(i) hereof. The provisions of this Section 3.18(c)
are in addition to those indemnification obligations of Sellers set forth in
Section 9.3(a) and (b) hereof.

As to the items set forth on Part 3.18(c) of the Sellers’ Disclosure Schedule
concerning the Schaefer Post-Retirement Health Benefit Plan and the Schaefer
Post-Retirement Life Insurance Plan (collectively referred to as the “Retiree
Plans”), each and every employee, former employee and/or retiree of either
Schaefer Company who is, as of the date of Closing eligible to currently receive
or in the future receive a benefits under either Retiree Plan is scheduled on
Part 3.18(j) of the Sellers’ Disclosure Schedule, and effective as of
December 31, 2003 participation into the Retiree Plans has been frozen. To
Sellers’ knowledge, Seller has made no written or oral representations which
would prohibit the Schaefer Companies, or either of them or their successors or
assigns, Buyer from amending or terminating either of the Retiree Plans at any
time as to all current or future participants in the Retiree Plans.

(d) None of (i) the Sellers, (ii) any Existing Plan or (iii) either Schaefer
Company has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA.

(e) There have been no “reportable events” (as that phrase is defined in
Section 4043 of ERISA) with respect to any Existing Plan which was not properly
reported.

(f) There have been no terminations, partial terminations or discontinuance of
contributions to any Qualified Plan since October 31, 2000 without notice to and
approval by the Internal Revenue Service, and as applicable the PBGC and the
Schaefer Companies have not incurred liability under Section 4062 of ERISA.

(g) Except as set forth on Part 3.18(g) of the Sellers’ Disclosure Schedule,
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (either alone or in conjunction with
any other event) result in, cause the accelerated vesting or payment of, or
materially increase the amount or value of, any payment or benefit to any
employee, officer or director of the Schaefer Companies.

(h) With respect to each Existing Plan, all contributions (including employee
salary reduction contributions) and all material insurance premiums that have
become due have been paid, and any such expense accrued but not yet due has been
properly reflected in the Interim Financial Statements. Except as reflected in
the Interim Financial Statements, there is no liability relating to any Benefit
Plan that could have a Material Adverse Effect.

(i) The Interim Financial Statements reflect the approximate total pension,
medical and other benefit expense for all Existing Plans, and no material
funding

 

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changes or irregularities are reflected thereon which would cause such Interim
Financial Statements to be not representative of most prior periods.

(j) Except as set forth on Part 3.18(j) of the Sellers’ Disclosure Schedule,
neither Schaefer Company has any current or future obligations to provide
retiree health and retiree life insurance and unfunded death benefits, whether
under a Benefit Plan or employment agreement, for current employees, former
employees or directors (or the beneficiaries of any current or former employees
or directors).

(k) As of the Closing Date, the sole trustees under the Trust are David J.
Kostolansky, David A. Rubino and Barry L. Anderson, and no other individuals are
authorized or required to act on behalf of the Trust.

3.19 Labor Matters.

(a) Neither Schaefer Company is a party to or bound by any collective bargaining
agreements or other union contracts. Within the last three (3) years, no
Schaefer Company has experienced any material labor disputes, union organization
attempts or work stoppages due to labor disagreements, and there is currently no
labor strike, dispute, request for representation, slow down or stoppage
actually pending or, to Sellers’ Knowledge, threatened against any of the
Schaefer Companies.

(b) No Schaefer Company is bound by any Order, settlement or attempt to organize
a collective bargaining unit. Sellers have no Knowledge of any employment
discrimination, safety or unfair labor practice or other employment-related
investigation, claim or allegation against either of the Schaefer Companies or
any set of facts which would reasonably be expected to constitute a basis for
such an action.

3.20 Undisclosed Liabilities. To the Knowledge of the Sellers, none of the
Schaefer Companies has any liability or obligation of the type required to be
set forth on their respective balance sheets (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any such
liability or obligation), except for (i) liabilities or obligations set forth on
the face of the Reference Balance Sheet, Interim Balance Sheet or referenced in
the notes thereto, and (ii) liabilities or obligations which have arisen after
July 31, 2006 in the ordinary course of business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).

3.21 Product Warranties; Customers.

(a) Since December 31, 2005, no warranty claim has been paid by any Schaefer
Company in excess of $50,000. There are no pending claims against either
Schaefer Company with respect to any warranty applicable to products of such
Schaefer Company and, to the Knowledge of Sellers, there is no such claim
threatened.

(b) Part 3.21(b) of the Sellers’ Disclosure Schedule sets forth (i) the names
and addresses of all customers of each Schaefer Company that ordered goods and
services with an aggregate value for each such customer of $50,000 annually or
more since December 31,

 

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2003 and (ii) the amount for which each such customer was invoiced during such
period. To the Knowledge of the Sellers, and neither Schaefer Company has
received any notice (written or otherwise), that any of its customers has
terminated or will terminate or has substantially reduced or will substantially
reduce its use of products, goods or services of the Schaefer Company, except
for such terminations or reduction as would not have a Material Adverse Effect.
To the Knowledge of the Sellers, no customer has otherwise threatened to take
any action described in the preceding sentence.

3.22 Insurance. Part 3.22 of the Sellers’ Disclosure Schedule contains a list of
all the insurance coverage (including without limitation all general liability
insurance coverage) maintained by or issued to the Schaefer Companies, including
the name of the issuer, the policy number, the policy period, limits of
liability and any self-insured retentions or deductibles that may apply, and
such insurance coverage is in full force and effect with respect to the business
of the Schaefer Companies. All premiums on policies due to the Closing Date have
been paid, and no notice has been received that any such insurance is in
default, will be canceled or not renewed and the Company is otherwise in
material compliance with the terms of such policies. There is no material claim
pending under any of such policies as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. Except as set
forth in Part 3.22 of the Sellers’ Disclosure Schedule, the Sellers have no
Knowledge of any threatened early termination of, or material premium increase
with respect to, any such policies. Part 3.22 of the Sellers’ Disclosure
Schedule contains a list of all agreements pursuant to which either of the
Schaefer Companies has agreed to provide third parties with status as an insured
or an additional insured under any insurance policy issued to such Schaefer
Company. Part 3.22 of the Sellers’ Disclosure Schedule contains a list of all
agreements pursuant to which a third party has agreed to provide either of the
Schaefer Companies with status as an insured or an additional insured under any
insurance policy issued to such third party.

3.23 Books and Records. The books of account, minute books, stock record books
and other records of each of the Schaefer Companies, all of which have been made
available to the Purchaser, are complete and correct in a material respects and
have been maintained in accordance with (i) industry practices standard in the
business in which such Schaefer Company is engaged and (ii) its Organizational
Documents. The minute books of the Schaefer Companies contain accurate and
complete records of all meetings held of and corporate action taken by, the
shareholders, the boards of directors (or similar governing body) and committees
of the boards of directors of the Schaefer Companies, and no meeting of any such
shareholders, board of directors or committee has been held for which minutes
have not been prepared and are not contained in such minute books, other than
the meeting of the boards of directors of the Schaefer Companies held on or
about September 14, 2006, which minutes the Sellers shall promptly provide
subsequent to Closing. At the Closing, all of the books and records of the
Schaefer Companies will be in the possession of the respective Schaefer
Companies.

3.24 Accounts Receivable. All accounts receivable of the Schaefer Companies that
are reflected on the Interim Balance Sheet or on the accounting records of the
Schaefer Companies as of the Closing Date (for purposes of this Section 3.24,
collectively, the “Accounts Receivable”) represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business consistent with past practice.

 

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Part 3.24 of the Sellers’ Disclosure Schedule contains a complete and accurate
list of all Accounts Receivable as of the date of the Interim Balance Sheet,
which list sets forth the aging of such Accounts Receivable. The Accounts
Receivable are current and collectible net of the respective reserves shown on
the Interim Balance Sheet or accounting records of the Schaefer Companies as of
the Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
then the reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, none of the Accounts Receivable as of the Closing Date
have been outstanding for greater than 120 days. To the Knowledge of the
Sellers, there is no contest, claim or right of set-off, other than returns in
the ordinary course of business, under any Contract with any obligor of an
Accounts Receivable relating to the amount of validity of such Accounts
Receivable.

3.25 Inventory. All Inventory of the Schaefer Companies, whether or not
reflected on the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the ordinary course of business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Reference Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Schaefer Companies as
of the Closing Date, as the case may be. All Inventory not written off has been
priced at the lower of cost or market on a LIFO basis. The quantities of each
item of Inventory are not excessive, but are reasonable in the present
circumstances of the Schaefer Companies.

3.26 Computer Systems.

(a) The computer systems (and each part of each of them) used by the Schaefer
Companies (for purposes of this Section 3.26, the “Computer Systems”) have
functioned without any material failures since being installed (except for
pre-planned maintenance shut downs and additional development periods).

(b) To the Knowledge of the Sellers, the data storage and transmittal
capability, functionality and performance of the Computer Systems as a whole are
reasonably satisfactory for the business of the Schaefer Companies.

(c) The Computer Systems are either owned by or properly licensed or leased to a
Schaefer Company and, with respect to licensed or leased software and Computer
Systems, the Schaefer Companies shall be entitled to use such software and
Computer Systems on the same terms as prior to the consummation of the
transactions contemplated herein.

(d) Each of the Schaefer Companies has taken commercially reasonable precautions
to preserve the availability, security and integrity of the Computer Systems and
the data and information stored on the Computer Systems, including, without
limitation, the detection and remediation of viruses and bugs.

 

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(e) To the Knowledge of the Sellers, the Computer Systems do not contain third
party software or systems which are not available from third party suppliers on
arms length commercial terms.

EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 3, SELLERS MAKE NO REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE
COMPANY, EQUIPMENT CO. OR ANY OF THEIR RESPECTIVE ASSETS, LIABILITIES OR
OPERATIONS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

To the extent that any of the Named Representatives has actual knowledge as of
the Closing Date of a breach of any of Sellers’ representations or warranties
set forth in this Agreement based upon his or her due diligence review of the
Schaefer Companies and Purchaser elects to close the transaction notwithstanding
such knowledge, Purchaser shall be deemed to have waived such breach of a
representation or warranty.

4. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASER. Purchaser
represents and warrants to Sellers as follows:

4.1 Organizational Matters.

(a) Organization; Power. Purchaser is a corporation duly organized and validly
existing under the Laws of the State of Delaware. Purchaser has all requisite
power and authority to own, lease and operate all of its properties and assets
and to carry on its business as it is now being conducted.

(b) Authorization; Validity. Purchaser has all requisite power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party
and to carry out its obligations hereunder and thereunder. The execution and
delivery by Purchaser of this Agreement and the Ancillary Agreements to be
executed by Purchaser pursuant hereto and the consummation by Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by the
board of directors of Purchaser. No further act or proceeding on the part of
Purchaser is necessary to authorize this Agreement or the Ancillary Agreements
to be executed and delivered by Purchaser pursuant hereto or the consummation of
the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which Purchaser is a party have been duly executed and
delivered by Purchaser and constitute the valid and legally binding obligations
of Purchaser, enforceable against it in accordance with their respective terms
except that enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws relating to or
affecting creditors’ rights generally and enforcement of this Agreement,
including among other things the remedy of specific performance and injunctive
or other forms of equitable relief, may be subject to equitable defenses and to
the discretion of the court before which any action, hearing or similar
proceeding therefor may be brought. The execution and delivery of this Agreement
and the related Ancillary Agreements and the consummation of the transactions
contemplated hereby will not violate or conflict with any Law, order, writ,
injunction, judgment, arbitration award or

 

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decree to which Purchaser is bound except for violations, defaults or conflicts
which would not have a Material Adverse Effect.

(c) Compliance; Binding Effect. The execution and delivery of this Agreement and
the Ancillary Agreements, the purchase of the Shares and the consummation of the
transactions contemplated hereby will not: (i) violate any provisions of the
Organizational Documents of Purchaser; (ii) constitute a default under, or
constitute an event which with the giving of notice or the lapse of time or both
would become a default under, any material contract to which Purchaser is a
party or by which Purchaser is bound, or (iii) violate or conflict with any Law,
Order or other restriction of any kind or character to which Purchaser is
subject or by which Purchaser is bound.

4.2 Consents. Except as set forth on Part 4.2 of the Purchaser Disclosure
Schedule, no notice to or Consent or Order of any Governmental Authority or any
other Person is required in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the transactions
contemplated by this Agreement.

4.3 Litigation. Except as set forth on Part 4.3 of the Purchaser Disclosure
Schedule, there is no Proceeding pending or, to the Knowledge of Purchaser,
threatened against Purchaser which questions the legality, validity or propriety
of the transactions contemplated by this Agreement or otherwise would adversely
affect Purchaser’s performance under this Agreement or the consummation of the
transactions contemplated hereby.

4.4 Financing. Purchaser has cash reserves or committed financing sufficient to
pay the Purchase Price and to consummate the transactions contemplated by this
Agreement.

4.5 Investment Representation. Purchaser is purchasing the Shares for its own
account with the present intention of holding the Shares for investment purposes
and not with a view to or for sale in connection with any public distribution of
the Shares in violation of any federal or state securities laws. Purchaser has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Shares.
Purchaser acknowledges that the Shares have not been registered under the
Securities Act or any state or foreign securities laws and that the Shares may
not be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of unless such transfer, sale, assignment, pledge, hypothecation or
other disposition is registered pursuant to the terms of an effective
registration statement under the Securities Act and is registered under any
applicable state or foreign securities laws or pursuant to an exemption from
registration under the Securities Act and any applicable state or foreign
securities laws.

4.6 Disclosure. To the Purchaser’s Knowledge, the Purchaser has had full access
to the Schaefer Companies’ officers, directors, employees, records, physical
plants and facilities to the extent the Purchaser has deemed necessary to enable
the Purchaser to evaluate the transaction contemplated hereby. The Purchaser has
notified Sellers in writing of any breach or default by Sellers under this
Agreement of which the Named Representatives had actual knowledge prior to the
Closing Date.

 

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4.7 No Knowledge of Misrepresentations or Omissions. Except as notice has been
provided under Section 4.6, the Named Representatives have no actual knowledge
of any breach of this Agreement by Sellers as of the Closing Date.

5. CLOSING.

5.1 Sellers’ Deliveries. Sellers shall deliver to Purchaser at or prior to
Closing the following:

(a) at least ten (10) days prior to the Closing Date a commitment (the “Title
Commitment”) for an ALTA owner’s policy of title insurance, issued by Chicago
Title Insurance Company (for purposes of this Section 5.2, the “Title Company”),
in an amount not less than $5,500,000 (without deduction for any applicable
transfer fees), committing the Title Company to insure the Schaefer Companies’
fee ownership interest in the Owned Real Estate, and accompanied by legible
copies of all underlying documents noted in the Title Commitment, which Title
Commitment shall be satisfactory in all respects to Purchaser.

(b) certificate(s) representing the Shares, duly endorsed in blank by Sellers or
accompanied by stock powers duly endorsed in blank;

(c) certificates of status with respect to the Company, issued by the Wisconsin
Department of Financial Institutions, dated no earlier than 15 days prior to the
Closing Date;

(d) certificates of status with respect to Equipment Co., issued by the
Secretary of State of Ohio, dated no earlier than 15 days prior to the Closing
Date;

(e) [reserved];

(f)(A) certificates from each Seller which is not a natural person, dated as of
the Closing Date and signed on its behalf by its secretary or assistant
secretary (or other comparable agent or representative), certifying the (i) the
names, true signatures and incumbency of its officers, (ii) adoption of
resolutions of such Seller’s board of directors (or other governing body)
authorizing such Seller’s execution, delivery and performance of this Agreement
and the Ancillary Agreements and (to the extent applicable) (iii) termination of
the agreements referred to in subsection (j) below and (B) certificate of the
Company as to the incumbency of the Trustees under the Schaefer 401(k) Plan;

(g) written resignations of all directors and officers of the Company and its
Subsidiaries;

(h) the written resignation of David J. Kostolansky as employee of the Equipment
Co.;

(i) opinions of counsel to the Company and the Sellers in form and substance
satisfactory to Purchaser;

 

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(j) each of the Schafer Companies shall have terminated any and all agreements
between (i)(A) any and all Sellers or (B) any former shareholders of a Schaefer
Company and (ii) such Schaefer Company, including without limitation the Bonus
Plan; provided, however, that any agreements or provisions thereof by which a
Schaefer Company is required to indemnify, defend or hold harmless any officer
or director of such Schaefer Company in respect of his or her services as such
shall terminate in accordance with their terms;

(k) from each beneficiary of the Bonus Plan, an executed release in form and
substance satisfactory to Purchaser (the “Bonus Plan Releases”);

(l) the Escrow Agreement duly executed by the Sellers’ Agent; and

(m) the Wabtec Corporation Employee Non-Competition and Confidentiality
Agreements executed by each of Barry L. Anderson, Philip D. Oswald, Richard J.
Barnhart and David A. Rubino.

5.2. Purchaser’s Deliveries. Purchaser shall deliver to Sellers at or prior to
Closing the following:

(a) certificate from Purchaser dated as of the Closing Date and signed on its
behalf by its secretary or assistant secretary (or other comparable agent or
representative), certifying the (i) the names, true signatures and incumbency of
its officers, and (ii) adoption of resolutions of Purchaser’s board of directors
authorizing Purchaser’s execution, delivery and performance of this Agreement
and the Ancillary Agreements

(b) the Closing Payment as provided in Section 2.3 of this Agreement;

(c) a Certificate of Good Standing with respect to Purchaser issued by the
Secretary of State of the State of Delaware dated no earlier than 15 days prior
to the Closing Date;

(d) the Consents identified in Part 4.2 of the Purchaser Disclosure Letter; and

(e) the Escrow Agreement duly executed by Purchaser and Escrow Agent.

6. TAX MATTERS.

6.1 Allocation of Tax Liabilities; Indemnification.

(a) Sellers shall, jointly and severally, be liable for and shall hold Purchaser
harmless against any liability for Taxes of the Sellers, the Company or the
Equipment Co. for any taxable year or other taxable period that begins before
the Closing Date and, in the case of any taxable year or other taxable period
that includes the Closing Date (a “Straddle Period”), that part of the taxable
year or other taxable period that begins before the Closing Date. Purchaser
shall be liable for and shall hold Sellers harmless against any liability for
Taxes of Purchaser, the Company and the Equipment Co. for any taxable year or
other taxable period that

 

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begins after the Closing Date and, in the case of a Straddle Period, that part
of the taxable year or other taxable period that begins after the Closing Date.
The provisions of this Section 6.1(a) are in addition to those indemnification
obligations of Purchaser set forth in Section 9.2(a) and of Sellers set forth in
Section 9.3(a) and (b) hereof.

(b) Whenever it is necessary for purposes of this Section 6.1 to determine the
liability for Taxes for a Straddle Period, the determination shall be made by
assuming a taxable year or other period which ended at the close of business on
the Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis (such as the deduction for depreciation) shall be
apportioned on a time basis.

(c) Each Party shall promptly notify the other Party in writing upon receipt by
such Party of notice of any pending or threatened audits or assessments relating
to Taxes for which such other Party would be required to indemnify pursuant to
this Agreement

(d) Sellers shall have the sole right to represent the Sellers’, the Company’s
and the Equipment Co.’s interest in any audit or administrative or court
proceeding relating to any such Tax that the Sellers are required to indemnify
pursuant to this Agreement except for a Straddle Period and to employ counsel of
their choice at their sole expense. Purchaser shall have the sole right to
represent the Purchaser’s, the Company’s and the Equipment Co.’s interest in any
audit or administrative or court proceeding relating to any such Tax that the
Purchasers are required to indemnify pursuant to this Agreement including a
Straddle Period and to employ counsel of its choice at its sole expense.
Notwithstanding the foregoing, a Party shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for such
Taxes that would materially adversely affect the liability of the other Party
for such Taxes without the prior written consent of such other Party, which
consent shall not be unreasonably withheld, conditioned or delayed. If Sellers
elect not to assume the defense of any claim for such Taxes which may be the
subject of indemnification by Sellers pursuant to this Agreement or with respect
to a Straddle Period, Sellers shall be entitled to participate in such defense
at their sole expense. Neither Purchaser nor the Company nor the Equipment Co.
may agree to settle any claim for such Taxes that may be the subject of
indemnification by Sellers under this Agreement without the prior written
consent of Sellers’ Agent, which consent shall not be unreasonably withheld,
conditioned or delayed.

6.2 Returns and Reports.

(a) Sellers’ Agent shall file or cause to be filed when due all Tax Returns with
respect to Taxes that are required to be filed by or with respect to the Company
and the Equipment Co. for taxable years or periods ending on or before the
Closing Date and shall pay any Taxes due in respect of such Tax Returns.
Purchaser shall file or cause to be filed when due all Tax Returns with respect
to Taxes that are required to be filed by or with respect to the Company and the
Equipment Co. for taxable years or periods ending after the Closing Date and
shall pay any Taxes due in respect of such Tax Returns, subject to
Section 6.1(a) above with respect to Straddle Periods.

(b) With respect to any such Tax Return for a Straddle Period, a copy of such
Tax Return shall be provided to Sellers’ Agent within 30 calendar days prior to
the due

 

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date (including extensions) for the filing thereof, and Sellers’ Agent shall
have the right to approve (which approval shall not be unreasonably withheld,
conditioned or delayed) such Tax Return to the extent it relates to the portion
of the period ending on the Closing Date. Sellers’ Agent shall promptly pay to
Purchaser the amount of Taxes attributable to such period (as determined
pursuant to Section 6.1(b) above) at the time such Tax Return is filed.

6.3 Cooperation; Access to Records. After the Closing Date, Sellers and
Purchaser shall:

(a) assist (and cause their respective affiliates to assist) the other Party in
preparing any Tax Returns or reports which such other Party is responsible for
preparing and filing in accordance with Section 6.2;

(b) cooperate fully in preparing for and conducting any audits of, or disputes
with taxing authorities regarding, any Tax Returns covered in this Article 6;

(c) make available to the other Party and to any taxing authority as reasonably
requested all applicable records, documents, accounting data and other
information relating to Taxes and Tax Returns covered in this Article 6;

(d) furnish the other Party with copies of all correspondence received from any
taxing authority in connection with any tax audit or information request with
respect to any such taxable period for which the other Party may have a
liability under Section 6.1; and

(e) execute and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this Article 6.

6.4 Refunds. Any refunds (including interest thereon) of Taxes paid or
indemnified by Sellers pursuant to this Agreement or for which a reserve was
included on the Reference Balance Sheet shall be for the account of Sellers. Any
refunds (including interest thereon) of Taxes paid or indemnified by Purchaser
pursuant to this Agreement (other than those for which a reserve was included on
the Reference Balance Sheet) shall be for the account of Purchaser. Purchaser
agrees to assign and promptly remit (and to cause the Company and the Equipment
Co. to assign and promptly remit) to Sellers’ Agent all refunds (including
interest thereon) of Taxes which any Seller is entitled to hereunder and which
are received by Purchaser or any of its affiliates. Sellers agree to assign and
promptly remit to Purchaser all refunds (including interest thereon) of Taxes
which Purchaser is entitled to hereunder and which are received by any Seller or
any of its affiliates.

6.5 Disputes. If Purchaser and Sellers’ Agent cannot agree on any calculation
required to be made under this Article 6, Purchaser and Sellers’ Agent shall
direct the Unrelated Accountant to make such calculation as promptly as
practicable, but in any event not later than 30 calendar days after such
direction, and to deliver a written notice to each of Purchaser and Sellers’
Agent setting forth the results of such calculation. The results of such
calculation as made by the Unrelated Accountant shall be final and binding, and
the fees and expenses of the Unrelated Accountant shall be paid 50% by Purchaser
and 50% by Sellers.

 

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6.6 Price Adjustment. Purchaser and Sellers agree that any payment made under
this Article 6 will be treated by the Parties on its Tax Returns as an
adjustment to the Purchase Price.

6.7 Survival; Indemnification. Any amounts owed to Purchaser pursuant to this
Article 6 shall be subject to the provisions of Article 9 hereof.

7. COVENANTS OF PURCHASER AND SELLERS.

7.1 Access to Books and Records. Purchaser hereby covenants and agrees to
maintain in a reasonably accessible place, during the three (3) year period
after the Closing, the books and records made available by Sellers hereunder
relating to the Company or Equipment Co. and to provide copies of such books and
records to Sellers or their representatives upon request, for any reasonable
purpose, at Sellers’ expense.

7.2 Reporting Assistance. Purchaser agrees to cooperate with Sellers in
preparing information for various authorities after the Closing Date. This
information includes, but is not limited to, accounting and tax workbooks,
responses to audit requests and other filings with tax authorities. Sellers
agree to provide the same reporting assistance to Purchaser.

7.3 Insurance Policies; Employee Benefits . Sellers agree to cooperate with and
assist Purchaser with any and all efforts to obtain copies of (i) insurance
policies previously issued to the Schaefer Companies, (ii) employee benefit
plans previously adopted by the Schaefer Companies and/or (iii) information
regarding the terms and conditions of such insurance policies or employee
benefit plans.

8. MUTUAL COVENANTS AND WARRANTIES.

8.1 Publicity. No public announcement or other publicity regarding the
transactions referred to herein shall be made by any Party hereto without the
prior written approval of all Parties hereto as to form, timing and manner of
distribution or publication, except to the extent otherwise required by Law on
written advice of counsel. Unless such disclosure is required by applicable Law,
no press release or public communication shall disclose the Purchase Price.

8.2 Brokerage. Sellers and Purchaser respectively warrant to each other, as to
the warranting Party’s conduct and commitments, that no Person provided services
as a broker, agent or finder in connection with the transactions contemplated
hereby, other than Cleary Gull Inc. which provided investment banking and
business brokerage services to Sellers, the Company and Equipment Co. Sellers
and Purchaser shall respectively indemnify the other Party for any claim
asserted by any other Person purporting to act on behalf of the respective
indemnitor as a broker, agent or finder in connection with the transactions
contemplated hereby.

8.3 Other Documents. Each party agrees to deliver such other documents as the
other party may reasonably request for the purpose of facilitating the
consummation or performance of any of the transactions contemplated by this
Agreement.

 

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9. SURVIVAL; INDEMNIFICATION.

9.1 Survival.

(a) Each and every agreement and covenant (other than those set forth in
Articles 6, 9, 10, 12 and 13 hereof) made by the Sellers or Purchaser in this
Agreement, in any exhibits or schedules to this Agreement, or in any Disclosure
Schedules, Ancillary Agreements, or instruments of transfer delivered hereunder
shall survive the Closing for a period of thirty-six (36) months after the
Closing Date and thereafter be of no further force and effect. Except as
otherwise set forth in this Section 9.1, each and every representation and
warranty made by the Sellers or Purchaser in this Agreement, in any exhibits or
schedules to this Agreement, or in the Sellers’ Disclosure Schedules, Ancillary
Agreements, or instruments of transfer delivered hereunder (other than those in
Sections 3.1, 3.2, 3.3, 3.11(a), 3.12(a), 3.13 or 3.16 or Article 6) shall
terminate on the date that is eighteen (18) months after the Closing Date and
thereafter be of no further force or effect; provided, that (i) a claim pursuant
to this Article 9 under Section 3.1, 3.2 or 3.3 may be made at any time; (ii) a
claim made pursuant to this Article 9 under Section 3.13 or Article 6 may be
made at any time prior to the expiration of the applicable statute of
limitations and (iii) a claim made pursuant to this Article 9 under Sections
3.11(a), 3.12(a) or 3.16 may be made at any time prior to the third anniversary
of the Closing Date (the date on which any covenant, agreement, representation
or warranty terminates in accordance with this Article 9 being referred to
herein as the “Cut-off Date” for such covenant, agreement, representation or
warranty).

(b) [Reserved]

(c) Any representation, warranty, covenant or agreement that would otherwise
terminate at the Cut-off Date with respect thereto shall survive if the notice
referred to in Section 9.2(b) or Section 9.3(c), as the case may be, of the
breach, inaccuracy, default or nonperformance thereof shall have been given on
or prior to the Cut-off Date with respect thereto to the Party against whom
indemnification may be sought.

9.2 Indemnification by Purchaser.

(a) From and after the Closing Date, Purchaser shall indemnify and hold Sellers,
and each of them, harmless from and against any and all Losses incurred or
sustained by, or imposed upon, Sellers, or any of them, with respect to or by
reason of (i) any breach of any representation or warranty made by Purchaser in
Section 4 of this Agreement at and as of the Closing Date (or at and as of such
different date or period specified in such representation or warranty), (ii) any
breach by Purchaser of any of its agreements or covenants contained in this
Agreement or (iii) any fact, event or circumstance occurring after the Closing
Date that would give rise to or result in a Third Party Claim against the
Sellers.

(b) Maximum Amount of Purchaser’s Indemnification. In no event shall the
aggregate liability of the Purchaser with respect to all of Seller’s claims for
indemnification under this Section 9.2 (other than those based upon breaches of
Section 4.1, Article 6 or claims based upon fraud) exceed, in the aggregate,
Five Million Dollars ($5,000,000.00).

 

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(c) Notwithstanding anything to the contrary in this Agreement, Sellers shall
not be entitled to indemnification under Section 9.2(a) with respect to any
claim for indemnification thereunder, unless any Seller or Sellers’ Agent has
given Purchaser written notice of such claim in reasonable specificity prior to
the applicable Cut-off Date.

9.3 Indemnification by Sellers.

(a) From and after the Closing Date, Sellers shall, jointly and severally,
indemnify and hold Purchaser, the Company and their respective Representatives,
shareholders and controlling Persons (for purposes of this Article 9,
collectively, the “Purchaser Indemnified Persons”) harmless from and against any
and all Losses (including without limitation any Environmental Losses) incurred
or sustained by, or imposed upon, directly or indirectly, such Purchaser
Indemnified Person with respect to, by reason of or arising out of (i) any
breach of any representation or warranty made by the Sellers contained in this
Agreement, (ii) any breach by the Schaefer Companies of any of their covenants
or obligations contained in this Agreement or (iii) (A) the Warrant Repurchase
Agreement, (B) that certain Amended and Restated Note and Warrant Purchase
Agreement dated as of May 4, 2005, as amended, supplemented or otherwise
modified through the date hereof, between the Company and BOCP, together with
each of the Transaction Documents (as defined therein), (C) the Bonus Plan
Releases; (D) that certain Waiver and Termination Agreement dated as of the date
hereof by and among the Company, CCP, the Trust, each of Messrs. Kostolansky,
Anderson, Rubino and Barnhart and BOCP with respect to the Shareholder Agreement
(as defined therein) and (E) that certain Waiver and Termination Agreement dated
as of the date hereof by and among the Company and each of Messrs. Kostolansky,
Anderson, Rubino and Barnhart with respect to the SAR Plan (as defined therein).

(b) From and after the Closing Date, each Seller hereby agrees individually and
severally (based on each such Seller’s pro rata portion of the Final Purchase
Price) to indemnify and hold the Purchaser Indemnified Persons harmless from and
against any and all Losses incurred or sustained by or imposed upon, directly or
indirectly, such Purchaser Indemnified Person with respect to, by reason of or
arising from or in connection with (i) any breach of a representation or
warranty made by that Seller contained in the Agreement or (ii) any breach of
any covenant or obligation of that Seller in this Agreement.

(c) Notwithstanding anything to the contrary in this Agreement, the Purchaser
Indemnified Persons shall not be entitled to indemnification under
Section 9.3(a) or (b):

(i) in connection with any claim for indemnification hereunder with respect to
which Purchaser or either of the Schaefer Companies has an enforceable
contractual right of indemnification or right of set-off against any third party
and Purchaser is enjoined by a court of competent jurisdiction or otherwise
legally prevented from assigning any such rights to Seller;

(ii) to the extent of the value of any net Tax benefit (less any tax burden
imposed on Purchaser by any indemnity amount paid in excess of such net Tax
benefit) realized (by reason of a Tax deduction, basis reduction, shifting of
income, credits

 

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and/or deductions or otherwise) by Purchaser or either of the Schaefer Companies
in connection with the Losses that form the basis of Purchaser’s claim for
indemnification hereunder;

(iii) with respect to any claim for indemnification hereunder, unless Purchaser
has given the written notice to Sellers’ Agent of such claim, setting forth in
reasonable detail the facts and circumstances pertaining thereto prior to the
applicable Cut-off Date;

(iv) to the extent of the proceeds received by Purchaser or either of the
Schaefer Companies in respect of any insurance claim under which Purchaser or
either of the Schaefer Companies is entitled in connection with the facts giving
rise to such indemnification; provided, that the Purchaser Indemnified Persons
shall be entitled to indemnification with respect to any Losses incurred by
Purchaser in pursuing any such insurance claim without regard to the provisions
of subsection (d)(i) hereof ; and

(v) to the extent the Loss is reserved for in the Final Closing Balance Sheet.

(d) In addition to the provisions of subsection (c) above and subject to the
provisions of subsection (h) below, the indemnification obligations of Sellers
under this Agreement shall be limited as follows:

(i) Basket. Unless otherwise provided herein, the Sellers shall not be required
to provide indemnification under this Section 9.3 unless the Losses for all of
Purchaser’s claim(s) for indemnification (other than those based upon breaches
of Sections 3.1, 3.2, 3.3 or 3.13, Article 6 or claims based upon fraud) shall
exceed in the aggregate an amount equal to one-half of one percent (0.5%) of the
sum of the Base Amount plus the amount of Final Closing Cash (the “Basket
Amount”), after which the Sellers shall be liable for the full amount of Losses
in excess of the Basket Amount.

(ii) Maximum Amount of Sellers’ Indemnification. In no event shall the aggregate
liability of the Sellers with respect to all of Purchaser’s claims for
indemnification under this Section 9.3 (other than those based upon breaches of
Sections 3.1, 3.2, 3.3 or 3.13, Article 6 or claims based upon fraud) exceed, in
the aggregate, Five Million Dollars ($5,000,000.00); provided, that Seller’s
failure to satisfy any or all of the Closing Funded Debt shall not be credited
toward such maximum indemnification nor be subject to any maximum
indemnification limit. The Sellers shall be liable for the full amount of Losses
arising out of breaches of Sections 3.1, 3.2, 3.3 and 3.13, Article 6 and claims
based upon fraud; provided, that the Sellers’ liability for Losses arising out
of breaches of Sections 3.1, 3.2, 3.3 and 3.13 and Article 6 shall not exceed,
in the aggregate, the Purchase Price.

(e) Notwithstanding anything to the contrary in this Agreement, the obligation
of Sellers with respect to Environmental Losses and breaches of the
representations and warranties contained in Section 3.16 of this Agreement shall
be subject to the following additional limitations:

(i) Neither Purchaser nor its consultants, contractors, agents or
representatives shall perform or undertake after the Closing Date any
investigation or sampling

 

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of any Hazardous Substance or contaminants in, on, at upon or under any surface
soil, subsurface soil, surface water, groundwater, building material or any
other media of any form or type at, in, on, under or from the Real Estate
(collectively “Media”) except to the extent that Purchaser, in its sole
discretion, concludes that an investigation and/or sampling of any Media is
(A) done in connection with a future sale of the Real Estate by Purchaser to a
bona fide third party purchaser; (B) done in connection with a bona fide third
party financing transaction in which Purchaser or any of its affiliates is the
borrowing entity; (C) warranted by any future construction or development on the
Real Estate by Purchaser (and then only to the extent related to the area of
construction or development); (D) required by Law or (E) done in connection with
a response to a bona fide Third Party Claim asserting liability for the Release
of Hazardous Substances at the Real Estate (items (A) through (E) referred to as
“Permissible Activities”).

(ii) Any Environmental Losses incurred or sustained by or imposed upon the
Purchaser Indemnified Persons other than as a result of the Permissible
Activities shall, after giving effect to subsection (d)(i) hereof, be borne in
the proportion of twenty-five percent (25%) by Purchaser and seventy-five
percent (75%) by Sellers.

(iii) With respect to Sellers’ indemnification obligations for Environmental
Losses under Section 9.3(a) or (b) above as a result of a breach of a
representation or warranty set forth in Section 3.16 above or otherwise,
Purchaser shall:

(A) provide Sellers or their Representatives access to the applicable Real
Estate so that Sellers may conduct their own investigation, testing or
corrective action with respect to the matter;

(B) immediately provide Sellers with the results, including analytical data, of
any investigation or testing conducted by Purchaser or, if available to
Purchaser, any third party;

(C) give Sellers the right to participate in any discussions or negotiations
with any Governmental Authority concerning such matter;

(D) if Remediation Action is required in any such matter, give Sellers the right
to develop and implement a plan of corrective action, such plan to be paid for
by Sellers and be subject to Purchaser’s approval, and, if requested by Sellers,
cooperate with Sellers in the development and implementation of such plan on a
cost effective basis; any such plan of action may, to the extent permitted under
Environmental Laws, be based on the industrial use of the property and may rely
on and utilize institutional controls (such as web-based GIS registrations, deed
notices or restrictions) and shall contain reasonable steps so as to minimize
disruption of or adverse effect on the ongoing operations of the business of the
Schaefer Companies; and

(E) cooperate fully and in good faith with Sellers in performing such tasks as
Sellers and their technical professionals and Representatives may reasonably
request as being necessary to complete any Remediation Action being undertaken
by Sellers pursuant to this Agreement; and Purchaser shall promptly execute any
and all documentation necessary or requested to facilitate “case closure” or a
similar acknowledgement

 

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by any Governmental Authority having jurisdiction over the matter and,
furthermore, without limiting the scope of the foregoing, Purchaser shall cause
its employees to cooperate fully with Sellers and to afford Sellers, their
agents, employees and technical professionals access to relevant records
relating to the matters which may be Sellers’ responsibility under this
Agreement;

(iv) Upon issuance of a “No Further Action” (“NFA”) letter or similar
acknowledgement from a Governmental Authority having jurisdiction over a
particular Remediation Action, all obligations of Sellers under this Agreement
with respect to the applicable Environmental Losses for that particular
Remediation Action, if any, shall be terminated and concluded to the extent such
NFA letter releases Purchaser from all future liability with regard to such
matter.

(f) If Purchaser is indemnified under this Section 9.3 with respect to any
Losses incurred or sustained by it as a result of the breach of the
representation and warranty made by Sellers in the penultimate sentence of
Section 3.24 (relative to Accounts Receivable outstanding for greater than 120
days), Purchaser shall assign its right to any such Account Receivable to
Sellers.

(g) Indemnification amounts finally determined to be payable by Sellers shall be
satisfied first from the Escrow Amount to the extent available. The Escrow
Agreement shall continue for three years except as extended with respect to
pending claims as set forth in the Escrow Agreement. The funds being held in
escrow shall be disbursed as follows: (i) one-third of the amount then held in
the escrow fund shall be released to Sellers at the one year anniversary of the
Closing Date; (ii) one-half of amount then held in the escrow fund shall be
released to Sellers at the two year anniversary of the Closing Date and
(iii) the remainder of the funds held in the escrow fund shall be released at
the third anniversary of the Closing Date except as may be extended as set forth
in the Escrow Agreement. Procedures for obtaining disbursements of the amounts
held in the escrow fund shall be as set forth in the Escrow Agreement.

(h) The indemnification obligations of Sellers under subsection 9.3(a)(iii)
above shall be without regard to the provisions of subsection (d) hereof.

9.4 Procedures for Indemnification.

(a) Subject to Section 9.5, if a Party seeking indemnification pursuant to this
Section 9 (an “Indemnified Party”) shall claim to have suffered a Loss for which
indemnification is available under Sections 9.2 or 9.3, as the case may be (for
purposes of this Section 9.4, regardless of whether such Indemnified Party is
entitled to receive a payment in respect of such claim), the Indemnified Party
shall notify the Party from whom indemnification with respect to such claim is
sought (the “Indemnifying Party”) in writing of such claim within the applicable
Cut-Off Date, which written notice shall describe the nature of such claim, the
facts and circumstances that give rise to such claim to the extent then known by
the Indemnified Party and the amount of such claim if reasonably ascertainable
at the time such claim is made (or if not then reasonably ascertainable, the
maximum amount of such claim reasonably estimated by the Indemnified Party).

 

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(b) In the event of a claim by an Indemnified Party involves Losses that do not
result from a Third-Party Claim, then the Parties shall follow the procedures
set forth in Section 10 with respect to the resolution of such matter.

9.5 Procedures for Third-Party Claims.

(a) Any Indemnified Party seeking indemnification pursuant to this Section 9 in
respect of any Proceeding instituted by any third Person (in each case, a
“Third-Party Claim”) shall give the Indemnifying Party from whom indemnification
with respect to such claim is sought (i) prompt written notice (but in no event
more than ten (10) days after the Indemnified Party acquires knowledge thereof)
of such Third-Party Claim and (ii) copies of all documents and information
relating to any such Third-Party Claim within ten (10) days of their being
obtained by the Indemnified Party; provided, that the failure by the Indemnified
Party to so notify or provide copies to the Indemnifying Party shall not relieve
the Indemnifying Party from any liability to the Indemnified Party for any
liability hereunder except to the extent that such failure shall have actually
prejudiced the defense of such Third-Party Claim.

(b) The Indemnifying Party shall have the right, at its option and expense, to
defend against, negotiate, settle or otherwise deal with any Third-Party Claim
with respect to which it is the Indemnifying Party and to be represented by
counsel reasonably acceptable to the Indemnified Party (unless (i) the
Indemnifying Party is also party to such Proceeding and the Indemnified Party
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Party fails to provide reasonable assurance to the
Indemnified Party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding). The Indemnifying Party
shall notify the Indemnified Party of its election to assume the defense of such
Proceeding and thereafter neither the Indemnifying Party nor the Indemnified
Party will admit any liability with respect thereto or settle, compromise, pay
or discharge the same without the written consent of the other party. The
Indemnified Party may participate in any Third-Party Claim with counsel of its
choice and at its expense. If notice is given to an Indemnifying Party of the
commencement of any Proceeding and the Indemnifying Party does not, within
twenty days after such notice is given, give notice to the Indemnified Party of
its election to assume the defense of such Proceeding, the Indemnified party
(upon further notice to the Indemnifying Party) will have the right to undertake
the defense, compromise or settlement of such Proceeding and the Indemnifying
Party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the Indemnified Party. Notwithstanding the
foregoing, if an Indemnified Party determines in good faith that there is a
reasonable probability that a Proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Party may, by
written notice to the Indemnifying Party, assume the exclusive right to defend,
compromise or settle such Proceeding, but the Indemnifying Party will not be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its written consent.

(c) If a firm good faith written offer is made to settle any such Third-Party
Claim and the Indemnifying Party proposes to accept such settlement and the
Indemnified Party refuses to consent to such settlement, then: (i) the
Indemnifying Party shall be excused from, and the Indemnified Party shall be
solely responsible for, all further defense of such

 

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Third-Party Claim; (ii) the maximum liability of the Indemnifying Party relating
to such Third-Party Claim shall be the amount of the proposed settlement if the
amount thereafter recovered from the Indemnified Party on such Third-Party Claim
is greater; and (iii) the Indemnified Party shall pay all attorneys’ fees and
legal costs and expenses incurred after rejection of such settlement by the
Indemnified Party, but if the amount thereafter recovered by such third party
from the Indemnified Party is less than the amount of the proposed settlement,
the Indemnified Party shall be reimbursed by the Indemnifying Party for such
attorneys’ fees and legal costs and expenses up to a maximum amount equal to the
difference between the amount recovered by such third party and the amount of
the proposed settlement.

(d) Purchaser and Sellers shall make available to each other, their counsel and
accountants all information and documents reasonably available to them which
relate to any claim subject to indemnity hereunder and to render to each other
such assistance as may reasonably be required in order to ensure the proper and
adequate defense of any such claim.

(e) If required for joinder purposes, the Sellers and Purchaser hereby consent
to the non-exclusive jurisdiction in which a Proceeding is brought against any
Indemnified Party for purposes of any claim that an Indemnified Party may have
under this Agreement with respect to such Proceeding or the matters alleged
therein and agree that process may be served on the Sellers and Purchaser with
respect to such claim anywhere in the world.

9.6 Exclusive Remedy. In the absence of fraud, bad faith or willful breach, the
indemnification obligations of Purchaser and Sellers under this Section 9 shall
constitute the sole and exclusive remedies of Sellers and Purchaser,
respectively, and their respective Representatives, shareholders and controlling
Persons, for the breach of any covenant, agreement, representation or warranty
included in this Agreement by the Sellers or Purchaser, as the case may be, and
Sellers and Purchaser shall not be entitled to rescission of this Agreement or
to any further indemnification rights or claims of any nature whatsoever in
respect thereof, all of which Purchaser and Sellers waive.

10. DISPUTE RESOLUTION.

10.1 Dispute. As used in this Agreement, “Dispute” shall mean any dispute or
disagreement between Purchaser and Sellers concerning the interpretation of this
Agreement, the validity of this Agreement, any breach or alleged breach by any
Party under this Agreement or any other matter relating in any way to this
Agreement; provided, that “Dispute” shall not include any dispute (i) relating
to the Preliminary Closing Balance Sheet, which shall be resolved in accordance
with Section 2.4(f), (ii) arising under Article 6 hereof, which shall be
resolved in accordance with Section 6.5 or (iii) any dispute arising under
Section 12 of this Agreement.

10.2 Process. If a Dispute arises, the Parties to the Dispute shall follow the
procedures specified in Sections 10.3, 10.4 and 10.5.

10.3 Negotiations. The Parties shall promptly attempt to resolve any Dispute by
negotiations between Purchaser and Sellers’ Agent. Purchaser or Sellers’ Agent,
as the case may be, shall give the other Party written notice (the “Dispute
Notice”) of any Dispute not

 

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resolved in the normal course of business. Purchaser and Sellers’ Agent (or
their Representatives) shall meet at a mutually acceptable time and place within
thirty (30) days after receipt of the Dispute Notice by the party to whom such
Notice was delivered, and thereafter as often as they reasonably deem necessary,
to exchange relevant information and to attempt to resolve the Dispute. If
Purchaser or Sellers’ Agent intends to be accompanied at any such meeting by
legal counsel, the other Party shall be given at least three (3) Business Days’
prior written notice of such intention and may also be accompanied by legal
counsel. If the Dispute has not been resolved by the Parties (A) within ninety
(90) days of receipt of a Dispute Notice, or (B) if the Parties fail to meet
within thirty (30) days of receipt of such Dispute Notice, either Purchaser or
Sellers’ Agent may initiate binding arbitration as provided in Section 10.4.

10.4 Arbitration. If the Dispute is not resolved by negotiations pursuant to
Section 10.3, all Disputes shall be determined by binding arbitration in
Chicago, Illinois in accordance with the commercial rules of the AAA then in
effect unless the parties mutually agree in writing to waive this provision.
This agreement to arbitrate shall be specifically enforceable under the laws of
the State of Illinois. The Party initiating arbitration shall file written
notice of the demand for arbitration with the other Party to the Dispute and
with the AAA in Chicago, Illinois. Such demand for arbitration shall be made
within sixty (60) days after the expiration of the applicable time period set
forth in the last sentence of Section 10.3, and in no event shall such demand be
made after the date when an institution of legal or equitable proceedings based
upon such Dispute would be barred by this Agreement or the applicable statute of
limitations. The arbitration shall be before a single arbitrator chosen in
accordance with the rules of the AAA, who shall interpret this Agreement in
accordance with the internal laws of the Commonwealth of Pennsylvania without
reference to any rule or provision thereof which would cause the application of
the law of any other state. The award rendered by the arbitrator shall be final
and binding and may not be appealed, and any judgment may be entered upon it in
accordance with the applicable law in any court having jurisdiction thereof. In
no event shall any Party be awarded punitive damages.

10.5 General.

(a) Provisional Remedies. At any time during the procedures specified in
Sections 10.3 and 10.4, a Party may seek a preliminary injunction or other
provisional judicial relief in the courts of Cook County, Illinois or the U.S.
District Court for the Northern District of Illinois if in the judgment of such
party such action is necessary to avoid irreparable harm. Each party hereto
consents to the exclusive jurisdiction of such courts with respect to this
Section 10.5 and waive any objection to venue laid therein. Process in any
Proceeding referred to in this Section 10.5 may be served on any party anywhere
in the world.

(b) Performance to Continue. Each Party shall use its commercially reasonable
efforts to perform its obligations under this Agreement pending final resolution
of any Dispute.

(c) Extension of Deadlines. All deadlines specified in this Section 10 may be
extended by mutual written agreement between Purchaser and Sellers’ Agent.

 

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(d) Enforcement. The Parties regard the obligations in this Section 10 to
constitute an essential provision of this Agreement and one that is legally
binding on them. In case of a violation of the obligations in this Section 10 by
either Purchaser or any of Sellers or the Sellers’ Agent, the other Party may
bring an action to seek enforcement of such obligations in any court of law
having jurisdiction thereof.

(e) Costs. The Parties to the dispute shall pay their own costs, fees, and
expenses incurred in connection with the application of the provisions of this
Section 10, and fifty percent (50%) of the fees and expenses of the AAA and the
arbitrator in connection with the application of the provisions of Section 10.4.

10.6. Waiver of Jury Trial. In any court action under this Section 10 as
contemplated above (whether to enforce an arbitration award as contemplated in
Section 10.4, to seek provisional remedies as contemplated in Section 10.5(a),
to enforce the arbitration provisions contained in this Section 10 as
contemplated in Section 10.5 (d), or otherwise), the Purchaser and Sellers
hereby voluntarily, knowingly, irrevocably and unconditionally waive any right
to have a jury participate in resolving the dispute which is the subject of such
court action.

11. [RESERVED]

12. NONCOMPETITION.

12.1 Acknowledgments by Shareholders. Each Seller acknowledges, to the extent
applicable to such Seller, that:

(a) such Seller has occupied a position of trust and confidence with the Company
prior to the Closing Date and has become familiar with the Information;

(b) Purchaser has required that each Seller make the covenants set forth in
Sections 12.2 and 12.3 as a condition to the Purchaser’s purchase of the Shares;

(c) the provisions of Sections 12.2 and 12.3 are reasonable and necessary to
protect and preserve the Company’s business; and

(d) the Company would be irreparably damaged if any Seller were to breach the
covenants set forth in Sections 12.2 and/or 12.3.

12.2 Confidential Information. Each Seller acknowledges and agrees that all
Information known or obtained by such Seller, whether before or after the
Closing Date, is the property of the Company. Therefore, each Seller agrees that
such Seller will not, at any time, disclose to any unauthorized Persons or use
for its or his own account or for the benefit of any Person any Information,
whether such Seller has such Information in its or his memory or embodied in
writing or other physical form, without Purchaser’s prior written consent. Each
Seller agrees to deliver to Purchaser within 30 days after execution of this
Agreement, and at any other time Purchaser may reasonably request, all physical
embodiments of any Information that such Seller may then possess or have under
its or his control.

 

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12.3 Noncompetition. As a material inducement for Purchaser to enter into this
Agreement and as additional consideration for the consideration to be paid
hereunder, each Seller agrees that:

(a) For a period of twenty-four (24) months after the Closing:

(i) such Seller will not, directly or indirectly, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend its or his name or any similar name to, lend its or
his credit to, or render services or advice to any business that competes with
any business conducted by any of the Schaefer Companies in the United States;
provided, that such Seller may purchase or otherwise acquire up to (but not more
than) one percent of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934. Each
Seller agrees that this covenant is reasonable with respect to its duration,
geographical area, and scope;

(ii) such Seller will not, directly or indirectly, either for itself or himself
or any other Person, (A) induce or attempt to induce any employee of any of the
Schaefer Companies to leave the employ of such Company, (B) in any way interfere
with the relationship between any such Company and any employee of such Company,
(C) employ, or otherwise engage as an employee, independent contractor, or
otherwise, any employee of any such Company, or (D) induce or attempt to induce
any customer, supplier, licensee, or business relation of any such Company to
cease doing business with such Company, or in any way interfere with the
relationship between any customer, supplier, licensee, or business relation of
any such Company; and

(iii) such Seller will not, directly or indirectly, either for itself or himself
or any other Person, solicit the business of any Person known to such Seller to
be a customer of any of the Schaefer Companies, whether or not such Seller had
personal contact with such Person, with respect to products or activities which
compete with the business of any of the Schaefer Companies.

(b) In the event of a breach by any Seller of any covenant set forth in
subsection (a) above, the term of such covenant will be extended by the period
of the duration of such breach.

13. MISCELLANEOUS PROVISIONS.

13.1 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under and in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to any conflict of law provisions to the
contrary. In furtherance of the foregoing, the internal law of the Commonwealth
of Pennsylvania will control the interpretation and construction of this
Agreement, even if under such jurisdiction’s choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily apply.
Any Proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be

 

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brought against any party hereto in the courts of Cook County, Illinois or the
U.S. District Court for the Northern District of Illinois. Each of the parties
hereby consent to the exclusive jurisdiction of such courts in any such
Proceeding and waives any objection to venue laid therein. Process in any
Proceeding referred to in this Section 13.1 may be served on any party anywhere
in the world.

13.2 Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be considered delivered in all respects when it
has been delivered by hand or overnight courier, by acknowledged facsimile
transmission followed by the original mailed by certified mail, return receipt
requested, or three (3) days after it is mailed by certified mail, return
receipt requested, first class postage prepaid, addressed as follows:

 

If to Purchaser:    With a copy to: Wabtec Corporation    Reed Smith LLP 1001
Air Brake Avenue    435 Sixth Avenue Wilmerding, PA 15148    Pittsburgh, PA
15219 Attention: Legal Department    Attention: Lee van Egmond, Esq. Telephone:
412-825-1000    Telephone: (412) 288-3824 Facsimile: 412-825-1305    Facsimile:
(412) 288-3063 If to Sellers:    With a copy to:

CCP Limited Partnership, as Sellers’ Agent

10936 North Port Washington Road #180

Mequon, WI 53092

Attention: Daniel J. Jagla

Telephone: (414) 272-5506

  

Thomas A. Myers, Esq.

Reinhart Boerner Van Deuren s.c.

1000 North Water Street

Suite 2100

Milwaukee, WI 53202

Telephone: (414) 298-8120

Facsimile: (414) 298-8097

or such other addresses as shall be similarly furnished in writing by either
party.

13.3. Exhibits. All exhibits, schedules and the Seller’ Disclosure Schedules
hereto are by reference incorporated herein and made a part of this Agreement.

13.4. Entire Agreement; Binding Effect. This Agreement (including all exhibits,
schedules and the Sellers’ Disclosure Schedules attached hereto) contains the
entire agreement between the Parties hereto with respect to the transactions
contemplated herein, and supersedes all prior oral or written statements,
representations, warranties, covenants or agreements between the parties with
respect to its subject matter (excluding the Confidentiality Agreement) and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement among the parties with
respect to its subject matter. Any information that is disclosed in any part of
the Sellers’ Disclosure Schedule or in any other schedule to this Agreement is
deemed disclosed for all Sections of this Agreement. There are no agreements or
understandings between the Parties other than those set forth herein or executed
simultaneously or in connection herewith. This Agreement shall be

 

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binding upon and inure to the benefit of the Parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.

13.5. Headings. The headings in this Agreement are inserted for convenience only
and shall not constitute a part of this Agreement.

13.6. Expenses. Except as otherwise specifically provided herein, each of the
Parties hereto shall be solely responsible for and pay its own consulting,
accounting, legal, and other charges and expenses incurred by such Party in
connection with the negotiation, execution and performance of this Agreement,
the related agreements and the transactions contemplated hereby and thereby
without obligation to pay or contribute to the expenses incurred by any other
Party. The reasonable fees and expenses of Reinhart Boerner Van Deuren s.c.,
Cleary Gull, Inc., Sellers’ Agent other professional advisor fees shall be paid
by the Company prior to the Closing. All transfer taxes incurred by the Company
as a result of the transactions contemplated by this Agreement shall be borne
equally by the Seller and the Purchaser.

13.7. Amendment. This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed on behalf
of all of the Parties or, in the case of a waiver, by the party waiving
compliance.

13.8. Waiver. The failure of any Party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce that provision or any other provision of hereof at any time
thereafter, except as specifically limited herein.

13.9. Time of the Essence. Time is deemed to be of the essence with respect to
all of the terms, covenants, representations and warranties of this Agreement.

13.10. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any Party hereto without the prior
written consent of the other Parties, and any purported assignment in violation
hereof shall be null and void.

13.11. No Third Party Beneficiary. Neither this Agreement nor any provision
hereof, nor any exhibit, statement, schedule, Sellers’ Disclosure Schedule,
certificate, instrument or other document delivered or to be delivered pursuant
hereto, nor any agreement entered into or to be entered into pursuant hereto or
any provision thereof, is intended to create any right, claim or remedy in favor
of, or impose any obligation upon, any Person other than the Parties hereto and
their respective successors and permitted assigns.

13.12. Counterparts; Facsimile Signature. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement. Each of the Parties to
this Agreement agrees that a signature affixed to a counterpart of this
Agreement and delivered by facsimile by any Person is intended to be its, his or
her signature and shall be valid, binding and enforceable against such Person.

13.13. Interpretation. Each party having participated in the negotiation and
preparation of this Agreement and having been represented by counsel of its
choosing, there

 

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shall be no presumption that any ambiguities herein be construed against any
particular party. When a reference is made in this Agreement to Sections,
exhibits or schedules, such reference shall be to a Section of or exhibit or
schedule to this Agreement unless otherwise indicated. The section headings,
table of contents and indexes contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limitation.”

13.14 Amendment and Severability. This Agreement may only be amended by a
written agreement of the Parties. If any provision, clause or part of this
Agreement or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the applications of each provision,
clause or part under other circumstances, shall not be affected thereby.

13.15 Further Assurances. Upon reasonable request, from time to time, Sellers
and Purchaser shall execute and deliver all documents, make all rightful oaths,
testify in any proceedings and do all other acts which may be necessary or
desirable in the reasonable judgment of the requesting party to consummate the
transactions contemplated by this Agreement.

13.16 Use of Words. The use of words of the masculine gender is intended to
include, wherever appropriate, the feminine or neuter gender and vice versa. The
use of words of the singular is intended to include, wherever appropriate, the
plural and vice versa.

13.17 Accounting Terms. As used in this Agreement or any Ancillary Agreement,
accounting terms relating to the Schaefer Companies defined in Section 1, and
accounting terms partly defined in Section 1 to the extent not defined, shall
have the respective meanings given to them under GAAP.

13.18 Sellers’ Agent.

(a) Appointment. Each Seller hereby irrevocably constitutes and appoints CCP as
such Seller’s agent (the “Sellers’ Agent”) for the purpose of performing and
consummating the transactions contemplated by this Agreement. The appointment of
CCP as Sellers’ Agent is coupled with an interest and all authority hereby
conferred shall be irrevocable and shall not be terminated by any or all of
Sellers without the consent of Purchaser, which consent may be withheld for any
reason, and Sellers’ Agent is hereby authorized and directed to perform and
consummate on behalf of Sellers all of the transactions contemplated by this
Agreement.

(b) Authority. Not by way of limiting the authority of Sellers’ Agent, each and
all of Sellers, for themselves and their respective heirs, executors,
administrators, successors and assigns, hereby authorize Sellers’ Agent to:

(i) waive any provision of this Agreement which Sellers’ Agent deems necessary
or desirable;

 

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(ii) execute and deliver on Sellers’ behalf all documents and instruments which
may be executed and delivered pursuant to this Agreement, including without
limitation the Shares and the stock powers with respect thereto;

(iii) receive the Preliminary Closing Balance Sheet and request (or not request)
any adjustments thereto;

(iv) make and receive notices and other communications pursuant to this
Agreement and service of process in any Proceeding arising out of or related to
this Agreement or any of the transactions contemplated hereunder;

(v) settle any dispute, claim, action, suit or proceeding arising out of or
related to this Agreement or any of the transactions hereunder;

(vi) as necessary in furtherance of the provisions of Section 2, receive and
distribute the Purchase Price;

(vii) appoint or provide for successor agents; and

(viii) pay expenses incurred or which may be incurred by or on behalf of Sellers
in connection with this Agreement.

In the event of the failure or refusal of CCP to act as Sellers’ Agent, Sellers
shall promptly appoint one of Sellers as their agent for purposes of this
Section 13.18, and failing such appointment within ten (10) days, Purchaser may,
by written notice to Sellers at the last address of Sellers applicable for
purposes of this Agreement, designate one of Sellers as Sellers’ Agent.

(c) Disputes. Any claim, action, suit or other proceeding, whether in law or
equity, to enforce any right, benefit or remedy granted to Sellers under this
Agreement may be asserted, brought, prosecuted or maintained only by Sellers’
Agent. Any claim, action, suit or other proceeding, whether in law or equity, to
enforce any right, benefit or remedy granted to Purchaser under this Agreement,
including any right of indemnification provided in Section 9, may be asserted,
brought, prosecuted or maintained by Purchaser against Sellers or Sellers’ Agent
by service of process on Sellers’ Agent and without the necessity of serving
process on, or otherwise joining or naming as a defendant in such claim, action,
suit or other proceeding, any Seller. With respect to any matter contemplated by
this Section 13.18, Sellers shall be bound by any determination in favor of or
against Sellers’ Agent or the terms of any settlement or release to which
Sellers’ Agent shall become a party.

*     *     *     *     *     *     *     *     *     *     *

[Signatures on following pages]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Stock Purchase
Agreement all as of the day and year first above written.

 

SELLERS: CCP LIMITED PARTNERSHIP   By:   Cedar Creek Partners LLC, its general
partner    

By:

 

/s/ Daniel J. Jagla

   

Its:

 

Managing Member

TRUSTEES OF THE SCHAEFER 401(k) PLAN f/b/o David J. Kostolansky

TRUSTEES OF THE SCHAEFER 401(k) PLAN f/b/o David A. Rubino

TRUSTEES OF THE SCHAEFER 401(k) PLAN f/b/o Richard J. Barnhart

TRUSTEES OF THE SCHAEFER 401(k) PLAN f/b/o Barry L. Anderson

 

By:  

/s/ David J. Kostolansky

  David J. Kostolansky, as Trustee and Beneficial Owner By:  

/s/ Barry L. Anderson

  Barry L. Anderson, as Trustee and Beneficial Owner By:  

/s/ David A. Rubino

  David A. Rubino, as Trustee and Beneficial Owner By:  

/s/ Richard J. Anderson

 

Richard J. Barnhart, as Beneficial Owner

 

/s/ Barry L. Anderson

   

Darl J. Anderson

Barry L. Anderson

   

Spouse

 

PURCHASER: WABTEC HOLDING CORPORATION

By:

 

/s/ Alvaro Garcia-Tunon

Its:

  Senior Vice President, Chief Financial Officer and Secretary

[Signatures continued on following page]

 

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SELLERS’ AGENT: CCP LIMITED PARTNERSHIP   By:   Cedar Creek Partners LLC, its
general partner    

By:

 

/s/ Daniel J. Jagla

   

Its:

 

Managing Director

 

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LIST OF SCHEDULES AND EXHIBITS

Schedule “A” – List of Sellers

Sellers’ Disclosure Schedules

Purchaser’s Disclosure Schedules

Exhibit “A” – Form of Escrow Agreement

Exhibit “B” – Schedule of Funded Debt

 

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