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##### 



TABLE OF CONTENTS
 Section
    
    PageINTRODUCTION
    
    
    1BACKGROUND
    
    
    11. Definitions
    
    
    12. Sale and Purchase
    
    
    82.1 Agreement to Sell and Purchase
    
    
    82.2 Purchase Price
    
    
    102.3 Escrow Account
    
    
    102.4 Assumption of Liabilities
    
    
    102.5 Post-Closing Purchase Price Adjustment
    
    
    112.6 Allocation of Purchase Price
    
    
    122.7 Consent of Third Parties
    
    
    132.8 Guaranty
    
    
    133. Closing
    
    
    133.1 Location; Date; Deliveries
    
    
    134. Representations and Warranties of Seller
    
    
    144.1 Organization and Standing
    
    
    144.2 Ownership
    
    
    144.3 Authority and Binding Effect
    
    
    144.4 Consents and Approvals
    
    
    154.5 Third-Party Options
    
    
    154.6 Financial Statements; Books of Account
    
    
    154.7 Taxes
    
    
    164.8 Undisclosed Liabilities
    
    
    174.9 Accounts Receivable
    
    
    174.10 Inventory
    
    
    184.11 Title to Purchased Assets and Related Matters
    
    
    184.12 Condition and Location of Purchased Assets
    
    
    184.13 Real Property
    
    
    184.14 Confidential Information; Intellectual Property
    
    
    194.15 Contracts
    
    
    224.16 Employees/Independent Contractors
    
    
    244.17 Governmental Permits
    
    
    244.18 Compliance with Law and Court Orders
    
    
    24
  i




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TABLE OF CONTENTS
 Section
    
    Page4.19 Litigation
    
    
    254.20 Insurance
    
    
    254.21 Non-Real Estate Leases
    
    
    254.22 Employee Benefit Plans
    
    
    254.23 Transactions with Related Parties
    
    
    274.24 Absence of Certain Changes
    
    
    284.25 Environmental Matters
    
    
    294.26 Additional Information
    
    
    304.27 Corporate Records
    
    
    304.28 Brokers or Finders Fee
    
    
    304.29 Relationship With Customers and Suppliers
    
    
    304.30 Certain Personal Property
    
    
    314.31 Subsidiaries
    
    
    314.32 Previous Sales; Warranties
    
    
    314.33 Solvency
    
    
    314.34 S Corporation Election
    
    
    314.35 Statements and Other Documents Not Misleading
    
    
    314.36 Consumer Safety Matters
    
    
    325. Representations and Warranties of Buyer
    
    
    325.1 Organization and Standing
    
    
    325.2 Authority and Binding Effect
    
    
    325.3 Validity of Contemplated Transactions
    
    
    325.4 Brokers or Finders Fee
    
    
    326. Pre-Closing Covenants
    
    
    336.1 Access
    
    
    336.2 No Solicitation
    
    
    336.3 Operation of the Business
    
    
    336.4 Update of Schedules
    
    
    356.5 Employees and Business Relations
    
    
    356.6 [RESERVED]
    
    
    356.7 Disclosure of Certain Matters
    
    
    356.8 Confidentiality
    
    
    356.9 [RESERVED]
    
    
    35
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##### 



TABLE OF CONTENTS
 Section
    
    Page6.10 Transfer of Purchased Assets and Business
    
    
    356.11 Fulfillment of Closing Conditions
    
    
    366.12 Change of Name
    
    
    366.13 Employee Payments
    
    
    366.14 Third Party Payments
    
    
    366.15 Further Assurances
    
    
    366.16 Insurance
    
    
    377. Post-Closing Covenants
    
    
    377.1 Noncompetition and Nonsolicitation, Confidential Information
    
    
    377.2 Satisfaction of Liabilities
    
    
    387.3 Transition Period
    
    
    387.4 Employees
    
    
    387.5 Accounts Receivable
    
    
    397.6 Conduct of the Business following the Closing
    
    
    407.7 Tax Matters
    
    
    408. Conditions Precedent to Obligations of Buyer
    
    
    408.1 Representations and Warranties; Performance of Obligations
    
    
    408.2 Ancillary Documents
    
    
    418.3 Closing Consents
    
    
    418.4 Material Adverse Changes
    
    
    418.5 Legal Matters
    
    
    418.6 Legal Opinion
    
    
    418.7 Review of Updated Schedules and Environmental Investigations
    
    
    418.8 Manufacturing Lease; Warehouse Lease
    
    
    418.9 Seller Employees
    
    
    419. Conditions Precedent to Obligations of Seller Parties
    
    
    429.1 Representations and Warranties; Performance of Obligations
    
    
    429.2 Legal Matters
    
    
    429.3 Legal Opinion
    
    
    4210. Indemnification
    
    
    4210.1 By the Seller Parties
    
    
    4210.2 By the Buyer and Parent
    
    
    4310.3 Procedure for Claims
    
    
    43
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TABLE OF CONTENTS
 Section
    
    Page10.4 Claims Period
    
    
    4510.5 Third Party Claims
    
    
    4510.6 Right of Offset
    
    
    4510.7 Effect of Investigation or Knowledge
    
    
    4610.8 Satisfaction of Indemnification Obligations
    
    
    4610.9 Contingent Claims
    
    
    4611. Termination
    
    
    4611.1 Grounds for Termination
    
    
    4611.2 Effect of Termination
    
    
    4712. Other Matters
    
    
    4712.1 Public Announcements
    
    
    4712.2 Reasonable Best Efforts
    
    
    4713. Miscellaneous
    
    
    4713.1 Contents of Agreement
    
    
    4713.2 Amendment, Parties in Interest, Assignment
    
    
    4713.3 Interpretation
    
    
    4813.4 Sole Remedy
    
    
    4813.5 Dispute Resolution
    
    
    4813.6 Expenses
    
    
    4913.7 Bulk Sales
    
    
    4913.8 Notices
    
    
    4913.9 Governing Law
    
    
    5013.10 Counterparts
    
    
    50
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ASSET PURCHASE AGREEMENT   INTRODUCTION
 Buyer Seller Exhibit A Shareholder Shareholders Seller Party Seller Parties Party Parties
 BACKGROUND
   Definitions
  Accounts Receivable
 Action Section 10.5
 Affiliates
 Agreement
 Allocation Section 2.6
 Arbitration Section 13.5(c)
 Assets
 Assignee Section 13.2
 Assumed Liabilities Section 2.4(a)
 Auditor




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##### 



Base Purchase Price
 Bill of Sale, Assignment and Assumption Agreement Exhibit
B
 Business
 Business Day
 Buyer Officers Certificate Section 9.1
 Buyers Legal Opinion Section 9.3
 Cap Section 10.3(c)
 CERCLA Section 4.25
 Charter Documents
 Claim Notice Section 10.3(a)
 Claim Response Section 10.3(a)
 Closing Section 3.1
 Closing Balance Sheet Section 2.5(a)
 Closing Consents Section 8.3
 Closing Date Section 3.1
 Closing Financial Data Section 2.5(b)
 Closing Payment Section 2.2(a)
 Code
 Confidential Information
  2




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Confidentiality Agreement Section 4.14(a)(ii)
 Consumer Acts Section 4.36
 Contingent Claim Section 10.9
 Contract
 Copyrights
 Court Order
 Current Balance Sheet Section 4.6(a)(ii)
 Current Balance Sheet Date Section 4.6(a)(iii)
 Damages Section 10.1(a)
 Default
 Dispute Section 13.5(a)
 Effective Date Section 3.1
 Employee Payments Section 6.13
 Employment Agreement Section 8.9
 Encumbrances
 Environmental Claims Section 4.25(i)
 Environmental Laws Section 4.25(ii)
  3




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##### 



Environmental Permit Section 4.25(iii)
 ERISA
 ERISA Affiliate
 Escrow Agent
 Escrow Agreement Exhibit C
 Escrow Funds Section 2.2(b)(ii)
 Escrow Payment Section 2.2(a)
 Escrow Rate
 Exchange Act
 Excluded Assets Section 2.1(b)
 Expiration Date Section 10.4
 GAAP
 Governmental Body
 Governmental Permits
 Guaranty Section 2.8
 Hazardous Material Section 4.25(iv)
 Indemnified Buyer Party Section 10.1
 Indemnified Party Section 10.3(a)
 Indemnified Seller Party Section 10.2
 Indemnitor Section 10.3(a)
  4




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##### 



Information Technology
 Intellectual Property
 Inventory
 Law
 Legal Proceeding
 Liability
 Liquidated Claim Notice Section 10.3(a)
 Litigation
 Manufacturing Lease Section 8.8
 Manufacturing Property
  5




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##### 



Material Adverse Effect
 Mediation Section 13.5(b)
 Non-Assignable Contract Section 2.6
 Non-Competition Period Section 7.1(a)
 Non-Real Estate Leases Section 4.21
 Objection Notice Section 2.5(b)
 Off-the-Shelf Software Section 4.14(a)(i)
 Ordinary course ordinary course of business
 Party Parties
 Patents
 PBGC Section 4.22(e)
 Person
 Plans Section 4.22(a)
 Prime Rate
 Purchased Assets Section 2.1(a)
 Purchase Price Section 2.2(a)
 Qualified Plan Section 4.22(c)
 Real Estate Leases Section 4.13
 Real Property
  6




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##### 



Response Period Section 10.3(a)
 Restricted Party Section 7.1(a)
 Securities Act
 Seller Contracts Section 4.15(c)
 Seller Financial Statements Section 4.6(a)(ii)
 Sellers Legal Opinion Section 8.6
 Seller Officers Certificate Section 8.1
 Seller Party Seller Parties
 Seller Required Consents Section 4.4
 Structures
 Tangible Real Assets
 Taxes
 Tax Returns
 Termination Date Section 11.1(b)
 Third Party Payments Section 6.14
 Threshold Amount Section 10.3(c)
 Trademarks
 Transaction Documents
  7




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Transactions
 Transferred Employees Section 6.5
 Unassumed Liability Section 2.4(b)
 Unliquidated Claim Section 10.3(a)
 US
 WARN Act
 Warehouse Lease Section 8.8
 Warehouse Property
 Year-End Financials Section 4.6(a)(i)
 Sale and Purchase
 Agreement to Sell and Purchase
 Purchased Assets
          8




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##### 



Schedule 2.1(a)(xii)
   Schedule 2.1(a)(xv) Section
2.4
  Excluded Assets
 Section
2.1(a)(xvi)
        9




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##### 



Purchase Price
 Purchase Price Closing
Payment Escrow Payment Section 2.5
   Escrow Funds
 Section 2.5
 Escrow Account Section 2.5 Section 10
 Assumption of Liabilities
 Assumed Liabilities
     10




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##### 



Unassumed Liability
 Post-Closing Purchase Price Adjustment
 Draft Estimated Closing Balance Sheet Estimated Closing Balance Sheet
 Review of Estimated Closing Balance Sheet Closing Balance Sheet
  11




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##### 



Closing Payment Adjustment Net Asset Value minus
  Allocation of Purchase Price Section 2.5 Allocation
  12




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##### 



Consent of Third Parties Non-Assignable
Contract Section 2.7 Section 2.7
 Guaranty Exhibit 2.8
 Closing
 Location; Date; Deliveries Closing Closing Date
      Schedule 4.11
  13




---



##### 



Section 2.2(b)
 Representations and Warranties of Seller
 Organization and Standing Schedule 4.
 Ownership
 Authority and Binding Effect
   14




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##### 



Consents and Approvals Schedule 4.4 Seller Required Consents
 Third-Party Options
 Financial Statements; Books of Account
  Year-End
Financials
 Current Balance Sheet Date Current Balance Sheet Seller Financial Statements
   15




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##### 



Schedule 4.6
  Taxes
  Schedule 4.7(b)
  Schedule 4.7(d)
  Schedule 4.7(f)
 Schedule 4.7(g)
  16




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##### 



Schedule 4.7(l)
 Schedule 4.7(m)
 Undisclosed Liabilities Schedule 4.8
  Schedule 4.15
   Accounts Receivable Schedule 4.9 Schedule 4.9
  17




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##### 



Inventory Schedule 4.10 Schedule 4.10, Schedule
4.10
 Title to Purchased Assets and Related Matters Schedule 4.11 Schedule 4.11
 Condition and Location of Purchased Assets Schedule 4.
 Real Property Schedule 4.13 Real Estate Leases
  18




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##### 



Confidential Information; Intellectual Property
 Confidential Information
 Schedule 4.14(a)(i)
 Schedule
4.14(a)(ii) Schedule 4.14(a)(ii)
 Schedule 4.14(a)(iii)
  19




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##### 



Schedule 4.14(a)(iv) Schedule 4.14(a)(iv) Schedule 4.14(a)(iv)
  Intellectual Property
 Schedule 4.14(b)(i) Off-the-Shelf Software
 Schedule 4.14(b)(ii)
 Schedule 4.14(b)(iii)
  20




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##### 



Schedule 4.14(b)(iv)
  Schedule 4.14(b)(vi),
 Schedule 4.14(b)(vii)
 Patents
 Schedule 4.14(c)(i)
    Trademarks
 Schedule 4.14(d)(i) Schedule 4.14(d)(i)
  21




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##### 



Schedule 4.14(d)(iii)
 Schedule 4.14(d)(i)
  Copyrights
 Schedule 4.14(e)(i)
  Contracts
 Schedule 4.15 Schedule 4.15 Section 4.15
     22




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##### 



Schedule
4.15
 Schedule 4.15 Seller Contracts
  23




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##### 



Employees/Independent Contractors
 Schedule 4.16(a) Schedule 4.16(a)
 Schedule 4.16(b)
 Governmental Permits Schedule 4.17
 Compliance with Law and Court Orders Schedule 4.18 Schedule 4.18
  24




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##### 



Litigation Schedule 4.19 Schedule 4.19
 Insurance Schedule 4.20 Schedule 4.20
 Non-Real Estate Leases Schedule 4.21 Schedule 4.21 Schedule 4.21 Non-Real Estate Leases
 Employee Benefit Plans
 Schedule 4.22 Sections 3(3) (1) (2) (37) (40) Plans Schedule
4.22
   25




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##### 



Schedule 4.22 Qualified Plans Qualified
Plan
  PBGC
 multiemployer pension plan
  leased employees
 Schedule 4.22
   reportable events
   26




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##### 



group health plans
 controlled group
   excess parachute
payments
   Transactions with Related Parties Schedule 4.23 Schedule 4.23
  27




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##### 



Absence of Certain Changes Schedule 4.24 Schedule 4.24
          Schedule 4.24
    28




---



##### 



Environmental Matters Section 4.18 Schedule
4.25 CERCLA
 Environmental Claims
 Environmental Laws
 Environmental Permit
  29




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##### 



Hazardous Material hazardous
substance regulated substance solid waste hazardous
substance hazardous waste hazardous substance regulated substance
 Additional Information Schedule 4.26
     Corporate Records Schedule 4.27
 Brokers or Finders Fee
 Relationship With Customers and Suppliers Schedule 4.29 Schedule 4.29 Schedule 4.29
  30




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##### 



Certain Personal Property Schedule 4.30 Schedule 4.30 Schedule 4.30 Schedule 4.30
 Subsidiaries
 Previous Sales; Warranties Schedule 4.32 Schedule
4.32 Schedule 4.32
 Solvency
 insolvent
  S Corporation Election
 Statements and Other Documents Not Misleading
  31




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##### 



Consumer Safety Matters Consumer Acts
 Representations and Warranties of Buyer and Parent
 Organization and Standing; Ownership
 Authority and Binding Effect
 Validity of Contemplated Transactions
 Brokers or Finders Fee
  32




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##### 



Pre-Closing Covenants
 Access
 No Solicitation
 Section 6.2
 Section 6.2(a) Section 6.2(a)
 Operation of the Business
     33




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##### 



34




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##### 



Section 4.24
 Update of Schedules
 Employees and Business Relations Exhibit 8.9 Transferred Employees
  Disclosure of Certain Matters Section 8 9
 Confidentiality
 [RESERVED]
 Transfer of Purchased Assets and Business
  35




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##### 



Fulfillment of Closing Conditions Section 8 Section 9 Section 8 Section 9
 Change of Name
   Employee Payments Employee Payments
 Third Party Payments Third Party Payments
 Further Assurances
  36




---



##### 



Insurance
 Post-Closing Covenants
 Noncompetition and Nonsolicitation, Confidential Information
 Non-Competition Period Restricted Party
       37




---



##### 



Satisfaction of Liabilities
 Transition Period
    Employees
   38




---



##### 



provided however
  Accounts Receivable
  Section 7.5(b)
  39




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##### 



Conduct of the Business following the Closing
 Tax Matters
     Section 2.4(b)(iii)
 Conditions Precedent to Obligations of Buyer
 Representations and Warranties; Performance of Obligations Seller Officers Certificate
  40




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##### 



Ancillary Documents
 Closing Consents Schedule
8.3 Closing Consents
 Material Adverse Changes
 Legal Matters
 Legal Opinion Exhibit 8.6 Sellers Legal Opinion
 Review of Updated Schedules and Environmental Investigations
 Manufacturing Lease; Warehouse Lease Manufacturing Lease Exhibit 8.8-1 Warehouse Exhibit 8.8-2
 Seller Employees Exhibit 8.9
  41




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##### 



Conditions Precedent to Obligations of Seller Parties
 Representations and Warranties; Performance of Obligations Buyer Officers Certificate
 Legal Matters
 Legal Opinion Exhibit 9.3 Buyers Legal
Opinion
 Indemnification
 By the Seller Parties Section 10 Indemnified Buyer Party
 Damages
      42




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##### 



Section
10.1
 Section 4.9
 By the Buyer and Parent Section 10 Indemnified Seller Party Section 5 Section 9.1 Section 10.1.  Section 10.2.
 Procedure for Claims
 Section 10 Claim Notice Indemnitor Unliquidated Claim Liquidated Claim Notice Claim Response Response Period
  43




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##### 



Section 10 Section 13.5
 Section 10 Section 2.5 Threshold Amount provided however Section
10.1(a)(i) Cap Sections 4.1 4.2 4.3 4.5, 4.7 4.11 4.16 4.22 4.25 Section 4.14 Section 10.1(a) Section 10.1(a)
 Section 10 Section 2.5 provided however Section 10.2 Section
  44




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##### 



Claims Period Section 10 Section 10.2 Expiration Date Section 10.4 Expiration Date
 Section 10.1(a)(i)
 Sections 4.2 4.3 4.4 4.5, 4.7 4.11, 4.16 4.22
 Section 4.25
 Section 10.1(a)(i)
 Section 10. 10.
  Third Party Claims Section 10 Action Section 10.5 Section 10
 Right of Offset Section 2.5
  45




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##### 



Effect of Investigation or Knowledge Section
10.1 Section 10.
 Satisfaction of Indemnification Obligations
 Contingent Claims Contingent Claim provided provided, further, Section 10.1(a) or 10.2
 Termination
 Grounds for Termination.
  Termination Date
     46




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##### 



Effect of Termination
 Other Matters
 Public Announcements
 Reasonable Best Efforts Sections 6 Section 9
 Miscellaneous
 Contents of Agreement
 Amendment, Parties in Interest, Assignment. Assignee
  47




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##### 



Interpretation
 Sole Remedy
 Dispute Resolution
 Good-Faith Negotiations Dispute Section 13.5(b)
 Mediation Mediation Section 13.5(c)
  48




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##### 



Resolution of Disputes Sections 13.5(a) or (b), Arbitration
 ex aequo et
bono
 Expenses
 Bulk Sales
 Notices
  
  49




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##### 



Governing Law
 Counterparts
  50




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##### 



BUYER:
GRANITE ACQUISITION CORP.By:

/s/ Christopher J. MunyanName:Title:PARENT:
LION RIBBON COMPANY, INC.By:

/s/ Clifford E. PietrafittaName:Title:SELLER:
HAMPSHIRE PAPER CORP.By:

/s/ Peter B. StepanekName:
    Peter B. StepanekTitle:
    PresidentSHAREHOLDERS:/s/ Peter B. StepanekPeter B. Stepanek/s/ Michael J. StepanekMichael J. Stepanek