**Exhibit 10.2**

 

**STOCKPURCHASE AGREEMENT**

 

**by andamong**

 

**NORCROSSSAFETY PRODUCTS L.L.C.,**

 

**THEFIBRE-METAL PRODUCTS COMPANY,**

 

**RESIDUARYTRUST UNDER THE WILL OF CHARLES E. BOWERS, JR.,**

 

**TRUST UNDERTHE WILL OF CHARLES E. BOWERS, JR. FOR THE BENEFIT OF JUDITH L. BOWERS,**

 

**and**

 

**CHARLES E.BOWERS, JR. IRREVOCABLE TRUST DATED DECEMBER 17, 1990**

 

 

**October 3,2005**

 

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**Table of Contents**

 
| ARTICLE I   | DEFINITIONS                                                                                 |   |
|------------------|---------------------------------------------------------------------------------------------|--------|
|             |                                                                                        |   |
| 1.1.             | Defined Terms                                                                               |   |
|             |                                                                                        |   |
| ARTICLE II  | SALE AND PURCHASE OF STOCK                                                                  |   |
|             |                                                                                        |   |
| 2.1.             | Agreement to Sell                                                                           |   |
|             |                                                                                        |   |
| 2.2.             | Agreement to Purchase                                                                       |   |
|             |                                                                                        |   |
| ARTICLE III | PURCHASE PRICE                                                                              |   |
|             |                                                                                        |   |
| 3.1.             | Purchase Price                                                                              |   |
|             |                                                                                        |   |
| 3.2.             | Estimated Closing Date  Balance Sheet; Estimated Net Working Capital and Estimated Net Debt |   |
|             |                                                                                        |   |
| 3.3.             | Closing Date Balance Sheet;  Net Working Capital and Net Debt                               |   |
|             |                                                                                        |   |
| 3.4.             | Review by Stockholders and  Grandi                                                          |   |
|             |                                                                                        |   |
| 3.5.             | Independent Review                                                                          |   |
|             |                                                                                        |   |
| 3.6.             | Payment of Net Working  Capital and Net Debt Adjustment                                     |   |
|             |                                                                                        |   |
| ARTICLE IV  | CLOSING                                                                                     |   |
|             |                                                                                        |   |
| 4.1.             | Closing                                                                                     |   |
|             |                                                                                        |   |
| 4.2.             | Deliveries by Stockholders                                                                  |   |
|             |                                                                                        |   |
| 4.3.             | Deliveries by Buyer                                                                         |   |
|             |                                                                                        |   |
| ARTICLE V   | REPRESENTATIONS AND  WARRANTIES OF STOCKHOLDERS AND GRANDI                                  |   |
|             |                                                                                        |   |
| 5.1.             | Authorization                                                                               |   |
|             |                                                                                        |   |
| 5.2.             | Capitalization                                                                              |   |
|             |                                                                                        |   |
| 5.3.             | Ability to Carry Out  Agreement                                                             |   |
|             |                                                                                        |   |
| ARTICLE VI  | REPRESENTATIONS AND  WARRANTIES OF THE COMPANY                                              |   |
|             |                                                                                        |   |
| 6.1.             | Organization                                                                                |   |
|             |                                                                                        |   |
| 6.2.             | Ability to Carry Out  Agreement                                                             |   |
|             |                                                                                        |   |
| 6.3.             | Authorization                                                                               |   |
|             |                                                                                        |   |
| 6.4.             | Permits and Licenses                                                                        |   |
|             |                                                                                        |   |
| 6.5.             | Compliance with Regulations                                                                 |   |
|             |                                                                                        |   |
| 6.6.             | Financial Statements                                                                        |   |
|             |                                                                                        |   |
| 6.7.             | Title to and Condition of Assets                                                            |   |
|             |                                                                                        |   |
| 6.8.             | Tax Returns and Taxes                                                                       |   |

 

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| 6.9.              | Labor Relations                                                                                                       |   |
|-------------------|-----------------------------------------------------------------------------------------------------------------------|--------|
|              |                                                                                                                  |   |
| 6.10.             | Material Contracts                                                                                                    |   |
|              |                                                                                                                  |   |
| 6.11.             | Changes or Events                                                                                                     |   |
|              |                                                                                                                  |   |
| 6.12.             | Employees and Employee  Benefits                                                                                      |   |
|              |                                                                                                                  |   |
| 6.13.             | Real Property; Leaseholds                                                                                             |   |
|              |                                                                                                                  |   |
| 6.14.             | Insurance                                                                                                             |   |
|              |                                                                                                                  |   |
| 6.15.             | Litigation                                                                                                            |   |
|              |                                                                                                                  |   |
| 6.16.             | Accounts  Receivable                                                                                                  |   |
|              |                                                                                                                  |   |
| 6.17.             | Proprietary  Rights                                                                                                   |   |
|              |                                                                                                                  |   |
| 6.18.             | Environmental  Requirements                                                                                           |   |
|              |                                                                                                                  |   |
| 6.19.             | Inventory                                                                                                             |   |
|              |                                                                                                                  |   |
| 6.20.             | Consents                                                                                                              |   |
|              |                                                                                                                  |   |
| 6.21.             | Related  Party Transactions                                                                                           |   |
|              |                                                                                                                  |   |
| 6.22.             | Finders’  Fees                                                                                                   |   |
|              |                                                                                                                  |   |
| ARTICLE VII  | REPRESENTATIONS  AND WARRANTIES OF BUYER                                                                              |   |
|              |                                                                                                                  |   |
| 7.1.              | Organization                                                                                                          |   |
|              |                                                                                                                  |   |
| 7.2.              | Ability to  Carry Out Agreement                                                                                       |   |
|              |                                                                                                                  |   |
| 7.3.              | Authorization                                                                                                         |   |
|              |                                                                                                                  |   |
| 7.4.              | Financing                                                                                                             |   |
|              |                                                                                                                  |   |
| 7.5.              | Finders’  Fees                                                                                                   |   |
|              |                                                                                                                  |   |
| 7.6.              | Litigation                                                                                                            |   |
|              |                                                                                                                  |   |
| 7.7.              | Purchase  for Investment                                                                                              |   |
|              |                                                                                                                  |   |
| ARTICLE VIII | COVENANTS                                                                                                             |   |
|              |                                                                                                                  |   |
| 8.1.              | Access                                                                                                                |   |
|              |                                                                                                                  |   |
| 8.2.              | Confidentiality;  No Publicity                                                                                        |   |
|              |                                                                                                                  |   |
| 8.3.              | Non-Solicitation                                                                                                      |   |
|              |                                                                                                                  |   |
| 8.4.              | Governmental  Approvals                                                                                               |   |
|              |                                                                                                                  |   |
| 8.5.              | Consents                                                                                                              |   |
|              |                                                                                                                  |   |
| 8.6.              | Restrictive  Covenants                                                                                                |   |
|              |                                                                                                                  |   |
| 8.7.              | Tax Matters                                                                                                           |   |
|              |                                                                                                                  |   |
| 8.8.              | Transfer of  Premises; Satisfaction of Indebtedness and Transaction Expenses; Retention of  Related Party Obligations |   |
|              |                                                                                                                  |   |
| 8.9.              | Appointment  of Sellers Representative                                                                                |   |

 

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| ARTICLE IX  | CONDUCT OF  BUSINESS PRIOR TO CLOSING                                       |   |
|------------------|-----------------------------------------------------------------------------|--------|
|             |                                                                        |   |
| 9.1.             | Conduct of  Business                                                        |   |
|             |                                                                        |   |
| ARTICLE X   | CONDITIONS  PRECEDENT TO BUYER’S OBLIGATIONS ON THE CLOSING DATE       |   |
|             |                                                                        |   |
| 10.1.            | Representations  and Warranties                                             |   |
|             |                                                                        |   |
| 10.2.            | Compliance  with Obligations                                                |   |
|             |                                                                        |   |
| 10.3.            | Closing  Certificate                                                        |   |
|             |                                                                        |   |
| 10.4.            | Consents                                                                    |   |
|             |                                                                        |   |
| 10.5.            | HSR Act                                                                     |   |
|             |                                                                        |   |
| 10.6.            | Resignations  of Directors                                                  |   |
|             |                                                                        |   |
| 10.7.            | Transfer  Documents                                                         |   |
|             |                                                                        |   |
| 10.8.            | Material  Adverse Effect                                                    |   |
|             |                                                                        |   |
| 10.9.            | Ancillary  Agreements                                                       |   |
|             |                                                                        |   |
| 10.10.           | Incumbency  Certificate                                                     |   |
|             |                                                                        |   |
| 10.11.           | Resolutions                                                                 |   |
|             |                                                                        |   |
| 10.12.           | Good  Standing Certificate                                                  |   |
|             |                                                                        |   |
| 10.13.           | Absence of  Litigation                                                      |   |
|             |                                                                        |   |
| 10.14.           | Consulting/Employment  Agreements                                           |   |
|             |                                                                        |   |
| ARTICLE XI  | CONDITIONS  PRECEDENT TO STOCKHOLDERS’ OBLIGATIONS ON THE CLOSING DATE |   |
|             |                                                                        |   |
| 11.1.            | Representations  and Warranties                                             |   |
|             |                                                                        |   |
| 11.2.            | Compliance  with Obligations                                                |   |
|             |                                                                        |   |
| 11.3.            | Closing  Certificate                                                        |   |
|             |                                                                        |   |
| 11.4.            | HSR Act                                                                     |   |
|             |                                                                        |   |
| 11.5.            | Ancillary  Agreements                                                       |   |
|             |                                                                        |   |
| 11.6.            | Incumbency  Certificate                                                     |   |
|             |                                                                        |   |
| 11.7.            | Resolutions                                                                 |   |
|             |                                                                        |   |
| 11.8.            | Good  Standing Certificate                                                  |   |
|             |                                                                        |   |
| 11.9.            | Absence of  Litigation                                                      |   |
|             |                                                                        |   |
| 11.10.           | Consulting/Employment  Agreements                                           |   |
|             |                                                                        |   |
| ARTICLE XII | INDEMNIFICATION                                                             |   |
|             |                                                                        |   |
| 12.1.            | Indemnification  by Stockholders and Grandi                                 |   |
|             |                                                                        |   |
| 12.2.            | Indemnification  by Buyer                                                   |   |

 

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| 12.3.             | Claims for  Indemnification        |   |
|-------------------|------------------------------------|--------|
|              |                               |   |
| 12.4.             | Defense by  the Indemnifying Party |   |
|              |                               |   |
| 12.5.             | Limitations                        |   |
|              |                               |   |
| ARTICLE XIII | TERMINATION                        |   |
|              |                               |   |
| 13.1.             | Termination                        |   |
|              |                               |   |
| 13.2.             | Effect of  Termination             |   |
|              |                               |   |
| ARTICLE XIV  | NOTICES                            |   |
|              |                               |   |
| 14.1.             | Notices                            |   |
|              |                               |   |
| ARTICLE XV   | GENERAL                            |   |
|              |                               |   |
| 15.1.             | Further  Assurances                |   |
|              |                               |   |
| 15.2.             | Finder’s  Fees                |   |
|              |                               |   |
| 15.3.             | Expenses                           |   |
|              |                               |   |
| 15.4.             | Governing  Law; Jurisdiction       |   |
|              |                               |   |
| 15.5.             | No Waiver                          |   |
|              |                               |   |
| 15.6.             | Entire  Agreement                  |   |
|              |                               |   |
| 15.7.             | Counterparts                       |   |
|              |                               |   |
| 15.8.             | Headings                           |   |
|              |                               |   |
| 15.9.             | Severability                       |   |
|              |                               |   |
| 15.10.            | Amendments                         |   |
|              |                               |   |
| 15.11.            | Third Party  Beneficiaries         |   |

 

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**STOCKPURCHASE AGREEMENT**

 

THIS STOCKPURCHASE AGREEMENT (this “Agreement”)is made and entered into as of this 3rd day of October, 2005, by andamong Norcross Safety Products L.L.C., a Delaware limited liability company (“Buyer”), The Fibre-Metal ProductsCompany, a Delaware corporation (“Fibre-Metal”), Residuary Trust under the Willof Charles E. Bowers, Jr., Trust under the Will of Charles E. Bowers, Jr.for the benefit of Judith L. Bowers, and Charles E. Bowers, Jr.Irrevocable Trust dated December 17, 1990 (each of whom is a stockholderof the Company and is referred to herein individually as a “Stockholder” andcollectively as the “Stockholders”), and Charles J. Grandi (“Grandi”) who is anexecutive officer of Fibre-Metal who has a contractual right to receive aportion of the proceeds of the transactions contemplated hereby.

 

**RECITALS**

 

WHEREAS,Fibre-Metal, along with its wholly-owned subsidiary Fibre-Metal (Canada)Limited (“FMC”) (Fibre-Metal and FMC are collectively referred to herein as the“Company”), is engaged in the business of designing, manufacturing, marketingand selling an array of high performance head (including welding helmets),face, hearing and respiratory protective products (the “Business”).

 

WHEREAS,Stockholders own all of the issued and outstanding capital stock of Fibre-Metal(the “Stock”).

 

WHEREAS, Buyerdesires to purchase from Stockholders, and Stockholders desire to sell toBuyer, all of the Stock in accordance with the terms and conditions set forthin this Agreement.

 

NOW,THEREFORE, in consideration of the premises, mutual covenants, promises,agreements and undertakings contained herein, and intending to be legallybound, the parties hereto agree as follows:

 

# **ARTICLE IDEFINITIONS**

# ** **

## **1.1.****         DefinedTerms**.  As used herein, the termsbelow shall have the following meanings. Unless the context otherwise requires, any such terms may be used in thesingular or plural, depending upon the reference.

##  

“Action”shall mean any action, suit (whether civil or criminal), litigation,proceeding, labor dispute, arbitration, mediation, audit, or investigationcommenced before any Governmental Entity or arbitrator.

 

“Affiliate”means, with respect to any Person, any other Person that, directly or indirectly,through one or more intermediaries, controls, is controlled by, or is undercommon control with, such Person; provided, however, that such term shall notinclude FMC.

 

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“Agreement”shall have the meaning set forth in the Recitals of this Agreement.

 

“AnnualFinancial Statements” shall have the meaning set forth in Section 6.6of this Agreement.

 

“Arbiter”shall have the meaning set forth in Section 3.5 of this Agreement.

 

“Basket”shall have the meaning set forth in Section 12.5(b) of this Agreement.

 

“Books andRecords” shall mean all books, ledgers, files, records, plans and reportsof the Company.

 

“Business”shall have the meaning set forth in the Recitals section.

 

“BusinessDay” shall mean any day other than a Saturday or Sunday or a day that is abank holiday in Philadelphia, Pennsylvania or New York, New York.

 

“Buyer”shall have the meaning set forth in the Recitals of this Agreement.

 

“Buyer’sTarget Net Working Capital Collar” shall mean the Target Net WorkingCapital minus Two Hundred Thousand Dollars ($200,000).

 

“Cap”shall have the meaning set forth in Section 12.5(b) of thisAgreement.

 

“Claims”shall have the meaning set forth in Section 6.12(h) of thisAgreement.

 

“Closing”shall have the meaning set forth in Section 4.1 of this Agreement.

 

“ClosingDate” shall have the meaning set forth in Section 4.1 of thisAgreement.

 

“ClosingDate Balance Sheet” shall mean a Balance Sheet of the Company as of theClosing Date as prepared in accordance with GAAP, and consistent with thepreparation of the Annual Financial Statements (as defined in Section 6.6),pursuant to the provisions of Section 3.3 of this Agreement.

 

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

 

“Company”shall have the meaning set forth in the Recitals of this Agreement.

 

“ConfidentialityAgreement” shall have the meaning set forth in Section 8.1 of thisAgreement.

 

“Consent”shall mean any consent, waiver, approval, order or authorization of, orregistration, declaration or filing with, or notice to, any Governmental Entityor other Person.

 

“Contract”shall mean any agreement, contract, note, loan, evidence of indebtedness,purchase order, letter of credit, indenture, security or pledge agreement,franchise agreement,

 

2

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covenant not to compete,employment agreement, license, instrument, obligation or commitment to whichthe Company is a party, whether oral or written.

 

“CourtOrder” shall mean any judgment, decision, consent decree, injunction, writ,ruling or order of any Governmental Entity, department or authority that isbinding on any Person or its property under applicable law.

 

“EmployeeClaims” shall have the meaning set forth in Section 6.9(b) ofthis Agreement.

 

“EmployeePlans” shall mean all employee benefit plans as defined in Section 3(3) ofERISA, and all severance, bonus, retirement, pension, profit sharing anddeferred compensation plans, and other similar fringe or employee benefit plansor programs, maintained or contributed to by the Company.

 

“Encumbrance”shall mean any claim, lien, pledge, charge, easement, security interest, deedof trust, security deed, mortgage, right-of-way, encroachment, encumbrance,covenant, condition, restriction, indemnity, option, assignment, judgment,stockholders agreement, right of first refusal, right of first offer or otherright of a third party.

 

“EnvironmentalRequirements” shall mean all applicable Regulations relating to theprotection of human health or the environment, including (a) allrequirements pertaining to reporting, licensing, permitting, investigation, andremediation of emissions, discharges, Releases or threatened Releases ofHazardous Materials, and (b) all other limitations, restrictions, conditions,standards, prohibitions, obligations, schedules and timetables containedtherein or in any notice or demand letter issued, entered, promulgated orapproved thereunder.

 

“ERISA”means the Employment Retirement Income Security Act of 1974, as amended.

 

“ERISAAffiliate” means, with respect to any Person, any entity that is, or at anytime for which any relevant statue of limitations remains open, was, a memberof a “controlled group of corporations” with, or is under “common control”with, or is a member of the same “affiliated service group” with such Person asdefined in Sections 414(b), 414(c) or 414(m) of the Code.

 

“EscrowAccount” shall mean the account held by the Escrow Agent under the EscrowAgreement.

 

“EscrowAgent” shall mean Wilmington Trust Corporation.

 

“EscrowAgreement” shall mean the Escrow Agreement entered into on the Closing Dateby and among the Escrow Agent, Stockholders, Grandi, Sellers Representative,and Buyer in substantially the form of Exhibit A hereto.

 

“EscrowAmount” shall mean Three Million Four Hundred Thousand Dollars($3,400,000).

 

“EstimatedClosing Date Balance Sheet” shall mean a pro-forma Balance Sheet of theCompany as prepared in accordance with GAAP and consistent with the preparationof the Annual Financial Statements reflecting the Stockholders’ and Grandi’sgood faith estimate of the

 

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Company’s financial position asof the Closing, to be prepared in advance of the Closing pursuant to theprovisions of Section 3.2 of this Agreement.

 

“EstimatedNet Debt” shall mean the Net Debt as of the Closing Date as set forth onthe Estimated Closing Date Balance Sheet and calculated pursuant to the formulaset forth on **Schedule 1.1(a)**.

 

“EstimatedNet Working Capital” shall mean the Net Working Capital as of the ClosingDate as set forth on the Estimated Closing Date Balance Sheet and calculatedpursuant to the formula set forth on **Schedule 1.1(a)**.

 

“Fibre-Metal”shall have the meaning set forth in the Recitals of this Agreement.

 

“FMC”shall have the meaning set forth in the Recitals of this Agreement.

 

“FinancialStatements” shall have the meaning set forth in Section 6.6 of thisAgreement.

 

“Fixturesand Equipment” shall mean all of the furniture, fixtures, furnishings, machinery,supplies, equipment, molds, and other tangible personal property owned by theCompany, wherever located, except for the items set forth on **Schedule 1.1(b)**.

 

“FormationDocuments” means, as to any entity, those instruments that (i) defineits existence, as filed or recorded with the applicable Governmental Entity,including, without limitation, its certificate or articles of incorporation (inthe case of a corporation), its certificate of limited partnership (in the caseof a limited partnership), or its certificate of formation (in the case of alimited liability company), and (ii) govern its internal affairs,including, without limitation, its by-laws (in the case of a corporation), itsagreement of general or limited partnership (in the case of a general orlimited partnership), or its operating agreement (in the case of a limitedliability company), in each case as amended, supplemented or restated.

 

“FundamentalRepresentations” shall have the meaning set forth in Section 12.3 ofthis Agreement.

 

“GAAP”means generally accepted accounting principles set forth in the opinions andpronouncements of the Accounting Principles Board of the American Institute ofCertified Public Accountants and the statements and pronouncements of theFinancial Accounting Standards Board, which are applicable on any particulardate and are consistently applied.

 

“GovernmentalEntity” means any court, administrative agency or commission or othergovernmental authority or instrumentality, domestic or foreign, federal, stateor local.

 

“Grandi”shall have the meaning set forth in the Recitals of this Agreement.

 

“HazardousMaterials” shall mean any (a) substances or waste classified as “hazardous,”“toxic,” or a “pollutant” pursuant to (i) any Environmental Requirementincluding, without limitation, the Comprehensive Environmental Response,Compensation, and Liability Act of 1980, as amended by the Superfund Amendmentsand Reauthorization Act of 1986, 42 USC 9601, *etseq*., the Solid Waste Disposal Act, as amended by the ResourceConservation and

 

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Recovery Act of 1976 andHazardous and Solid Waste Amendments of 1984, 42 USC 6901 *et seq*., the Federal Water PollutionControl Act, as amended by the Clean Water Act of 1977, 33 USC 1251 *et seq*., the Clean Air Act of 1966, asamended, 42 USC 7401 *et seq*., theToxic Substances Control Act of 1976, 15 USC 2601 *et seq*., and the Hazardous Materials Transportation Act, 49USC 5101 *et seq*., and (ii) thePennsylvania Health and Safety Code; (b) asbestos or asbestos-containingmaterials; (c) polychlorinated biphenyls; (d) petroleum, includingcrude oil or any fraction thereof, natural gas, natural gas liquids, liquefiednatural gas, methane or synthetic gas usable for fuel, and (e) radioactivematerials.

 

“HSR Act”shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, asamended.

 

“Indebtedness”shall mean (i) all indebtedness for borrowed money of the Company, (ii) allobligations of the Company for the deferred purchase price of property orservices, (iii) all obligations of the Company evidenced by notes, bonds,debentures or similar instruments (other than capital lease obligations), (iv) allindebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by the Company, (v) allobligations, contingent or otherwise, of the Company under acceptance, letterof credit or similar facilities, (vi) the amount of the liability inrespect of all capital lease obligations of the Company, (vii) allindebtedness of the type described in clauses (i) through (vi) aboveguaranteed directly or indirectly in any manner by the Company includinginterest and penalties thereon, (viii) any indebtedness of the typedescribed in clauses (i) through (vi) above secured by (or for whichthe holder of such indebtedness has an existing right, contingent or otherwise,to be secured by) any lien on assets or property owned by the Company and (ix) allaccrued but unpaid interest (or interest equivalent) to the date ofdetermination, and all prepayment premiums or penalties or commitment fees,related to any items of indebtedness of the type described in clauses (i) through(viii) above.

 

“IndemnificationClaim Notice” shall have the meaning set forth in Section 12.3 of thisAgreement.

 

“IndemnifiedParty” shall have the meaning set forth in Section 12.3 of thisAgreement.

 

“IndemnifyingParty” shall have the meaning set forth in Section 12.3 of thisAgreement.

 

“IndemnityPercentages” shall have the meaning set forth in Section 12.5(e) ofthis Agreement.

 

“InterestRate” shall have the meaning set forth in Section 3.6 of thisAgreement.

 

“InterimFinancial Statements” shall have the meaning set forth in Section 6.6of this Agreement.

 

“IPContracts” shall have the meaning set forth in Section 6.17 of thisAgreement.

 

“IPLitigation” shall have the meaning set forth in Section 12.1(e) ofthis Agreement.

 

“JP/SPatents” shall have the meaning set forth in Section 12.1(e) ofthis Agreement.

 

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“Knowledgeof the Company” shall mean the actual knowledge, after due inquiryreasonable under the circumstances, of Grandi, Richard Say, Robert Ennamorato,Dean Simpson, Alex Stefanelli or Paul Brooks.

 

“Leaseholds”shall mean all the right, title and interest of the Company as lessee, licenseeor occupant in, to and under any lease or occupancy right of land, improvementsand/or fixtures.

 

“Leases”shall mean leases with the Company for the Premises to be entered into on theClosing Date in substantially the form of Exhibit B-1 hereto for thePremises located in Concordville, Pennsylvania, in substantially the form of Exhibit B-2hereto for the Premises located in Aston, Pennsylvania, and in substantiallythe form of Exhibit B-3 hereto for the Premises located in Mississauga,Ontario, Canada.

 

“Losses”shall have the meaning set forth in Section 12.1 of this Agreement.

 

“MaterialAdverse Effect” shall mean any change, effect, event, occurrence, state offacts, development or circumstance that has had or will have a material adverseeffect on the business, financial condition or results of operation of theCompany, taken as a whole; provided, however, that none of the following shallbe deemed, either alone or in combination, to constitute, and none of thefollowing shall be taken into account in determining whether there has been orwill be a Material Adverse Effect: (a) attributable to conditionsaffecting (i) the industries in which the Company participate (including fluctuatingconditions resulting from cyclicality or seasonality affecting the business ofthe Company, including its customers and suppliers), (ii) the U.S. economyas a whole, or (iii) the economy of any foreign country as a whole inwhich country the Company purchases product or has operations or sales; or (b) arisingfrom or relating to any change after the date of this Agreement in accountingrequirements or principles or any change in applicable laws, rules orregulations.  The parties heretoacknowledge and agree that the Company is not making any representations,warranties or covenants in this Agreement with regard to any internal orpublished projections, forecasts, or revenue or earnings predictions for anyperiod ending on or after the date of this Agreement, and a failure by theCompany to meet, any internal or published projections, forecasts, or revenueor earnings predictions for any period ending on or after the date of thisAgreement shall not be considered with respect to whether a Material AdverseEffect has occurred or will occur.

 

“MaterialContracts” shall have the meaning set forth in Section 6.10 of thisAgreement.

 

“Net Debt”shall be based on and calculated pursuant to the formula set forth on **Schedule 1.1(a)**.

 

“NetWorking Capital” shall be based on and calculated pursuant to the formulaset forth on **Schedule 1.1(a)**.

 

“Notices”shall have the meaning set forth in Section 14.1 of this Agreement.

 

“Permitsand Licenses” shall mean all licenses (other than software or otherintellectual property licenses), permits, franchises, approvals,authorizations, consents or orders of, or filings with, any Governmental Entityor any other Person.

 

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“PermittedEncumbrances” shall mean (i) liens, arising by operation of law orotherwise, to secure obligations which arose in the ordinary course of businessand are not yet due or delinquent, to the extent such obligations are reflectedon the balance sheet as of July 31, 2005 contained in the Financial Statements,and (ii) minor liens which in the aggregate are not substantial in amount,do not materially detract from the value or transferability of the property orassets subject thereto or interfere with the present use thereof and have notarisen other than in the ordinary course of business, to the extent theliability in respect of such liens are reflected on the balance sheet as of July 31,2005 contained in the Financial Statements.

 

“Person”shall mean a natural person, joint venture, corporation, partnership (generaland/or limited), limited liability company, trust, estate, sole proprietorship,governmental agency or authority or other juridical entity.

 

“Pre-ClosingTaxes” shall mean (i) all Taxes (or the non-payment thereof), wheneverdue and payable, of the Company for all taxable periods ending on or before theClosing Date and the portion through the end of the Closing Date for anytaxable period that includes (but does not end on) the Closing Date (“Pre-ClosingTax Period”) and all Taxes payable in connection with the transfer of thePremises contemplated by Section 8.8 hereof.  In the case of any taxable period thatincludes (but does not end on) the Closing Date (a “Straddle Period”),the amount of any Taxes based on or measured by income, receipts orexpenditures of the Company for the Pre-Closing Tax Period shall be determinedbased on an interim closing of the books as of the close of business on theClosing Date (and for such purpose, the taxable period of any partnership orother pass-through entity in which the Company holds a beneficial interestshall be deemed to terminate at such time) and the amount of other Taxes of theCompany for a Straddle Period which relate to the Pre-Closing Tax Period shallbe deemed to be the amount of such Tax for the entire taxable period multipliedby a fraction the numerator of which is the number of days in the taxableperiod ending on the Closing Date and the denominator of which is the number ofdays in such Straddle Period; provided, however, that if the amount of periodicTaxes imposed for such taxable period reflects different rates of tax imposedfor different persons within such taxable period, the formula described in thepreceding clause shall be applied separately with respect to each such periodwithin the taxable period; (ii) all Taxes of any member of an affiliated,consolidated, combined or unitary group of which the Company (or anypredecessor thereof) is or was a member on or prior to the Closing Date,including pursuant to Treasury Regulation §1.1502-6 or any analogous or similarstate, local, or foreign law or regulation, and (iii) any and all Taxes ofany Person (other than the Company) imposed on the Company as a transferee orsuccessor, by contract or pursuant to any law, rule, or regulation, which Taxesrelate to an event or transaction occurring before the Closing.

 

“Premises”shall mean the real property and Leaseholds described on **Schedule 1.1(c) **attached hereto.

 

“ProprietaryRights” shall mean all rights in trademarks, logos, trade names, domainname registrations and all goodwill related thereto, patents, patentapplications and, computer software (including without limitation any source orobject codes therefor or documentation relating thereto), trade secrets,inventions and all other intellectual property rights, in addition to allregistrations, applications and common-law rights related thereto, all rightsto obtain renewals, reissues and extensions of registrations or other legalprotections related thereto and

 

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any licenses, consents,settlements or other agreements relating to the use of any of the foregoing.

 

“PurchasePrice” shall have the meaning set forth in Section 3.1 of thisAgreement.

 

“Regulations”shall mean any laws, statutes, ordinances, rules, regulations, court decisions,principles of law and orders of any foreign, federal, state or localgovernmental and any other governmental department or agency, including withoutlimitation Environmental Requirements.

 

“RelatedParty” shall mean any Stockholder and Grandi, any Affiliate of anyStockholder or Grandi, or any of their respective Affiliates or any relative ofany of the foregoing.

 

“Release”shall mean any past or present spilling, leaking, pumping, pouring, emitting,emptying, discharging, injecting, escaping, leaching, migration, dumping ordisposing of Hazardous Materials into the environment or any structure orfacility.

 

“ScheduledContracts” shall mean (a) the Material Contracts, (b) theLeaseholds, and (c) the IP Contracts.

 

“SellersRepresentative” shall have the meaning set forth in Section 8.9 ofthis Agreement.

 

“SpecialEnvironmental Indemnity” shall have the meaning set forth in Section 12.1(c) ofthis Agreement.

 

“Stock”shall have the meaning set forth in the Recitals section.

 

“Stockholder”shall have the meaning set forth in the Recitals section.

 

“Stockholders’Target Net Working Capital Collar” shall mean the Target Net WorkingCapital plus Two Hundred Thousand Dollars ($200,000).

 

“Target NetWorking Capital” shall mean the amount of $9,138,000, as set forth on **Schedule 1.1(a)**, and calculated pursuant to the formula set forth on **Schedule 1.1(a)**.

 

“Taxes”means, with respect to any entity, all income taxes (including any tax on orbased upon net income, gross income as specially defined, earnings, profits orselected items of income, earnings or profits) and all gross receipts, sales,use, transfer, conveyance, value added, capital gains, franchise, license,withholding, payroll, employment, excise, severance, stamp, occupation, orproperty taxes, alternative minimum taxes, customs, duties and other taxes,fees, assessments or charges of any kind whatsoever, together with all interestand penalties, imposed by any taxing authority (domestic or foreign) on suchentity.

 

“TaxReturns” shall mean all returns, reports, declarations, and informationreturns and statements relating to Taxes, including any amendments thereto.

 

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“TerminationDate” shall have the meaning set forth in Section 13.1(c) of thisAgreement.

 

“TransactionExpenses” shall mean the amount of any fees and expenses in connection withthe transactions contemplated by this Agreement (other than any fees andexpenses incurred by Buyer), including any change of control payments, salebonuses, success fees, severance obligations, legal fees, investment bankingfees and other professional fees, payable or to be paid by the Company inconnection with the transactions contemplated by this Agreement, including anytransfer taxes or fees in connection with the transfer of the real propertycomprising the Premises pursuant to Section 8.8, and one-half the HSR Actfee as described in Section 15.3.

 

# **ARTICLE IISALE AND PURCHASE OF STOCK**

 

## **2.1.****         Agreementto Sell**.  Subject to all of theterms and conditions of this Agreement, at the Closing, Stockholders shallsell, assign, transfer, convey and deliver to Buyer all of Stockholders’ right,title and interest in and to the Stock, free and clear of all Encumbrances.

##  

## **2.2.****         Agreementto Purchase**.  Subject to all ofthe terms and conditions of this Agreement, at the Closing, Buyer shallpurchase the Stock by paying the Purchase Price (as defined in Section 3.1)pursuant to Section 3.1.

##  

# **ARTICLE IIIPURCHASE PRICE**

 

## **3.1.****         PurchasePrice**.** **Inconsideration for the Stock, at the Closing, Buyer shall pay: (i) toStockholders and Grandi by wire transfer of immediately available funds, to theaccounts set forth on **Schedule 3.1**hereto, the aggregate sum of (a) Sixty-Eight Million Dollars($68,000,000), (b) as applicable, plus the amount by which the EstimatedNet Working Capital exceeds the Stockholders’ Target Net Working CapitalCollar, or minus the amount by which Buyer’s Target Net Working Capital Collarexceeds the Estimated Net Working Capital (there being no increase or decreaseif the Estimated Net Working Capital is between Stockholders’ Target NetWorking Capital Collar and Buyer’s Target Net Working Capital Target Collar), (c) minusEstimated Net Debt ((a) through (c) collectively, the “Purchase Price”),and (d) minus the Escrow Amount, and (ii) to the Escrow Agent by wiretransfer of immediately available funds, to the account designated by theEscrow Agent, the Escrow Amount.

##  

## **3.2.****         EstimatedClosing Date Balance Sheet; Estimated Net Working Capital and Estimated NetDebt**.  On or prior to three (3) Business Daysprior to the Closing Date, Stockholders and Grandi shall deliver to Buyer theEstimated Closing Date Balance Sheet, together with their good faithcomputation of the Estimated Net Working Capital and Estimated Net Debt.  If Buyer disagrees with the Estimated ClosingDate Balance Sheet, Estimated Net Working Capital or Estimated Net Debt,Stockholders, Grandi and Buyer shall negotiate in good faith to resolve theirdifferences prior to the Closing.

##  

## **3.3.****         ClosingDate Balance Sheet; Net Working Capital and Net Debt**. As promptly as possible following the close of business on the ClosingDate, but in no event later than forty-five (45) days after the Closing Date, theCompany shall prepare the Closing Date Balance Sheet

 

9

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## in conformity withGAAP and historical preparation of the Annual Financial Statements, and (b) deliverthe Closing Date Balance Sheet, together with the computations of the NetWorking Capital and Net Debt, to Buyer. Stockholders and Grandi agree to provide, or cause to be provided, tothe Company any materials or information in their possession requested by theCompany as necessary for the preparation of the Closing Date Balance Sheet andthe computation of the Net Working Capital and the Net Debt.

##  

## **3.4.****         Reviewby Stockholders and Grandi**.** **Stockholders andGrandi shall have a period of thirty (30) days following delivery of theClosing Date Balance sheet to review, at their expense, the Closing DateBalance Sheet and the computation of the Net Working Capital and Net Debt.  Within such thirty (30) day period, SellersRepresentative shall notify Buyer in writing when Stockholders and Grandi havecompleted their review and whether or not Stockholders and Grandi agree withthe Closing Date Balance Sheet and the computations of the Net Working Capitaland Net Debt.  Any objection to theClosing Date Balance Sheet or to the computation of Net Working Capital or NetDebt may only be made to the extent such balance sheet or computation has notbeen made in accordance with GAAP and consistent with the preparation of theAnnual Financial Statements or to the extent it contains computational errors.  If Sellers Representative does not give Buyernotice of Stockholders and Grandi’s objection within such thirty (30) dayperiod, the Closing Date Balance Sheet and the computations of Net WorkingCapital and Net Debt shall become final and Stockholders and Grandi shall haveno further right to disagree therewith, and the payment of the Net WorkingCapital adjustment and the Net Debt adjustment pursuant to Section 3.6shall be made.  The Company agrees toprovide, or cause to be provided, to Sellers Representative or its designatedrepresentatives any materials or information in the Company’s possession or thepossession of the Company’s accountants (upon execution of such accountants’standard waiver letter) requested by Sellers Representative relating to thepreparation of the Closing Date Balance Sheet and the computations of the NetWorking Capital and Net Debt.

##  

## **3.5.****         IndependentReview**.  In the event Sellers Representative and Buyerdo not agree upon the Closing Date Balance Sheet or the computation of the NetWorking Capital or Net Debt within ten (10) Business Days after deliveryby Sellers Representative of a notice of disagreement pursuant to Section 3.4,Sellers Representative and Buyer shall submit to PricewaterhouseCoopers, LLP(the “Arbiter”) such Closing Date Balance Sheet and computations of the NetWorking Capital and Net Debt, and any other documents or information that theArbiter deems pertinent to make a final and binding determination of any issuesas to which the parties are in disagreement. The Arbiter shall advise the parties of its decision relative to thecontroversy within thirty (30) days after its receipt of the applicablestatements and other documents or information that it has requested.  Such firm shall be acting as an arbitratorand not as an auditor and shall decide only those issues as to which theparties are not in agreement on the grounds that the Closing Date Balance Sheetor the relevant computation of Net Working Capital or Net Debt delivered by theCompany pursuant to Section 3.3 was not prepared in accordance with GAAPconsistent with the preparation of the Annual Financial Statements or containedcomputational errors.  The fees andexpenses of the Arbiter shall be equally apportioned between the Stockholdersand Grandi, on the one hand, and Buyer, on the other hand.

 

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## **3.6.****         Paymentof Net Working Capital and Net Debt Adjustment**.  Within five (5) BusinessDays after the final determination of the Net Working Capital and Net Debt asprovided for in Sections 3.4 or 3.5, as the case may be (provided that anyundisputed amount shall be paid within five (5) Business Days of SellersRepresentative’s notice of objection pursuant to Section 3.4), (i) ifthe Purchase Price as calculated pursuant to the formula set forth in Section 3.1substituting such Net Working Capital and Net Debt for Estimated Net WorkingCapital and Estimated Net Debt (the “Final Purchase Price”) is greater than thePurchase Price determined at Closing using Estimated Net Working Capital andEstimated Net Debt (the “Closing Purchase Price”), Buyer shall pay to anaccount designated by Stockholders and Grandi an amount in cash equal to thedifference.  If the Final Purchase Priceis less than the Closing Purchase Price, Stockholders and Grandi shall pay toBuyer an amount in cash equal to the difference.  In each of theforegoing, interest shall accrue thereon from the date of Closing to the dateof payment thereof, at an interest rate equal to the “Prime Rate” as publishedin the Wall Street Journal on the Closing Date plus one percent (1%) (the “InterestRate”).

##  

# **ARTICLE IVCLOSING**

 

## **4.1.****         Closing**.  The closing for the sale and purchase of theStock (“Closing”) shall take place at the offices of Stradley, Ronon, Stevens &Young, LLP, 2600 One Commerce Square, Philadelphia, Pennsylvania, at 10:00 a.m.(local time) on the fifth (5th) Business Day following thesatisfaction of the conditions contained in Article X and Article XIof this Agreement (except those conditions which by their terms requireperformance at Closing), or such other date and time as is mutually agreed uponby the parties hereto.  The date and timeof Closing are hereinafter referred to as the “Closing Date.”  The Closing shall be effective as of 11:59 p.m.(local time) on the Closing Date.

##  

## **4.2.****         Deliveriesby Stockholders**.  At Closing,Stockholders shall deliver to Buyer:

##  

### (a)           Stockcertificates for the Stock, which certificates shall be duly endorsed to Buyer,or accompanied by duly executed stock powers; and

###  

### (b)           Suchdocuments listed in Article X of this Agreement, as are to be delivered toBuyer by Stockholders.

###  

## **4.3.****         Deliveriesby Buyer**.  At Closing, Buyershall deliver to Stockholders:

##  

### (a)           ThePurchase Price, as specified in Section 3.1; and

###  

### (b)           Such documentslisted in Article XI of this Agreement, as are to be delivered toStockholders by Buyer.

###  

# **ARTICLE VREPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND GRANDI**

# ** **

Stockholdershereby represent and warrant, and Grandi represents and warrants solely with respectto the provisions contained in Sections 5.1(b), to Buyer as follows:

 

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## **5.1.****         Authorization**.  (a) The execution, delivery andperformance of this Agreement, and the consummation of the transactions contemplatedhereby, have been duly and validly authorized and approved by all necessaryaction on the part of Stockholders.  ThisAgreement constitutes a valid and binding obligation of Stockholders,enforceable in accordance with its terms, except as the enforceability hereofmay be limited by bankruptcy, reorganization, moratorium or similar lawsrelating to or limiting creditors’ rights generally or by equitableprinciples.  No Consent is required withrespect to Stockholders in connection with the execution, delivery andperformance of this Agreement, except (i) Consent under the HSR Act, or (ii) asset forth on **Schedule 5.1**.

##  

(b)           Grandihas full capacity to enter into this Agreement, and it constitutes a valid andbinding obligation of Grandi, enforceable in accordance with its terms, exceptas the enforceability hereof may be limited by bankruptcy, reorganization,moratorium or similar laws relating to or limiting creditors’ rights generallyor by equitable principles.  Theexecution, delivery and performance of this Agreement, does not constitute aviolation of, default under, or conflict with, any Court Order applicable toGrandi.

 

## **5.2.****         Capitalization**.  The authorized number of shares of capitalstock of Fibre-Metal, the par value per share, and the number of shares ofcapital stock of Fibre-Metal issued and outstanding, and the holders thereof,as of the date of this Agreement are as set forth on **Schedule 5.2**.  Except as set forth on **Schedule 5.2**,each Stockholder is the sole record and beneficial owner of each share of Stockindicated on **Schedule 5.2** asowned by such Stockholder, free and clear of any and all Encumbrances.  All of the outstanding shares of the Stockhave been duly and validly issued and are fully paid and non-assessable.  None of the outstanding shares of the Stockwere issued in violation of applicable state or federal securities laws.  Other than as set forth on **Schedule 5.2**, there are no outstanding options,warrants, calls, commitments, agreements, pre-emptive or other rights to subscribefor, purchase or otherwise acquire any capital stock of the Company, orsecurities convertible into or exchangeable for any capital stock of theCompany, to which the Company or any Stockholder is bound.

##  

## **5.3.****         Abilityto Carry Out Agreement**.  Exceptas set forth on **Schedule 5.3**, theconsummation of the transactions contemplated hereby, including, but notlimited to, the execution, delivery and performance of this Agreement, doesnot: (a) constitute a violation of or default under, conflict with or resultin a breach of (i) the Formation Documents for any Stockholder, (ii) theterms of any contract, agreement or understanding to which any Stockholder isbound (except where any such breach would not have a material adverse effect onthe Stockholders’ ability to consummate the transactions contemplated hereby), (iii) anyCourt Order to which such Stockholder is subject, or (iv) any Regulationapplicable to such Stockholder; (b) result in the creation or impositionof any Encumbrance on, or give to any Person any interest or right in any ofthe Stock; or (c) accelerate the maturity of, or otherwise modify, or giveto others any right of termination, amendment, acceleration, suspension,revocation or cancellation of any rights under, any material contract, agreementor understanding to which any Stockholder is bound (except where any suchbreach would not have a material adverse effect on the Stockholders’ ability toconsummate the transactions contemplated hereby).

 

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# **ARTICLE VIREPRESENTATIONS AND WARRANTIES OF THE COMPANY**

# ** **

The Companyhereby represents and warrants to Buyer as follows:

 

## **6.1.****         Organization**.  Fibre-Metal is a corporation duly organized,validly existing and in good standing under the laws of the State of Delaware,and FMC is a corporation duly organized, validly existing and in good standingunder the laws of Canada.  The Companyhas full power and authority to own its assets and to carry on its business asand where such business is now conducted. The Company is duly qualified or licensed to do business and is in goodstanding in all jurisdictions in which the nature of its business or thecharacter of its properties or assets requires such qualification or license,all such jurisdictions are set forth on **Schedule 6.1**,except where the failure to so qualify would not constitute a Material AdverseEffect.  Copies of the FormationDocuments for the Company heretofore delivered to Buyer are true, accurate andcomplete as of the date of this Agreement.

##  

## **6.2.****         Abilityto Carry Out Agreement**.  Exceptas set forth on **Schedule 6.2**, theconsummation of the transactions contemplated hereby, including, but notlimited to, the execution, delivery and performance of this Agreement, doesnot: (a) constitute a violation of or default under, conflict with orresult in a breach of (i) the Formation Documents for the Company, (ii) theterms of any of the Scheduled Contracts (except where any such breach would nothave a material adverse effect on the Company’s ability to consummate thetransactions contemplated hereby), (iii) any Court Order to which theCompany is subject, or (iv) any Regulation applicable to the Company; (b) resultin the creation or imposition of any Encumbrance on, or give to any Person anyinterest or right in any of the Stock or any of the Company’s assets; or (c) acceleratethe maturity of, or otherwise modify, or give to any Person any right oftermination, amendment, acceleration, suspension, revocation or cancellation ofany rights under, any of the Scheduled Contracts (except where any such breachwould not have a material adverse effect on the Company’s ability to consummatethe transactions contemplated hereby).

##  

## **6.3.****         Authorization**.  The execution, delivery and performance ofthis Agreement, and the consummation of the transactions contemplated hereby,have been duly and validly authorized and approved by all necessary action onthe part of the Company.  This Agreementconstitutes the valid and binding obligation of the Company, enforceable inaccordance with its terms, except as the enforceability hereof may be limitedby bankruptcy, reorganization, moratorium or similar laws relating to orlimiting creditors’ rights generally or by equitable principles relating toenforceability.  No Consent is requiredwith respect to the Company in connection with the execution, delivery andperformance of this Agreement, except (i) Consent under the HSR Act, (ii) asset forth on **Schedule 6.3,** or (iii) suchConsents which, if not obtained, would not constitute a Material AdverseEffect.

##  

## **6.4.****         Permitsand Licenses**.  The Company holdsall Permits and Licenses that are necessary for the operation of the Businessas now conducted and as presently planned to be conducted as of the date ofthis Agreement, except for Permits and Licenses which, if not in full force andeffect and currently valid, would not constitute a Material AdverseEffect.  The

 

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## Company is inmaterial compliance with all of the terms and conditions of all materialPermits and Licenses.

##  

## **6.5.****         Compliancewith Regulations**.  The Company isin compliance with all material Regulations and the Company has not receivedwritten notice of any violation of any material Regulations.

##  

## **6.6.****         FinancialStatements**.  Attached as **Schedule 6.6** are copies of the audited balance sheets,statements of income, statements of cash flows and statements of Stockholder’sequity for the Company for the fiscal years ending December 31, 2003 and2004 (collectively, the “AnnualFinancial Statements”) and copies of the unaudited balance sheets andstatements of income for the Company for the six (6) month period ending June 30,2005 and the seven (7) month period ending July 31, 2005 (the “Interim Financial Statements” and,together with the Annual Financial Statements, sometimes collectively referredto herein as the “Financial Statements”).  Except as described on **Schedule 6.6**,or as disclosed in the Financial Statements, as of their respective dates, theFinancial Statements (i) were prepared from the Books and Records, (ii) wereprepared in accordance with GAAP, consistently applied from period to period(except for changes, if any, permitted by GAAP and disclosed therein), (iii) fairlypresent in all material respects in accordance with GAAP consistently applied,the financial position and results of operations of the Company as of the datesand for the periods covered thereby, subject, in the case of the InterimFinancial Statements, to normal year end adjustments and the absence offootnotes, and (iv) in the case of the Annual Financial Statements, areaccompanied by a report of the Company’s independent auditors prepared inaccordance with generally accepted auditing standards.  The Company does not have any materialliability or obligation of any nature, whether due or to become due, absolute,contingent or otherwise, including liabilities for or in respect of federal,state, local and foreign Taxes and any interest or penalties relating thereto,except (a) to the extent reflected as a liability contained in the balancesheet as of July 31, 2005 included in the Financial Statements, (b) liabilitiesincurred in the ordinary course of business since July 31, 2005 and fullyreflected as liabilities on the Books and Records, which are consistent inamounts and consistent with the type as those set forth on such July 31,2005 balance sheet, and (c) liabilities disclosed on **Schedule 6.6A**.

##  

## **6.7.****         Titleto and Condition of Assets**.  TheCompany has good, valid and marketable title to all of its assets, tangible andintangible, including, without limitation, the assets set forth on the InterimFinancial Statements, free and clear of all Encumbrances, other than PermittedEncumbrances and except as set forth on **Schedule 6.7**(which items set forth on **Schedule 6.7**shall be removed at or prior to the Closing). All Fixtures and Equipment are, and shall on the Closing Date be, in acondition sufficient for the operation of the Business as currently conducted,and there are no material defects in such Fixtures and Equipment that wouldconstitute a Material Adverse Effect. Except as set forth on **Schedule 6.7**,none of the Company’s assets consist of any capital stock or debt security of,or other debt or equity interest in, any other Person, and the Company has notentered into any agreement requiring it to acquire any such interest orotherwise contribute to the capital of any other Person.  The Company has sufficient right, title andinterest in and to all assets necessary for the operation of the Business asnow conducted.

 

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## **6.8.****         TaxReturns and Taxes**.  The Companyhas duly and timely filed (taking into account all extensions of due dates)with the appropriate Governmental Entity all tax and other returns and reportsrequired to be filed, all of which have been accurately prepared in allmaterial respects.  All Taxes due, owingand payable, or which may be due, owing and payable, have been fully paid orreserved for by the Company in the Financial Statements.  Except as set forth on **Schedule 6.8**,all Taxes arising from January 1, 2005 to the Closing Date will be, on theClosing Date, fully paid or reserved for on the Closing Balance Sheet.  The Company has not received, with respect tothe Company’s tax returns, notice from any Governmental Entity of anydeficiency or other adjustment that has not been satisfied.  Except as set forth on **Schedule 6.8**,the Company (i) is not presently under audit by the Internal RevenueService (“IRS”) or any other taxauthority for any Taxes, (ii) has not been the subject of an IRS auditduring the past five (5) years, and (iii) has not received any noticeof a proposed IRS audit.  There are noagreements, waivers, or other arrangements providing for an extension of timewith respect to the assessment of any Taxes or deficiency against the Company,nor are there any Actions, now pending or, to the Knowledge of the Company,threatened against the Company in respect of any Taxes.  The Company has withheld, and will withholdprior to Closing, proper and accurate amounts from employees of the Company incompliance in all material respects with all withholding and similar provisionsof any and all applicable federal, foreign, state, and local laws, statutes,codes, ordinances, rules and regulations. No liens for Taxes exist with respect to any assets or properties of theCompany, except for statutory liens for Taxes not yet due.  The Company has duly elected to be an Scorporation for purposes of Sections 1361 through 1379 of the Code (the “SElection”).  The S Election has beeneffective from September 1, 2002 and continuously thereafter.  The Company is treated as an S corporationfor state and local income tax purposes as set forth on Schedule 6.8,which indicates the effective date of such tax status in each listedjurisdiction.  During the last threefiscal years, the Company has not distributed stock of another Person, or hashad its stock distributed by another Person, in a transaction that waspurported or intended to be governed in whole or in part by Section 355 ofthe Code; since the date of the latest balance sheet, the Company has notincurred any material liability for Taxes arising from extraordinary gains orlosses, as the term is used in GAAP, outside the ordinary course of businessconsistent with past practice; the Company (A) has not been a member of anaffiliated group of corporations, within the meaning of Section 1504 ofthe Code, and (B) has no liability for the Taxes of any Person underTreas. Reg. §1.1502-6 (or any similar provision of state, local or foreignincome Tax law), as a transferee or successor, by contract, or otherwise; noclaim has been made in writing by a tax authority in a jurisdiction where theCompany does not file Tax Returns that the Company is or may be subject toTaxes assessed by such jurisdiction; the unpaid income Taxes of the Company didnot, as of the date of the latest balance sheet, exceed the reserve for incomeTax liability set forth on the latest balance sheet; the Company has notentered into any transaction which is a “reportable transaction” (as defined inTreasury Regulation Section 1.6011-4) or a “potentially abusive taxshelter” (as defined in Treasury Regulation Section 1.6112-1); the Companyis not a party to any contract, plan or arrangement (written or otherwise)covering any Person that, individually or collectively, would, in whole or inpart resulting from the consummation of the transactions contemplated hereby,result in the payment of any amount that will not be deductible pursuant to theterms of Section 280G of the Code; the Company is not nor has the Companybeen, a United States real property holding corporation within the meaning ofCode Section 897(c)(2) during the applicable period described in CodeSection 897(c)(1)(A)(ii).  TheCompany has not filed a consent under Code

 

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## Section 341(f);the Company will not be required to include any item of income in, or excludeany item of deduction from, taxable income for any taxable period ending afterthe Closing Date as a result of any change in accounting method for any taxableperiod ending on or prior to the Closing Date, any installment sale or opentransaction disposition made on or prior to the Closing Date or, any prepaidamount received on or prior to the Closing Date.

##  

## **6.9.****         LaborRelations**.

##  

### (a)           TheCompany is party to the collective bargaining agreements set forth on **Schedule 6.9**. During the most recent twelve (12) month period prior to the date ofthis Agreement, the Company has not received any notice of, and there have notbeen, any strikes, slowdowns, work stoppages or lock-outs, or threatsthereof, by or with respect to any of the Company’s employees.  There are no unfair labor practice complaintspending or, to the Knowledge of the Company, threatened against theCompany.  Other than the collectivebargaining agreement listed on **Schedule 6.9**, to the Knowledge of theCompany, there are no present activities or proceedings by any labor union toorganize any of the Company’s employees.

###  

### (b)           Except as set forth on **Schedule 6.9(b)**,there are no controversies, grievances or claims by any, or on behalf of any,of the Company’s employees pending with respect to their employment or benefitsincident thereto, including, but not limited to, sexual harassment anddiscrimination claims and claims arising under workers’ compensation laws(collectively, “Employee Claims”), and to the Company’s Knowledge, there is nostate of facts or event which could reasonably be expected to form the basisfor any Employee Claims.

###  

## **6.10.****       MaterialContracts**.  **Schedule 6.10**identifies each Contract between the Company and any third party that (i) involvesthe future payment by the Company thereunder of an amount in excess of $50,000 duringa one-year period or $100,000 during the term of the Contract, (ii) wasentered into not in the ordinary course of the Business, (iii) containsany provision or covenant prohibiting or limiting the ability of the Company tooperate the Business or pursuant to which the Company has agreed not to competewith any other Person or to solicit the customers of employees of any otherPerson, (iv) is a sales representative or distribution Contract thatinvolves or will reasonably involve payments in excess of $50,000 during aone-year period or $100,000 during the term of the Contract, (v) is asupply Contract with any customer or vendor that involves or will reasonablyinvolve payments in excess of $50,000 during a one-year period or $100,000during the term of the Contract, (vi) is a Contract pursuant to which theCompany has acquired or disposed of any business that involves or willreasonably involve payments in excess of $50,000 during a one-year period or$100,000 during the term of the Contract, or (vii) is a Contract relatingto any Indebtedness ((i) through (vii) collectively, “Material Contracts”).  Each Material Contract is in full force andeffect and constitutes the valid and binding obligation of the Company and, tothe knowledge of the Company, the other parties thereto, enforceable inaccordance with its terms, except as the enforceability thereof may be limitedby bankruptcy, reorganization, moratorium or similar laws relating to orlimiting creditors’ rights generally or by equitable principles.  Except as set forth on **Schedule 6.10**,the Company is not in default under, the Company has not received or deliveredany written notice of default, cancellation or termination of, and, to theKnowledge of the Company, no other party is in material default under, anyMaterial Contract.

 

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## **6.11.****       Changesor Events**.  Except as set forthon **Schedule 6.11**and except for thetransfer of the Premises contemplated by Section 8.8, since January 1,2005, the Company has conducted its business in the ordinary course and none ofthe following has occurred with respect to the Company:

##  

### (a)           Anyamendments to the Company’s Formation Documents;

###  

### (b)           Anydisposition of, or agreement to dispose of, or placement of an Encumbranceupon, any of the Company’s assets, other than dispositions of inventory andobsolete equipment in the regular, normal and ordinary course of business,consistent with past custom or practice;

###  

### (c)           Anyacquisition, by merger, consolidation, purchase of stock or assets orotherwise, of any corporation, partnership, association or other businessorganization or of all or substantially all of its assets, or any sale oragreement to sell the Company, by merger, consolidation, sale of stock or saleof all or substantially all of the Company’s assets;

###  

### (d)           Any (i) issuanceor sale (or agreement to issue or sell) any of the Company’s capital stock orany options, warrants or other rights to purchase any such shares or anysecurities convertible into or exchangeable for such shares, (ii) declaration,setting aside or payment of any distributions, dividends or similar payments(other than cash dividends) in respect of the Stock or any other capital stock(or similar equity interest) of the Company; or (iii) redemption, purchaseor other acquisition of the Stock or any other capital stock (or similar equityinterest) of the Company;

###  

### (e)           Anyincurrence of any Indebtedness or making of loans or advances by the Company toany Person other than advances to employees in the ordinary course of businessconsistent with past practice;

###  

### (f)            Anyincrease in the compensation or other payment to any director, officer oremployee, whether now or hereafter payable or granted (other than increases inbase compensation in the ordinary course consistent in timing and amount withpast practices), or entry into or variation of the terms of any employment orincentive agreement with any such person;

###  

### (g)           Anycommencement, entering into, or altering of any Scheduled Contract, or any EmployeePlan, stock option, stock purchase, or incentive plan for employees of theCompany;

###  

### (h)           Anycapital expenditure or commitment to any capital expenditure in excess of$100,000;

###  

### (i)            Anytermination of employees of the Company, except in the ordinary course ofbusiness;

###  

### (j)            Anychange in the Company’s accounting procedures or practices;

 

17

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### (k)           Anydevelopment, change or occurrence that constitutes a Material Adverse Effect;

###  

### (l)            Anycancellation of any debts or waiver of any material rights or payment,discharge or satisfaction of any claim, liabilities or obligations (absolute,accrued, contingent or otherwise), other than the payment, discharge orsatisfaction in the ordinary course of business consistent with past practiceof liabilities and obligations reflected on or reserved against on theFinancial Statements or incurred in the ordinary course of business consistentwith past practice since July 31, 2005;

###  

### (m)          Anydisposition of or permission to lapse of any rights to the use of any materialProprietary Rights or disposition of or disclosure of (except as necessary inthe conduct of its business) to any Person, of any trade secret, formula,process or know-how not a matter of public knowledge prior to such disclosure;

###  

### (n)           Anyentering into or termination of any agreement or transaction with any RelatedParty;

###  

### (o)           Any makingor revoking of any election for Tax purposes by the Company or on its behalf orany change in the Company’s status as an S corporation;

###  

### (p)           Anyincurrence of any material damage, destruction or loss, whether or not coveredby insurance, adversely affecting the properties, business or assets of theCompany; or

###  

### (q)           Anyagreement or commitment by the Company to do or take any of the foregoingactions.

###  

## **6.12.****       Employeesand Employee Benefits.**

##  

### (a)           Set forthon **Schedule 6.12(a) **is a trueand complete listing of (i) all written employment and consultingagreements to which the Company is a party; (ii) all confidentiality orother agreements between the Company and its employees protecting proprietaryprocesses or information; and (iii) all Employee Plans.  A true and complete copy of each agreement,plan or arrangement listed on **Schedule 6.12(a)**,and, where applicable, a copy of the most recent IRS Determination Letterreceived, and the three most recent IRS Forms 5500 filed, including allschedules and exhibits filed with that 5500, with respect to each suchagreement, plan or arrangement, has been furnished to Buyer.

###  

### (b)           Except asset forth on **Schedule 6.12(b)**,the Employee Plans have been administered in accordance with their terms andall applicable provisions of ERISA, the Code and state law.  The Company has made all payments to allEmployee Plans as required by the terms of each such plan and applicable law.

###  

### (c)           Except asset forth on **Schedule 6.12(c)**,the IRS has issued a letter for each Employee Plan that is an employee pensionbenefit plan, as defined in Section 3(2) of ERISA, which is intendedto be a qualified plan, determining that such plan is so qualified under Section 401(a) ofthe Code as amended through the effective dates of the legislation referred to

 

18

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### as “GUST” and is exemptfrom United States Federal Income Tax under Section 501(a) of theCode, and there has been no occurrence, including any amendment or failure toamend, since the date of any such determination letter that has adverselyaffected such qualification.

###  

### (d)           Except asset forth on **Schedule 6.12(d)**, neither theCompany nor any ERISA Affiliate has contributedto, or been required to contribute to, during any period with respect to whichany relevant statute of limitations remains open, any multiemployer plan asdefined by Section 3(37) of ERISA, nor has the Company or any ERISAAffiliate incurred any withdrawal liability within the meaning of Section 4201of ERISA with respect to any multiemployer plan or have any potentialwithdrawal liability arising from a transaction described in Section 4204of ERISA.

###  

### (e)           None ofthe Employee Plans which is an employee welfare benefit plan, within themeaning of Section 3(l) of ERISA, provides benefits to retirees or otherformer employees of the Company, regardless of whether such benefits are vestedand the Company has not terminated any employee welfare benefit plan providingbenefits to retirees.  The Company andeach ERISA Affiliate have complied with the notice and continuation coveragerequirements of section 4980B of the Code and the regulations thereunder,including, without limitation, the “M&A regulations” issued as TreasuryRegulations § 54.4980B-9, with respect to each Employee Welfare BenefitPlan that is, or was during any taxable year of the Company or any ERISAAffiliate for which the statute of limitations on the assessment of federalincome taxes remains open, by consent or otherwise, a group health plan withinthe meaning of section 5000(b)(1) of the Code.

###  

### (f)            No ERISAAffiliate has incurred any liability which could subject Buyer or the Companyto liability under Section 4062, 4063, 4064 or 4069 of ERISA, nor has anyERISA Affiliate, during any period with respect to which any relevant statuteof limitations remains open, been required to contribute to, or incurred anywithdrawal liability, within the meaning of Section 4201 of ERISA to anymultiemployer pension plan, within the meaning of Section 3(37) of ERISAnor does any ERISA Affiliate have any potential withdrawal liability arisingfrom a transaction described in Section 4204 of ERISA.

###  

### (g)           Except asset forth on **Schedule 6.12(g)**,the assets of each Employee Plan that is a defined benefit pension plan, asdefined by Section 3(35) of ERISA maintained or contributed to by theCompany or any ERISA Affiliate and subject to Title IV of ERISA (other than anymultiemployer plan) are at least equal to the liabilities for accrued benefitsunder such Employee Plan, determined in accordance with Statement of FinancialAccounting Standards No. 87.  Nosuch Employee Plan has incurred any accumulated funding deficiency or requesteda waiver of the minimum funding standards of section 412 of the Code or Section 302of ERISA.  The Company has furnished toBuyer the most recent actuarial report with respect to each such Employee Plan.

###  

### (h)           Other thanroutine claims for benefits made in the ordinary course of business, there areno pending claims, investigations or causes of action (“Claims”) and to theKnowledge of the Company, no such Claims are threatened, against any EmployeePlan or fiduciary of any such Employee Plan by any participant, beneficiary orGovernmental Entity

 

19

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### with respect to thequalification or administration of any such Employee Plan and there is no basisto anticipate that any such claims will be made.

###  

### (i)            Except asdescribed on **Schedule 6.12(i)**, neither the execution and delivery of this Agreement,nor the sale of the Stock or any of the transactions contemplated herein, willterminate or modify, or give a third party a right to terminate or modify, theprovisions or terms of any Employee Plan (including employment agreements) andwill not constitute a stated triggering event under any Employee Plan(including employment agreements) that will result in any payment (includingparachute payments, severance payments or any similar payments) becoming due toany employees of the Company.  No paymentwhich is or may be made by from or with respect to any Employee Plan, to anyemployee, former employee, director or agent of the Company or any ERISA Affiliate,either alone or in conjunction with any other payment, will or could properlybe characterized as an excess parachute payment under section 280G of theCode, provided that the Company remains a small business corporation (asdefined in Section 1361(b) of the Code) until the Closing.

###  

### (j)            NoEmployee Plan or other arrangement listed on **Schedule 6.12(a)**,is maintained outside the jurisdiction of the United States or Canada.

###  

## **6.13.****       RealProperty; Leaseholds**.

##  

### (a)           TheCompany does not own any interest in any real property other than the realproperty constituting the Premises.  Noportion of the real property constituting the Premises is subject to anypending condemnation proceeding by any public or quasi-public authority and, tothe Knowledge of the Company, there is no threatened condemnation proceedingwith respect thereto, except as set forth on **Schedule 6.13**.  The Company has not received written noticeof any outstanding violation of any Regulation respecting any portion of thePremises.  The real property constitutingthe Premises is supplied with utilities and other services necessary for theoperation of the facilities located thereon as presently conducted, and all ofsuch services are adequate to conduct that portion of the Business as is presentlyconducted at such facility.  The Companyhas not sublet, underlet or assigned any portion of the Premises and no thirdparty is in possession of any portion of the Premises other than the Company.  The zoning of the real property constitutingthe Premises permits the presently existing improvements and the Businesspresently being conducted thereon as a conforming use.

###  

### (b)           **Schedule 1.1(c) **includes a list of allLeaseholds.  The Company is the holder ofeach Leasehold and each Leasehold is in full force and effect and constitutes avalid and binding obligation of the Company and, to the Knowledge of theCompany, all other parties thereto and is enforceable in accordance with itsterms.  The Company has the sole right touse or occupy the realty subject of each Leasehold and, upon consummation ofthe transactions contemplated hereby, each Leasehold will continue in fullforce and effect and constitute a valid and binding obligation on the part ofthe Company and all other parties thereto enforceable in accordance with itsterms.  The Company has not received anynotice of any default related to a Leasehold and, to the Knowledge of theCompany, no party currently has the right to cancel or terminate a Leasehold.

 

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## **6.14.****       Insurance.**

##  

### (a)           Schedule 6.14lists:

###  

### (i)            Allpolicies of insurance pertaining to the Company, including policies coveringthe Company’s public and product liability and its personnel, properties,buildings, machinery, equipment, furniture, fixtures and operations, specifyingwith respect to each such policy, the name of the insurer, type of coverage,term of policy, limits of liability and annual premium.  All such policies are presently in full forceand effect, all premiums with respect thereto have been fully paid, and nonotice of cancellation or termination has been received by the Company withrespect to any such policy. With respect to each such insurance policy:  (i) the policy is legal, valid, binding,enforceable, and in full force and effect; (ii) there are no outstandingclaims under the policy; (iii) neither the Company nor, to the Knowledgeof the Company, any other party to the policy is in breach or default(including with respect to the payment of premiums or the giving of notices), andno event has occurred which, with notice or the lapse of time, would constitutesuch a breach or default, or permit termination or modification, under thepolicy; (iv) the Company is not subject to a retroactive rate adjustment,loss sharing arrangement or other actual or contingent liability; and (v) inthe past two years, no notice of cancellation or non-renewal with respect to,or disallowance (other than reservation of rights by the insurer) of anymaterial claim under, the policy has been received.  All such insurance policies are sufficient forcompliance with all material Regulations applicable to the Company and theCompany’s obligations under the Contracts. There has been no failure to give any notice or present any claim underany insurance policy in a timely fashion or in the manner or detail required bythe policy.  The Company has not beenrefused any property and casualty insurance, nor has any of its coverages beenlimited by any insurance carrier to which it has applied for insurance or withwhich has carried insurance during the last five years and the Company has beenfully covered at all times during the past five years by insurance in scope andamount customary and reasonable for the businesses in which it has engaged andthe nature and amount of the liabilities it has incurred during theaforementioned period; and

###  

### (ii)           Allinsurance claims by the Company for damage to or loss of property or income, oragainst the Company, that have been referred to its insurers for coverageduring the last four (4) years.

###  

### (b)           TheCompany has not manufactured, sold or distributed manganese welding rods.

###  

## **6.15.****       Litigation**.  Except as disclosed on **Schedule 6.15**,there is no Action or Court Order pending or, to the Knowledge of the Company,threatened against the Company that constitutes a Material Adverse Effect ormaterially impairs the Company’s ability to perform its obligations hereunderor to consummate the transactions contemplated hereby.

##  

## **6.16.****       AccountsReceivable**.  All accountsreceivable of the Company shown on the Interim Financial Statements or arisingthereafter, to the extent uncollected on the date hereof, represent obligationsarising from bona fide transactions in the ordinary course of theBusiness.  Except as set forth on **Schedule 6.16**, there are no refunds, rights of setoff,discounts or other adjustments payable in respect of any of the accountsreceivable of the Company.  **Schedule 6.16**

 

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## contains a summaryof accounts receivable due the Company, specifying the name, amount, age, andany amount written off or reserved against, as of August 31, 2005.

##  

## **6.17.****       ProprietaryRights**.  **Schedule 6.17**contains a listing of all Proprietary Rights that the Company owns or licenses(the “IP Contracts”), pursuant to which the Company has rights to anyProprietary Rights, setting forth as to each such item of owned ProprietaryRights: the item, owner, jurisdiction, registration or issuance date, asapplicable, and as to each licensed item of Proprietary Rights, the identity ofthe licensor, date and subject matter of the license.  Each IP Contract is in full force and effectand constitutes the valid and binding obligation of the Company and, to theknowledge of the Company, the other parties thereto, enforceable in accordancewith its terms, except as the enforceability thereof may be limited bybankruptcy, reorganization, moratorium or similar laws relating to or limitingcreditors’ rights generally or by equitable principles.  The Company is not in default under, theCompany has not received or delivered any written notice of default,cancellation or termination of, and, to the Knowledge of the Company, no otherparty is in material default under, any such IP Contract.  Except as disclosed on **Schedule 6.17**:

##  

### (a)           TheCompany (i) owns or has the right to use in the Business all ProprietaryRights used in the conduct of the Business as now conducted, and (ii) ownsall right, title and interest in the Proprietary Rights described on **Schedule 6.17** as Company-owned Proprietary Rights(including, without limitation, exclusive rights to use and license the same)free and clear of any Encumbrances;

###  

### (b)           TheCompany is not in default under any agreement relating to the ProprietaryRights and, to the Knowledge of the Company, no other party is in defaultthereunder and the transactions contemplated hereby will not result in anydefault under, or trigger any right of renegotiation, rescission or othermodification under any such agreements;

###  

### (c)           There isno written claim or demand of any Person pertaining to, or any proceedingpending or, to the Knowledge of the Company, threatened in writing, whichchallenges the rights of the Company in respect of the Proprietary Rights orthat seeks to invalidate, cancel or otherwise challenge the extent or validityof the Proprietary Rights;

###  

### (d)           To theKnowledge of the Company, the operation of the Business as it is currentlyconducted, including but not limited to the design, development, use, import,manufacture and sale of the products, technology or services of the Company,does not infringe, dilute, misappropriate or otherwise violate the ProprietaryRights of any third party, or constitute unfair competition or trade practicesunder the laws of any jurisdiction, and no claim has been made, notice given,or dispute arisen to that effect.  To theKnowledge of the Company, the Company has not benefited from any other Person’smisappropriation of the Proprietary Rights of any third party.  The Company does not have any pending claimsthat a third party has violated or infringed any of the Company’s ProprietaryRights;

###  

### (e)           All of thepatents, trademark registrations, and domain name registrations indicated in **Schedule 6.17** are valid and in full force and effect,and are held of record in the name of the Company;

 

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### (f)            To theKnowledge of the Company, none of the trade secrets, material know-how or otherconfidential or proprietary information of the Company has been disclosed to anyPerson unless such disclosure was necessary and made pursuant to an appropriateconfidentiality agreement, and to the Knowledge of the Company there has beenno unauthorized release or disclosure of the Company’s trade secrets or otherconfidential or proprietary information; and

###  

### (g)           All of thecomputer software used in the Business is adequately documented.  Except as set forth in **Schedule 6.17**,all of the computer software used in the Business performs in materialconformance with the applicable documentation for such software.  The information technology systems owned,licensed, leased, operated on behalf of, or otherwise held for use in theBusiness by Company, including all computer hardware, software, firmware andtelecommunications systems used in the Business, perform reliably in theoperation of the Business.

###  

## **6.18.****       EnvironmentalRequirements**.  Except asspecifically disclosed on **Schedule 6.18**:

##  

### (a)           Neither the Company nor, to the Knowledge ofthe Company, any predecessor or other Person has engaged in or permitted anyoperations or activities or any use or occupancy of the Premises resulting inthe storage, emission, Release, discharge, dumping, transportation or disposalof any Hazardous Materials on, under, in or about the Premises or in connectionwith the operation of the Business, in any case in such a way as to give riseto, or that would reasonably be expected to give rise to, any materialliability (contingent or otherwise) under any applicable EnvironmentalRequirements (including without limitation for response costs, correctiveaction costs, personal injury, property damage, natural resources damages orattorney fees, or any investigative, corrective or remedial obligations);

###  

### (b)           (i)  Each of the Premises and itsexisting and prior uses and activities comply, and have for the applicablestatute of limitations complied, in all material respects with allEnvironmental Requirements, except for such violations that have been resolved,and the Company has obtained and complied with all material Permits andLicenses necessary under applicable Environmental Requirements and (ii) theCompany has not received any notice or other communication in writingconcerning any alleged violation of or liability under EnvironmentalRequirements, whether or not corrected to the satisfaction of the appropriateGovernmental Entity, and no Action or Court Order exists or is threatenedrelating to the ownership, use, maintenance or operation of the Premisesarising from an alleged violation of Environmental Requirements, or from thesuspected presence of Hazardous Materials thereon;

###  

### (c)           TheCompany has not received notice that it has been identified as a potentiallyresponsible party at any federal or state site that requires remedial, responseor other action as a result of a Release or threat of Release of HazardousSubstances, including without limitation any such site listed or proposed forlisting on the National Priority List of Superfund sites or any similar list ofsites;

###  

### (d)           The Company has not entered into any consentdecree or other written agreement in settlement of any alleged violation of orliability under any Environmental

 

23

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### Requirements under whichdecree or agreement the Company has any unfulfilled obligations, and theCompany has not assumed or retained any such liabilities by contract, law orotherwise; and

###  

### (e)           TheCompany has furnished to Buyer all environmental audits, reports and otherenvironmental documents in the Company’s possession or control prepared duringthe twenty (20) year period prior to the date of this Agreement relating to theBusiness, the Company, or the Premises, except such reports that only identifyconditions or violations (i) that have been resolved and where the statuteof limitations for such liabilities has expired, or (ii) that are notmaterial.

###  

## **6.19.****       Inventory**.  Attached hereto as **Schedule 6.19**is a summary of the inventory of raw materials, work-in-process and finishedgoods of the Company as of August 31, 2005.  Except as disclosed on **Schedule 6.19**,the Company’s inventory of raw materials, work-in-process and finished goodsare of a quality and quantity that is usable or saleable in the ordinary courseof business.  Except as disclosed on **Schedule 6.19**, none of the Company’s inventory isobsolete.

##  

## **6.20.****       Consents**.  Except for the Consents set forth on **Schedule 6.20**, no Consent is required to be obtainedpursuant to any of the Scheduled Contracts in connection with the execution,delivery and performance of this Agreement by the Company.

##  

## **6.21.****       RelatedParty Transactions**.  Except asset forth on **Schedule 6.21**, no RelatedParty or other Affiliate of the Company has: (a) borrowedmoney from or loaned money to the Company; (b) anycontractual or other claims of any kind against the Company; (c) any interest in any assets used by the Company;or (d) engaged in any other transaction withthe Company.

##  

## **6.22.****       Finders’Fees**.  No investment banker,agent, broker, finder or other intermediary is entitled to any fee, commissionor expense reimbursement from the Company in connection with the transactionscontemplated by this Agreement, except for Harris Williams & Co.  Any fee, commission or expense due to HarrisWilliams & Co. under its arrangements with the Company shall be the exclusiveliability of the Company, and Buyer shall not be liable for any such fees orexpenses.

##  

# **ARTICLE VIIREPRESENTATIONS AND WARRANTIES OF BUYER**

 

Buyer herebyrepresents and warrants to each Stockholder as follows:

 

## **7.1.****         Organization**.  Buyer is a limited liability company dulyorganized, validly existing and in good standing under the laws of the State ofDelaware.  Buyer has full power andauthority to enter into this Agreement and to consummate the transactions contemplatedby this Agreement.

##  

## **7.2.****         Abilityto Carry Out Agreement**.  Theconsummation of the transactions contemplated hereby, including, but notlimited to, the execution, delivery and performance of this Agreement does not:(a) constitute a violation of or default under, or result in a breach of (i) theFormation Documents of Buyer, (ii) any contract to which the Buyer isbound or constitute a

 

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## default thereunder(except where any such breach would not have a material adverse effect on Buyer’sability to consummate the transactions contemplated hereby), (iii) anyCourt Order to which Buyer is subject, or (iv) any Regulation applicableto Buyer.

##  

## **7.3.****         Authorization**.  The execution, delivery and performance ofthis Agreement, and the consummation of the transactions contemplated hereby,have been duly and validly authorized and approved by all necessary limitedliability company action on the part of Buyer. This Agreement will constitute valid and binding obligations of Buyer,enforceable in accordance with its terms, except as the enforceability hereofmay be limited by bankruptcy, reorganization, moratorium or similar lawsrelating to or limiting creditors’ rights generally or by equitable principlesrelating to enforceability.  No Consentis required with respect to Buyer in connection with the execution, deliveryand performance of this Agreement, except for the Consent under the HSR Act andsuch Consents which, if not obtained, would not and would not reasonably beexpected to materially impair Buyer’s ability to consummate the transactionshereby.

##  

## **7.4.****         Financing**.  Buyer has cash on hand or financingcommitments that are sufficient to satisfy all of its obligations under thisAgreement to be performed at Closing.

##  

## **7.5.****         Finders’Fees**.  No investment banker,agent, broker, finder or other intermediary has been retained by or isauthorized to act on behalf of Buyer, or is entitled to any fee, commission orexpense reimbursement from Buyer, in connection with the transactionscontemplated by this Agreement.

##  

## **7.6.****         Litigation**.  There is no Action or Court Order pending,or, to the knowledge of Buyer, threatened that could reasonably be anticipatedto materially impair Buyer’s ability to consummate the transactionscontemplated by this Agreement.

##  

## **7.7.****         Purchasefor Investment**.  Buyer willacquire the Stock for its own account for investment and not with a view towardany resale or distribution thereof.

##  

# **ARTICLE VIIICOVENANTS**

# ** **

## **8.1.****         Access**.  (a) Priorto the Closing, the Company shall afford Buyer and its representatives(including its lenders) reasonable access during normal business hours and uponreasonable advance notice, to the Books and Records of the Company; provided,however, that such access shall not unreasonably disrupt or interferewith the normal operations of the Company, and shall be subject to the termsand conditions of the Confidentiality Agreement between Buyer and theCompany dated as of May 2, 2005 (the “ConfidentialityAgreement”).

##  

(b)           Prior to the Closing, the Company shallreasonably assist, and shall use reasonable efforts to obtain the assistance ofthe Company’s accountants, in preparing financial statement informationrelating to the Company to be included in Buyer’s public filings, provided thatBuyer shall provide reasonable advance notice to the Company setting forth theassistance requested by Buyer, and Buyer shall reimburse the Company for allout-of-pocket costs and expenses in connection with such assistance.

 

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## **8.2.****         Confidentiality; NoPublicity**.  Buyer acknowledgesand agrees that the transactions contemplated by this Agreement, including,without limitation, the information and access with regard to the Companyprovided hereunder, is subject to all of the terms and conditions of theConfidentiality Agreement.  Buyer, the Company, Stockholders and Grandiagree that, from the date hereof through the Closing Date, no public release orannouncement concerning this Agreement or the transactions contemplated herebyshall be issued by any party without the prior consent of all other parties,except as such release or announcement may be required by law or the rules orregulations of any securities exchange, in which case the party required tomake the release or announcement shall use reasonable efforts to allow theother parties to comment on such release or announcement in advance of suchissuance.

##  

## **8.3.****         Non-Solicitation**.  Until such time, if any, that this Agreementis terminated pursuant to Section 12.1, the Company, Stockholders andGrandi shall not, and shall cause each of their respective officers, directors,agents, and representatives not to, directly or indirectly, make, solicit,initiate, assist or encourage any inquiries, proposals, offers or bids from,discuss or negotiate with, or provide any non-public information to any Person(other than Buyer) relating to any transaction involving the sale of theCompany, or substantially all of its assets, or any merger, consolidation,business combination or similar transaction involving the Company and agree topromptly notify Buyer if any of them receives any such inquiry, proposal, offeror bid specifying the party making such inquiry, proposal, offer or bid and theterms thereof.

##  

## **8.4.****         Governmental Approvals**.  Buyer andthe Company shall as promptly as practicable, but in no event later than five (5) BusinessDays following the execution and delivery of this Agreement, file with theUnited States Federal Trade Commission (the “FTC”) and the United StatesDepartment of Justice (the “DOJ”) the notification and report form, if any,required for the transactions contemplated hereby and any supplementalinformation requested in connection therewith pursuant to the HSR Act and willrequest early termination of the waiting period under the HSR Act.  Any such notification and report form andsupplemental information shall be in substantial compliance with therequirements of the HSR Act.  Buyer andthe Company shall as promptly as practicable comply with any other laws of anyother country that are applicable to any of the transactions contemplatedhereby and pursuant to which any Consent in connection with such transactionsis necessary.  Buyer and the Companyshall furnish to the other such necessary information and reasonable assistanceas the other may request in connection with preparation of any filing,submission, registration or declaration that is necessary under the HSR Act orany other law.  Buyer and the Companyshall keep each other apprised of the status of any communications with, andany inquiries or requests for additional information from, the FTC and the DOJand any other Governmental Entity and shall comply promptly with any suchinquiry or request.  Buyer and theCompany shall each use its reasonable best efforts to obtain any clearancerequired under the HSR Act or any other consent, approval, order orauthorization of any Governmental Entity necessary for the consummation of thetransactions contemplated by this Agreement. For purposes of this Section 8.4, the “reasonable best efforts” ofBuyer shall not include Buyer’s agreement to hold separate and divest anybusiness or assets of the Company or of Buyer or its Affiliates.

##  

## **8.5.****         Consents**.  **Schedule 6.20**identifies Scheduled Contracts that require Consent in connection with theconsummation of the transactions contemplated by this Agreement.  To the extent that such Consents have notbeen obtained prior to Closing, Stockholders and Grandi shall

 

26

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## use commerciallyreasonable efforts to obtain any such required Consent as promptly as possibleafter Closing (without requiring the payment of any money or the institution oflegal proceedings).  If any such Consentshall not be obtained, Stockholders and Grandi shall use commerciallyreasonable efforts to act as Buyer’s agent in order to obtain for it thebenefits thereunder and to cooperate with Buyer in any other reasonablearrangement designed to provide such benefits exclusively to Buyer (absent theinstitution of legal proceedings).

##  

## **8.6.****         Restrictive Covenants**

##  

### (a)           From andafter the Closing Date, each Stockholder and Grandi will not and will cause itsAffiliates not to, for its own account or for the account of others, directlyor indirectly, own, manage, operate, join, control or participate in theownership, management, operation or control of any business conducting businessunder the name “Fibre Metal,” or any variant thereof.  For a period of five (5) years from andafter the Closing Date, each Stockholder and Grandi will not and will cause itsAffiliates not to, for its own account or for the account of others, directlyor indirectly, (i) engage in any business which competes with theBusiness, or (ii) own, manage, operate, join, control or participate inthe ownership, management, operation or control of any Person who or which atany relevant time during such period is engaged in any business which competeswith the Business, except for investments in publicly traded securities wherethe beneficial ownership by the Stockholder or Grandi is five percent (5%) orless of all of the issued and outstanding publicly traded securities of theparticular entity.

###  

### (b)           For aperiod of five (5) years from and after the Closing Date, each Stockholderand Grandi will not and will cause its Affiliates not to, directly orindirectly, solicit or attempt to solicit any Person who is or has been acustomer, supplier, licensor, licensee of the Business prior to or during suchperiod to cease its particular business relationship with the Company thatrelates to the Business.

###  

### (c)           For aperiod of five (5) years from and after the Closing Date, each Stockholderand Grandi will not and will cause its Affiliates not to, directly orindirectly, solicit or induce any Person who is then a director, officer,employee or agent of the Company to terminate his, her or its relationshipwith, or employment by the Company.

###  

### (d)           From andafter the Closing, each Stockholder and Grandi shall, and shall cause itsAffiliates and representatives to, keep confidential and not disclose to anyother Person or use for its own benefit or the benefit of any other Person anyconfidential proprietary information, technology, know-how, trade secrets(including, without limitation, all results of research and development),product formulas, industrial designs, franchises, inventions or otherindustrial and intellectual property in its possession or control regarding theCompany or the Business.  The obligationsof each Stockholder and Grandi under this Section 8.6(d) shall notapply to information which (i) is or becomes generally available to thepublic without breach of the commitment provided for in this Section 6.8(d),(ii) is made available to Stockholders or Grandi by an independent thirdparty, provided, however, that such information was not obtained by said thirdparty in violation of a confidentiality agreement or a fiduciary relationship;or (iii) is required to be disclosed by law, order or regulation of acourt or tribunal or governmental authority; provided, however, that, in anysuch case, any Stockholder or Grandi shall in such circumstance notify theCompany as early as reasonably practicable prior to disclosure to allow theCompany to take

 

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### appropriate measures topreserve the confidentiality of such information at the cost of the Company.

###  

### (e)           The restrictive covenants contained in this Section 6.8are covenants independent of any other provision of this Agreement and theexistence of any claim which any Stockholder or Grandi may allege against anyother party to this Agreement, whether based on this Agreement or otherwise,shall not prevent the enforcement of these covenants.  Stockholders and Grandi agree that Buyer’sremedies at law for any breach or threat of breach by Stockholders or Grandi ofthe provisions of this Section will be inadequate, and that Buyer shall beentitled to an injunction or injunctions to prevent breaches of the provisionsof this Section 6.8 and to enforce specifically the terms and provisionshereof, in addition to any other remedy to which Buyer may be entitled at lawor equity.  In the event of litigationregarding the covenant not to compete, the prevailing party in such litigationshall, in addition to any other remedies the prevailing party may obtain insuch litigation, be entitled to recover from the other party its reasonablelegal fees and out of pocket costs incurred by such party in enforcing ordefending its rights hereunder.  Thelength of time for which this covenant not to compete shall be in force shallnot include any period of violation or any other period required for litigationduring which Buyer seeks to enforce this covenant.  Should any provisions of this Section beadjudged to any extent invalid by any competent tribunal, such provision willbe deemed modified to the extent necessary to make it enforceable.

###  

## **8.7.****         TaxMatters.**

##  

### (a)           Buyershall prepare or cause to be prepared in a manner consistent with pastpractice, and file or cause to be filed, all Tax Returns of the Company withrespect to periods ending on or before the Closing Date.  Such Tax Returns shall be subject to thereview and approval by Stockholders and Grandi. Such Tax Returns shall be delivered to Stockholders and Grandi at leastthirty (30) days prior to the due date for approval.  Buyer shall prepare or cause to be prepared,and file or cause to be filed, all Tax Returns of the Company with respect toperiods ending after the Closing Date. Stockholders shall timely pay any income Taxes with respect to incomereported to them on Schedule K-1. Stockholders and Grandi shall reimburse the Company for any Taxespayable with respect to such Tax Returns that are the responsibility ofStockholders and Grandi pursuant to Section 12.1(d) within ten (10) Businessdays of the payment thereof by the Company, provided that such Taxes have nototherwise been accrued in calculating the Net Working Capital.

###  

### (b)           Wheneverany taxing authority sends a notice of an audit, initiates an examination ofthe Company, or otherwise asserts a claim, makes an assessment, or disputes theamounts of Taxes for which Stockholders and Grandi are or may be liable underthis Agreement, Buyer or the Company shall promptly give Notice to Stockholdersand Grandi, and Stockholders and Grandi shall have the right to control, attheir cost, any resulting proceedings and to determine whether and when tosettle any such claim, assessment or dispute to the extent such proceedings ordeterminations affect the amount of Taxes for which Stockholders and Grandi areor may be liable under this Agreement; provided, however, that in the eventthat Stockholders and Grandi desire to settle any such claim, assessment ordispute in such a manner that reasonably may negatively impact Buyer or the Company,then Stockholders and Grandi shall obtain the prior consent of Buyer, whichshall not be unreasonably withheld. Whenever any

 

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### taxing authority sends anotice of an audit, initiates an examination of the Company, or otherwiseasserts a claim, makes an assessment or disputes the amount of Taxes for whichBuyer is or may be liable under this Agreement and Stockholders and Grandireceive such notice, Stockholders and Grandi shall promptly inform Buyer, and,except to the extent such proceedings affect the amount of taxes for whichStockholders and Grandi are liable under this Agreement, Buyer shall have theright to control, at its cost, any resulting proceedings and to determinewhether and when to settle any such claim, assessment or dispute.

###  

### (c)           Buyer,Stockholders and Grandi and the Company will provide each other with suchassistance as may reasonably be requested by any of them in connection with thepreparation of any Tax Return, any audit or other examination by any taxingauthority, or any judicial or administrative proceedings relating to liabilityfor Taxes, and each will retain and provide the other with any records orinformation that may be relevant to such Tax Return, audit or examination,proceedings or determination.  Suchassistance shall include making employees available on a mutually convenientbasis to provide additional information and explanation of any materialprovided hereunder and shall include providing copies of any relevant TaxReturn and supporting work schedules. The party requesting assistance hereunder shall reimburse the other forreasonable expense incurred in providing such assistance.  Without limiting in any way the foregoingprovisions of this Section 8.7(c), Buyer hereby agrees that it will retainor cause the Company to retain, until the applicable statutes of limitation(including any extensions thereof) expire, copies of all Tax Returns,supporting work schedules and other records or information which it possessesand which may be relevant to such Tax Returns of the Company for all taxableperiods ending on or prior to the Closing Date. Further, Buyer will not (and will assure that the Company will not)destroy or otherwise dispose of such records without first providingStockholders and Grandi with a reasonable opportunity to review and copy suchrecords.

###  

### (d)           Buyercovenants that it will not, nor will it cause or permit any other Affiliate ofBuyer to (i) take any action on or after the Closing Date that will giverise to any Tax liability of Stockholders or Grandi, (ii) make anyelection or deemed election under Section 338 of the Code, or (iii) makeor change any Tax election, file any amended Tax Return or take any Taxposition on any Tax Return, take any action, omit to take any action or enterinto any transaction that results in any increased Tax liability or reductionof any net operating loss, net capital loss, investment tax credit, foreign taxcredit, charitable deduction or any other credit or Tax attribute whichattribute could increase Taxes (including, without limitation, deductions andcredits related to alternative minimum Taxes) of the Stockholders or Grandi inrespect of any Pre-Closing Tax Period. Buyer agrees that neither Stockholders nor Grandi is to have liabilityfor any Tax resulting from any action referred to in the preceding sentence,and agrees to indemnify and hold harmless Stockholders and Grandi against anysuch Tax.

###  

### (e)           Stockholdersshall be entitled to any Tax refunds pertaining to the activities or income ofthe Company for periods ending on or before the Closing Date.  Buyer agrees to assign and promptly remit(and to cause the Company to assign and promptly remit) to the Stockholders allsuch refunds (including interest thereon) received by the Company, the Buyer orany Affiliate of the Company or the Buyer.

 

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## **8.8.****         Transferof Premises; Satisfaction of Indebtedness and Transaction Expenses; Retentionof Related Party Obligations**. Prior to Closing, the Company shall transfer to Stockholders orAffiliates of Stockholders all of its right, title and interest in and to thePremises located in Concordville, Pennsylvania; Aston, Pennsylvania; andMississauga, Ontario, Canada; in accordance with deeds substantially in theforms attached hereto as **Exhibit C**,and all beneficial rights thereto, including the effluent discharge unitsissued by Concord Township with respect to Premises located in Concordville,Pennsylvania.  At or prior to theClosing, the Stockholders or the Company shall pay-off and fully satisfy allIndebtedness and Transaction Expenses, and cause the removal of theEncumbrances set forth on Schedule 6.7, and at or prior to the Closing,the Stockholders shall retain all obligations to any Related Party, including,without limitation, all such items set forth on **Schedule 8.8**.

##  

## **8.9.****         Appointmentof Sellers Representative. **Stockholdersand Grandi hereby irrevocably appoint Robert Shoemaker, Jr. (“SellersRepresentative”), as Stockholders’ and Grandi’s representative,attorney-in-fact and agent, with full power of substitution to act in the name,place and stead of Stockholders and Grandi, and to act on behalf ofStockholders and Grandi in all matters involving this Agreement, including,without limitation, the power: (a) to give and receive all notices andcommunications to be given or received under this Agreement and to receiveservice of process in connection with any notices under this Agreement; (b) toexecute and deliver all ancillary agreements, certificates, statements,notices, approvals, extensions, waivers, undertakings, amendments and otherdocuments required or permitted to be given in connection with this Agreement;and (c) to act for each Seller and Grandi with regard to matterspertaining to indemnification referred to in this Agreement, including thepower to compromise any claim on behalf of Stockholders and Grandi, to bringand transact matters of litigation and to refer matters to arbitration.

##  

# **ARTICLE IXCONDUCT OF BUSINESS PRIOR TO CLOSING**

# ** **

## **9.1.****         Conductof Business**.  During the periodfrom the date of this Agreement until the Closing Date, except as otherwiseconsented to in writing by Buyer and except for the transfer of the Premisescontemplated by Section 8.8, the Company agrees, and Stockholders agree tocause the Company, to operate its Business only in the ordinary course and thatthe Company will not:

##  

### (a)           Amend theCompany’s Formation Documents;

###  

### (b)           Disposeof, or agree to dispose of, or place an Encumbrance upon, any of the Company’sassets, other than dispositions of inventory and obsolete equipment in theregular, normal and ordinary course of business, consistent with past custom orpractice;

###  

### (c)           Acquire,by merger, consolidation, purchase of stock or assets or otherwise, anycorporation, partnership, association or other business organization, or all orsubstantially all of its assets, or sell or agree to sell the Company, bymerger, consolidation, sale of stock or sale of all or substantially all of theCompany’s assets;

 

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### (d)           (i) Issueor sell (or agree to issue or sell) any of the Company’s capital stock or anyoptions, warrants or other rights to purchase any such shares or any securitiesconvertible into or exchangeable for such shares; (ii) declare, set asideor pay any distributions, dividends or similar payments (other than cashdividends) in respect of the Stock or any other capital stock (or similarequity interest) of the Company; or (iii) redeem, repurchase or otherwiseacquire the Stock or any other capital stock (or similar equity interest) ofthe Company;

###  

### (e)           Incur anyIndebtedness (including through the issuance of debt securities) or make anyloans or advances to any Person other than advances to employees in theordinary course of business consistent with past practice;

###  

### (f)            Increasethe base compensation or other payment to any director, officer or employee,whether now or hereafter payable or granted (other than increases in base compensationfor employees who are not officers of the Company in the ordinary courseconsistent in timing and amount with past practices), or enter into or vary theterms of any employment or incentive agreement with any such person;

###  

### (g)           Commence,enter into, or alter any Scheduled Contract, or any Employee Plan, stockoption, stock purchase, or incentive plan for employees of the Company, exceptthat the Company shall permit Grandi to resign as a trustee of Employee Plansas of the Closing without regard to any advance notice or resignation thatotherwise would be required;

###  

### (h)           Make anycapital expenditure or commit to any capital expenditure in excess of $100,000;

###  

### (i)            Terminateany employees of the Company, except in the ordinary course of business;

###  

### (j)            Make anychange in its account procedures or practices unless required by GAAP;

###  

### (k)           Cancel anydebts or waive any material rights or pay, discharge or satisfy any claim,liabilities or obligations (absolute, accrued, contingent or otherwise), otherthan the payment, discharge or satisfaction in the ordinary course of businessconsistent with past practice of liabilities and obligations reflected on orreserved against on the Financial Statements or incurred in the ordinary courseof business consistent with past practice since July 31, 2005;

###  

### (l)            Disposeof or permit to lapse any rights to the use of any material Proprietary Rightsor dispose of or disclosure (except as necessary in the conduct of itsbusiness) to any Person, any trade secret, formula, process or know-how not amatter of public knowledge prior to such disclosure;

###  

### (m)          Enter intoand, except with respect to any agreement or transaction disclosed on**Schedule 8.8**, terminate any agreement or transactionwith any Related Party;

###  

### (n)           Make or revoke any election for Tax purposesby the Company or on its behalf or allow the Company’s status as an Scorporation to change; or

 

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### (o)           Agree orcommit to do or take any of the foregoing actions.

###  

Notwithstanding anything herein to the contrary, Buyer acknowledges andagrees that, prior to or at the Closing, the Company may distribute all of itscash and cash equivalents to Stockholders, and shall (i) satisfy anyoutstanding long-term debt of the Company, (ii) pay any fees and expensesin connection with the transactions contemplated hereby (other than any feesand expenses incurred by Buyer), including any change of control payments, salebonuses, success fees, severance obligations incurred at or prior to theClosing, legal fees, investment banking fees and other professional fees, orobligations to or for the benefit of any Related Party, and (iii) pay anyfiscal year-end bonuses accrued by the Company solely with respect to Grandi.

 

# **ARTICLE XCONDITIONS PRECEDENT TO BUYER’SOBLIGATIONS ON THE CLOSING DATE**

# ** **

Each and everyobligation of Buyer to be performed on the Closing Date shall be subject to thesatisfaction, prior to or concurrently with the performance of such obligation,of all the following conditions precedent (any of which may be waived by Buyer,in whole or in part, and if waived by Buyer, the circumstance being waivedshall not be used as the basis for indemnification pursuant to Article XIII):

 

## **10.1.****       Representationsand Warranties**.  The representationsand warranties made by Stockholders and Grandi in Article V of thisAgreement and by the Company in Article VI of this Agreement, shall eachbe true, correct and accurate, in all material respects on, as of, and withrespect to, the Closing Date, with the same force and effect as though they hadbeen made as of the Closing Date, except those qualified by materiality orMaterial Adverse Effect which shall be true and correct in all respects.

##  

## **10.2.****       Compliancewith Obligations**.  Stockholdersand the Company shall have performed and complied with, in all materialrespects, all of their respective obligations under this Agreement, which areto be performed or complied with by them prior to or on the Closing Date, asthe case may be.

##  

## **10.3.****       ClosingCertificate**.  Buyer shall havebeen furnished with a certificate of Stockholders, Grandi and the Company,dated as of the Closing Date, certifying compliance with the applicableprovisions of Sections 10.1 and 10.2.

##  

## **10.4.****       Consents**.  Stockholders or Grandi shall have obtainedall Consents listed on **Schedule 10.4**.

##  

## **10.5.****       HSRAct**.  The waiting period underthe HSR Act shall have expired or been earlier terminated.

##  

## **10.6.****       Resignations**.  Buyer shall have received resignations datedthe Closing Date duly executed by all directors of the Company.

##  

## **10.7.****       TransferDocuments**.  Buyer shall havereceived good and sufficient instruments and documents dated as of the ClosingDate as shall be necessary and effective to convey,

 

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## transfer andassign to, and vest in Buyer all of Stockholders’ right, title and interest inand to the Stock, free and clear of all Encumbrances.

##  

## **10.8.****       MaterialAdverse Effect**.  There shall nothave been any Material Adverse Effect from January 1, 2005 to the ClosingDate.

##  

## **10.9.****       AncillaryAgreements**.  Buyer shall havereceived (a) the Leases duly executed by the Stockholders or Affiliates ofStockholders, as applicable, and (b) the Escrow Agreement duly executed byStockholders and Grandi.

##  

## **10.10.****     IncumbencyCertificate**.  Buyer shall havereceived an incumbency certificate for the officers of the Company and thetrustees of the Stockholders dated as of the Closing Date, including specimensignatures.

##  

## **10.11.****     Resolutions**.  Buyer shall have received a copy of allresolutions adopted by (a) the trustees of the Stockholders relating tothe transactions contemplated by this Agreement, and (b) the Company’sboard of directors relating to the transactions contemplated by this Agreement,certified on the Closing Date to be complete and correct by the Secretary ofthe Company.

##  

## **10.12.****     GoodStanding Certificate**.  Buyershall have received a good standing certificate for the Company dated not morethan five (5) Business Days prior to the Closing Date issued by the Secretaryof State of Delaware.

##  

## **10.13.****     Absenceof Litigation**.  No Court Order orRegulation shall be in effect that restrains or prohibits the transactionscontemplated hereby or that would limit or adversely affect Buyer’s ability toacquire the Stock and there shall not have been threatened, nor shall there bepending, any action or proceeding by or before any Governmental Authority (i) challengingany of the transactions contemplated hereby or seeking monetary relief byreason of the consummation of such transactions, or (ii) which constitutesa Material Adverse Effect.

##  

## **10.14.****     Consulting/EmploymentAgreements**.  At the Closing,Grandi, Robert Ennamorato and Paul Brooks shall have entered into a consultingor employment agreement, as applicable, with Buyer or the Company on the termsset forth on **Schedule 10.14**, asapplicable.  Stockholders and Grandishall have used reasonable efforts (without making or committing to make anypayments to any Person) to cause Richard Say, Dean Simpson and Alex Stefanellito enter into employment agreements with Buyer or the Company at the Closing onthe terms set forth on **Schedule 10.14**,as applicable.

##  

# **ARTICLE XICONDITIONS PRECEDENT TO STOCKHOLDERS’OBLIGATIONS ON THE CLOSING DATE**

 

Each and everyobligation of Stockholders and Grandi to be performed on the Closing Date shallbe subject to the satisfaction, prior to or concurrently with the performanceof such obligation, of all the following conditions precedent (any of which maybe waived by Sellers Representative, in whole or in part, and if waived bySellers Representative, the circumstance being waived shall not be used as thebasis for indemnification pursuant to Article XIII):

 

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## **11.1.****       Representationsand Warranties**.  Therepresentations and warranties made by Buyer in this Agreement shall each betrue, correct and accurate in all material respects on, as of, and with respectto the Closing Date with the same force and effect as though they had been madeas of the Closing Date, except those qualified by materiality which shall betrue and correct in all respects.

##  

## **11.2.****       Compliancewith Obligations**.  Buyer shallhave performed and complied with, in all material respects, all of itsobligations under this Agreement, which are to be performed or complied with byit prior to or on the Closing Date, as the case may be.

##  

## **11.3.****       ClosingCertificate**.  Stockholders shallhave been furnished with a Certificate of the Chief Executive Officer of Buyer,dated as of the Closing Date, certifying compliance with Sections 11.1 and11.2.

##  

## **11.4.****       HSRAct**.  The waiting period underthe HSR Act shall have expired or been earlier terminated.

##  

## **11.5.****       AncillaryAgreements**.  Stockholders shallhave received the Leases and the Escrow Agreement duly executed by Buyer.

##  

## **11.6.****       IncumbencyCertificate**.  Stockholders shallhave received an incumbency certificate for the officers of Buyer dated as ofthe Closing Date, including specimen signatures.

##  

## **11.7.****       Resolutions**.  Stockholders shall have received a copy ofall resolutions adopted by Buyer’s board of directors relating to thetransactions contemplated by this Agreement, certified on the Closing Date tobe complete and correct by the Secretary of Buyer.

##  

## **11.8.****       GoodStanding Certificate**. Stockholders shall have received a good standing certificate for Buyerdated not more than five (5) Business Days prior to the Closing Dateissued by the Secretary of State of Delaware.

##  

## **11.9.****       Absenceof Litigation**.  No Court Order orRegulation shall be in effect that restrains or prohibits the transactionscontemplated hereby or that would limit or adversely affect Buyer’s ability toacquire the Stock and there shall not have been threatened, nor shall there bepending, any action or proceeding by or before any Governmental Authoritychallenging any of the transactions contemplated hereby or seeking monetaryrelief by reason of the consummation of such transactions.

##  

## **11.10.****     Consulting/EmploymentAgreements**.  At the Closing,Buyer or the Company shall have entered into a consulting or employmentagreement, as applicable, with Grandi, Robert Ennamorato, and Paul Brooks onthe terms set forth on **Schedule 10.14**,as applicable.  Buyer shall have usedreasonable efforts to enter into employment agreements with Richard Say, DeanSimpson and Alex Stefanelli at the Closing on the terms set forth on **Schedule 10.14**, as applicable.

 

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# **ARTICLE XIIINDEMNIFICATION**

 

## **12.1.****       Indemnificationby Stockholders and Grandi**. Stockholders and Grandi shall severally in accordance with theirapplicable Indemnity Percentages, and not jointly, indemnify and hold harmlessBuyer and the Company and their respective officers, directors, employees,stockholders, members, agents, advisors and other representatives, from andagainst all claims, damages, losses, liabilities, costs and expenses (includingreasonable legal fees and expenses), after offset by any recovery of insuranceproceeds (net of any premium increases), any tax-related benefits, or anyrecovery from third parties, actually received or realized (collectively, the “Losses”), in connection with each andall of the following:

##  

### (a)           Any breachof a representation, warranty or covenant made by Stockholders, Grandi or theCompany in this Agreement;

###  

### (b)           Anymisrepresentation contained in any certificate or schedule furnished byStockholders, Grandi or the Company pursuant to this Agreement;

###  

### (c)           Any Losses for any environmental condition orviolation of any Environmental Requirements relating to the Premises located inConcordville, Pennsylvania and Aston, Pennsylvania, or the real propertylocated at 5th & Tilghman Streets, Chester, Pennsylvania,where the Company conducted its operations prior to moving to Concordville,Pennsylvania, as a result of conditions, acts, events or circumstances thatfirst occurred or existed prior to the Closing (including the costs ofinvestigation and remediation, or liabilities for personal injury, propertydamage or natural resources damages) (the “Special Environmental Indemnity”);

###  

### (d)           Pre-ClosingTaxes; and

###  

### (e)           any liability, claim or obligation arisingwith respect to U.S. Patent No. 5,208,688, U.S. Patent No. 5,751,258,or U.S. Patent No. 5,315,099, Swiss Patent No. 688 292 A5, EPO No. 0550 384 (collectively, the “JP/S Patents”)(including any foreign equivalents, extensions, continuations, continuations inpart, or divisionals of the foregoing), including any cross claims,counterclaims, appeals, interlocutory proceedings or other actions brought inconnection with such action, or any other suits, claims or actions allegingthat Company products infringe the JP/S Patents (the “IP Litigation”).  The foregoing indemnification shall extend toall Losses incurred, paid or resulting from the manufacture, sale, importation,or distribution, by or on behalf of the Company, of Company products occurringat any time prior to the one hundred eightieth (180th) day after theClosing Date (the “IP Indemnification Period”). As provided in Section 12.4(b),the Company and Buyer shall be responsible for any Losses with respect toclaims related to the JP/S Patents based on Company products manufactured,sold, imported or distributed by or on behalf of Company at any time on orafter the one hundred eighty first (181st) day after the ClosingDate.

###  

It beingunderstood and agreed that for purposes of determining whether there has beenany misrepresentation or breach of any representation or warranty and forpurposes of calculating the amount of any Losses arising therefrom under this Article XII,the representations

 

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and warranties shall not be deemed to be qualified by any concept of “material,”“materiality,” “Material Adverse Effect” or similar qualification.

 

## **12.2.****       Indemnificationby Buyer**.  Buyer herebyindemnifies and agrees to defend and hold harmless Stockholders and Grandi andtheir respective trustees, officers, directors, employees, stockholders,members, agents, advisors and other representatives from and against all Lossesin connection with each and all of the following:

##  

### (a)           Any breachof a representation, warranty or covenant made by Buyer in this Agreement;

###  

### (b)           Anymisrepresentation contained in any certificate or schedule furnished byBuyer pursuant to this Agreement;

###  

### (c)           Anyliability for or arising out of any Taxes for taxable periods ending after theClosing Date; and

###  

(d)           As provided in Section 12.4(b),any Losses with respect to claims related to the JP/S Patents based on Companyproducts manufactured, sold, imported or distributed by or on behalf of Companyat any time on or after the one hundred eighty first (181st) dayafter the Closing Date.

 

It beingunderstood and agreed that for purposes of determining whether there has beenany misrepresentation or breach of any representation or warranty and forpurposes of calculating the amount of any Losses arising therefrom under this Article XII,the representations and warranties shall not be deemed to be qualified by anyconcept of “material,” “materiality,” “Material Adverse Effect” or similarqualification.

 

## **12.3.****       Claimsfor Indemnification**.  Wheneverany claim shall arise for indemnification under this Article XII, theparty (parties) seeking indemnification (the “Indemnified Party”), shall notify the party (parties) from whomindemnification is sought (the “IndemnifyingParty”) of the claim and, when known, the facts constituting the basisfor such claim (an “IndemnificationClaim Notice”); provided that the failure of the Indemnified Party togive the Indemnification Claim Notice promptly shall not relieve theIndemnifying Party of any liability hereunder in respect of such claim (or thefacts or circumstances giving rise thereto) except to the extent that suchIndemnifying Party is materially prejudiced or harmed as a consequence of suchfailure.  Claims for indemnificationunder Sections 12.1(a), 12.1(b), 12.2(a) and 12.(b) with respect to abreach of a representation or warranty may not be brought pursuant to anIndemnification Claim Notice or otherwise after the date that is twenty-four(24) months from the date hereof, except for claims for indemnification withrespect to (a) the representations and warranties contained in Sections5.1, 5.2, 5.3 and 6.1 (the “Fundamental Representations”) which may be broughtat any time; (b) the representations and warranties contained in Section 6.18which may not be brought after the date that is three (3) years after theClosing Date; (c) the representations and warranties contained in Section 6.8and the indemnification pursuant to Sections 12.1(d) and 12.2(c), whichmay not be brought more than sixty (60) days after the statute of limitationshas expired with respect to an Action relating to the Tax Returns and Taxes bythe Company; and (d) covenants contained in Article VIII, which maynot be brought more

 

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## than sixty (60)days after the time period for performing such covenant has expired.  In the event of any such claim forindemnification hereunder resulting from or in connection with any claim orlegal proceedings by a third party, the Indemnification Claim Notice shallspecify, if known, the amount or an estimate of the amount of the liabilityarising therefrom.  The Indemnified Partyshall not settle or compromise any claim by a third party for which it isentitled to indemnification hereunder without the prior written consent of theIndemnifying Party; provided, however, that if suit shall have been institutedagainst the Indemnified Party and the Indemnifying Party shall not have takencontrol of such suit after notification thereof as provided in Section 12.4of this Agreement, the Indemnified Party shall have the right to settle orcompromise such claim upon giving notice to the Indemnifying Party, as providedin Section 12.4.

##  

## **12.4.****       Defenseby the Indemnifying Party**.  (a) Inconnection with any claim which may give rise to indemnity hereunder resultingfrom or arising out of any claim or legal proceeding, the Indemnifying Party,at its sole cost and expense, may, upon written notice to the IndemnifiedParty, assume the defense of any such claim or legal proceeding if theIndemnifying Party acknowledges to the Indemnified Party in writing theobligation of the Indemnifying Party to indemnify the Indemnified Party withrespect to all elements of such claim, such claim is solely for monetarydamages or relates to the IP Litigation, and, if requested, the IndemnifyingParty gives the Indemnified Party reasonable assurances of its ability to payany adverse judgment resulting from such claim. If the Indemnifying Party assumes the defense of any such claim or legalproceeding, the Indemnifying Party shall select counsel reasonably acceptableto the Indemnified Party to conduct the defense of such claims or legalproceeding and at the sole cost and expense of the Indemnifying Party shalltake all steps necessary in the defense or settlement thereof.  The Indemnifying Party shall not consent to asettlement of, or the entry of any judgment arising from, any such claim orlegal proceeding, without the prior written consent of the Indemnified Party(which consent shall not be unreasonably withheld, conditioned or delayed itbeing understood that it shall not be unreasonable for the Indemnified Party towithhold its consent from any settlement that (1) commits the IndemnifiedParty to take, or to forbear to take, any action, or (2) does not providefor a complete release of the Indemnified Party by such third party).  The Indemnified Party shall be entitled toparticipate in (but not control) the defense of any such action, with its owncounsel and at its own expense.  If theIndemnifying Party does not assume the defense of any such claim or litigationresulting therefrom within fifteen (15) Business Days after the date of theIndemnification Claim Notice:

##  

### (i)            TheIndemnified Party may defend against such claim or litigation in such manner asit may deem appropriate, including, but not limited to, settling such claim orlitigation, after giving notice of the same to the Indemnifying Party, on suchterms as the Indemnified Party may reasonably deem appropriate and all costs oflitigation incurred by the Indemnified Party shall be included in thecalculation of the Indemnified Party’s Loss; and

###  

### (ii)           TheIndemnifying Party shall be entitled to participate in (but not control) thedefense of such action, with its counsel and at its own expense.  If the Indemnifying Party thereafter seeks toquestion the manner in which the Indemnified Party defended such third partyclaim or the amount or nature of any such settlement, the Indemnifying Partyshall have the burden to prove by a preponderance of the evidence that theIndemnified Party did not defend or settle such third party claim in areasonably prudent manner.

 

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(b)           Notwithstanding theforegoing, in the event the IP Litigation is not finally concluded upon theexpiration of the IP Indemnification Period, then the IP Litigation shall becontrolled by the Company and/or Buyer at the time at which the Company’saggregate sales of products alleged to infringe the JP/S Patents exceed salesof such allegedly infringing products by the Company during the IPIndemnification Period.  Each of theBuyer and the Company, on the one hand, and the Stockholders and Grandi, on theother hand, must consent in writing to any settlement or compromise of the IPLitigation (such consent not to be unreasonably withheld).  Upon the entry of any final, non-appealablejudgment or order related to the IP Litigation resulting in Losses, then theparties agree that each shall be responsible for its attorney’s fees and costsincurred as set forth in this Section 12.4, and that Losses shall beapportioned, on a per-unit basis based on the number of product units sold, (i) toStockholder and Grandi, for sales during the IP Indemnification Period, and (ii) toCompany/Buyer for sales after the expiration of the IP Indemnification Period.

 

## **12.5.****       Limitations**.  (a) The parties agree thatindemnification under this Article XII shall be the sole and exclusiveremedy with respect to any actual or alleged breach of the provisions of thisAgreement.

##  

(b)           Notwithstandinganything contained in this Agreement to the contrary, neither Buyer nor theCompany shall be entitled to indemnification by Stockholders and Grandi forbreaches of representations and warranties pursuant to Section 12.1 (otherthan Fundamental Representations and the representations and warrantiescontained in Section 6.8 and Section 6.14(b)), until its Lossesexceed $680,000 in the aggregate (the “Basket”), and only to the extent ofLosses in excess of such amount.  Assuch, Stockholders’ and Grandi’s indemnification for (1) breaches ofFundamental Representations, (2) breaches of the representations andwarranties contained in Section 6.8, (3) breaches of therepresentations and warranties contained in Section 6.14(b), (4) breachesof covenants pursuant to Section 12.1, (5) Losses pursuant to theSpecial Environmental Indemnity pursuant to Section 12.1(c), (6) Losseswith respect to Pre-Closing Taxes pursuant to Section 12.1(d), and (7) anybreaches that come within Section 12.5(f), shall not be subject to theBasket.

 

(c)           Notwithstandinganything contained in this Agreement to the contrary, the indemnification byStockholders and Grandi for breaches of representations and warranties pursuantto Section 12.1 (other than Fundamental Representations and therepresentations and warranties contained in Section 6.8 and Section 6.14(b))shall in no event exceed $6,800,000 in the aggregate (the “Cap”).  As such, Stockholders’ and Grandi’sindemnification for (1) breaches of Fundamental Representations, (2) breachesof the representations and warranties contained in Section 6.8, (3) breachesof the representations and warranties contained in Section 6.14(b), (4) breachesof covenants pursuant to Section 12.1, (5) Losses pursuant to theSpecial Environmental Indemnity pursuant to Section 12.1(c), (6) Losseswith respect to Pre-Closing Taxes pursuant to Section 12.1(d), and (7) anybreaches that come within Section 12.5(f), shall not be subject to theCap.

 

(d)           Stockholders and Grandishall not be entitled to indemnification by Buyer for breaches ofrepresentations and warranties pursuant to Section 12.2 until their Lossesexceed the Basket in the aggregate, and only to the extent of Losses in excessof such amount, provided

 

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that such indemnification forbreaches of representations and warranties shall in no event exceed the Cap inthe aggregate.

 

(e)           In addition to theforegoing limitations, each Stockholder and Grandi shall only be liable for theportion of any Losses that is equal to the proportion of the Purchase Pricereceived by the Stockholder or Grandi, as set forth on **Schedule 12.5(e) **(the“Indemnity Percentages”).

 

(f)            Notwithstandinganything to the contrary in this Article XII, no limitation or conditionof liability provided in this Article XII (including, without limitation,the time limitations set forth in Section 12.3 and the monetarylimitations and conditions set forth in Section 12.5) shall apply to thebreach of any of the representations and warranties contained herein if suchrepresentation or warranty was made with actual knowledge of any Stockholder,Grandi or the Company that it contained an untrue statement of a material factor omitted to state a material fact necessary to make the statements or factstherein not misleading or to any claim for fraud.

 

# **ARTICLE XIIITERMINATION**

# ** **

## **13.1.****       Termination**.  This Agreement may be terminated at any timeprior to the Closing Date:

##  

### (a)           By themutual written consent of Stockholders, Grandi and Buyer;

###  

### (b)           ByStockholders and Grandi if a material breach of any provision of this Agreementhas been committed by Buyer and such breach has not been waived by Stockholdersand Grandi, or by Buyer if a material breach of any provision of this Agreementhas been committed by either Stockholders or the Company and such breach hasnot been waived by Buyer;

###  

### (c)           ByStockholders and Grandi, collectively, if the Closing shall not have beenconsummated by November 17, 2005 (the “Termination Date”); provided,however, that Stockholders and Grandi may not terminate this Agreement pursuantto this Section 13.1(c) if the Closing shall not have been consummatedby the Termination Date by reason of the failure of the Stockholders or theCompany to perform in all material respects any of their respective covenantsor agreements contained in this Agreement;

###  

### (d)           By Buyerif the Closing shall not have been consummated by the Termination Date; provided, however, that Buyer may notterminate this Agreement pursuant to this Section 13.1(c) if theClosing shall not have been consummated by the Termination Date by reason ofthe failure of Buyer to perform in all material respects any of its respectivecovenants or agreements contained in this Agreement; or

###  

### (e)           ByStockholders and Grandi, or Buyer, if (i) any Governmental Entity, theConsent of which is a condition to the obligations of Stockholders toconsummate the transactions contemplated hereby, shall have determined not togrant its Consent and all appeals of such determination shall have been takenand have been unsuccessful, or (ii) any court of

 

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### competent jurisdiction inthe United States or any State shall have issued a Court Order restraining,enjoining or otherwise prohibiting the transactions subject to this Agreement.

###  

## **13.2.****       Effectof Termination**.  In the event oftermination of this Agreement by either Stockholders and Grandi, or Buyer, asprovided for in Section 13.1, this Agreement shall forthwith become null,void and of no further force or effect (except as set forth in Sections 15.2,15.3 and 15.4, which shall survive the termination) and there shall be noliability on the part of Stockholders and Grandi, or Buyer, or their respectiveofficers or directors, except for any breach of any of its obligations underSections 15.2 and 15.3.  Notwithstandingthe foregoing, neither Stockholders nor Buyer shall be relieved from liabilityfor any willful and material breach of this Agreement.

##  

# **ARTICLE XIVNOTICES**

 

## **14.1.****       Notices**.  All notices, requests and othercommunications hereunder (“Notices”) shall be in writing and shall either bemailed (by registered or certified mail, postage prepaid, return receiptrequested), or sent by an overnight courier service guaranteeing next daydelivery (i.e., Federal Express), or by facsimile transmission, and shall beeffective upon receipt, in each instance, addressed as follows:

##  

If to Buyer,to:

 

Norcross Safety Products L.L.C.

2001 Spring Road

Suite 425

Oak Brook IL 60523

Attention: Robert A. Peterson

Fax:  (630) 572-8518

 

with a copyto:

 

Dechert LLP

4000 Bell Atlantic Tower

1717 Arch Street

Philadelphia, PA 19103

Attention: Geraldine A. Sinatra

Fax: (215) 994-2222

 

If to theCompany, to:

 

The Fibre-Metal Products Company

Baltimore Pike at Brinton Lake Road

Concordville, Pennsylvania  19331

Attention: Charles J. Grandi

Fax: (610) 459-3884

 

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with a copyto:

 

Stradley, Ronon, Stevens & Young, LLP

2600 One Commerce Square

Philadelphia, Pennsylvania  19103

Attention:  John F. Dougherty, Jr.,Esquire

Fax: (215) 564-8120

 

If toStockholders, to:

 

1800 East Lancaster Avenue

Paoli, Pennsylvania  19301

Attention:  Robert Shoemaker

Fax: (610) 296-4389

 

with a copyto:

 

Morris, Nichols, Arsht & Tunnell

1201 N. Market Street

P.O. Box 1347

Wilmington, Delaware  19899

Attention:  David Ley Hamilton,Esquire

Fax: (302) 658-3989

 

If to Grandi,to:

 

140 Jaffrey Road

Malvern, Pennsylvania  19355

Attention:  Charles J. Grandi

Fax: (610) 722-9561

 

If to SellersRepresentative, to:

 

1800 East Lancaster Avenue

Paoli, Pennsylvania  19301

Attention:  Robert Shoemaker

Fax: (610) 296-4389

 

# **ARTICLE XVGENERAL**

 

## **15.1.****       FurtherAssurances**.  From the date hereofthrough the Closing Date and thereafter Stockholders and Buyer will execute anddeliver to one another such further instruments of transfer and conveyance andtake such action and deliver such other documents, certifications and furtherassurances as may reasonably be required to carry out more effectively the saleand transfer of the Stock.  In addition,following Closing, Buyer will provide Stockholders and Grandi, and itsauthorized accountants, attorneys and appraisers with access to

 

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## financial records(including accountant’s work papers), and the tax returns of the Company to theextent reasonably necessary, during regular business hours.

##  

## **15.2.****       Finder’sFees**.  Stockholders and Grandi,on the one hand, and Buyer, on the other, agree to indemnify and hold the otherharmless from and against any claim for a broker’s or finder’s fee relative tothis Agreement arising by, through or under such party.

##  

## **15.3.****       Expenses**.  Stockholders, Grandi, the Company and Buyershall each pay all of the costs and expenses of their performance of andcompliance with all agreements and conditions contained in this Agreement ontheir part to be performed or complied with; provided, however, that (i) theTransaction Expenses shall be paid by the Stockholders or the Company at theClosing, and (ii) Buyer has agreed to pay all filing fees under the HSRAct for all parties, but one-half the amount of the filing fee shall beincluded in the Transaction Expenses.

##  

## **15.4.****       GoverningLaw; Jurisdiction**.  ThisAgreement shall be governed by and construed in accordance with the substantivelaws of the Commonwealth of Pennsylvania without giving effect to the conflictof law principles thereof.  Except asotherwise provided in Article III, the parties hereto agree to submit anydispute or controversy arising out of or relating to this Agreement exclusivelyto a federal or state court in the Eastern District of Pennsylvania.

##  

## **15.5.****       NoWaiver**.  No failure or delay onthe part of any party to exercise any right, power or remedy shall operate as awaiver thereof, nor shall any single or partial exercise of any right, power orremedy preclude any other or further exercise thereof or of any other right,power, or remedy.

##  

## **15.6.****       EntireAgreement**.  This Agreement,including the Schedules thereto, sets forth the entire understanding of theparties relating to the subject matter hereof and supersedes all prior oral orwritten understandings relating hereto, other than the ConfidentialityAgreement, which shall continue in force according to its terms.  This Agreement shall not be modified,supplemented or terminated orally and shall be binding upon and inure to thebenefit of the parties hereto and their respective successors and permittedassigns including without limitation any successor to a party hereto by merger,consolidation or otherwise by operation of law. Neither this Agreement nor any rights hereunder may be assigned by aparty hereto except that Buyer may assign any of its rights and obligationshereunder in whole or in part to any Affiliate of Buyer and may collaterallyassign its rights hereunder to any lender or financing source to Buyer, in eachcase, without the consent of Stockholders and Grandi; provided, however, that no such assignment by Buyer shall relieve theBuyer from any of its obligations hereunder.

##  

## **15.7.****       Counterparts**.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed to be an original hereof, andall of which, when taken together, shall constitute one and the sameinstrument.

##  

## **15.8.****       Headings**.  The headings of the several articles,sections and subsections of this Agreement are inserted for convenience ofreference only and shall not constitute a part of this Agreement.

 

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## **15.9.****       Severability**.  If any portion of this Agreement is construedto be invalid or unenforceable, the remaining portions hereof shall not beaffected thereby and shall be enforceable without regard to the invalid orunenforceable portions.

##  

## **15.10.****     Amendments**.  This Agreement may be modified only by anagreement in writing signed by each of the parties hereto.

##  

## **15.11.****     ThirdParty Beneficiaries**.  Each partyhereto intends that this Agreement shall not benefit or create any right orcause of action in or on behalf of any Person other than the parties hereto.

##  

 

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be duly executed anddelivered on the date first above written.

 
|   | **NORCROSS SAFETY PRODUCTS L.L.C.**                                                      |
|--------|------------------------------------------------------------------------------------------|
|   |                                                                                     |
|   |                                                                                     |
|   | By:                                                                                      |   /s/  Robert A. Peterson |   |
|   | Name: Robert  A. Peterson                                                                |
|   | Title:  President and Chief Financial Officer                                            |
|   |                                                                                     |
|   | **THE FIBRE-METAL PRODUCTS COMPANY**                                                     |
|   |                                                                                     |
|   |                                                                                     |
|   | By:                                                                                      |   /s/  Charles J. Grandi |   |
|   | Name:  Charles J. Grandi                                                                 |
|   | Title:  President and Chief Executive Officer                                            |
|   |                                                                                     |
|   | **RESIDUARY  TRUST UNDER THE WILL OF CHARLES E. BOWERS, JR.**                            |
|   |                                                                                     |
|   |                                                                                     |
|   | By:                                                                                      |   /s/  Robert Shoemaker, Trustee and Authorized Representative |   |
|   |                                                                                     |
|   | **TRUST  UNDER THE WILL OF CHARLES E. BOWERS, JR.  FOR THE BENEFIT OF JUDITH L. BOWERS** |
|   |                                                                                     |
|   |                                                                                     |
|   | By:                                                                                      |   /s/  Robert Shoemaker, Trustee and Authorized Representative |   |
|   |                                                                                     |
|   | **CHARLES  E. BOWERS, JR. IRREVOCABLE TRUST  DATED DECEMBER 17, 1990**              |
|   |                                                                                     |
|   | By:                                                                                      |   /s/  Robert Shoemaker, Trustee and Authorized Representative |   |
|   |                                                                                     |
|   | **CHARLES J. GRANDI**                                                                    |
|   |                                                                                     |
|   |                                                                                     |
|   |   /s/  Charles J. Grandi                                                       |   |
|        |                                                                                          |  |  |  |

 

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